ITEM NO. 9.
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SUBJECT: Appeal Re Government Code Section 65941.1
DATE: April 16, 2026
BACKGROUND:
This hearing has been scheduled for the limited purpose of considering two appeals concerning the proper interpretation of Government Code Section 65941.1. The merits of either planning application are not part of this hearing.
Government Code Section 65941.1 authorizes housing project applicants to submit a Senate Bill 330 (SB 330) “preliminary application.” An SB 330 “preliminary application” vests an applicant to the Town regulations that were in effect at the time that the preliminary application was deemed submitted. [Government Code Section 65589.5(o)].
Government Code Section 65941.1(e)(1) provides: “Within 180 calendar days after submitting a preliminary application with all of the information required . . . to a city . . . , the development proponent shall apply for a development project that includes all of the information required to process the development application consistent with Sections 65940, 65941, and 65941.5." Government Code Section 65941.1(e)(2) further provides: “If the public agency determines that the application for a development project is not complete pursuant to Section 65943, the development proponent shall submit the specific information needed to complete the application within 90 days of receiving the agency’s written identification of the necessary information. If the development proponent does not submit this information within the 90-day period, then the preliminary application shall expire and have no further force or effect.” The Town read Section 65941.1(e)(2) to provide for a single 90-day period following the initial 180-day period in which to render a planning application complete and retain vesting.
However, the Town recognized that the statute was not clear. Therefore, the Town filed an action for declaratory relief on March 28, 2025, in order to obtain a court’s determination on this question.
After receiving correspondence from the Town stating that two planning applications remained incomplete (Attachments 1 and 2), the architect for both projects called Town staff to inquire about the import of that incompleteness determination. Town staff stated that they believed it was possible that the project vesting had expired. After that conversation, on January 30, 2025, the Town received the appeals of that statement, which are attached to this report (Attachments 3 and 4). After receiving the appeals, the Town Attorney contacted counsel for the applicants to let them know that the Town would hear the appeals after obtaining the court’s determination and that, in the meantime, the Town would continue to process the planning applications. A copy of that letter is attached as Attachment 5.
ITEM NO. 9.
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SUBJECT: Appeal Re Government Code Section 65941.1
DATE: April 16, 2026
DISCUSSION:
Status of Projects
14849 Los Gatos Boulevard (Luxe)
A preliminary application for the Luxe project was submitted on August 30, 2023, and a formal planning application for a 120-unit mixed-use development (Architecture and Site Application S-24-008 and Subdivision Application M-24-005) was submitted on March 8, 2024, and deemed complete on April 16, 2025. The project has also continued to be processed. The applicant has paid the deposit for an Initial Study to be prepared by the Town’s environmental consultant.
On February 10, 2026, and March 23, 2026, staff informed the applicant that completion of the Initial Study is pending the applicant's providing the following items:
1) Re-submit the traffic report based on peer review comments provided by the Town’s consultant, because the environmental consultant cannot complete the technical analyses for noise and air quality/greenhouse gas/energy until the traffic report, or at least the trip generation and intersection volumes are finalized; and
2) Provide the items requested by the visual simulation consultant in order to complete the renderings.
On March 25, 2026, the applicant provided the items requested by the visual simulations consultant. The renderings are currently being processed by the consultant.
On April 9, 2026, the applicant resubmitted the traffic report. Peer review by the Town’s consultant is currently underway.
15300 and 15330 Los Gatos Boulevard (Arya)
A preliminary application for the Arya project was submitted on November 7, 2023, and a formal planning application for a 175-unit mixed-use development (Architecture and Site Application S-24-018, Conditional Use Permit Application U-24-007, and Subdivision Application M-24-009) was submitted on May 10, 2024, and deemed complete on April 16, 2025.
The project has continued to be processed. Environmental review for the project is currently underway through the preparation of an environmental impact report. Photo simulations for the project were completed on August 13, 2025. On August 26, 2025, staff provided peer review comments on the project’s traffic analysis.
On January 19, 2026, the applicant’s team notified staff that proposed modifications to the project are forthcoming, including potential changes to circulation, parking, floor plans, and building elevations. Staff is awaiting the applicant’s resubmittal.
ITEM NO. 9.
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SUBJECT: Appeal Re Government Code Section 65941.1
DATE: April 16, 2026
On April 6, 2026, the applicant provided staff with a response to peer review comments. The revisions are currently being reviewed by the Town’s traffic consultant to complete the technical reports required for the EIR.
Appeal of Town's Interpretation of Government Code Section 65941.1 The Superior Court issued its order on January 29, 2026, ruling Government Code Section 65941.1(e)(2) "allows for multiple 90-day resubmission periods for a project proponent to respond to successive incompleteness determinations without losing the project vesting conferred by a preliminary application as provided at section 65941.1, subdivision (e)(1)" (Attachment 6).
Having obtained the Court’s determination, the Town has scheduled this public hearing to hear the applicants’ appeals for these two projects. Draft resolutions are attached as Attachment 1.
Notice of this public hearing was published in a newspaper of general circulation in the Town on April 10, 2026, and posted on the Town’s website.
CONCLUSION:
Based on the Court’s determination, Town staff recommends that the Town Council adopt the resolutions (Attachments 7 and 8) granting the appeals and finding that multiple 90-day resubmission periods are allowed to respond to successive incompleteness determinations.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required, because applying a trial court determination will not have a significant impact upon the environment.
Attachments:
1. Incompleteness Letter for 14849 Los Gatos Boulevard
2. Incompleteness Letter for 15300 and 15330 Los Gatos Boulevard
3. Appeal Submitted for 14840 Los Gatos Boulevard
4. Appeal Submitted for 15300 and 15330 Los Gatos Boulevard
5. Correspondence from Town Attorney to Counsel for Applicants
6. Superior Court Order
7. Resolution Granting Appeal for 14849 Los Gatos Boulevard
8. Resolution Granting Appeal for 15300 and 15330 Los Gatos Boulevard
ITEM NO. 9.
Planning Division • 110 E. Main Street, Los Gatos, CA 95030 408.354.6872 • www.losgatosca.gov • www.facebook.com/losgatosca
TOWN OF LOS GATOS
PLANNING DIVISION
January 30, 2025
Kurt Anderson, AIA
Anderson Architects, Inc.
120 W. Campbell Avenue, Suite D
Campbell, CA 95008
Subject: SB330 Application Incompleteness Determination Appeal Process 14849 Los Gatos Boulevard
Dear Mr. Anderson,
Please note that in accordance with Government Code Section 65943, you may appeal the incompleteness determination, of the Senate Bill 330 application for the property located at 14849 Los Gatos Boulevard to the Town Council by paying the required appeal fee and submitting a written appeal to the Town Clerk on the attached appeal form within 10 days of the date of this letter.
The application’s incompleteness determination was provided to the applicant’s team on November 19, 2024, as part of the Staff Technical Review Committee comments, and discussed at the November 20, 2024, Staff Technical Review Committee meeting.
If you have questions, please contact Jocelyn Shoopman, Senior Planner, by email at [email protected].
Sincerely,
Joel Paulson
Community Development Director
cc: Ali Moayed, Los Gatos Boulevard Properties, LLC , 16400 Lark Avenue, Suite 400, Los Gatos, CA 95032 ATTACHMENT 1
ITEM NO. 9.
Planning Division • 110 E. Main Street, Los Gatos, CA 95030 408.354.6872 • www.losgatosca.gov • www.facebook.com/losgatosca
TOWN OF LOS GATOS
PLANNING DIVISION
January 30, 2025
Kurt Anderson, AIA
Anderson Architects, Inc.
120 W. Campbell Avenue, Suite D
Campbell, CA 95008
Subject: SB330 Application Incompleteness Determination Appeal Process 15300 and 15330 Los Gatos Boulevard
Dear Mr. Anderson,
Please note that in accordance with Government Code Section 65943, you may appeal the incompleteness determination, of the Senate Bill 330 application for the properties located at 15300 and 15330 Los Gatos Boulevard to the Town Council by paying the required appeal fee and submitting a written appeal to the Town Clerk on the attached appeal form within 10 days of the date of this letter.
The application’s incompleteness determination was provided to the applicant’s team on December 23, 2024, as part of the Staff Technical Review Committee comments, and discussed at the January 8, 2025, Staff Technical Review Committee meeting.
If you have questions, please contact Erin Walters, Senior Planner, by email at [email protected].
Sincerely,
Joel Paulson
Community Development Director
Cc: Ali Moayed, Arya Properties, LLC , 16400 Lark Avenue, Suite 400, Los Gatos, CA 95032 ATTACHMENT 2
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Filed
January 29, 2026 Clerk of the Court Superior Court of CA County of Santa Clara 25CV462276
By: MJacobo
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA
THE TOWN OF LOS GATOS, California Case No. 25CV462276
12 municipal corporation, ORDER RE: MOTION FOR
vs. ALTERNATIVE, SUMMARY ADJUDICATION
16 ARYA PROPERTIES, LLC, et al. (Order on Submitted Matter) Defendants. 18 AND RELATED CROSS-ACTION
I. Introduction
Plaintiff in this case is the Town of Los Gatos, which filed its complaintfor declaratory relief against defendants Arya Properties, LLC (Arya) and Los Gatos Boulevard Properties, LLC (Boulevard, and collectively, defendants). The complaint seeks "a declaration of [the Town's] rights and duties with respectto the processing of applications for housing development projects" and "judicial guidance on the correct interpretation of [Government Code! s]ection 65941.1, so that it may process Further unspecified statutory references are to the Government Code.
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Plaintiff, SUMMARY JUDGMENT, OR IN THE
ATTACHMENT 6
ITEM NO. 9.
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28 development projects in full accordance with its legal rights and obligations, and so affected developers may have similar clarity as to their, and the Town’s, rights and duties.” (Complaint, ¶ 1.) The complaint asserts the Town’s position that “to retain extraordinary vesting rights granted by the Housing Crisis Act [of 2019, sections 65941.1, 65943, and 66300], developers should complete their applications within the reasonable period of time granted by the Legislature [while] [d]efendants claim that they may retain these vesting rights indefinitely while continuing to submit incomplete applications, and building no housing.” (Ibid.) Specifically, the Town’s complaint alleges that under section 65941.1, subdivision (e)(2) (section 65941.1(e)(2)), “after the 180-day period to submit a complete application expires,” there is only “a single 90-day period … within which a project applicant must complete a [development] application to maintain vesting” while defendants maintain that the vesting of “a preliminary application remains in effect so long as applicants re-submit [a development] application found to be incomplete within 90 days after receiving a list of incomplete items—no matter how long the overall process takes, how little change is made in the plans, or how many notices of incompletion the Town provides—allowing successive and unending 90- day periods after each incompleteness determination.” (Complaint, ¶¶ 16, 17.) The complaint’s prayer seeks “a judicial declaration that [section 65941.1(e)(2)]’s reference to ‘the 90-day period’ within which to submit specific information needed to complete a [development] application refers to a single 90-day period.” Defendants Arya and Boulevard, in turn, filed a cross-complaint/petition against the Town, the Town of Los Gatos Community Development Department, and the Town of Los Gatos Planning Division (collectively, the Town crossdefendants) alleging causes of action for (1) a writ of mandate directing the Town cross-defendants to comply with the Permit Streamlining Act (PSA, section 65920 et seq.) with respect to Arya and Boulevard’s respective projects; (2) a writ of mandate directing the Town cross-defendants to comply with the Housing Accountability Act
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28 (section 65589.5) with respect to Arya and Boulevard’s respective projects; and (3) declaratory relief. The declaratory relief cause of action alleges an actual controversy in that: “Cross-defendants’ policies and procedures … operate to avoid obligations imposed by state law, such as (1) [the] refusal to process housing development projects that qualify under the ‘Builder’s Remedy’ section of the Government Code; and (2) [the] disregard[ of] the vested rights of Preliminary Applications and associated housing development project applications under state law,” in that the Town cross-defendants’ actions are prohibited by the HAA, section 65589.5, California Senate Bill 330 (SB 330), specifically section 65941.1, and the PSA, section 65943.
The Town and the Town cross-defendants filed a motion for summary judgment on both the complaint and cross-complaint, respectively, and alternatively for summary adjudication of the complaint’s single declaratory relief cause of action.
The notice of motion asserts as its grounds that “the undisputed facts establish that the 90-day period in … section 65941.1(e)(2) refers to a single 90-day deadline within which to submit all of the information needed to complete the preliminary application as set forth in the statute, or else the preliminary application and associated vesting expires.” This ground is asserted to resolve both the complaint and cross-complaint in the Town’s and the Town cross-defendants’ favor in that “all causes of action are based on the dispute over this 90-day deadline in” section 65941.1(e)(2). In this regard, the notice of motion further seeks a judicial declaration that “[s]ection 65941.1(e)(2)’s reference to ‘the 90-day period’ within which to submit specific information needed to complete a preliminary application refers to a single 90-day period.”2
2 The Town’s counsel somewhat inconsistently clarified its position in argument at the hearing, asserting it more precisely as section 65941.1, subdivisions (e)(1) and (e)(2), read together, mean that “the total amount of time available to complete the development application is 270 days. 180 days, referred to in (e)(1), plus a 90-day period to complete, for a total period of 270 days. … [¶] …
ITEM NO. 9.
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28 Thus, as apparently agreed by the parties, the motion in essence presents a single legal issue—the correct statutory interpretation of section 65941.1. Although the motion is one for summary judgment or adjudication under Code of Civil Procedure section 437c, it does not pivot on whether there are disputed issues of material fact. Indeed, the material facts appear to be undisputed such that the single issue presented by the motion is one of law. This, despite the parties’ evidence in support of and in opposition to the motion, and their respective separate statements, going well beyond the material facts needed to resolve the dispositive legal issue presented by motion.
The motion came on for hearing before the Honorable Helen E. Williams on October 15, 2025, at 1:30 p.m. in Department 66. Counsel of record appeared. After full consideration of the papers on both sides, the authorities submitted, as well as oral argument by the parties,3 the court orders as follows:
II. Factual and Procedural Background
A. The Pleadings as Relevant to the Motion
As noted, this action presents a complaint for declaratory relief by plaintiff and cross-defendant the Town against defendants and cross-complainants Arya and Because the total period is 270 days, multiple submissions are possible if a developer acts quickly.” (RT pp. 15-16.) In other words, the Town’s position incorporates the possibility that multiple incompleteness determinations by the agency are permitted and responses thereto, but if the total period exceeds 270 days, the developer’s vested entitlement rights under section 65941.1, subdivision (e)(1) are lost.
3 The court previously granted the applications of amici curiae in support of defendants and cross-complainants California Housing Defense Fund, Californians for Homeownership, and Yes In My Backyard to file a single brief in opposition to the motion, further allowing the Town and the Town cross-defendants a single response brief. At the hearing, the court also allowed brief and collective argument by counsel for one amicus party and rebuttal to that argument by the Town’s counsel. The court has considered the amici brief and arguments and the Town’s responses thereto in ruling on the motion.
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28 Boulevard, and a cross-complaint in mandate and declaratory relief against the Town cross-defendants.
The complaint sets out the Town’s view of the legal issue presented. It alleges that the preliminary application for a housing development project as provided at section 65941.1, subdivision (a) allows developers to “vest” housing projects as entitlements very early in the planning process, when only conceptual plans have been prepared. (Complaint at ¶ 13.) Once a preliminary application is submitted with all required components, the developer gains “vested rights” to develop the project according to the standards and fees that were in place at the time of submission. (Ibid.)
The complaint further alleges that under section 65941.1, a project proponent must complete a formal application and move a project forward within the statutory deadlines provided at section 65941.1, subdivision (e), or else the project loses vesting. (Complaint at ¶ 14.) “To maintain the vesting conferred by the preliminary application, the development proponent must submit an application for approval of the housing development project under the PSA (sections 65940 et seq., 65941, and 65943). (Ibid.) The deadline for submitting the project application under section 65941.1, subdivision (e)(1) is 180 calendar days after submission of a preliminary application that contains all of the statutorily required information.” (Ibid.) The complaint then quotes section 65941.1, subdivision (e)(1) as follows:
Within 180 calendar days after submitting a preliminary application with all of the information required by subdivision (a) to a city, county, or city and county, the development proponent shall submit an application for a development project that includes all of the information required to process the development application consistent with Sections 65940, 65941, and 65941.5. (Complaint at ¶ 14, quoting statute.)
As noted, the complaint further pleads that the controversy in this declaratory relief action is the correct interpretation of section 65941.1(e)(2), which provides, as quoted:
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28 If the public agency determines that the application for the development project is not complete pursuant to Section 65943 [the PSA], the development proponent shall submit the specific information needed to complete the application within 90 days of receiving the agency’s written identification of the necessary information. If the development proponent does not submit this information within the 90-day period, then the preliminary application shall expire and have no further force or effect. (Complaint at ¶ 15, quoting statute, italics added.)
According to the complaint, many local agencies throughout the State, including the Town, contend that “after the 180-day period in section 65941.1, subdivision (e)(1) to submit a complete application expires, this provision refers plainly to a single 90-day review period (the 90-day period) within which a project applicant must complete a preliminary application to maintain vesting.” (Complaint at ¶ 16.) “This provides an applicant with at least 270 days total to merely submit plans that include all items required by the local agency’s application form before a preliminary application expires.” (Ibid.)
By contrast, according to the complaint, “defendants contend that a preliminary application remains in effect so long as applicants re-submit an application found incomplete within 90 days after receiving a list of incomplete items—no matter how long the overall process takes, how little change is made in the plans, or how many notices of incompletion the Town provides—allowing successive and unending 90-day periods after each incompleteness determination.” (Complaint at ¶ 17.)
The cross-complaint/petition makes allegations and claims and seeks relief beyond the correct interpretation of section 65941.1 in support of its three causes of action. But it also alleges as material to all three causes of action cross-defendants’ view that under section 65941.1(e)(2), the “completeness determination [of a development application] is an iterative process that contemplates the possibility of resubmissions and 30[-]day response periods to make a [d]evelopment [a]pplication complete.” (Cross-complaint at ¶ 31.) It further alleges that section 65941.1(e)(2) expressly cross-references section 65943, which contains an iterative process that
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28 contemplates multiple resubmission windows.” (Cross-complaint at ¶ 32; see also cross-complaint at ¶¶ 47-49, 56, 65, 69 [e.g., “the necessary predicate for the Town’s declaratory relief action is that the parties disagree as to the meaning and interpretation of” section 65941.1].)
Thus, the proper statutory construction and interpretation of section 65941.1(e)(2) as the dispositive legal issue presented by the motion appears to be well framed by the pleadings. (Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1253 [pleadings delimit issues to be considered on summary judgment].) Again, although the material facts appear to be undisputed here, the question remains whether the Town and Town cross-defendants are dispositively entitled to judgment (or adjudication) as a matter of law based on their asserted position on the dispositive legal issue, on which the Town and Town cross-defendants as the moving parties bear the burden of persuasion. (Aguilar, supra, 25 Cal.4th at p. 850 [from start to finish, moving party bears the burden of persuasion that there is no disputed issue of material fact and that they are entitled to judgment as a matter of law].)
B. Undisputed Material Facts as Relevant to the Motion4
1. The Town’s Compliance With its Required Housing Element Update
4 The relevant facts as treated by both sides in their respective separate statements are larded with irrelevant information, improper and biased characterizations, and legal conclusions. The stated facts are also with some frequency not supported by admissible evidence (see two separate orders on evidentiary objections issued in connection with this motion, which are incorporated here by reference). The court here reframes the undisputed material facts from the separate statements to the unadorned basics as necessary only to decide the motion.
Further, it does not appear that the moving parties responded to the defendants/cross-complainants’ “additional material facts and supporting evidence” reflected at the end of these parties’ filed response to separate statement in opposition to the motion. The court will therefore accept the relevant and material facts stated there as undisputed for purposes of the motion.
ITEM NO. 9.
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28 Under the housing element law, the Town was required to adopt a compliant housing element update for its Sixth Cycle Regional Housing Needs Allocation (RHNA) (2023-2031) by January 31, 2023. (Additional Material Fact No. 1.) From February 1, 2023, to July 10, 2024, the Town did not have a substantially compliant housing element and was therefore subject to the builder’s remedy during this compliance gap. (Ex. H to Brooks Decl.)
2. The Arya Project
On November 14, 2023, while the Town was out of compliance with its housing element requirements, Arya submitted a preliminary application for a project to be located at 15300 and 15330 Los Gatos Boulevard, Los Gatos (Arya Project). (Complaint at ¶ 26; Town’s Sep. Stmt. at Fact No. 1.) Arya followed its preliminary application with the timely submission of its development application on May 10, 2024, within the 180-day deadline set forth in section 65941.1, subdivision (e)(1). (Town’s Sep. Stmt. at Fact No. 3 and response.) The Town responded with a letter dated June 5, 2024, within 30 days, determining Arya’s development application to be incomplete under section 65943. (Town’s Sep. Stmt. at Fact No. 1.) Arya timely responded to the Town’s first incompleteness determination on September 2, 2024, within 90 days as provided by section 65941.1(e)(2). (Ibid.) The Town then issued its second incompleteness determination on September 25, 2024, within 30 days. (Ibid.) Arya timely responded to the second incompleteness determination on November 27, 2024, 63 days later and within 90. (Ibid.) On December 23, 2024, the Town provided Arya with its third determination of incompleteness, followed by a letter dated January 30, 2025, from the Town’s Community Development Director, notifying Arya of the right to appeal the incompleteness determination. (Town’s Sep. Stmt. at Fact No. 4 and response.) The Town also communicated its position that Arya’s preliminary application had expired and lost vesting because its development application remained incomplete after a second resubmittal. (Ex. C to Paulson Decl.)
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28 On February 7, 2025, defendant Arya submitted an appeal of the Town’s position that the preliminary application had expired because Arya’s application remained incomplete after a second submittal. (Complaint at ¶ 29; Town’s Sep.
Stmt. at Fact No. 5.)
3. The Boulevard Project
Boulevard submitted a preliminary application on September 12 or 13, 2023 (it doesn’t matter which), for a builder’s remedy project located at 14849 Los Gatos Boulevard, Los Gatos, known as “the Luxe Builder’s Remedy Project.” (Boulevard Project) (Complaint at ¶ 32; Town’s Sep. Stmt. at Fact No. 7 and response thereto; Additional Material Fact No. 9.) The Town was then out of compliance with its housing element requirements. Boulevard then submitted its development application on March 8, 2024, within section 65941.1, subdivision (e)(1)’s 180-day deadline. (Complaint at ¶ 34; Town’s Sep. Stmt. at Fact No. 9.) The Town responded with a letter dated April 3, 2024, within 30 days, determining the application to be incomplete under section 65943. (Complaint at ¶ 34; Town’s Sep. Stmt. at Fact No. 10 and response thereto; Additional Material Fact No. 9.) Boulevard responded to the Town’s April 3, 2024 incompleteness letter on July 2, 2024, 90 days later. (Complaint at ¶ 34; Town’s Sep. Stmt. at Fact No. 11.) The Town responded with its second incompleteness determination on July 24, 2024, within 30 days. (Town’s Sep. Stmt. at Fact No. 11 and response thereto.) Boulevard timely responded to the second incompleteness determination on October 21, 2024, 89 days later. (Town’s Sep. Stmt. at Fact No. 11 and response thereto.) On November 20, 2024, the Town responded with a third incompleteness determination. (Town’s Sep. Stmt. at Fact No. 11 and response thereto.) On January 30, 2025, the Town’s Community Development Director issued a letter notifying Boulevard of its right to appeal the incompleteness determination. (Complaint at ¶ 34; Town’s Sep. Stmt. at Fact No. 12.) The Town also communicated its position that Boulevard’s preliminary application had expired
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28 and lost vesting because its development application remained incomplete after a second resubmittal. (Ex. C to Paulson Decl.)
On February 7, 2025, Boulevard submitted an appeal of the Town’s position that the preliminary application had expired because Boulevard’s development application remained incomplete after a second resubmittal. (Complaint at ¶ 34; Town’s Sep. Stmt. at Fact No. 12.)
III. Motion for Summary Judgment, or in the Alternative, Summary Adjudication
As noted, the Town seeks an order granting summary judgment in its favor on the complaint and the Town cross-defendants seek the same with respect to the cross-complaint. In the alternative, the Town requests an order granting summary adjudication of its complaint, which alleges the single cause of action for declaratory relief on the parties’ conflicting legal interpretations of section 65941.1(e)(2). The correct interpretation of this statutory text is thus the single and dispositive legal issue presented by the motion.
A. Town’s Request for Judicial Notice
“Judicial notice is the recognition and acceptance by the court, for use by the trier of fact or by the court, of the existence of a matter of law or fact that is relevant to an issue in the action without requiring formal proof of the matter.” (Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1117.)
In support of the motion, and without objection, the Town requests judicial notice of the following:
(1) The California Affordable Housing Pipeline (Pipeline) Brief which is publicly available online (Request for Judicial Notice [RJN] at Ex. A); (2) May 27, 2025 Minute Order issued in this case (Ex. B); (3) Authentication of Legislative History (Ex. C);
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28 (4) Assembly Committee on Local Government – Committee Background Request re. Measure SB 330 Response (Authored by Senator Nancy Skinner) (Ex. D);
(5) Assembly Committee on Housing and Community Development – Summary of SB 330 (June 19, 2019 hearing) (Ex. E);
(6) Assembly Committee on Local Government’s Report on SB 330 (July 10, 2019 hearing) (Ex. F);
(7) Senate Amendment to Senate Bill No. 330 (March 25, 2019; 2019 – 2020 Reg. Sess.) (Ex. G); and
(8) June 12, 2019 American Planning Association Memorandum to Members of the Assembly Housing Committee re. SB 330 (Skinner) – Neutral if Amended (Ex. H).
The unopposed request appears relevant to issues raised in connection the motion for summary judgment and adjudication. (See Gbur v. Cohen (1979) 93 Cal.App.3d 296, 301[information subject to judicial notice must be relevant to the issue at hand].) The court accordingly grants the request and takes judicial notice of Exhibit A as the Pipeline Brief is publicly available online and not reasonably subject to dispute. (Evid. Code, § 452, subd. (h); see, e.g., People v. Miami Nation Enterprises (2016) 2 Cal.5th 222, 231 [taking judicial notice of screenshots from United States Patent and Trademark Office’s website].) The court takes judicial notice of Exhibit B as a record of the superior court. (Evid. Code, § 452, subd. (d); see Stepan v. Garcia (1974) 43 Cal.App.3d 497, 500 [the court may take judicial notice of its own file]; see also Steed v. Dept. of Consumer Affairs (2012) 204 Cal.App.4th 112, 122 (Steed) [trial court may take judicial notice of minute order, but not of truth of factual findings and determinations on which the minute order is based].) The court takes judicial notice of Exhibits C through H as they constitute legislative history materials with respect to SB 330. (Evid. Code, § 452, subd. (c); see Global Financial Distributors Inc. v. Super. Ct. (2019) 35 Cal.App.5th 179, 190,
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28 fn. 4 [“We grant Global Financial’s request to take judicial notice of the legislative history of [Code of Civil Procedure] section 418.10”]; see also Guinn v. County of San Bernardino (2010) 184 Cal.App.4th 941, 949, fn. 4 [“We take judicial notice of the legislative history materials pertaining to Senate Bill No. 2215 contained in the record on appeal”].)
B. Defendants’ Request for Judicial Notice
In opposition, defendants request judicial notice of the following:
(1) Letter of Technical Assistance dated August 30, 2024, issued by the Department of Housing and Community Development Division of Housing Policy Development (HCD) to the Town entitled: “Town of Los Gatos – Saratoga Road Project – Letter of Technical Assistance” (Ex. A); (2) Notice of Violation dated December 2, 2024, issued by HCD to the City of Beverly Hills entitled: “Beverly Hills Builder’s Remedy Applications – Notice of Violation” (Ex. B);
(3) Notice of Potential Violation dated February 12, 2025, issued by HCD to the Town entitled: “Town of Los Gatos – 980 University Avenue Project – Notice of Potential Violation” (Ex. C);
(4) Notice of Violation dated July 16, 2025, issued by HCD to the City of Cupertino entitled: “City of Cupertino – Permit Streamlining Act 90-Day Review – Notice of Violation” (Ex. D);
(5) Judgment Granting Petition for Writ of Mandate filed on September 17, 2024, in the case of Janet Jha v. City of Los Angeles, et al. (case no. 23STCP03499) in Los Angeles County Superior Court (Ex. E); (6) Judgment Granting Petition for Writ of Mandate, filed on November 8, 2024, in the case of Cal., Cnty. of Los Angeles, Yes in My Backyard, Trauss, et al. v. City of Los Angeles (case no. 24STCP0070) in Los Angeles County Superior Court (Ex. F);
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28 (7) 2024 Assembly Floor Analysis of Assembly Bill 1893, as amended August 23, 2024 (“AB 1893”) (Ex. G).
Defendants request judicial notice of Exhibits A through D under Evidence Code section 452, subdivisions (b), (c), and (h) as they constitute public records issued by HCD. The Town does not oppose the existence of the HCD documents but contends the court should not afford them any weight or deference in ruling on the motion. This objection however has no bearing on whether judicial notice is proper under the Evidence Code as to these exhibits. Thus, the request for judicial notice of Exhibits A through D is granted.
Defendants request judicial notice of Exhibits E and F as records of the superior court in Los Angeles County under Evidence Code section 452, subdivision (d). The Town objects to the request on the ground that the exhibits constitute unpublished trial court opinions lacking precedential value. (See Crab Addison, Inc. v. Super. Ct. (2008) 169 Cal.App.4th 958, 963, fn. 3 [appellate court declined to take judicial notice of trial court order which had no precedential value and judicial notice could not be used to impart value it did not have].) The objection lacks merit as the exhibits constitute trial court judgments where judicial notice is permitted. “Judicial notice is properly taken of the existence of a factual finding in another proceeding, but not of the truth of that finding.” (Steed, supra, 204 Cal.App.4th at p. 120; see O’Neill v. Novartis Consumer Health, Inc. (2007) 147 Cal.App.4th 1388, 1405 [“A court may take judicial notice of a court’s action, but may not use it to prove the truth of the facts found and recited”]; see also Professional Engineers v.
Department of Transportation (1997) 15 Cal.4th 543, 590, superseded by statute on another ground in Consulting Engineers & Land Surveyors of California v.
Department of Transportation (2008) 167 Cal.App.4th 1457 [“[J]udicial notice of findings of fact does not mean that those findings of fact are true, but, rather, only means that those findings of fact were made”].) Therefore, the request for judicial notice of Exhibits E and F is granted. The court acknowledges that the results in
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28 these two superior court cases as reflected in the documents has no precedential or authoritative value and the court will afford them none.
Finally, defendants request judicial notice of Exhibit G as an official act of the California Legislature under Evidence Code section 452, subdivision (b). (See Elsner v. Uveges (2004) 34 Cal.4th 915, 929, fn. 10 [Supreme Court grants request for judicial notice of legislative history of assembly bill]; Tellez v. Super. Ct. (2020) 56 Cal.App.5th 439, 449, fn. 3 [“We grant Tellez’s request for judicial notice of Assembly Bill 3234, several interim drafts of the bill, several legislative analyses of the bill, and the governor’s signing statement for the bill”].) The Town objects to the request as the legislative history of Exhibit G does not refer to any statute at issue in the case. But the court finds the exhibit is relevant to arguments raised in support of the opposition and thus the request for judicial notice as to this exhibit is granted.
C. Post-Hearing Submission
After the motion hearing, defendants submitted by letter (but did not file as it does not appear on the court’s Odyssey docket) an advisement of a “Legal Alert” issued by the California Department of Justice, Office of the Attorney General, dated November 14, 2025 (OAG 2025-04).5 The Legal Alert is directed to “All Cities, Counties, and other interested parties” and its subject is identified as “Consistent Interpretation of the Permit Streamlining Act’s 90-day Rule to Resubmit Housing Development Applications.” The Legal Alert provides analysis and concludes that “for purposes of determining whether a housing development project application is complete, an applicant is entitled to as many 90-day review and resubmission periods as necessary, and, throughout the process, retains the rights that vest upon the submission of a preliminary application under the Housing Crisis Act [of 2019].” The Legal Alert also cites HCD’s technical assistance letters directed to various 5 The letter merely pointed out the existence of the Legal Alert, which the court asked to be provided with.
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28 jurisdictions on the application of section 65941.1(e)(2)’s 90-day rule, which are consistent with the Legal Alert’s analysis and conclusion, and argues that HCD’s interpretation of the statute is entitled to some deference, citing Martinez v. City of Clovis (2023) 90 Cal.App.5th 193, 221–222 (Martinez) (“courts generally will not depart from the HCD’s determination unless ‘it is clearly erroneous or unauthorized’).
The Town cross-defendants filed an objection to defendants’ letter and the court’s consideration of the Legal Alert, challenging its authoritative and deferential value and urging the court instead to exercise its independent judgment in construing the relevant statute. The objection also notes that the Legal Alert is not “new,” having been issued before the hearing in this case.
As explained below, the court will at the threshold exercise its independent judgment on the proper construction of the statute and will not defer to the Legal Alert, but the court recognizes that the analysis and conclusions stated therein precisely mirror both the position of the HCD on the relevant issue, for which there exists authority for some deference, and the arguments of defendants themselves in opposition to the motion.
D. Legal Standard
Any party may move for summary judgment. (Code Civ. Proc., § 437c, subd. (a); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Aguilar).) “The motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c), italics added.) “The object of the summary judgment procedure is ‘to cut through the parties’ pleadings’ to determine whether trial is necessary to resolve their dispute. [Citation.]” (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1020.)
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28 “[T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact…” (Aguilar, supra, 25 Cal.4th at p. 850.) “A prima facie showing is one that is sufficient to support the position of the party in question.” (Id. at p. 851.) If the moving party makes the necessary initial showing, the burden of production shifts to the opposing party to make a prima facie showing of the existence of a triable issue of material fact. (Code Civ. Proc., § 437c, subd. (p)(2); see Aguilar, supra, 25 Cal.4th at p. 850.)
A triable issue of material fact exists “if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Aguilar, supra, 25 Cal.4th at p. 850, fn. omitted.) If the party opposing summary judgment presents evidence demonstrating the existence of a disputed material fact, the motion must be denied. (Id. at p. 856.)
Throughout the process, the trial court “must consider all of the evidence and all of the inferences drawn therefrom.” (Aguilar, supra, 25 Cal.4th at p. 856.) The moving party’s evidence is strictly construed, while the opponent’s is liberally construed. (Id. at p. 843.)
Similarly, “[a] party may seek summary adjudication on whether a cause of action, affirmative defense, or punitive damages claim has merit or whether a defendant owed a duty to a plaintiff. [Citation.] ‘A motion for summary adjudication…shall proceed in all procedural respects as a motion for summary judgment.’ [Citation.]” (California Bank & Trust v. Lawlor (2013) 222 Cal.App.4th 625, 630.)
“[S]ummary judgment (or summary adjudication) is a drastic remedy and should be used with caution. [Citation.] Because summary judgment is a drastic procedure all doubts as to the propriety of granting a motion for summary judgment should be resolved in favor of the party opposing the motion. [Citations.]” (Tully v.
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28 World Savings & Loan Assn. (1997) 56 Cal.App.4th 654, 660; see Kernan v. Regents of University of California (2022) 83 Cal.App.5th 675, 684 [“The drastic remedy of summary judgment may not be granted unless reasonable minds can draw only one conclusion from the evidence”].)
E. Legal Overview—Relevant Housing Laws
There is no doubt that California is perceived to be experiencing an unprecedented and long-term housing crisis, decades old. The Legislature has attempted to address the crisis over time with many and ongoing changes to housing laws to encourage and promote the production of housing, especially lowincome housing. The crisis is reflected in legislation itself: “California has a housing supply and affordability crisis of historic proportions.” (§ 65589.5, subd. (a)(2)(A).) “This ‘despite the fact that, for decades, the Legislature has enacted numerous statutes intended to significantly increase the approval, development, and affordability of housing for all income levels.’ ” (California Renters Legal Advocacy and Education Fund v. City of San Mateo (2021) 68 Cal.App.5th 820, 830 (San Mateo), quoting § 65589.5, subd. (a)(2)(J).)
Legislative efforts to address the housing crisis include the Housing Element Law (§ 65580 et seq.), under which each city and local jurisdiction is required to have a “comprehensive, long-term general plan for [its] physical development.” (§ 65300.) Each general plan must have a housing element consisting of standards and plans for housing sites that “ ‘shall endeavor to make adequate provision for the housing needs of all economic segments of the community.’ [Citations.]’ (California Building Industry Assn. v. City of San Jose (2015) 61 Cal.4th 435, 444; see also § 65580 [legislative findings concerning housing element law].) “A municipality [or other jurisdiction] must review its housing element for the appropriateness of its housing goals, objectives, and policies and must revise the housing element in accordance with a statutory schedule.” (Martinez, supra, 90 Cal.App.5th at p. 222, citing § 65588, subds. (a) & (b).) “The interval between the due dates for the revised
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28 housing element is referred to as a planning period or cycle, which is usually eight years.” (Ibid., citing § 65588, subds. (e)(3), (f)(1).) “The projected regional housing needs for a planning period are determined by the HCD in consultation with regional ‘councils of government.’ ” (Martinez, supra, 90 Cal.App.5th at p. 223, citing §§ 65584, subd. (a) & (b), 65584.01, 65588, subd. (e)(3).) “Based on HCD’s regional housing needs determination, each regional council of government adopts a ‘final regional housing needs plan that allocates a share of the regional housing need’ among the cities and counties within its region.” (Ibid., citing § 65584, subd. (b).)
Local governments are required by the Housing Element Law to adopt comprehensive updates to the housing element of their general plans in the eightyear cycles to provide sufficient zoning capacity to accommodate their respective fair shares of the regional housing need. For jurisdictions that fail to adopt a substantially compliant housing element by the statutory deadline, the HAA includes a provision that requires the approval of certain housing development projects regardless of whether the project complies with local zoning and general plan standards. (§ 65589.5, subds. (d), (h)(11).) This provision is known as the “builder’s remedy,” which now applies to projects submitting a preliminary application for development during a time period in which the jurisdiction did not have a substantially compliant housing element, even if the jurisdiction later achieves compliance. (§ 65589.5, subd. (o)(1); see also § 65941.1 [preliminary application process])
The HAA represents another comprehensive and regularly amended legislative effort to promote and increase the state’s housing supply at all income levels. “The HAA was enacted in 1982 in an effort to address the state’s shortfall in building housing approximating regional needs, and the Legislature has amended the law repeatedly in an increasing effort to compel cities and counties to approve
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28 more housing. [Citations.]” (Save Lafayette v. City of Lafayette (2022) 85 Cal.App.5th 842, 850 (Save Lafayette).)
Among other things, “[t]he HAA provides that when a proposed housing development complies with objective general plan, zoning, and subdivision standards and criteria in effect at the time the application is deemed complete, the local agency may disapprove the project or require lower density only if it finds the development would have specific adverse effects on public health or safety that cannot feasibly be mitigated. [Citations.]” (Safe Lafayette, supra, 85 Cal.App.5th at p. 850, citing § 65589.5, subd. (j)(1).)
In 2019, the Legislature also enacted the Housing Crisis Act (HCA, SB 330, stats. 2019, ch. 654, § 13), which added the “preliminary application” process to the PSA (at section 65941.1) for housing development projects. Under this process, once a project applicant submits a complete preliminary application, the HAA vesting rights provision prohibits a local government from subjecting the housing project to “an ordinance, policy, or standard beyond those in effect when a preliminary application was submitted.” (§ 65589, subd. (o).) This locks in a developer’s right to pursue a project under the rules in effect when the preliminary application is complete even if the rules later change. This gives developers desired certainty about the rules that will apply to a project and avoids those rules changing midstream but before the formal development application is complete, which has historically been the point at which a project attains vested rights as an entitlement.
Vesting rights are an important part of builder’s remedy projects as this remedy is available only when a jurisdiction is not in substantial compliance with the Housing Element Law. If a permit application process is lengthy, the timing of vesting rights takes on added importance and the builder’s remedy will not provide its intended benefit if vesting rights are lost.
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28 The HCA included provisions added to the PSA to address and establish early vesting for a project. The PSA was first enacted years ago to “ ‘ensure clear understanding of the specific requirements which must be met in connection with the approval of development projects and to expedite decisions on such projects.’ [Citation.] Under the [PSA], public agencies must maintain ‘one or more lists that shall specify in detail the information that will be required from any applicant for a development project.’ [Citation.] This list of information must ‘indicate the criteria which the agency will apply in order to determine the completeness of any application submitted to it for a development project.’ [Citation.]” (Old Golden Oaks LLC v. County of Amador (2025) 111 Cal.App.5th 794, 799 (Old Golden Oaks).) The goal of the PSA is to relieve permit applicants from protracted and unjustified delays in processing their permit applications. (Riverwatch v. County of San Diego (1999) 76 Cal.App.4th 1428, 1438.)
“After an agency receives an application for a development project, it must determine whether the application is complete and notify the applicant of its determination within 30 days. [Citation.] If the agency determines an application is incomplete, it must ‘provide the applicant with an exhaustive list of items that were not complete. That list shall be limited to those items actually required on the lead agency’s submittal requirement checklist.’ [Citation.]” (Old Golden Oaks, supra, 111 Cal.App.5th at p. 800.) For preliminary applications, the checklist items are prescribed by statute and may not be added to by the jurisdiction. (See § 65941.1, subds. (a) & (c).)
Finally, section 65943, part of the PSA, provides a process, which is expressly iterative, for the determination of completeness of a development application.
Iterative process
F. Declaratory Relief Principles/Ripeness
“Code of Civil Procedure section 1060, which governs actions for declaratory relief, provides: ‘Any person interested under a written instrument … , or under a
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28 contract, or who desires a declaration of his or her rights or duties with respect to another … may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action … for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract.’ ” (California Public Records Research, Inc. v. County of Yolo (2016) 4 Cal.App.5th 150, 185 (County of Yolo).)
“ ‘Declaratory relief operates prospectively, serving to set controversies at rest before obligations are repudiated, rights are invaded or wrongs are committed.
Thus the remedy is to be used to advance preventive justice, to declare rather than execute rights. [Citation.]’ [Citation.] ‘The correct interpretation of a statute is a particularly suitable subject for a judicial declaration. [Citation.] Resort to declaratory relief therefore is appropriate to attain judicial clarification of the parties’ rights and obligations under the applicable law. [Citation.]’ [Citation.]” (County of Yolo, supra, 4 Cal.App.5th at p. 185.)
As a preliminary matter, Defendants, in opposition, contend the case is not ripe for adjudication and the Town’s claim for declaratory relief fails on that basis alone.
“ ‘The fundamental basis for declaratory relief is the existence of an actual, present controversy over a proper subject.’ [Citation.]” (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 79.)
“Whether a case is founded upon an ‘actual controversy’ centers on whether the controversy is justiciable. ‘The principle that courts will not entertain an action which is not founded on an actual controversy is a tenet of common law jurisprudence, the precise content of which is difficult to define and hard to apply.
The concept of justiciability involves the intertwined criteria of ripeness and standing. A controversy is “ripe” when it has reached, but not passed, the point that the facts have sufficiently congealed to permit an intelligent and useful decision to
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28 be made.’ [Citations.]” (Stonehouse Homes LLC v. City of Sierra Madre (2008) 167 Cal.App.4th 531, 540 (Stonehouse Homes).)
“ ‘The ripeness requirement … prevents courts from issuing purely advisory opinions. [Citation.] It is rooted in the fundamental concept that the proper role of the judiciary does not extend to the resolution of abstract differences of legal opinion.’ [Citations.]” (Stonehouse Homes, supra, 167 Cal.App.4th at p. 540.) “To determine if a controversy is ripe, we employ a two-pronged test: (1) whether the dispute is sufficiently concrete that declaratory relief is appropriate; and whether withholding judicial consideration will result in the parties suffering hardship. [Citations.] ‘Under the first prong, the courts will decline to adjudicate a dispute if “the abstract posture of [the] proceeding makes it difficult to evaluate … the issues” [citation], if the court is asked to speculate on the resolution of hypothetical situations [citation], or if the case presents a “contrived inquiry” [citation]. Under the second prong, the courts will not intervene merely to settle a difference of opinion; there must be an imminent and significant hardship inherent in further delay. [Citation.]’ [Citations.]” (Stonehouse Homes, supra, 167 Cal.App.4th at p. 540.)
To the extent the Town argues it has not disapproved the projects, defendants assert the case is not ripe and the claim for declaratory relief must be rejected.6 The court notes the Town submitted evidence of its position (and reiterated at oral argument) that the applications for the projects have not been denied. (See Paulson Decl. at ¶¶ 22, 24; see Town’s Sep. Statement at Fact Nos. 6, 13, 19, 26.) As a threshold matter, defendants do not address the two-pronged test for ripeness under California case authority and thus the contention is undeveloped. (See Allen v. City of Sacramento (2015) 234 Cal.App.4th 41, 52 [“We are not 6 The cross-complaint contends that the Town cross-defendants’ course of conduct resulted in disapproval of the project applications as a matter of law, under the HAA. (See § 65589.5, subd. (h)(6)(D), (F), and (H), and subd. (k).)
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28 required to examine undeveloped claims or to supply arguments for the litigants”].) Nor does the court find defendants’ cases to be persuasive as they consider the ripeness doctrine in connection with whether a public agency has made a decision that is final. (See California Water Impact Network v. Newhall County Water Dist. (2008) 161 Cal.App.4th 1464, 1485 [“Until a public agency makes a final decision, the matter is not ripe for judicial review”]; see also Santa Barabara County Flower & Nursery Growers Assn. v. County of Santa Barbara (2004) 121 Cal.App.4th 864, 875 [“In the context of administrative proceedings, a controversy is not ripe for adjudication until the administrative process is completed and the agency makes a final decision that results in a direct and immediate impact on the parties”].) But the action for declaratory relief here addresses a single legal issue involving interpretation of section 65941.1(e)(2). As noted above, the Town contends the statute’s reference to a 90-day period to submit a complete preliminary application refers to a single 90-day period, after the expiration of the 180-day period to submit a complete development application, to maintain vesting. By contrast, defendants argue the preliminary application remains in effect so long as the applicants resubmit an application within 90 days after receiving a list of incomplete items – no matter how many times this process takes. Furthermore, the briefing submitted by defendants and amici in opposition clearly demonstrates the presence of an actual controversy about the statute’s interpretation. Thus, the legal issue appears to be ripe and proper for resolution by way of this motion for summary judgment and adjudication. (See Gafcon, Inc. v. Ponsor & Associates (2002) 98 Cal.App.4th 1388, 1401–1402 [the propriety of the application of summary judgment to declaratory relief lies in the trial court’s function to render such a judgment when only legal issues are presented for determination]; see also Sambrano v. City of San Diego (2001) 94 Cal.App.4th 225, 236 [“Legal issues can be resolved on summary judgment only where there are no material disputed factual issues”].)
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28 G. Rules of Statutory Interpretation
“Our essential task in interpreting a statute ‘ “is to determine the Legislature’s intent so as to effectuate the law’s purpose. We first examine the statutory language, giving it a plain and commonsense meaning. We do not examine that language in isolation, but in the context of the statutory framework as a whole in order to determine its scope and purpose and to harmonize the various parts of the enactment. If the language is clear, courts must generally follow its plain meaning unless a literal interpretation would result in absurd consequences the Legislature did not intend. If the statutory language permits more than one reasonable interpretation, courts may consider other aids, such as the statute’s purpose, legislative history, and public policy.” [Citation.] “Furthermore, we consider portions of a statute in the context of the entire statute and the statutory scheme of which it is a part, giving significance to every word, phrase, sentence, and part of an act in pursuance of the legislative purpose.” [Citation.]’ [Citation.]” (Jackpot Harvesting Co., Inc. v. Super. Ct. (2018) 26 Cal.App.5th 125, 140 (Jackpot Harvesting).)
“California courts follow an approach to determine legislative intent that involves up to three steps. [Citation.] The first step is our ‘examin[ation of] the actual language of the statute. [Citations.]’ [Citation.] We do so ‘ “because the statutory language is generally the most reliable indicator of legislative intent.” [Citations.]’ [Citation.] In this first step, we scrutinize ‘words themselves, giving them their “usual and ordinary meanings” and construing them in context. [Citation.]’ [Citation.] And we ‘will apply common sense to the language at hand and interpret the statute to make it workable and reasonable. [Citation.]’ [Citation.] In doing so, if we find the statutory language to be ‘clear, its plain meaning should be followed. [Citation.]’ [Citation.] Thus, if there is no ambiguity, ‘ “we presume the Legislature meant what it said, and the plain meaning of the language governs.
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28 [Citations.]” ’ [Citation.]” (Jackpot Harvesting, supra, 26 Cal.App.5th at pp. 140– 141.)
“If we determine the statutory language is unclear, we will proceed to the second step and review the legislative history. [Citations.] In doing so, we ‘examine the legislative history and statutory context of the act under scrutiny.’ [Citation.] Under these circumstances, we ‘select the construction that comports most closely with the apparent intent of the Legislature, with a view to promoting rather than defeating the general purpose of the statute, and avoid an interpretation that would lead to absurd consequences.’ [Citation.]” (Jackpot Harvesting, supra, 26 Cal.App.5th at p. 141.)
“In the event the proper interpretation of the statute is not evident after examining the legislative history, ‘we must cautiously take the third and final step in the interpretive process. [Citation.] … Where an uncertainty exists, we must consider the consequences that will flow from a particular interpretation. [Citation.] Thus, “[i]n determining what the Legislature intended, we are bound to consider not only the words used, but also other matters, ‘such as context, the object in view, the evils to be remedied, the history of the times and of legislation upon the same subject, public policy and contemporaneous construction.’ [Citation.]” [Citation.]’ [Citation.]” (Jackpot Harvesting, supra, 26 Cal.App.5th at p. 141.) “An overarching principle for our interpretation of statutes is that courts have a ‘limited role in the process of interpreting enactments from the political branches of our state government. In interpreting statutes, we follow the Legislature’s intent, as exhibited by the plain meaning of the actual words of the law, “ ‘ “whatever may be thought of the wisdom, expediency, or policy of the act.” ’ ” [Citation.] “… [T]he judicial role in a democratic society is fundamentally to interpret laws, not write them. …” [Citation.] It cannot be too often repeated that due respect for the political branches of our government requires us to interpret the laws in accordance with the expressed intention of the Legislature. “This court has
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28 no power to rewrite the statute so as to make it conform to a presumed intention which is not expressed.” [Citations.]’ [Citation.]” (Jackpot Harvesting, supra, 26 Cal.App.5th at pp. 141–142.)
Finally, as relevant here, the vesting of rights by the completion of a preliminary application is part of the HAA, at section 65589.5, subdivision (o)(1), which refers over to section 65941.1. The Legislature has expressly added an “interpretive gloss” or command to the HAA at section 65589.5, subdivision (a)(2)(L), which provides that it “is the policy of this state that [the HAA] should be interpreted and implemented in a manner to afford the fullest possible weight to the interest of, and the approval and provision of, housing.” (See Save Lafayette, supra, 85 Cal.App.5th at p. 853; San Mateo, supra, 68 Cal.App.5th at p. 887.) H. Analysis
1. Plain Language of Section 65941.1, subdivision (e)
Under the above principles, the court first examines the plain language set forth in section 65941.1, subdivision (e)(1) and (2) which provides:
(1) Within 180 calendar days after submitting a preliminary application with all of the information required by subdivision (a) to a city, county, or city and county, the development proponent shall submit an application for a development project that includes all of the information required to process the development application consistent with Sections 65940, 65941, and 65941.5.
(2) If the public agency determines that the application for the development project is not complete pursuant to Section 65943, the development proponent shall submit the specific information needed to complete the application within 90 days of receiving the agency’s written identification of the necessary information. If the development proponent does not submit this information within the 90-day period, then the preliminary application shall expire and have no further force or effect. (§ 65941.1, subd. (e)(1) – (2), italics added.)
As to section 65941.1(e)(2), it is the Town’s position as articulated in its briefing that the plain language refers only to or allows only for a single 90-day period for resubmission of the development application or response to an
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28 incompleteness determination. Or at least that with more than one submission, the total period must not exceed 270 days (a maximum of 180 days for submission after a preliminary application is complete, plus 90 to respond to an incompleteness determination, setting aside the 30 days the locality has to initially respond to the development application). Exceeding that, according to the Town, if the development application is not complete, the vesting rights conferred with the preliminary application are lost.
On its face, the statute itself does not specify whether an applicant’s resubmission or response to an incompleteness determination is limited to a single 90-day period or whether this process is iterative and can be repeated. The Town argues that the phrase “the 90-day period” is synonymous with a single resubmission or response period within which to complete the development application, pointing the court to the article “the” and its dictionary definition. (See Wasatch Property Management v. Degrate (2005) 35 Cal.4th 1111, 1121–1122 [“When attempting to ascertain the ordinary, usual meaning of a word, courts appropriately refer to the dictionary definition of that word”].) While multiple definitions of the word exist, the Town relies on a dictionary definition for “the” as follows: “used as a function word to indicate that a following noun or noun equivalent is a unique or a particular member of its class.” (Merriam-Webster’s Online Dict. (2026) http://www.merriam-webster.com/dictionary/the [as of January 16, 2026].) Given the word “the” and the fact that the word “period” is singular, the Town contends the plain language of the statute refers to a single 90-day period.
But it is more linguistically likely, in the context of the statute and the PSA as a whole, that the word “the” preceding “90-day period” in section 65941.1(e)(2) is simply an anaphoric reference—a word or phrase that refers back to an antecedent term already mentioned in the text to ensure coherence and reduce repetition—to the “90 days” in the prior sentence and without limitation on the number of 90-day periods allowed.
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28 Despite the Town’s arguments, there is no such frequency limitation mentioned in section 65941.1(e)(2) and a plain reading does not require this interpretation. Moreover, the Town’s position improperly isolates the terms “90 days” and “the 90-day period” in section 65941.1(e)(2), plucking them from the entire operative statutory scheme of which this section is a part and ignoring their place and context within this very subdivision, which specifically cross-references section 65943 that is likewise contained within the PSA and provides for the iterative process leading to a determination of completeness. Subdivision (a) of that section states in full:
“Not later than 30 calendar days after any public agency has received an application for a development project, the agency shall determine in writing whether the application is complete and shall immediately transmit the determination to the applicant for the development project. If the application is determined to be incomplete, the lead agency shall provide the applicant with an exhaustive list of items that were not complete. That list shall be limited to those items actually required on the lead agency’s submittal requirement checklist. In any subsequent review of the application determined to be incomplete, the local agency shall not request the applicant to provide any new information that was not stated in the initial list of items that were not complete. If the written determination is not made within 30 days after receipt of the application, and the application includes a statement that it is an application for a development permit, the application shall be deemed complete for purposes of this chapter. Upon receipt of any resubmittal application, a new 30-day period shall begin, during which the public agency shall determine the completeness of the application. If the application is determined not to be complete, the agency’s determination shall specify those parts of the application which are incomplete and shall indicate the manner in which they can be made complete, including a list and thorough description of the specific information needed to complete the application.
The applicant shall submit materials to the public agency in response to the list and description.” (§ 65943, subd. (a), italics added.) The incorporation of section 65943 into section 65941.1(e)(2) indicates that the Legislature intended for these two statutes to be read in harmony with each another. (See People v. Harrison (2025) 116 Cal.App.5th 1145, 1156 [“[B]y this cross-reference, the Legislature indicated it intends these two statutes to be read together”].) So doing establishes that there is a new 30-day period during which the
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28 public agency must determine the completeness of the development application with every resubmission or response to an incompleteness determination made within 90 days of a prior incompleteness determination, after the initial development application is made within 180 days of a complete preliminary application, as referenced in section 65941.1, subdivision (e)(1). And that the 90-day periods continue with each subsequent determination of incompleteness.
The use of the words “any” and “new” as referencing a resubmittal in section 65943, subdivision (a) also suggests that multiple resubmissions in response to succeeding incompleteness determinations may be made without a preliminary application expiring as provided in section 65941.1(e)(2). Indeed, neither statute expressly limits the number of resubmissions by a development proponent in response to successive incompleteness determinations. Therefore, the incorporation of section 65943 into section 65941.1(e)(2) supports a plain reading of the latter that multiple resubmissions within 90 days of successive incompleteness determinations, ultimately leading to completeness by an ever narrowing list of incomplete items, are allowed without expiration of the vesting conferred by a preliminary application. The court rejects the speculative notion that this could theoretically lead to a project proponent simply resubmitting the same information over and over ad infinitum in successive responses without some narrowing of incompleteness issues—like Groundhog Day—while retaining vested rights, as it doubtful that such a course of action could reasonably be viewed as an applicant engaging in good faith in the prescribed process that requires responses within deadlines.
The Town contends that the iterative aspects of section 65943 are not applicable to or incorporated into section 65941.1(e)(2) by the express reference, as section 65943 addresses only development applications, not preliminary applications. But this assertion lacks merit as there is no such express limitation and both statutes pertain to the process of determining whether an application is
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28 complete as well as to the path leading to that determination, and section 65941.1(e)(2) expressly incorporates section 65943.
The Town alternatively contends that, unlike section 65493, there is no “reset” language included in section 65941.1(e)(2) and the court is not permitted to add provisions not contained in a statute. (See Prang v. Los Angeles County Assessment Appeals Bd. (2024) 15 Cal.5th 1152, 1177 [as a general rule, when the Legislature uses a term in one provision of a statute but omits from another, the court generally presumes the Legislature did so deliberately, in order to convey a different meaning]; see also People v. Guzman (2005) 35 Cal.4th 577, 587 [inserting additional language into a statute violates the cardinal rule of statutory construction that courts must not add provisions to statutes].) While section 65941.1(e)(2) might be more clearly understood if it included express reset language, such addition appears both unnecessary and redundant, given that section 65941.1(e)(2) already expressly cross-references section 65943. And, as the statutes are properly read together in harmony, the absence of the reset provision is not fatal to reading section 65941.1(e)(2) to include multiple 90-day resubmission periods as part of the iterative process described at section 65943 without leading to loss of vesting. In other words, the court rejects the argument that reading the plain text of the statute this way requires adding language that the Legislature intentionally omitted.
The Town further argues that the newer section 65941.1(e)(2), providing a 90-day period to respond to an incompleteness determination without an express reference to that period repeating, should somehow control to the exclusion of section 65943, which does provide for an iterative process. (See Bledstein v. Super.
Ct. (1984) 162 Cal.App.3d 152, 160 (Bledstein) [“A well-settled rule of statutory construction is that in the event of a conflict between two statutes, effect will be given to the more recently enacted law”]; see also Lazar v. Hertz Corp. (1999) 69 Cal.App.4th 1494, 1504 [“[A] more recent provision is typically more persuasive
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28 than an older one.”].) “However, the rule giving precedence to the more recently enacted statute is invoked only if the two cannot be harmonized. [Citation.] This is because rules of construction are designed to aid in resolving doubts about the meaning of statutes and not to create doubts or defects regarding legislative intent.” (Bledstein, supra, 162 Cal.App.3d at pp. 160–161.) In this, the Town fails to articulate how the two statutes are actually in conflict and cannot be harmonized.
And, as already noted, the two statutes appear to be in harmony as section 65941.1(e)(2) expressly cross-references section 65943 and both provisions are directed to a completeness determination and the process required or allowed to get there.
The court thus concludes that a plain and textual reading of section 65941.1(e)(2) allows for multiple and successive 90-day periods within which to respond to incompleteness determinations following the submission of a development application within 180 days of a complete preliminary application as provided at section 65941.1, subdivision (e)(1), without loss of project vesting and access to the builder’s remedy.
2. Legislative History and Other Interpretive Aids
As noted, where the terms of a statute are clear, there is no need to resort to interpretive aids. (See City of Brentwood v. Department of Finance (2020) 54 Cal.App.5th 418, 428 [“If the language is clear and unambiguous, there is no need to resort to other indicia of legislative intent”].) But “[w]here statutory provisions are unclear, they should be interpreted to achieve the purpose of the statutory scheme and the public policy underlying the legislation. [Citation.] ‘An important aid in this regard is the legislative history of the statute. [Citation.]’ [Citation.]” (Conrad v.
Medical Bd. (1996) 48 Cal.App.4th 1038, 1046.) The court has concluded that the terms of section 65941.1(e)(2), read in the context of the statute as a whole and the entire statutory scheme of which it is a part, is clear enough to permit a facial or textual reading. The Town does not assert in any event that the statute is
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28 ambiguous, arguing instead that its plain meaning supports the Town’s interpretation. But if interpretive aids are required because of some ambiguity, if anything, they appear to support the same plain statutory meaning the court has ascribed to section 65941.1(e)(2).
The Town cross-defendants direct the court to various legislative history materials incorporated as part of their request for judicial notice. (See Town’s RJN at Exs. D-F.) Defendants do not substantively address these materials in their opposition. But considering them does not lead to the conclusion that the Legislature intended to limit section 65941.1 to one 90-day resubmission period for a project proponent to retain vested rights conferred by a preliminary application.
Nothing in the proferred legislative history compels a contrary conclusion, including the clear legislative intention expressed in the materials to promote much-needed housing development, especially affordable housing, as quickly as possible.
The Town also urges the court to refrain from giving weight or deference to the HCD guidance letters addressing the interpretation of section 65941.1 attached in support of defendants’ request for judicial notice. (See defendants’ RJN at Exs. AD.) “An agency interpretation of the meaning and legal effect of a statute is entitled to consideration and respect by the courts; however, unlike quasi-legislative regulations adopted by an agency to which the Legislature has confided the power to ‘make law,’ and which, if authorized by the enabling legislation, bind this and other courts as firmly as statutes themselves, the binding power of an agency’s interpretation of a statute or regulation is contextual: Its power to persuade is both circumstantial and dependent on the presence or absence of factors that support the merit of the interpretation.” (Yamaha Corp. of America v. State Bd. Of Equalization (1998) 19 Cal.4th 1, 7 (Yamaha), italics omitted.)
“Courts must, in short, independently judge the text of the statute, taking into account and respecting the agency’s interpretation of its meaning, of course,
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28 whether embodied in a formal rule or less formal representation. Where the meaning and legal effect of a statute is the issue, an agency’s interpretation is one among several tools available to the court. Depending on the context, it may be helpful, enlightening, even convincing. It may sometimes be of little worth. [Citation.] Considered alone and apart from the context and circumstances that produce them, agency interpretations are not binding or necessarily even authoritative.” (Yamaha, supra, 19 Cal.4th at pp. 7–8.) That said, “courts generally will not depart from the HCD’s determination unless ‘it is clearly erroneous or unauthorized.’ [Citations.]” (Martinez, supra, 90 Cal.App.5th at p. 243.)
The HCD letters submitted here in support of defendants’ request for judicial notice align with their interpretation of the statute, rejecting the Town’s opposing view. For example, in a letter to the Town, HCD stated in relevant part:
“The 90-day deadline restarts with each subsequent resubmittal by the applicant. Subdivision (d) of Government Code section 65941.1 references section 65943, which provides for an iterative process in which deadlines reset upon resubmittal. Because of that reference, it is reasonable to conclude that the subdivision envisions a similar back-and-forth process. Nothing in the subdivision explicitly precludes this. … An interpretation that there is a single finite 90-day review period is inconsistent with both the intent of the PSA and the Legislature when it introduced this system in Senate Bill 330 (Chapter 654, Statutes of 2019).” (Defendants’ RJN at Ex. A.) The remaining HCD letters directed to other jurisdictions on the same point likewise assert that section 65941.1(e)(2)’s 90-day deadline resets after each incompleteness determination made by a city. (Defendants’ RJN at Exs. B-D.) According to HCD, under section 65941.1(e)(2), a development with multiple incompleteness determinations and responses may have multiple 90-day periods while vested rights conferred by a preliminary application are retained. (Ibid.) In short, the Town argues the HCD letters explaining its view of the relevant statute within its scope of authorized agency action are not worthy of deference and offer minimal assistance to the court in its task. The court first reiterates that its
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28 interpretation of section 65941.1(e)(2) to provide for multiple resubmissions and 90- day deadlines is independent of the HCD letters or other interpretive aids, and the court has exercised its independent judgment in this regard. That said, the court finds the HCD letters, which establish a consistent interpretive history by HCD in this regard since the statute was enacted in 2019 to have some persuasive value.
And, despite the Town’s arguments, the court does not find HCD’s views on the issue to be “clearly erroneous or unauthorized” and thus commanding no deference.
As a final point, the court briefly addresses the public policy arguments made by the parties in support of their respective positions on the dispositive legal issue presented by this motion. (See Moore v. Super. Ct. (2020) 58 Cal.App.5th 561, 54 [for purposes of statutory interpretation, the court may consider “evils to be remedied” by the statute and public policy].) In particular, the Town contends the statute affords only a single 90-day period as California is in a housing crisis and it makes little sense for preliminary-application vesting to continue infinitely. By contrast, defendants echo the expressed legislative concern that jurisdictions have used incompleteness determinations to attempt to free themselves from builder’s remedy projects that have garnered public opposition and thereby skirt and thwart the development of necessary housing at all levels of affordability while contributing to, instead of helping to address, the housing crisis that the Legislature is actively targeting.
The court concludes that the highlighted public policy and legislative purposes, on balance, favor the interpretation of section 65941.1(e)(2) as proffered by defendants. And there is no evidence before the court on this motion of the parade of horribles offered by the Town in the form of developers dragging their feet while infinitely maintaining vesting of their projects or unreasonably extending the process of reaching completeness determinations by manipulation and gaming.
Instead, it appears that reading section 65941.1(e)(2), as the Town urges, to require the loss of project vesting after a single 90-day resubmission in response to an
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28 initial incompleteness determination fails to recognize the reality that achieving completeness of a development application, especially for large projects, inherently involves and may even require the iterative process as reflected in section 65943 and that the reading urged would likely result in more delay and less housing development as vesting rights are lost—anathema to the very purposes the Legislature is so obviously trying to achieve.
IV. Disposition
To conclude, based first on its independent judgment but secondarily in consideration of other interpretive aids that align, the court is convinced that section 65941.1(e)(2), by its express cross-reference to section 65943, allows for multiple 90-day resubmission periods for a project proponent to respond to successive incompleteness determinations without losing the project vesting conferred by a preliminary application as provided at section 65941.1, subdivision (e)(1). While there are no disputed issues of material fact presented on this motion, the moving parties have consequently not demonstrated their entitlement to summary judgment or adjudication on the complaint or cross-complaint/petition as a matter of law.
The motion for summary judgment on the complaint and cross-complaint is accordingly DENIED, as is the alternative motion for summary adjudication of the complaint.
This case is set for a further case management conference on March 17, 2026, at 1:30 in Department 66.
SO ORDERED.
Dated: January 29, 2026 _________________________________ Hon. Helen E. Williams
Judge of the Superior Court
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Draft Resolution April 21, 2026
DRAFT RESOLUTION
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
GRANTING AN APPEAL OF THE DECISION OF THE
COMMUNITY DEVELOPMENT DIRECTOR’S INCOMPLETENESS DETERMINATION FOR A SENATE BILL 330 (SB 330) APPLICATION REQUESTING APPROVAL TO CONSTRUCT A MIXED-USE DEVELOPMENT (120 UNITS) A TENTATIVE MAP, SITE
WORK REQUIRING A GRADING PERMIT, AND REMOVAL OF LARGE PROTECTED TREES ON PROPERTY ZONED NORTH FORTY SPECIFIC PLAN:HOUSING ELEMENT OVERLAY ZONE.
APN 424-07-064
ARCHITECTURE AND SITE APPLICATIONS: S-24-008
AND SUBDIVISION APPLICATION M-24-005
PROPERTY LOCATION: 14849 LOS GATOS BOULEVARD
APPELLANT/PROPERTY OWNER/APPLICANT: LOS GATOS BOULEVARD
PROPERTIES, LLC
WHEREAS, Government Code Section 65941.1 authorizes housing development project applicants to submit a Senate Bill 330 (SB 330) “preliminary application;” WHEREAS, under Government Code Section 65589.5(o), submittal of an SB 330 “preliminary application” containing all items required by Government Code Section 65941.1 vests an applicant to the Town regulations that were in effect on the date that the preliminary application was deemed submitted, with certain exceptions; WHEREAS, Government Code Section 65941.1(e)(1) provides that within 180 calendar days after submitting a preliminary application with all of the required information, an applicant must submit a planning application that includes all of the information required by Government Code Sections 65940, 65941, and 65941.5 in order to retain vesting; WHEREAS, Government Code Section 65941.1(e)(2) provides that, if the Town determines under Government Code Section 65943 that the planning application is incomplete, the applicant must submit the information required to complete the planning application within 90 days of receiving the Town's determination in order to retain vesting; WHEREAS, Government Code Section 65941.1(e)(2) could be interpreted to mean that the applicant may have either a single 90-day period in which to render a planning application complete after the 180-day submittal period expires, or unlimited 90-day periods to complete the application;
WHEREAS, a preliminary application for the Luxe project was submitted on August 30, 2023, and a formal planning application for a mixed-use development (120 units), tentative map, site improvements requiring a grading permit, and removal of large protected trees ATTACHMENT 7
ITEM NO. 9.
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Draft Resolution April 21, 2026
(Architecture and Site application S-24-008 and Subdivision Application M-24-005) was submitted on March 8, 2024;
WHEREAS, on November 19, 2024, the Town provided the Applicant with a letter indicating that the Town had completed its review of the resubmittal of the formal application pursuant to provisions of the Permit Streamlining Act (specifically, Government Code Section 65943), and that the application remained incomplete;
WHEREAS, the application incompleteness determination was provided to the Applicant’s team on November 19, 2024, as part of the Staff Technical Review Committee comments, and discussed at the November 20, 2024, Staff Technical Review Committee meeting;
WHEREAS, the Luxe applicant received an incompleteness letter after both the 180-day submittal period and an additional 90-day period had elapsed; WHEREAS, on January 30, 2025, the Town’s Community Development Director provided provided the Applicant with a letter stating that the application remained incomplete and that, in accordance with Government Code Section 65943, the Applicant may appeal the incompleteness determination of the SB 330 application to the Town Council by paying the required appeal fee and submitting a written appeal to the Town Clerk on the appeal form within 10 days of the date of the letter;
WHEREAS, the Applicants’ architect called a Town staff member to inquire regarding the import of the incompleteness letter, and the Town staff member indicated that the vesting afforded by the preliminary application may have expired; WHEREAS, after speaking with a Town staff member, the Luxe applicant submitted an appeal of the Town staff member’s statement that their preliminary application vesting may have expired;
WHEREAS, the Town sought declaratory relief to obtain a judicial determination on the question of whether, after the initial 180-day submittal period expires, there is a single 90-day period or unlimited 90-day periods in which to render a planning application complete; WHEREAS, the Town continued to process in a normal fashion, without delays, all potentially affected planning applications, including the planning application of the appellant, pending judicial review of this question;
WHEREAS, the Luxe planning application was deemed complete on April 16, 2025, and is continuing to be processed, pending receipt of requested information from the applicant; WHEREAS, on January 29, 2026, the Santa Clara County Superior Court ruled in The Town of Los Gatos v. Arya Properties, LLC (Case No. 25CV462276), that that Government Code
ITEM NO. 9.
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Draft Resolution April 21, 2026
Section 65941.1(e)(2) "allows for multiple 90-day resubmission periods for a project proponent to respond to successive incompleteness determinations without losing the project vesting conferred by a preliminary application as provided at section 65941.1, subdivision (e)(1)." NOW, THEREFORE, BE IT RESOLVED that the Town Council of the Town of Los Gatos does hereby declare, determine, and order as follows:
1. Because the Superior Court has determined that multiple 90-day resubmission periods are allowed to respond to successive incompleteness determinations, the vesting afforded by the SB 330 preliminary application for the Luxe application has not expired.
2. The appeal submitted by the Luxe applicant is granted.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on the 21st of April, 2026, by the following vote:
COUNCIL MEMBERS:
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
_______________________________
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
___________________________________
TOWN CLERK OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ITEM NO. 9.
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Draft Resolution April 21, 2026
DRAFT RESOLUTION
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
GRANTING AN APPEAL OF THE DECISION OF THE
COMMUNITY DEVELOPMENT DIRECTOR’S INCOMPLETENESS DETERMINATION FOR A SENATE BILL 330 (SB 330) APPLICATION REQUESTING APPROVAL TO
DEMOLISH A COMMERCIAL BUILDING AND CONSTRUCT A MIXED-USE DEVELOPMENT (175 MULTI-FAMILY RESIDENTIAL UNITS) WITH COMMERCIAL SPACE AND A CONDOMIUM TENTATIVE MAP ON PROPERTY ZONED C-1:HEOZ AND C-1.
APNS 424-17-035 AND -036
ARCHITECTURE AND SITE APPLICATION: S-24-018,
CONDITIONAL USE PERMIT APPLICATION: U-24-007,
AND SUBDIVISION APPLICATION: M-24-009.
PROPERTY LOCATION: 15300 AND 15330 LOS GATOS BOULEVARD
APPELLANT/PROPERTY OWNER/APPLICANT: ARYA PROPERTIES, LLC.
WHEREAS, Government Code Section 65941.1 authorizes housing development project applicants to submit a Senate Bill 330 (SB 330) “preliminary application;” WHEREAS, under Government Code Section 65589.5(o), submittal of an SB 330 “preliminary application” containing all items required by Government Code Section 65941.1 vests an applicant to the Town regulations that were in effect on the date that the preliminary application was deemed submitted, with certain exceptions; WHEREAS, Government Code Section 65941.1(e)(1) provides that within 180 calendar days after submitting a preliminary application with all of the required information, an applicant must submit a planning application that includes all of the information required by Government Code Sections 65940, 65941, and 65941.5 in order to retain vesting; WHEREAS, Government Code Section 65941.1(e)(2) provides that, if the Town determines under Government Code Section 65943 that the planning application is incomplete, the applicant must submit the information required to complete the planning application within 90 days of receiving the Town's determination in order to retain vesting; WHEREAS, Government Code Section 65941.1(e)(2) could be interpreted to mean that the applicant may have either a single 90-day period in which to render a planning application complete after the 180-day submittal period expires, or unlimited 90-day periods to complete the application;
WHEREAS, a preliminary application for the Arya project was submitted on November 7, 2023, and a formal planning application for a mixed-use development (175 units) and a condominium tentative map (Architecture and Site Application S-24-018, Conditional Use ATTACHMENT 8
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Draft Resolution April 21, 2026
Permit Application U-24-007, and Subdivision Application M-24-009) was submitted on May 10, 2024;
WHEREAS, on December 23, 2024, the Town provided the Applicant with a letter indicating that the Town had completed its review of the resubmittal of the formal application pursuant to provisions of the Permit Streamlining Act (specifically, Government Code Section 65943), and that the application remained incomplete;
WHEREAS, the application incompleteness determination was provided to the Applicant’s team on December 23, 2024, as part of the Staff Technical Review Committee comments, and discussed at the January 8, 2025, Staff Technical Review Committee meeting; WHEREAS, the Arya applicant received an incompleteness letter after both the 180-day submittal period and an additional 90-day period had elapsed; WHEREAS, on January 30, 2025, the Town’s Community Development Director provided provided the Applicant with a letter stating that the application remained incomplete and that, in accordance with Government Code Section 65943, the Applicant may appeal the incompleteness determination of the SB 330 application to the Town Council by paying the required appeal fee and submitting a written appeal to the Town Clerk on the appeal form within 10 days of the date of the letter;
WHEREAS, the applicants’ architect called a Town staff member to inquire regarding the import of the incompleteness letter, and the Town staff member indicated that the vesting afforded by the preliminary application may have expired; WHEREAS, after speaking with a Town staff member, the Arya applicant submitted an appeal of the Town staff member’s statement that their preliminary application vesting may have expired;
WHEREAS, the Town sought declaratory relief to obtain a judicial determination on the question of whether, after the initial 180-day submittal period expires, there is a single 90-day period or unlimited 90-day periods in which to render a planning application complete; WHEREAS, the Town continued to process in a normal fashion, without delays, all potentially affected planning applications, including the planning application of the appellant, pending judicial review of this question;
WHEREAS, the Arya planning application was deemed complete on April 16, 2025, and is continuing to be processed, pending receipt of requested information from the applicant; WHEREAS, on January 29, 2026, the Santa Clara County Superior Court ruled in The Town of Los Gatos v. Arya Properties, LLC (Case No. 25CV462276), that that Government Code Section 65941.1(e)(2) "allows for multiple 90-day resubmission periods for a project proponent
ITEM NO. 9.
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Draft Resolution April 21, 2026
to respond to successive incompleteness determinations without losing the project vesting conferred by a preliminary application as provided at section 65941.1, subdivision (e)(1)." NOW, THEREFORE, BE IT RESOLVED that the Town Council of the Town of Los Gatos does hereby declare, determine, and order as follows:
1. Because the Superior Court has determined that multiple 90-day resubmission periods are allowed to respond to successive incompleteness determinations, the vesting afforded by the SB 330 preliminary applications for the Arya application has not expired.
2. The appeal submitted by the Luxe applicant is granted.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on the 21st of April, 2026, by the following vote:
COUNCIL MEMBERS:
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
_______________________________
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
___________________________________
TOWN CLERK OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ITEM NO. 9.
PREPARED BY: Kristina Alfaro
Administrative Services Director
Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Administrative Services Director
110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 04/21/2026
ITEM NO: 10
DATE: April 14, 2026
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Receive the Fiscal Condition Assessment and Fiscal Impact Analysis for Proposed and Planned Growth Memorandums and Provide Feedback RECOMMENDATION: Receive the Fiscal Condition Assessment with Five-Year and LongTerm Financial Projections and Fiscal Impact Analysis for Proposed and Planned Growth Memorandums and provide feedback for the Town Council.
FISCAL IMPACT:
There is no fiscal impact associated with this item. Funding for this work was previously approved by the Town Council. Any future costs or financial impacts identified through this analysis would be considered by the Town Council as part of the annual budget process.
STRATEGIC PRIORITY:
This action supports Strategic Priorities regarding prudent financial management to result in a structurally balanced 5-year budget.
BACKGROUND:
In December 2025, the Town began work with NHA Advisors with sub-contract support from Raftelis Financial Consultants and Willdan. Raftelis is leading the first study with the development of a baseline long-term financial model. Willdan is supporting the second study, focusing on fiscal impact analysis that incorporates proposed and planned growth based on the Housing Element Plan and General Plan, with sensitivity analysis regarding the percentage of
ITEM NO. 10.
PAGE 2 OF 2
SUBJECT: Receive the Fiscal Condition Assessment with Five-Year and Long-Term Financial Projections and Fiscal Impact Analysis for Proposed and Planned Growth Memorandums and provide feedback for the Town Council.
DATE: April 21, 2026
new units designated as affordable. Both studies will support the future Asset, Liability Management (ALM) study.
DISCUSSION:
A preliminary Fiscal Condition Assessment with Five-Year and Long-Term Financial Projections and Fiscal Impact Analysis for Proposed and Planned Growth was presented to the Finance Commission at their February 2, 2026, meeting. The Commission requested information on the assumptions for the five-year and long-term forecast and changes to methodology for the study focused on the fiscal impact of proposed and planned growth based on the Housing Element.
Memos for the Fiscal Condition Assessment with Five-Year and Long-Term Financial Projections Assumption and an updated fiscal impact analysis for the Proposed and Planned Growth were posted to the Town’s Finance website on March 18, 2026 (Attachment 1 and Attachment 2) At its April 13, 2026, meeting, the Finance Commission reviewed the memos and forwarded them to the Town Council with the following comments. The Commission recommended that the financial forecast be presented as a base case scenario reflecting projected conditions should the Town take no action. This base case would serve as the foundation for evaluating alternative scenarios. The Commission also advised that the base case clearly identify all underlying assumptions, including staffing levels required to maintain current service levels, anticipated population changes, and expected housing development within the Town.
CONCLUSION:
Receive both memos and provide feedback to consultant.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachments:
1. Fiscal Condition Assessment with Five-Year and Long-Term Financial Projections Assumption Memo
2. Updated Fiscal Impact Analysis for Proposed and Planned Growth
ITEM NO. 10.
www.raftelis.com
MEMO
To: Los Gatos Executive Leadership Team
From: Raftelis
Date: March 18, 2026
Re: Los Gatos Long-Term Financial Plan – Detailed Assumptions Background
The Town of Los Gatos (Town) issued a request for proposals to conduct three studies:
1. Fiscal Condition Assessment with Five-Year and Long-Term Financial Projections
2. Fiscal Impact Analysis for proposed and planned growth
3. An Asset Liability Management (ALM) Study
The contract was awarded to NHA Advisors with sub-contract support from Raftelis Financial Consultants and Willdan. Raftelis is leading the first study with the development of a baseline long-term financial model. Willdan is supporting the second study, focusing on fiscal impact analysis that incorporates proposed and planned growth based on the Housing Element Plan and General Plan, with sensitivity analysis regarding the percentage of new units designated as affordable. Both of these studies will support the future ALM study. Work began in earnest in December 2025, with ongoing coordination from each consulting firm.
Development of a long-term financial model began with a detailed review of the Town’s financial data, policies, and economic factors influencing the fiscal outlook. This included working closely with Town Finance staff to understand their budgeting and forecasting methodology. As the model was being developed, Raftelis conducted multiple check-in calls with the Town’s project team to review progress and vet key assumptions. This iterative communication process continues as we refine assumptions and review underlying trends. Most recently, the Raftelis project team presented preliminary assumptions and findings to the Town’s Finance Commission on February 2, 2026.
ATTACHMENT 1
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 2
The purpose of this memo is to provide a detailed overview of the data sources, assumptions, and methodology that went into the development of the Town’s long-term financial plan, including changes and revisions that were incorporated based on feedback from the Finance Commission presentation in February. Project next steps include sharing the preliminary outlook with Town Council after the Finance Commission is comfortable with the detailed assumptions and methodology used to develop the baseline financial model.
Project deliverables will include the model itself, which was developed in Microsoft Excel™ and will be provided to Town staff as a dynamic tool that can be used for the annual forecast and budget development process. Once the baseline assumptions and outlook have been fully reviewed and vetted, Raftelis will work with Town staff and the Finance Commission to develop scenarios that support anticipated development activity as well as asset management and infrastructure investment considerations. A comprehensive report detailing methodology, assumptions, and various scenarios will be provided at the conclusion of the project.
Methodology
The baseline General Fund forecast assumes normalized historical patterns will continue without major policy intervention. Normalized historical patterns leverage actual revenue and expenditure trends, after adjusting for one-time events or anomalies that may skew expected future results. Budget-to-actual results remain a relevant metric to understand how the Town has historically estimated major revenue and expenditure categories, including recent adjustments to the base budget that may be more in-line with actual performance.
The primary data source used to build the model is a line-item record of budgeted and actual revenues and expenditures by fund from Fiscal Year (FY) 2019 through FY2026, provided by Town Finance staff. Other information was also used to develop the model, including personnel history, collective bargaining agreements, economic and population data, and permit data. Further sections of this memo provide more detail on the specific information used to inform each assumption.
The aim of this model is to develop a robust forecast for future revenues and expenditures based on the bestavailable data. It uses a trend-based approach to determine the long-term direction of the underlying data. This deviates from the annual budget process where the primary objective is making near-term adjustments to maintain fiscal balance. The projections in this model are not intended to represent actual revenues and expenditures, but instead to serve as a planning tool for the Town’s leadership and governing bodies to frame high-level policy and investment considerations.
The baseline model was also built to balance accuracy with usability. It is meant to be a tool used by staff for years to come, and the more complex the model the more difficult it is to use and the more prone it is to errors. This is the reason why the project team, for example, looks at aggregate data on assessed value and new construction to estimate property taxes, rather than more specific data by census tract, because collecting and maintaining that data would be a significant burden on Town staff. Aggregate data also allows for better identification of trends that may not be apparent at a more granular level. Where appropriate, granular level data such as new housing units for a potential new development can be used in scenario analysis to understand the underlying adjustment or change in assumption required to compare with the baseline forecast.
Model Structure
The model focuses on forecasting General Fund expenditures and revenues over a 10-year period, from FY2027 through FY2036. The FY2026 budget is the initial base year for the model; however, the model calculates an estimated 2026 base that considers actual revenue and expenditure trends and will project from this base for the out years. This allows staff to monitor and update actual performance throughout the fiscal year.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 3
For the purposes of this model, all Measure G Sales Tax revenue is considered part of the General Fund.
Revenue and Operating Expenditure Categories
The model forecasts operating expenditures and revenues by category. Revenue categories largely align with categories used in the Town’s audited Annual Comprehensive Financial Report (ACFR), Budget Document, and State Controller’s Office required Town Financial Transactions Report (FTR). In some cases more granular categories were developed, in consultation with Town staff. The Assumptions by Category section of this memo will identify those categories that may not align exactly with existing financial reporting. Generally, categories were selected with the intention of balancing accuracy with the model’s ease of use.
Categories of revenue and operating expenditures used in the model are listed below.
Table 1: Revenue and Operating Expenditure Categories in Model Revenues Operating Expenditures
• Property Tax
• Vehicle and License Fee (VLF) Backfill
Property Tax
• Sales and Use Tax (Non-Measure G)
• Sales and Use Tax (Measure G)
• Licenses & Permits
• Franchise Fees
• Town Services
• Business License Tax
• Transient Occupancy Tax
• Intergovernmental
• Fines & Forfeitures
• Investment Income
• Other Revenue
• Transfers In
• Personnel- Salary
• Personnel- Overtime
• Personnel- California Public Employees'
Retirement System (CalPERS)
• Personnel- Other Post-Employment Benefits
(OPEB) Pay As You Go
• Personnel- Other Benefits
• Personnel- Vacancy Savings
• Grants and Awards
• Materials and Supplies
• Utilities
• Purchased Services
• Other Operating Expenditures
• Internal Service Charges
• Debt Service
• Transfers Out- New Capital
• Transfers Out- Other (including Pension
Trust)
Excluded Revenues and Expenditures
The model uses actual and budgeted revenue and expenditure data as provided by Town staff. This line-item data was mapped to the higher level categories outlined in this memo. Raftelis continues to work with the Town to reconcile actual expenditures provided in the line-item financial system detail with audited financial statements and budget documents. The ACFR reports by function (department), therefore, a direct reconciliation by expenditure classification as structured for the forecast model is not possible. This includes identifying accounts and/or onetime amounts to exclude for normalizing trends. Specific accounts and one-time amounts are identified below; however, this list may continue to change as we refine our understanding of the underlying data and chart of account/fund structure with Town staff.
Excluded accounts typically relate to non-cash or Generally Accepted Accounting Principles (GAAP) adjustments such as depreciation and mark-to-market adjustments. This allows for a forecast that reflects actual funds available for the Town’s use.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 4
Table 2: “Non-Cash” Revenue and Expenditure Accounts Excluded from Model Account Description Actual
Amount
Revenue 45218 - GASB31 to Market
2019 $643,911
2020 $1,092,564
2021 ($780,399)
2022 ($2,015,501)
2023 $3,197
2024 $1,712,246
2025 $1,201,824
Expenditures 62142 - Depreciation Expense1
2019 $102,250
2020 $101,693
2021 $101,693
2022 $101,693
2023 $101,693
2024 $77,081,050
2025 $5,914,417
Additionally, one-time revenues and operating expenditures are not considered in the model, because it is not assumed that they would carry forward into future years. This includes American Rescue Plan Act funds that the Town received from 2021 – 2025. The remaining one-time revenues and expenditures excluded from the model are listed in the table below.
Table 3: One-Time Revenues and Expenditures Excluded from Model Model
Category
Account
Number Fiscal Year(s) Amount Town Chart of Accounts Description Revenues
Licenses and Permits 42416 2022 Actuals $1,200,000 Contra revenue for bmp Intergovernmental 43210 2021 Actuals $388,181 CARES Act Coronavirus Relief Intergovernmental 43211 No actual funds
logged $0 American Rescue Plan Act 2021
N/A – Capital Fund 45946 2023 Actuals $1,565,000 Insurance Settlement Other Sources 45949 2023-2025 Actuals $45,323 Misc. Non-Operating Revenues Town Services 45961 2025 Actuals ($344,388) Contra revenue for bmp Transfers In 49411 2025 Actuals $250,000 Community Grants Expenditures
N/A 67109 No actual funds
logged $0 ARPA- American Rescue Plan Act
Grants and Awards 67506 2022 Actuals $1,200,000 20 dittos ln BMR housing loan Materials and Supplies 82202 2023, 2025 Actuals $0 Land Acquisition Purchased Services 81505 2024 Actuals $706,713 Subscriptions - GASB 96 1 Depreciation expense is not recorded to the General Fund. Amounts represent total for all Town funds, including Internal Service Funds and Development Agency Fund.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 5
Capital
The model also estimates future capital costs for capital projects, vehicles and equipment, and technology. Costs are estimated based on the Town’s adopted Capital Improvement Program (CIP), as well as equipment and technology replacement schedules provided by Town staff. The model projects the amount of money transferred from the General Fund to finance these investments, based on past history and Town direction. It assumes no new debt to support capital maintenance needs, although the model allows users to project the potential impact of new debt.
It is important to distinguish capital needs assumed in the baseline model from potential scenarios. For the baseline forecast, ongoing maintenance and replacement needs for existing assets are factored in. If the Town’s historical funding for maintenance and replacement have not kept pace with actual need then there is inherent deferred maintenance. A catch-up or higher level of investment to address any deferred maintenance would be a potential scenario. A large-scale capital investment required to support anticipated development would also be considered a scenario.
Assumptions by Category
The following sections detail assumptions used to project a 10-year General Fund baseline forecast, including projected revenues, operating expenditures, and transfers to other funds.
Revenues
The following sections detail the model’s revenue assumptions by category. The sections discuss the model’s assumptions for revenues in the base year of the model, FY2026, as well as assumptions for how that amount is projected to change over time during the model period.
The following table compares the categories used in the model to the categories reported in the Town’s ACFR and provides context for any variation.
Table 4: Model vs. ACFR Revenue Categories
ACFR Category Model Category Comments
Property Taxes Property Tax
VLF Backfill
VLF Backfill is separated because it
is revenue from the State, and so
forecasts may vary
Sales Taxes Sales and Use Tax (Non-Measure G)
Sales and Use Tax (Measure G)
Separated due to potential
differences in forecasts
Transient Occupancy Taxes Transient Occupancy Tax
Licenses & Permits Licenses & Permits
Town Services
Separated based on the Town’s
internal categories and to allow for
more specific forecasts
Intergovernmental Intergovernmental
Fines and Forfeitures Fines & Forfeitures
Franchise Fees Francise Fees
Interest Interest
Other Taxes
Use of Property
Other
Business License Tax
Other Sources
Business Licenses Tax separated to
allow for forecasting based on
economic conditions. Other
categories combined for model
usability.
Transfers In Transfers In
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 6
Property Tax
The following table illustrates the Town’s historical trend for actual property tax revenue collected, as well as the average annual change.
Table 5: Property Tax Revenue History
Year Actual
Revenue
Annual Percent
Change
2019 $13,636,099 N/A
2020 $14,454,513 6.0%
2021 $15,826,162 9.5%
2022 $16,899,618 6.8%
2023 $18,187,388 7.6%
2024 $19,321,147 6.2%
2025 $20,157,765 4.3%
Average 6.7%
2026 Budget: $21,450,971
Base Year Estimate: $21,450,971
Historically, General Fund revenue has been 5.6% higher than budget, but in the most recent year actual revenues were close to budget. The model maintains the 2026 budget as the base for forecasting property tax growth over the next ten years.
Potential Revenue Risks and Restrictions
California law restricts the amount of funds that local governments can collect through property tax, primarily through two mechanisms summarized below:
• Proposition 13 was adopted in 1978. It limits property tax assessed value increases at 2% per year and limits property tax revenue to 1% of assessed value (unless a higher rate is approved by voters). Properties can only be assessed at market value for new construction or when a property changes ownership. • Proposition 4, commonly known as the Gann Limit, was adopted in 1978 and caps local revenue at 1979 expenditure levels, adjusted annually based on population and income. • Proposition 98, adopted in 1992, requires each local government to set aside a portion of its tax revenues to ensure that school districts meet minimum funding levels.2 Between FY2019 and FY2025, an average of
11.9% of Town property tax revenue was designated for ERAF. However, it is important to note that currently any ERAF funding not needed to meet school funding minimums has been returned to the Town. If the State changes this policy it would reduce total property tax funding available to the Town.
Annual Change Assumption: 5.2%, on average
Estimates of future sales tax revenue were based on several factors, selected to account for State revenue restrictions and available information.
The primary information source used to estimate future property tax revenue was data from Santa Clara County on historical valuation trends. As stated above, Proposition 13 restricts changes in valuation except in cases of new construction or when property is bought and sold, so the team evaluated trends separately for new construction, changes in ownership, and other properties.
2 The State is responsible for ensuring that schools receive at least minimum funding. The ERAF allocation reduces the State’s funding obligation.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 7
The team used trends for each of these categories, as well as reported FY2026 valuations and data prepared by a separate company, HdL Companies (HdL), on historical trends in the median value of new construction and the median sales price of homes, to estimate total valuation per year over the course of the model period. The model also assumes that 15% of property tax funds in the base year will be allocated to ERAF, based on Santa Clara County FY2026 budget allocations3.
Finally, the model calculates the estimated Gann appropriation limit each year, based on a State law limiting property tax revenue that can be collected based on changes in population and income. The team estimated the Gann limit for each model year based on historical population and income trends reported by the United States Census Bureau, and verified that the projected revenue did not hit that limit.
The annual change in projected revenue based on these assumptions varies from year to year based on the estimate for each valuation component: new construction, home sales, ERAF, and base valuation. On average, it increases approximately 5.2% per year between FY2027 and FY2036. The assumed growth for new construction considered the Town’s Housing Element Plan and anticipated new housing units outlined in that plan. After further discussion with staff and Finance Commission members, there is uncertainty in how those units may be realized over time and whether they will meet state required affordability metrics. As such, the baseline model maintains a steady growth assumption for new residential development but relies on historical trend with a more moderate long-term outlook than the post-pandemic era given recent softness in real estate market activity.
The following table summarizes model assumptions.
Table 6: Property Tax Performance History and Assumptions by Component Property Tax
Component
Five Year
Average Annual
Change4
Assumed
Portion of
Revenue
Assumed
Annual
Change
Comments
New
Construction 12.5% 0.3% 0.0% Assumed flat to be conservative due to variations in the change of value from year to year Changes in
Ownership 17.1% 2.8% 4.0% Reduced to be conservative due to variations in the change of value from year to year ERAF 19.1% 14.9% 6.9%5 Based on the average of the past two years to normalize post-pandemic volatility
Base
Valuation 6.2% 81.9% 5.6%
Based on the average of the past two years to
normalize post-pandemic volatility
Vehicle and License Fee (VLF) Backfill Property Tax
The VLF backfill is a payment from the State of California intended to reimburse local governments for losses due to a State VLF reduction. The annual amount allocated is based on the Town’s assessed property valuation. The following table illustrates the category’s historical trend for actual revenue collected, as well as the average annual change.
3 The County estimates a $3.2 million allocation to ERAF in 2026. 4 Based on Santa Clara County valuation reports
5 Based on the average of the past two years to normalize post-pandemic volatility
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 8
Table 7: VLF Backfill Property Tax Revenue History
Year Actual
Revenue
Annual Percent
Change
2019 $3,685,247 N/A
2020 $3,875,914 5.2%
2021 $4,052,672 4.6%
2022 $4,229,462 4.4%
2023 $4,555,700 7.7%6
2024 $4,906,019 7.7%
2025 $5,109,100 4.1%
Average 5.6%
2026 Budget: $5,377,328
Base Year Estimate: $5,557,685
Historically, since FY2019, General Fund revenue has consistently outperformed budget by approximately 3.4%.
The model assumes the FY2026 base amount will be higher than the current budgeted amount by this average variance.
Potential Revenue Risks and Restrictions
VLF revenue is allocated from the State, and is therefore subject to changes in State law. A future legislature could opt to reduce or eliminate this revenue source.
Annual Change Assumptions: 5.4%
VLF revenue is allocated based on property value. The project team used the property value assumptions discussed in the Property Tax section above to project VLF revenue. The model assumes a 5.4% average annual property value increase over the next 10 years.
Sales and Use Tax
The Town has two sources of sales tax revenue:
• The Town, like all California municipalities, receives 1% of the State’s base sales tax rate (7.25%) • The Town has adopted an additional 1/8 cent general sales tax (Measure G) The following tables illustrate the category’s historical sales tax revenue trends. 6 Higher increases in FY2023 and 2024 are aligned with higher increases in the City’s property valuation in those years.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 9
Table 8: Sales and Use Tax (non-Measure G) Revenue History Year Actual
Revenue
Annual Percent
Change
2019 $7,930,021 N/A
2020 $6,535,034 -17.6%
2021 $6,794,218 4.0%
2022 $7,177,597 5.6%
2023 $7,507,068 4.6%
2024 $6,795,037 -9.5%
2025 $6,992,336 2.9%
Average -1.7%
Table 9: Sales and Use Tax (Measure G) Revenue History7 Year
Actual
Revenue
Annual Percent
Change
2019 $0 N/A
2020 $0 N/A
2021 $1,139,386 N/A
2022 $1,306,076 14.6%
2023 $1,299,409 -0.5%
2024 $1,276,698 -1.7%
2025 $1,338,642 4.9%
Average 4.3%
2026 Budget: Non-Measure G: $6,639,081
Measure G: $1,298,825
$7,937,906
Base Year Estimate: Non-Measure G: $7,780,826
Measure G: $1,329,000
$9,109,826
The Town engaged a separate firm, HdL, to forecast sales tax in FY2026. HdL’s forecasts were used to inform the base estimate for 2026 as well as future growth detailed below. There is a significant increase in the non-measure G base estimate for 2026. This is driven by the most recent projections from HdL, which include proprietary, confidential local economic data to inform estimates. This information was not known at the time of budget adoption.
Potential Revenue Risks and Restrictions
Sales tax revenue is closely tied to economic conditions. An economic downturn would have a significant impact on revenue in this category. Additionally, the 1% of the State’s sales tax revenue is defined by State legislation, and is subject to change by the Legislature.
7 This includes all Measure G revenue, not just the revenue allocated to the General Fund.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 10
Annual Change Assumptions: 2.0% (weighted average)
Projections of sales tax revenue are based on industry data as well as trend projections prepared by the City’s economic advisor. The model projects revenue by industry to allow each industry’s revenue trends to be separately modeled.
Previously, an Economic Review prepared for the Town by an outside firm, MuniServices, provided information on the Town’s historical sales tax revenue trends by industry along with estimates for future sales tax collection. As the Town transitions to a new economic advisor (HdL), Raftelis relied on both historical MuniServices reports as well as the first, and most recent, HdL report to establish a framework for detailing the various components that comprise overall sales tax revenue collection.
The industry components of sales tax revenue are detailed in the table below. Historically, the largest generators of sales tax revenue have been the Food and General Retail industries, and they are assumed to remain the largest generators moving forward.
Table 10: Sales Tax Revenue Historical Performance and Assumptions by Industry, as Reported by MuniServices
Industry
Five Year
Average
Annual
Change
Assumed
Portion of
Revenue8
Assumed
Annual
Change
Comments
Food Products 5.4% 28.7% 2.0% Based on HdL projection
General Retail -1.6% 21.1% 2.0% Based on HdL projection Transportation -8.9% 19.6% 2.5%
Based on HdL projection, reduced
slightly based on past history (HdL
generally projects 3.0-3.5% per year)
County Pool -4.7% 19.2% 2.0%
Based on HdL projection, reduced
slightly based on past history (HdL
generally projects 3.0% per year)
Business to Business 0.3% 4.8% 1.0%
Based on HdL projection, reduced
slightly based on past history (HdL
generally projects 2.2-2.8% per year)
Misc. -33.0% 3.9% 0.0% Kept flat due to past volatility Construction 7.5% 2.6% 2.5% Based on HdL projection
The historic volatility of sales tax collections and dynamic local economic conditions led the project team to take a conservative approach to forecasting the Town's second-largest revenue source. The baseline model incorporates the significant increase to 2026 base estimates and then uses a lower annual growth rate assumption compared to HdL. The first report from HdL suggests higher growth across each of the industries noted in the table above during 2026-2027 and then settles to a blended average that is slightly below 3%. Some industries like transportation, which have experienced decline in past years due to higher use of electric vehicles, and construction, assume a higher rate of growth (2.5%) because of known development activity expected to have a positive influence on collections. Other sources like general retail and food products rely more on regional inflation trends for cost of goods and no significant variation or increase to the volume of goods purchased from historical experience.
8 Based on five-year historical average for that industry’s representative share of overall sales tax revenue to the Town.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 11
Licenses & Permits
The following table illustrates the Town’s historical Licenses & Permits revenue, as well as the average annual change. The significant revenue increase in FY2025 is due to a change in how the Town accounts for Solid Waste revenue; before FY2025, the Town classified it as a Franchise Fee. The revenue collected by the Town from the Solid Waste Joint Powers Agreement (JPA) also increased from prior years as a result of a recently updated valuation report used to determine payment amount.
Table 11: Licenses & Permits Actual Revenue History
Year Actual Revenue Annual Percent Change
2019 $3,044,490 N/A
2020 $2,673,706 -12.2%
2021 $3,003,475 12.3%
2022 $3,614,650 20.3%
2023 $3,283,848 -9.2%
2024 $3,993,247 21.6%
2025 $6,681,657 67.3%
Average 16.7%
2026 Budget: $6,322,712
Base Year Estimate: $6,322,712
Historically, actual General Fund revenue has been 12.1% higher than budget, on average, but there has been significant volatility after the pandemic. This is coupled with the Solid Waste revenue transfer, updated valuation, and in the 2026 budget changes to permit fees that also increased overall revenue collected in this category. The 2026 budget is in line with most recent 2025 actuals and is used as the base estimate in the forecast model.
Potential Revenue Risks and Restrictions
The amount of License & Permit revenue received by the Town can vary based on external factors, such as the amount of development occurring in the community, but the Town also has the ability to revise fees as needed to cover costs. Additionally, less revenue also means a lower cost to process license and permit applications.
Annual Change Assumptions: 0.4%
The types of licenses and permits issued vary from department to department, so the project team used revenue history by department to estimate future trends. For the Community Development Department, historical permit trends were also used to inform the projection. Other departments’ revenue is projected based on past history, due to lack of additional available data.
Although Community Development Department Licenses & Permit revenue has generally been increasing in recent years, with an average increase of 19.4% between FY2019 and FY2025, the number and value of permits has been decreasing, as illustrated in the table below. Because of this decline, it is assumed that Community Development Licenses & Permit revenue will have minimal growth over the next ten years.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 12
Table 12: Building Permit History9
Year Number of
Permits
Annual Percent
Change Permit Value Annual Percent Change
2021 1,196 N/A $148,527,983 N/A
2022 1,261 5.4% $156,227,403 5.2%
2023 1,202 -4.7% $92,855,563 -40.6%
2024 1,019 -15.2% $94,598,614 1.9%
2025 980 -3.8% $103,021,665 8.9%
Average -4.6% -6.1%
The following table illustrates assumed annual Licenses & Permits revenue change by department. Police and Solid Waste (non-departmental) revenue are assumed to be flat with the most recent solid waste valuation adjustment reflected in the 2026 base.
Table 13: Licenses & Permits Revenue Assumptions by Department Department
Five Year
Average
Change
Average
Portion of
Revenue
Assumed
Annual
Change
Comments
Administrative Services 91.7% 0.1% 2.0% Assumed lower due to volatility Community Development 19.4% 59.0% 0.5%
Assumed lower due to permit
trends
Police -6.9% 1.8% 0.0% Assumed flat due to volatility
Parks and Public Works 10.0% 24.8% 0.5% Assumed lower due to volatility Non-Departmental 1663.2% 14.2% 0.0%
Significant increase reflects Solid
Waste revenue- assumed flat
due to volatility
Franchise Fees
The following table illustrates the Town’s historical Franchise Fee revenue, as well as the average annual change.
The significant revenue decrease in FY2025 is due to a change in how the Town accounts for Solid Waste revenue; before FY2025, the Town considered it a Franchise Fee, but is now categorized under Licenses & Permits.
Table 14: Franchise Fees Revenue History
Year Actual
Revenue
Annual Percent
Change
2019 $2,475,916 N/A
2020 $2,495,792 0.8%
2021 $2,499,463 0.1%
2022 $2,822,51510 12.9%
2023 $3,074,624 8.9%
2024 $2,547,012 -17.2%
2025 $1,057,484 -58.5%
Average -8.8%
9 Provided by Town staff
10 Increased revenues in FY2022 and 2023 were largely due to increases in Solid Waste revenue, which went from $1.6 million in FY2021 to $1.9 in FY2022, then to $2.1 million in FY2023, only to reduce to $1.5 million in 2024.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 13
2026 Budget: $1,043,730
Base Year Estimate: $1,043,730
Historically, General Fund revenue has been 8.3% higher than budget; however, the recent base adjustment to remove solid waste JPA revenue impacts the future growth assumptions. For the baseline model, the 2026 budget is used as the initial base year estimate since it is in line with actual revenue collected in 2025 after the solid waste revenue transition.
Potential Revenue Risks and Restrictions
Franchise fee revenue depends on private companies’ use of public infrastructure and can vary depending on the companies’ needs and economic conditions.
Annual Change Assumptions: 1.7%
When Solid Waste revenue is not considered, annual increases in past years have ranged from 0.3% to 8.7%, as illustrated below. The project team believes that past history is the best available indicator to predict future revenue. Annual increases are assumed at 1.7%, which is the average over the past seven years when the outlier year, 2023, is removed.11
Table 15: Franchise Fees Actual Revenue History (No Solid Waste Revenue) Year Actual
Revenue
Annual Percent
Change
2019 $892,980 N/A
2020 $898,636 0.6%
2021 $925,621 3.0%
2022 $941,647 1.7%
2023 $1,023,289 8.7%
2024 $1,053,827 3.0%
2025 $1,057,484 0.3%
Average 2.9%
Town Services
This revenue category essentially reflects charges for services where the Town has some cost recovery component.
The two highest-revenue categories of Town services, accounting for more than $1 million in revenue each in 2025, were policing services for Monte Sereno and building plan reviews.
The following table illustrates the category’s historical revenue, as well as the average annual change.
Table 16: Town Services Revenue History
Year Actual Revenue Annual Percent
Change
2019 $4,440,606 N/A
2020 $4,373,603 -1.5%
2021 $4,778,695 9.3%
2022 $5,310,271 11.1%
11 The increase is largely driven by a 23% increase in PG&E Franchise Fee revenues for that year.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 14
Year Actual Revenue Annual Percent
Change
2023 $4,631,325 -12.8%
2024 $5,913,520 27.7%
2025 $5,749,895 -2.8%
2026 N/A N/A
Average 5.2%
2026 Budget: $5,736,735
Base Year Estimate: $5,736,735
Actual revenue has averaged about $5 million annually, outperforming budget by approximately 12.1% on average. In 2026 the Town made a significant adjustment to the base budget that is reflective of actual collections the past two years. This is the base estimate used in the forecast.
Potential Revenue Risks and Restrictions
Like sales tax, this is a customer-driven revenue source that has experience greater volatility over the past seven years. The Town has maintained a conservative budget approach for this revenue source given the difficulty predicting the volume of customer activity from year to year.
Annual Change Assumptions: 3.0%
The types of services offered vary from department to department, so the project team used revenue history by department to estimate future trends. In many departments revenue has varied significantly from year to year. The projections in the model are intended to smooth out this growth from year to year, while also generally assuming a conservative projection to avoid over-estimating revenue with future economic uncertainty.
The following table illustrates assumed annual revenue change by department.
Table 17: Town Services Revenue Historical Performance and Assumptions by Department Department Five Year
Average Change
Average Portion
of Revenue
Assumed Annual
Change Comments
Administrative
Services 8.9% 2.2% 5.0%
Assumed lower than average
due to past variance
Community
Development 1.7% 40.1% 2.0%
Assumed in line with past
average
Police 7.4% 24.2% 5.0%
Assumed lower than average
due to past variance
Parks and Public
Works 9.2% 30.9% 3.0% Assumed lower than average due to past variance NonDepartmental -11.3% 2.6% 0.0% Assumed flat due to past variance
The following table compares the highest-revenue line items that are categorized as Town Services versus those categorized as License & Permits.
Table 18: Town Services and Licenses & Permits Top Revenue Source, FY2025 Town Services Licenses and Permits
PD Services for Monte Sereno- $1,135,514 Wasteholder Encroachment Fee (Solid Waste)- $2,297,703
Plan Check- $1,043,926 Building Permit Fees- $2,205,805 Plan Check Building- $529,251 Planning Permits- $902,524
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 15
Town Services Licenses and Permits
Engineering Review Surcharge- $323,972 Encroachment Permits- $459,831 Environmental Impact- $277,397 Tree Removal Permits- $155,535 Business License Tax
The following table illustrates the Town’s historical Business License Tax revenue, as well as the average annual change. The revenue has significant year-to-year variation due to economic factors as well as delays in revenue collection. Revenue from one of the largest businesses in the Town was delayed due to an appeal of the tax rate, for example, which is one of the reason for the significant variation in recent years.
Table 19: Business License Actual Revenue History
Year Actual
Revenue
Annual Percent
Change
2019 $1,526,894 N/A
2020 $1,357,080 -11.1%
2021 $1,386,943 2.2%
2022 $1,481,667 6.8%
2023 $2,361,862 59.4%
2024 $1,519,960 -35.6%
2025 $2,975,721 95.8%
Average 19.6%
2026 Budget: $2,493,992
Base Year Estimate: $2,470,000
The Town commissioned HdL to project future Business License Tax revenue. The firm created aggressive, conservative, and moderate projection scenarios. Under the moderate scenario, a total of $2.47 million in revenue is estimated for FY2026. HdL bases this forecast on actual payments received in the beginning of the fiscal year as well as projected trends for the remaining months. The forecast leverages this estimate as the 2026 base.
Potential Revenue Risks and Restrictions
The variation from year to year illustrated in the table above illustrates the volatility of this revenue source. It is influenced by economic trends as well as Town tax policy, potential court challenges, and other external factors.
Annual Change Assumptions: 1.5%
Business License Tax revenue has increased significantly in the past years, but there has also been a great deal of variation from year to year. HdL acknowledges this volatility in its projections and forecasts three scenarios: an aggressive estimate, a moderate estimate, and a conservative estimate. HdL’s assumption for a moderate Business License Tax growth rate is 1.5% per year, and this assumption is used for the model.
This estimate may be somewhat conservative when compared against past trends in the Consumer Price Index (CPI) for the San Francisco region. The CPI can be considered an indicator of long-term growth, and the past five years of CPI growth have averaged 3.8% per year, as illustrated below. However, we believe that HdL’s estimate is appropriate given future economic uncertainty.
Table 20: San Francisco Region CPI History
Year Annual CPI: All Costs Percent Change
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 16
Year Annual CPI: All Costs Percent Change
2021 309.721 3.2%
2022 327.06 5.6%
2023 339.05 3.7%
2024 348.417 2.8%
Average 3.8%
Transient Occupancy Tax
The Town charges a Transient Occupancy Tax on hotels and other short-term lodging. Revenue is based on the nightly room rate and number of days at each establishment. The following table illustrates the category’s historical revenue, as well as the average annual change.
Table 21: Transient Occupancy Tax Revenue History
Year Actual
Revenue
Annual Percent
Change
2019 $2,692,043 N/A
2020 $1,869,685 -30.5%
2021 $1,044,820 -44.1%
2022 $1,895,064 81.4%
2023 $2,228,190 17.6%
2024 $2,367,653 6.3%
2025 $2,417,630 2.1%
Average 5.4%
2026 Budget: $2,422,390
Base Year Estimate: $2,412,087
Actual Transient Occupancy Tax revenues have been an average of 10.4% higher than budgeted over the last seven years. However, one of the hotels in the community closed in 2026, and this change will likely reduce the amount of revenue collected from the Transient Occupancy Tax. The Town provided us with the revenue history per establishment, and based on this we calculated that the closure will mean a reduction of approximately $260,000 in FY2026. Based on these assumptions, we estimate a base year revenue of approximately $2.4 million.
Potential Revenue Risks and Restrictions
Transient Occupancy Tax revenue varies significantly from year to year, as illustrated above. It is tied to the level of tourism and business travel in the community, which is heavily influenced by economic trends. Additionally, the number of hospitality establishments in the Town also influence the amount of revenue generated.
Annual Change Assumptions: 3.0%
Transient Occupancy Tax revenue is projected forward based on the most recent two years of available historical data on revenue by establishment. Older data is not used due to the impact of the pandemic on hotel occupancy.
Data for the establishment that closed was not considered when projecting future trends.
Intergovernmental Revenue
The Town receives some intergovernmental revenue, such as state and federal grants. The following table illustrates the category’s historical revenue, as well as the average annual change.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 17
Table 22: Intergovernmental Revenue History
Year Actual
Revenue
Annual Percent
Change
2019 $945,191 N/A
2020 $1,094,075 15.8%
2021 $1,185,516 8.4%
2022 $1,263,352 6.6%
2023 $1,553,397 23.0%
2024 $1,157,225 -25.5%
2025 $1,357,593 17.3%
Average 7.6%
2026 Budget: $838,936
Base Year Estimate: $1,300,000
Actual intergovernmental revenue has been an average of 29.6% higher than budgeted revenue over the past seven years. The budget in FY2026 is somewhat lower than the past, at $838,936 compared to more than $950,000 in previous years. Political and economic uncertainty justifies a lower budget estimate, but the model seeks to normalize revenues over the 10-year projection period. For this reason, we are assuming a base year revenue of $1.3 million to align with previous years’ actual revenue.
Potential Revenue Risks and Restrictions
Intergovernmental revenue is dependent on the state of the economy, as well as the philosophies and priorities of the governments in power. These external factors are difficult to predict, which is one reason why revenues are assumed to be flat for this category as discussed below.
Annual Change Assumptions: 0.0%
Intergovernmental revenue is assumed to be flat due to past volatility and to political uncertainty on the state and federal levels.
Fines & Forfeitures
The Town receives revenue from fines levied for infractions, as well as asset forfeitures. The following table illustrates the category’s historical revenue, as well as the average annual change.
Table 23: Fines & Forfeitures Revenue History
Year Actual
Revenue
Annual Percent
Change
2019 $510,266 N/A
2020 $271,117 -46.9%
2021 $103,467 -61.8%
2022 $319,170 208.5%
2023 $416,951 30.6%
2024 $480,634 15.3%
2025 $420,127 -12.6%
Average 22.2%
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 18
2026 Budget: $315,200
Base Year Estimate: $440,000
Actual intergovernmental revenue has consistently been higher than budgeted in recent years, with an average variance of 27.7%. To estimate a reasonable base year revenue, the team averaged the actual fine & forfeiture revenue for the past three years, which translates to approximately $440,000. This is somewhat higher than the budgeted figure for FY2026 but was chosen to establish a reasonable basis for future projections, beyond year-overyear volatility.
Potential Revenue Risks and Restrictions
Fines and forfeiture revenue can vary significantly, as illustrated above, because it depends on the frequency with which individuals incur fines and other penalties. The Town does have some ability to influence revenue by adjusting the amount of the fines and by determining the level of enforcement.
Annual Change Assumptions: 0.8%
Revenue in this category is largely influenced by the frequency of fines incurred, which can vary significantly from year to year. It is reasonable, however, to assume that fines incurred with increase over time somewhat proportionally to population. The average population growth over the past two years of available United States Census data (2023 and 2024) was 0.8%, so it is assumed that fine & forfeiture revenue will increase by 0.8% per year.
It is important to reiterate that revenue in this category could be influenced by policy and practice changes, such as new or increased fines or increased enforcement. The model assumes no changes in fines or enforcement levels in the base scenario, but users can project the impact of potential changes moving forward.
Investment Income
The Town also receives income from funds it has invested. Investment income for the General Fund model excludes earnings from the pension trust designated to support the Town’s long-term pension liability. Earnings are generated from operating cash accounts as well as pooled cash funds invested in the state Local Agency Investment Fund (LAIF). The interest rate environment has gone through a period of significant change over the past several years, emerging from near 0% rates for cash-related investments to spikes in interest rates to help curb inflation after the pandemic, and most recently steady reductions from the Federal Reserve. The following table illustrates the category’s historical revenue, including GAAP-based revenue that includes required mark-to-market non-cash accounting adjustments and interest income without this adjustment as a proxy for cash-based collections.
Table 24: Investment Income Revenue History
Year Actual
Revenue
Annual Percent
Change
Actual Revenue (No
Mark-to-Market
Adjustment)
Annual Percent
Change
2019 $1,445,640 N/A $801,728 N/A
2020 $2,238,102 54.8% $1,145,537 42.9%
2021 $58,250 -97.4% $838,649 -26.8%
2022 ($1,404,526) -2511.2% $610,975 -27.1%
2023 $584,171 -141.6% $580,975 -4.9%
2024 $2,597,723 344.7% $885,477 52.4%
2025 $2,935,466 13.0% $1,733,643 95.8%
2026 N/A N/A N/A N/A
Average -389.6% 22.0%
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 19
2026 Budget: $1,567,774
Base Year Estimate: $1,567,774
The model maintains a base estimate equal to the 2026 budget. This estimate is consistent with 2025 earnings.
Potential Revenue Risks and Restrictions
The amount of income generated by the Town’s investments is dependent on market changes. It can be volatile from year to year, as illustrated above, and in an economic downturn the Town risks a significant reduction in revenue.
Annual Change Assumptions: 2.0% for LAIF and 2.8% remaining cash investments There are two offsetting factors influencing the projected interest earnings over the next ten years. First, the assumption for interest earned on investment balance is split between a steady LAIF balance of $15m returning
2.0% on average over the forecast period and approximately $45m of investment account balance that is expected to decline over the forecast period as the projected structural deficit will reduce fund balance and cash on hand for the Town. This declining balance, however, is expected to return interest earnings of approximately 2.8% annually.
The interest rate assumptions are lower than the most recent rate of return the Town has experienced of 3.4%. This is influenced by recent Federal Reserve actions to reduce rates.
Actual interest earnings collected by the Town declines over the ten-year period from an estimated $1.5m in 2027 to $700,000 in 2036. This is driven by a lower investment balance of $65 million today to approximately $30 million in 2036. This decline assumes the Town will rely more on fund balance to meet balanced budget requirements, decreasing the amount of cash available to invest.
Other Revenue
The final external revenue category in the model encompasses all revenue not falling into another category, such as donations or property sales. The following table illustrates the category’s historical revenue, as well as the average annual change.
Table 25: Other Revenue History
Year Actual
Revenue
Annual Percent
Change
2019 $6,575,936 N/A
2020 $2,731,171 -58.5%
2021 $3,550,564 30.0%
2022 $2,410,531 -32.1%
2023 $2,755,697 14.3%
2024 $3,156,921 14.6%
2025 $2,517,861 -20.2%
Average -8.7%
2026 Budget: $2,188,465
Base Year Estimate: $2,800,000
The Town’s budgeted revenues in this category for FY2026 are lower than FY2025, reflecting the decrease that took place between FY2024 and FY2025. This is appropriate for the FY2026 budget, but may be artificially low if used as the basis for future projections. Instead, the project team used the average revenue for the past three years, approximately $2.8 million, as a basis for future projections.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 20
Potential Revenue Risks and Restrictions
There are a variety of revenue sources in this category, many of which vary significantly from year to year. This impacts the Town’s ability to reliably predict future revenues.
Annual Change Assumptions: 0.0%
The base year assumption is intended to normalize revenue projections in this category based on past years’ average, but volatility in annual revenue makes it difficult to predict future revenues. For the purposes of the model, revenue is assumed to be flat in the base scenario.
Transfers In
Some General Fund revenue is transfers from other Town funds. The following table illustrates the category’s historical revenue, as well as the average annual change.
Table 26: Transfers In Revenue History
Year Actual
Revenue
Annual Percent
Change
2019 $1,578,911 N/A
2020 $599,669 -62.0%
2021 $652,056 8.7%
2022 $633,352 -2.9%
2023 $538,536 -15.0%
2024 $564,910 4.9%
2025 $812,411 43.8%
Average -3.7%
The two largest sources of transfers are the General Fund Appropriation Reserve (GFAR) Fund 411 and the Gas Tax Fund; all other transfer amounts have historically been $10,000 or less. The GFAR Fund is used to finance capital projects, and the transfers into the General Fund are intended to represent excess unspent funds in a given year. The Gas Tax Fund transfers go towards operating costs that can legally be paid out of Gas Tax revenue, such as the cost of mowing laws and trimming trees in Town Right-Of-Way. Historically, the Town has transferred a standard amount year for this purpose.
2026 Budget: $562,411
Base Year Estimate: $321,280
The Town has historically transferred a set amount from most funds each year, as shown in the table below, and these amounts are also assumed in the base budget. The exception is the General Fund Appropriation Reserve (GFAR) Fund 411, where amounts have varied. The GFAR Fund is used to finance capital projects, and over the past seven years GFAR transfers into the General Fund have averaged 6.9% of expenditures. We applied this 6.9% to the average annual assumed GFAR capital expenditures over the model period and based on these assumptions an average of approximately $200,970 is expected to be transferred into the General Fund. This is assumed as the base revenue for FY2026.
Table 27: Assumed Transfers In by Fund, FY2026
Fund FY2026
Transfers In
General Fund Appropriated Reserve Fund 411 $200,970
Gas Tax Fund $106,000
Traffic Mitigation Fund $10,000
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 21
Fund FY2026
Transfers In
Kennedy Assessment District Fund $1,510
Vasona Assessment District Fund $1,430
Santa Rosa Assessment District Fund $660
Blackwell Assessment District Fund $460
Hillbrook Assessment District Fund $250
Total $321,280
Annual Change Assumptions: 0.0%
The Town has had a historical practice of transferring in set amounts from various other funds, as discussed above, with the transfers generally remaining flat from year to year. The exception is GFAR transfers, but the base year assumption is the normalized annual projected transfer for the entire model period. For this reason, all transfers are assumed to remain flat.
Personnel Expenditures
The following sections detail personnel-related expenditures including salaries and overtime (e.g. wages) and benefits, including healthcare and retirement.
Personnel Costs- Salary
Personnel-related costs are the single largest driver of operating expenses for the Town. Wages, including salaries and overtime account for nearly 40% of total budgeted expenditures in 2026. Wages and benefit costs are nearly 70% of total cost. To determine the underlying assumption for personnel – salaries cost, the project team reviewed actual expenditure history since 2019 alongside the change in authorized staffing levels over that same period. The following table illustrates these trends.
Table 28: Personnel - Salary Actual Expenditure History Year Actual
Expenditures
Annual Percent
Change
Authorized
Staffing
Annual
Percent
Change
Cost per
FTE
Annual
Percent
Change
2019 $17,223,545 N/A 148.99 N/A $115,602 N/A
2020 $18,175,614 5.5% 149.63 0.4% $121,470 5.1%
2021 $18,987,346 4.5% 150.00 0.2% $126,582 4.2%
2022 $18,306,124 -3.6% 150.24 0.2% $121,846 -3.7%
2023 $20,011,354 9.3% 153.26 2.0% $130,571 7.2%
2024 $21,186,554 5.9% 152.51 -0.5% $138,919 6.4%
2025 $21,813,266 3.0% 152.50 0.0% $143,038 3.0%
Average 4.1% 0.4% 3.7%
Personnel Costs- Vacancy Savings
Budgeting for vacancy savings is a tool to improve realistic forecasting, especially in an environment of financial constraint. The underlying assumption should be rooted in actual experience for the Town and consider, where appropriate, department specific turnover rates that may have an outsized impact on overall savings, such as Police. The challenge is determining a vacancy factor that does not prevent hiring or influence policy/service level decisions. In other words, vacancy savings occur naturally each year based on normal staffing churn (e.g. time to hire, retirements, voluntary resignations etc.). Where the savings are generated can vary from year to year.
Therefore, the estimate should rely on Town-wide experience without impacting individual department hiring practices to meet service level expectations.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 22
Raftelis reviewed the recent budget-to-actual variance for personnel cost (excluding OPEB) to get a sense of vacancy savings generated annually compared to the Town’s current vacancy savings estimate of $2.2 million or
4.6%.
Table 29: Budgeted vs. Actual Personnel Costs, FY2019-202512 Year
Budgeted
Personnel
Costs
Actual Personnel
Costs Variance ($) Variance (%)
2019 $27,182,218 $26,791,635 $390,583 1.4%
2020 $30,910,360 $28,563,165 $2,347,195 7.6%
2021 $31,578,999 $29,954,224 $1,624,775 5.1%
2022 $32,269,661 $29,651,637 $2,618,024 8.1%
2023 $35,472,824 $32,306,067 $3,166,757 8.9%
2024 $36,166,293 $34,234,940 $1,931,353 5.3%
2025 $38,518,446 $36,315,240 $2,203,206 5.7%
Average $2,040,270 6.0%
The vacancy savings percentage estimate falls below historical experience; however, the amount is close to the historical average. The Town should exercise caution with this budgetary estimate going forward. Attrition data needs to be evaluated annually to see if staffing trends have changed and if so, adjust this estimate to remain conservative instead of in-line with actual experience. Reductions to the vacancy savings will increase the annual budget gap. In addition, part of the historical experience considers overtime and pension costs. While these costs are certainly related to personnel, they are not always linear in terms of impact. Overtime may spike due to service response needs and pension cost also factors in amortization of long-term liability based on market performance in addition to covered payroll.
Bargaining Units
Town staff fall within five different labor groups, with three groups governed by collective bargaining agreements or memorandums of understanding (MOU’s). The MOU’s indicate contractual salary increases over a set period of time. For purposes of the baseline forecast, Raftelis considered each of these labor groups individually and the associated historical trend for personnel costs. The current MOUs expire at the end of FY 2027. Details regarding salary assumptions for each of these labor groups are provided below. 2026 Personnel – Salary Budget without Vacancy Savings: $25,381,471 2026 Personnel – Salary Budget with Vacancy Savings: $23,182,932 Base Year Estimate: $22,794,863
For the long-term forecast, Raftelis chose to rely on historical trend and not include a vacancy savings factor. The base estimate for 2026 considers the most recent actual personnel cost of $21.3 million and assumed base increase of 4.5%.
12 Includes salary, overtime, other benefits, and CalPERs pension.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 23
Annual Change Assumptions: 3.9%, weighted average
The model assumes that the number of positions remains unchanged over the course of the model period.13 Costs are projected forward based on the average annual salary increase by bargaining unit14, the total number of positions per bargaining unit, and the average annual salary per position. All data was provided by Town staff.
Based on these assumptions, salary costs are assumed to increase by an average of 3.9% per year over the course of the model period.
The following table summarizes data used to create these assumptions.
Table 30: Salary Assumptions by Bargaining Group
Group
Average Salary Range
Increase, Most Recent
Three Years of Data
Total Authorized
Positions,
FY2026
Average Hourly
Salary, FY2026
American Federation of State, County
and Municipal Employees (AFSCME) 4.0% 14 $47.93
Los Gatos Police Officers' Association 5.2% 39 $81.72
Los Gatos Town Employees' Association 3.0% 56 $58.40
Confidential 3.7% 13 $57.25
Management 3.7% 32 $96.56
Personnel Costs- Overtime
As mentioned previously, overtime costs can vary and are typically tied to overall trends in staffing. Often, overtime costs run higher when staffing levels are lower (higher vacancy rates). The Town’s budget for overtime has consistently lagged actual expenditures as illustrated in the following table.
Table 31: Overtime Budgeted and Actual Expenditure History Year Actual
Expenditures
Annual Percent
Change
Adopted
Budget
2019 $707,046 N/A $387,204
2020 $708,955 0.3% $477,890
2021 $882,421 24.5% $424,560
2022 $1,134,177 28.5% $472,270
2023 $1,373,672 21.1% $604,678
2024 $1,342,518 -2.3% $578,856
2025 $1,333,709 -0.7% $599,171
Average 11.9%
2026 Budget: $657,310
Base Year Estimate: $1,371,566
Overtime costs grew significantly between 2021 and 2023. This is likely correlated with lower staffing levels after the pandemic. As staffing levels have stabilized, overtime costs have also remained more consistent at approximately $1.3 million annually. Maintaining a historical trend-based methodology, the 2026 estimate for the General Fund forecast assumes an amount in line with recent experience. 13 The Excel model does include mechanisms to allow the user to project the cost of additional positions. 14 Actual increases are used where negotiated agreements are available.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 24
Annual Change Assumptions: 1.0%
The project team analyzed trends in average overtime per authorized position in recent years to project future costs. Overtime per position has varied significantly over time, as illustrated below, but has decreased in recent years. The baseline model assumes no new positions are added; therefore, future overtime costs will be a factor of vacancy rates, changes in service level expectations (without corresponding funding), and the underlying base wage for overtime eligible positions. Because overall salary growth is projected to increase, a corresponding increase is expected for overtime. The projected growth is smaller than anticipated salary growth, assuming staffing levels remain consistent with recent experience and the actual amount of overtime hours incurred (overtime per person) continues to decline slightly.
Table 32: Historical Overtime Costs by Authorized Position Year Total
Positions
Overtime Per
Position
Annual
Change
2019 148.99 $4,746 N/A
2020 149.64 $4,738 0%
2021 150.81 $5,851 24%
2022 150.24 $7,549 29%
2023 153.25 $8,964 19%
2024 152.50 $8,803 -2%
2025 152.50 $8,746 -1%
Average 11.4%
Personnel Costs- CalPERS
Current and former Town employees participate in the state’s public pension fund – CalPERs. Plan participation varies depending on when employees entered the system and the nature of their employment (general or public safety). The Town relies on actuarial consultants to provide estimates for annual contributions. These estimates include multiple factors such as current Town payroll for covered employees (those eligible to participate), accrued pension liability resulting from pension assets underperforming relative to plan assumptions, and the expected benefit payment for each vested employee based on demographics and plan features.
Similar to other personnel cost drivers, the project team first assessed actual pension cost paid annually to understand underlying growth trends. This data along with actuarial estimates provided by Foster and Foster® informed assumptions for expected future pension costs. The following table illustrates actual CalPERS costs, as well as the average annual change.
Table 33: CalPERS Actual Expenditure History
Year Actual
Expenditures
Annual Percent
Change
2019 $5,282,681 N/A
2020 $6,059,646 14.7%
2021 $6,374,119 5.2%
2022 $6,531,958 2.5%
2023 $7,091,215 8.6%
2024 $7,431,198 4.8%
2025 $8,220,124 10.6%
Average 7.7%
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 25
2026 Budget: $9,907,119
Base Year Estimate: $9,114,430
The table below details how the 2026 base amount was determined relying on the actuarial estimates from the March 2025 Foster and Foster Report. Included in that report were estimates for covered payroll that support the model’s 2026 base estimate for contributions.
Table 34: CalPERS Covered Payroll and Contribution by Group Employee Group15 Employee
Count
2025/26
Payroll
2025/26
Contribution16
FY2026 Base
Estimate
Miscellaneous 114 $15,215,000 30.0% $4,564,500
Safety 36 $6,842,000 66.5% $4,549,930
Total 150 $22,057,000 N/A $9,114,430
Annual Change Assumptions: 4.9% on average (varies by year) The model projects annual covered payroll for Safety and miscellaneous employees based on the assumptions detailed in the salary section above. The Foster and Foster report projects the percentage of payroll contributions needed for both safety and miscellaneous employees over the next 10 years to cover normal cost and the unfunded accrued liability (UAL) payment. This percentage (50th percentile) is used to determine pension cost for the Town over the next ten years.
It is important to note the baseline model does not consider changes to underlying pension assumptions, such as the discount rate used for market rate of return on assets. This type of change would be modeled as a scenario and may have a significant impact on the required contribution from the Town each year. To hedge against growing unfunded liability the Town has also established a pension trust, for which annual contributions are factored into the baseline model projection for the General Fund. Additional details can be found in that expenditure category section.
15 Includes proportionate share of classic members utilizing final average contribution (FAC) of one year or three years as well as members who joined after the 2013 Public Employees’ Retirement Reform Act (PEPRA). 16 Includes normal cost and unfunded accrued liability (UAL) payment
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 26
Figure 1: Foster and Foster Miscellaneous Employer Pension Contributions FY2026-2036 Figure 2: Foster and Foster Safety Employer Pension Contributions FY2026-2036
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 27
Personnel Costs- Other Benefits
The other benefits category encompasses costs primarily related to health insurance (including dental and vision) as well as other benefits such as disability and group life insurance. The Town is fully insured, paying a fixed premium to an insurance carrier to provide medical coverage for employees. The following table illustrates the category’s historical actual costs, as well as the average annual change.
Table 35: Other Benefits Budgeted and Actual Expenditure History Year Actual
Expenditures
Annual Percent
Change
2019 $3,578,363 N/A
2020 $3,618,950 1.1%
2021 $3,710,338 2.5%
2022 $3,679,378 -0.8%
2023 $3,829,826 4.1%
2024 $4,274,670 11.6%
2025 $4,948,141 15.8%
Average 5.7%
2026 Budget: $6,265,770
Base Year Estimate: $5,548,868
Benefit costs were dormant through the pandemic years and then rebounded to above average increases, particularly within the past two years. The lower actual costs experienced in 2020 – 2022 are not anticipated in future years. Rather, it is expected that healthcare costs will settle into historic growth patterns of 6-8% employer cost increases annually. For this reason, the 2026 base estimate in the forecast is $5.5 million, reflecting approximately a 12% increase from the 2025. This is base assumes a “catch up” from the deflated costs experienced previously and is below the Town’s 2026 budget. The growth in costs from this base estimate are not expected to increase as much as explained below.
Annual Change Assumptions: 6.6%
The project team looked at trends in healthcare costs from two industry experts, PricewaterhouseCoopers (PwC) and the National Association of Insurance Commissioners (NAIC), as well as the Town’s own experience with costs the past several years to develop the annual benefit cost projection of a 6.6% annual increase.
Table 36: Industry Healthcare Cost Trends
Year PwC Annual Change in
Group Plan Healthcare Costs
NAIC Annual Change in
Insurance Premiums
2021 7.0% Not available
2022 5.5% 5.5%
2023 8.0% 5.2%
2024 8.5% 4.9%
2025 8.5% 7.1%
Average 7.5% 5.7%
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 28
Personnel Costs- Other Post-Employment Benefits (OPEB)
The Town’s share of retiree medical expenses is categorized as OPEB. The Town is required to provide medical insurance for retirees who are not yet Medicare eligible. The underlying cost for this benefit is related to assumptions for healthcare cost increases (e.g. Other Benefits); however, the demographic composition is a higher age group that typically utilize medical benefits at a higher rate than the overall employee population. The historical trend data supports this, with Town-wide benefit costs growing at 5.7% on average the past seven years, while retiree’s share of healthcare costs grew at 8.2%. The following table illustrates the category’s historical actual costs, as well as the average annual change.
Table 37: OPEB Actual Expenditure History
Year Actual
Expenditures
Annual Percent
Change
2019 $1,181,579 N/A
2020 $1,203,101 1.8%
2021 $1,286,285 6.9%
2022 $1,391,296 8.2%
2023 $1,527,074 9.8%
2024 $1,631,602 6.8%
2025 $1,883,528 15.4%
Average 8.2%
2026 Budget: $2,125,000
Base Year Estimate: $2,125,000
The Town’s 2026 budget aligns with growth in actual costs of approximately 8% from the most recent fiscal year.
Annual Change Assumptions: 7.7%
Similar to the underlying industry data support total benefit costs for the Town, the anticipated growth for this expenditure category uses a higher overall percentage to mirror the differences in demographics and the higher end of anticipated national healthcare cost increases anticipated by industry experts.
Non-Personnel Expenditures
The Town has multiple ongoing operating expenditures required to support service delivery that do not involve personnel. Actual expenditure trend history and underlying cost assumptions for the General Fund baseline model are detailed by category below. Unless otherwise noted, historical averages shown by department or a more granular expense type reflect the seven-year average consistent with the historical trend data provided.
Grants and Awards
The Town has historically set aside funds for grant and awards programs in the community. The amount has varied depending on the Town’s financial position and community/economic factors. For example grants increased significantly after pandemic, likely related to one-time funding from state and federal sources to support various community programs. The amount of grants awarded is an annual discretionary policy decision. As such, for the baseline forecast model, we relied on Town staff guidance of $155,000 as the ongoing base amount of grants awarded annually with no anticipated increases over the ten year period.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 29
Materials and Supplies
Police, Parks and Public Works, and Library comprise 88% of total materials and supplies expenditures for the Town. The following table illustrates the category’s historical cost, as well as the average annual change. Amount have been adjusted to remove one-time anomalies.
Table 38: Materials and Supplies Actual Expenditure History Year Actual Expenditures Annual Percent
Change
2019 $506,425 N/A
2020 $954,191 88.4%
2021 $986,060 3.3%
2022 $976,524 -1.0%
2023 $1,004,047 2.8%
2024 $1,336,078 33.1%
2025 $1,205,674 -9.8%
Average 19.5%
2026 Budget: $1,341,030
Base Year Estimate: $1,101,676
In FY2024 the Town increased the base budget to $1.3 million, which is slightly higher than recent trends for the past three years. The model assumes an initial base estimate of $1.1 million, which the five-year historical expenditure average since 2021.
Annual Change Assumptions: 7.4% (weighted average)
The types of materials and supplies purchased vary from department to department, so the project team used expenditure history by department to estimate future trends. As stated previously, three departments drive the majority of underlying cost for this category. The remaining departments make up a smaller share of costs with actual expenses varying from year to year. For those departments, expenditures are assumed to remain flat throughout the model period (e.g. existing allocation of base budget is sufficient to cover these departments collectively).
The following table illustrates historical and assumed annual expenditure change by department. A three-year (post pandemic) average growth rate was used to inform the future costs.
Table 39: Materials and Supplies Expenditure Assumptions by Department Department Average Portion
of Expenditures
Three Year
Average Annual
Change
Assumed Annual
Change
Police 41.9% 12.8% 10.0%
Parks and Public Works 29.2% 10.1% 7.0%
Library 16.9% 3.0% 2.0%
All Other 12.0% -15.4% 0.0%
Utilities
The Town pays a variety of utilities including water, electric, and telecommunications. The following table illustrates actual utilities costs, as well as the average annual change.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 30
Table 40: Utilities Actual Expenditure History
Year Actual
Expenditures
Annual Percent
Change
2019 $451,146 N/A
2020 $540,966 19.9%
2021 $572,195 5.8%
2022 $560,096 -2.1%
2023 $636,764 13.7%
2024 $723,753 13.7%
2025 $829,296 14.6%
Average 10.9%
2026 Budget: $721,546
Base Year Estimate: $900,000
Actual utilities costs since the pandemic have increased by 14%, exceeding budget estimates in FY2023-25. For the model, an initial 2026 base estimate of $900,000 is used. This is based on the recent three year growth trajectory.
Annual Change Assumptions: 10.6% (weighted average)
Costs were estimated by utility type, based on past history. Utilities with a minimal impact on overall cost and volatile changes year-over-year are assumed to be flat. The following table illustrates assumed annual expenditure change by utility.
Table 41: Utility Expenditure Assumptions by Type
Utility Average Portion
of Expenditures
Average Annual
Change
Assumed
Percent of Cost17
Assumed Annual
Change
Electric 6.4% 11.4% 7.0% 12.0%
Water 50.6% 11.9% 51.6% 12.0%
St Lite / Signals Energy 31.1% 9.4% 30.9% 9.0%
911 Communications Line 5.2% 14.8% 5.3% 10.0%
Telephone 3.3% 11.7% 3.3% 8.0%
Mobile/Cell Phones 2.2% 3.2% 1.0% 1.0%
Communications Data
Lines 0.3% -39.2% 0.2% 0.0%
Cable 0.8% 2.9% 0.7% 0.0%
Purchased Services
Purchased services include contracts and third-party technical/advisory support services for the Town. Amounts can vary significantly by department, however, Police, Parks and Public Works, and Community Development account for almost two-thirds of costs, with the remaining share coming from administrative functions (including non-departmental). The table below provides historical expenditure trends.
Table 42: Purchased Services Actual Expenditure History Year Actual
Expenditures
Annual Percent
Change
2019 $3,518,231 N/A
2020 $3,408,461 -3.1%
17 Based on most recent 2025 portion of actual cost.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 31
Year Actual
Expenditures
Annual Percent
Change
2021 $2,899,476 -14.9%
2022 $3,308,630 14.1%
2023 $2,795,440 -15.5%
2024 $3,453,697 23.5%
2025 $3,063,557 -11.3%
Average -1.2%
2026 Budget: $3,752,045
Base Year Estimate: $3,206,785
Actual purchased services costs have generally come in lower than budget. The model assumes a 2026 base estimate of $3.2 million, which is consistent with the historical average for expenditures over the past seven years.
Annual Change Assumptions: 4.6% (weighted average)
Costs were estimated by department, based on past history. Departments with volatile past change that are relatively small relative to total cost incurred are assumed to be flat. The following table illustrates assumed annual expenditure change by Department.
Table 43: Purchased Services Expenditure Assumptions by Department Department Average Portion
of Expenditures
Average Annual
Change
Assumed
Percent of Cost18
Assumed Annual
Change
Council 0.1% 55.1% 0.2% 0.0%
Attorney 5.1% 152.5% 16.2% 10.0%
Administrative Services 8.0% 14.8% 8.1% 5.0%
Community Development 17.1% 1.6% 17.0% 2.0%
Police 20.5% 18.8% 17.5% 10.0%
Parks and Public Works 19.7% 3.3% 19.4% 2.0%
Library 2.9% 7.8% 4.2% 2.0%
Non-Departmental 26.7% -12.5% 17.5% 0.0%
Other Operating Expenditures
The final non-personnel operating expenditure category includes all operating expenditures that do not fall into another category. Examples include license fees, subscriptions, and reimbursements for employee travel. The following table illustrates actual costs, as well as the average annual change. 18 Based on most recent 2025 portion of actual cost.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 32
Table 44: Other Operating Costs Budgeted and Actual Expenditure History Year Actual
Expenditures
Annual Percent
Change
2019 $2,732,835 N/A
2020 $2,363,715 -13.5%
2021 $2,656,065 12.4%
2022 $2,826,600 6.4%
2023 $2,898,164 2.5%
2024 $3,177,868 9.7%
2025 $3,907,189 23.0%
Average 6.7%
2026 Budget: $3,367,687
Base Year Estimate: $4,170,370
Actual expenditures increased significantly in 2024 and 2025. The base year estimate assumes this pattern continues with a 6.7% increase from 2025 actual.
Annual Change Assumptions: 6.7%
Based on the average annual change.
Internal Services Charges
The Town relies on internal service funds (ISF) for Town-wide insurance including general liability and workers compensation, as well as facility, Fleet/equipment replacement, and IT services. Each of these funds incur operating costs, including ongoing maintenance, repair, and small capital asset replacement. In some cases they may also receive external revenue sources that support operating costs. The baseline model first calculates estimated operating costs including ongoing maintenance, repair, and replacement for each ISF, then applies any outside revenue sources, before determining the net “charge” required to be allocated to departments to fully recover operational cost. As a result, the General Fund model internal service charge category reflects this aggregate net “charge” to all General Fund departments. The following sections detail assumptions for each internal service fund.
Liability Self-Insurance Fund
The underlying cost of this fund reflects general liability insurance premiums, which are influenced by the Town’s claims experience and insurance industry cost trends. The following table illustrates historical operating expenditures for the fund, as well as the average annual change. The fund does not consistently receive external revenue to support operating costs.
Table 45: Liability Self-Insurance Fund Actual Expenditure History Year Actual Expenditures Annual Percent
Change
2019 $338,617 N/A
2020 $400,823 18.4%
2021 $646,495 61.3%
2022 $583,924 -9.7%
2023 $988,486 69.3%
2024 $1,131,184 14.4%
2025 $1,320,458 16.7%
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 33
2026 Charges for Service Budget: $1,825,348
Base Year Estimate: $1,622,241
Actual costs spiked beginning in 2023 through 2025. The Town recently moved to a new JPA that is expected to yield some cost savings in future years. The 2026 base estimate reflects historical cost with anticipated growth of 22% from 2025 actual.
Annual Change Assumptions: 7.0%, on average
With the recent shift to a new JPA, the annual growth in insurance costs are expected to slow from recent historical averages. Costs are still projected to increase each year at a rate greater than inflation given insurance industry trends. This assumption will need to be closely monitored as the Town receives future premium and claims data under the new JPA.
Workers’ Compensation Self-Insurance Fund
The underlying cost of this fund reflects workers compensation claims activity. The following table illustrates historical operating expenditures for the fund, as well as the average annual change.
Table 46: Workers’ Compensation Self-Insurance Fund Actual Revenue and Expenditure History Year Actual Operating
Expenditures
Annual Percent
Change
Actual External
Revenues
Annual Percent
Change
2019 $1,270,628 N/A 412,720 N/A
2020 $1,525,589 20.1% 526,552 27.6%
2021 $1,381,049 -9.5% 327,768 -37.8%
2022 $1,533,045 11.0% 258,474 -21.1%
2023 $1,913,144 24.8% 163,755 -36.6%
2024 $1,332,697 -30.3% 392,310 139.6%
2025 $1,131,566 -15.1% 330,788 -15.7%
Average 0.2% 9.3%
2026 Charges for Service Budget: $1,901,696
Base Year Estimate: $1,650,000
Recent workers compensation costs have declined from the 2023 peak of $1.9 million. With the difficulty predicting claims activity, some contingency or fund balance within the ISF is desired as a way to smooth incremental cost increases over time. The 2026 base estimate includes the historical average cost of $1.4 million with a $250,000 contingency.
Annual Change Assumptions: 2.3%, on average
The model projects Workers’ Compensation Self-Insurance Fund costs using a general inflationary factor of 2%.
Year-to-year costs have varied significantly. With some contingency built into the base estimate, ongoing growth assumptions are smoothed to consider inflation given the average historical experience has been relatively flat.
Facilities Maintenance Internal Service Fund
The facilities maintenance funds provides funding for the upkeep and maintenance of Town facilities. The following table illustrates actual operating expenditures, as well as the average annual change and external revenue sources (outside of charges to General Fund departments) that support facilities maintenance operating needs.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 34
Table 47: Facilities Maintenance Fund Budgeted and Actual Contribution History Year Actual Operating
Expenditures
Annual Percent
Change
Actual External
Revenues
Annual Percent
Change
2019 $968,550 N/A $904,548 N/A
2020 $1,002,775 3.5% $233,302 -74.2%
2021 $1,063,763 6.1% $333,649 43.0%
2022 $1,217,971 14.5% $1,115,005 234.2%
2023 $1,298,219 6.6% $394,952 -64.6%
2024 $1,330,691 2.5% $490,512 24.2%
2025 $1,418,481 6.6% $245,818 -49.9%
Average 6.6% 18.8%
2026 Charges for Service Budget: $1,175,983 (net of external revenue) Base Year Estimate: $1,175,983
The Town has consistently charged the General Fund departments for 100% of underlying operating expenditures.
The 2026 base maintains the original adopted budget of $1.2 million, which is reflective of actual operating expenditures less external revenue sources.
Annual Change Assumptions: 7.2%, on average
The model projects Facilities Maintenance Fund costs by category, based on past history and consistent with underlying assumptions for General Fund costs for the same non-personnel expenditure categories. The expected charge is offset by approximately $340,000 in revenue, which does not include a growth factor over the ten years.
The following table summarizes expenditure assumptions by category.
Table 48: Facilities Maintenance Fund Model Assumptions Expenditure Category FY2025 Actual
Expenditures
Annual Change
Assumed for Model
Materials and Supplies $404,096 3.5%
Utilities $817,793 8.0%
Purchased Services $158,481 2.0%
Other Operating Expenditures $58,836 6.1%
Information Technology (IT) Internal Service Fund
The IT ISF supports Town-wide application support and maintenance contracts, along with equipment (hardware) replacement cycles. The following table illustrates actual operating expenditures, as well as the average annual change.
Table 49: IT Internal Service Fund Actual Expenditure History Year Actual
Expenditures
Annual Percent
Change
2019 $566,952 N/A
2020 $796,071 40.4%
2021 $668,473 -16.0%
2022 $877,789 31.3%
2023 $538,282 -38.7%
2024 $731,789 35.9%
2025 $887,063 21.2%
Average 12.4%
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 35
2026 Charges for Service Budget: $954,554
Base Year Estimate: $1,067,101
Base year estimates for the IT ISF charges for services do not include any assumption for external revenue sources.
In addition, the 2026 base estimate is reflective of the anticipated maintenance and replacement schedule provided by Town staff, not historical spending. This schedule reflects the true cost to maintain the IT infrastructure the Town has in place to support current service levels.
Annual Change Assumptions: 3.0%, on average
The Town provided an inventory of existing technology assets and planned replacement schedules, and the project team used this data to project annual technology replacement needs over the 10-year model period. The model projects that actual technology costs will be between approximately $1.1 and $1.5 million per year over the next 10 years. These figures are smoothed out over the model period to allow for a more predictable annual contribution.
Contribution amounts are assumed to increase by 3% each year based on inflation and higher replacement costs over time.
The following table illustrates estimated actual technology needs by year. It is based on existing technology and does not assume any expansion of technology use.
Table 50: Estimated Technology Replacement Needs per Year, FY2026-2036 Year
Town Estimate of
Maintenance and
Replacement Needs
Smoothed
Estimate for
Forecast19
2026 $1,251,845 $1,042,067
2027 $1,420,894 $1,101,297
2028 $1,105,082 $1,134,336
2029 $1,157,701 $1,168,366
2030 $1,206,837 $1,203,417
2031 $1,138,311 $1,239,520
2032 $1,508,759 $1,276,705
2033 $1,214,200 $1,315,007
2034 $1,190,731 $1,354,457
2035 $1,196,769 $1,395,091
2036 $1,276,077 $1,436,943
Average $1,242,473 N/A
Equipment Replacement Internal Service Fund
The Equipment Replacement ISF supports maintenance and replacement of vehicles and other large equipment used by various Town departments. The following table illustrates historical operating expenditures, as well as the average annual change. Since the fund supports vehicle and equipment replacement (capital costs), there is greater variation in funds expended annually. This may be due to market conditions delaying the purchasing and receipt of new vehicles, which was common immediately after the pandemic. The fund also relies more heavily on fund balance to support catch-up or timing of replacement.
19 Includes 3% annual inflationary increase
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 36
Table 51: Equipment Replacement Fund Actual Expenditure History Year Actual
Expenditures
Annual Percent
Change Actual Revenues Annual Percent Change
2019 $601,961 N/A $22,492 N/A
2020 $540,036 -10.3% $36,987 64.4%
2021 $248,302 -54.0% $59,852 61.8%
2022 $157,761 -36.5% $48,484 -19.0%
2023 $526,960 234.0% $78,916 62.8%
2024 $187,323 -64.5% $33,418 -57.7%
2025 $563,192 200.7% $43,409 29.9%
Average 44.9% 23.7%
2026 Charges for Service Budget: $1,167,544
Base Year Estimate: $1,026,554
Base year estimates for the Equipment Replacement ISF charges for services includes a small assumption of $40,000 in external revenue to offset General Fund charges for services. This external revenue is typically generated by sale proceeds from auction on obsolete vehicles that have exceeded their useful life. In addition, the 2026 base estimate is reflective of the anticipated maintenance and replacement schedule provided by Town staff, not historical spending. This schedule reflects the ongoing cost required to replace the Town’s current vehicle and equipment asset inventory.
Annual Change Assumptions: 3.0%, on average
The Town provided an inventory of equipment and planned replacement schedules, and the project team used this to project annual vehicle and equipment replacement needs over the 10-year model period. The Town replacement schedule projects that actual equipment costs will be between approximately $215,000 and $2.4 million per year over the next 10 years. These figures are smoothed out over the model period to allow for a more predictable annual contribution. Contribution amounts are assumed to increase by 3% each year.
The following table illustrates estimated actual equipment needs by year. It is based on existing equipment and does not assume any expansion for increased service levels.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 37
Table 52: Estimated Equipment Replacement Needs per Year, FY2026-2036 Year
Town Estimate of
Maintenance and
Replacement Needs
Smoothed Estimate for
Forecast20
2026 $584,890 $1,000,000
2027 $2,387,730 $1,089,741
2028 $2,014,115 $1,122,433
2029 $214,275 $1,156,106
2030 $1,029,654 $1,190,789
2031 $837,932 $1,226,513
2032 $532,015 $1,263,308
2033 $1,079,139 $1,301,207
2034 $1,414,414 $1,340,244
2035 $2,162,045 $1,380,451
2036 $1,403,991 $1,421,864
Average $1,241,836 N/A
Debt Service
The following table illustrates historical debt service, as well as the average annual change and the average annual variance between budgeted and actual.
Table 53: Debt Service Budgeted and Actual Expenditure History Year Actual
Expenditures
Annual Percent
Change
2019 $1,909,073 N/A
2020 $1,905,024 -0.2%
2021 $1,960,505 2.9%
2022 $2,055,884 4.9%
2023 $2,049,747 -0.3%
2024 $2,119,919 3.4%
2025 $2,108,681 -0.5%
Average 1.7%
2026 Budget: $2,057,884
Base Year Estimate: $2,057,884
It is assumed that actual debt service expenditures will match the Town’s adopted debt service schedule, as provided by Town staff.
Annual Change Assumptions: Varies
Debt service payments are based on debt service schedules provided by the Town. No additional debt is assumed during the model period.
20 Includes 3% annual inflationary increase
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 38
Transfers Out
Pension Trust Transfers
The Town transfers General Fund balance to a pension trust each year as a policy directive to accumulate reserves and investment earnings that can be used to offset the anticipated growth in unfunded pension liability over time.
Similar to Town grants, the amount funded to the Pension Trust is an annual discretionary policy decision. For the baseline forecast, the model assumes $390,000 is transferred annually from the General Fund.
Capital Transfers Out
For purposes of a baseline model forecast, transfers from the General Fund to support capital investment should only consider tier one funding, which is the required maintenance, repair, and replacement cost for existing assets used to provide services. If the Town has historically underfunded asset maintenance needs, this would not be reflected in the underlying baseline assumption. Rather, a scenario-based analysis could be used that incorporates higher funding levels to address deferred maintenance needs in a way that positions the Town to achieve desired replacement cycles for future years. The same scenario-based assumption is true for new capital projects tied to potential development or projects desired by Town Council.
The table below shows the history of capital expenditure, non-transfer revenue, and General Fund revenue (transfers in).
Table 54: Capital Improvement Projects Sources and Uses History Year Actual Capital
Expenditures
Non-Transfer
Revenue Sources
General Fund
Transfer
2019 $9,521,126 $6,162,615 $2,335,220
2020 $8,477,293 $13,382,084 $6,982,591
2021 $6,398,953 $5,622,634 $3,401,479
2022 $18,257,900 $18,196,039 $1,750,001
2023 $10,617,693 $18,098,143 $3,006,978
2024 $13,375,941 $11,406,579 $1,615,000
2025 $16,525,663 $14,029,724 $1,110,000
Average $11,882,081 $12,413,974 $2,885,896
The General Fund baseline model only considers pay-go cash sourced from the General Fund operating budget needed to support tier one capital needs after considering any external sources of designated revenue used for capital purposes. The model does not assume any new debt is issued to support ongoing tier one capital needs.
Base Year Estimate: $1,000,000
Ultimately, General Fund cash to support capital investment is a policy decision. Given the history of total capital expenditures and other capital revenue sources, the model assumes a conservative $1 million is transferred annually only to support tier one project needs. Additional capital investment is required but will be modeled as scenarios within the asset liability management (ALM) study components of the project.
There are potential options to mitigate the impact of these capital needs on the General Fund. The Town’s capital funds have an estimated FY2026 beginning fund balance of $17.3 million, per the Town’s FY2026 budget book, and the strategic use of fund balance could minimize the need for General Fund transfers. The Town also has the option of incurring additional debt to finance capital project. No new debt is assumed in projections, but the Excel model allows users to project the impact of additional bond financing.
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 39
Preliminary Outlook
Projected Revenues and Expenditures
The following figure summarizes the projected revenues and expenditures.
Figure 3: Estimated General Fund Revenues and Expenditures, in Millions The model shows a gap between estimated revenues and expenditures that is projected to increase over time based on underlying assumptions for each of the model forecast categories detailed in this memo. It is again important to reiterate that these projections are based on a number of assumptions, and actual costs will vary significantly based on policy and operational decisions as well as external factors like the economy. The Excel model provided to staff as part of this project allows users to evaluate the potential impact of different scenarios.
The tables below show the estimated revenues, expenditures, and impact on fund balance in greater detail. $0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
Millions
Los Gatos Revenue and Expenditure
Projections: Base Scenario
Revenues Expenditures
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 40
Table 55: Detailed General Fund Revenue Projections, FY2026-2036, in Millions Category 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Property Tax $21.5 $23.1 $24.4 $25.7 $27.2 $28.7 $30.4 $32.1 $33.9 $35.8 $37.8 VLF Backfill $5.6 $5.9 $6.2 $6.5 $6.9 $7.2 $7.6 $8.0 $8.5 $8.9 $9.4 Sales and Use Tax (nonMeasure G) $7.8 $7.9 $8.1 $8.3 $8.4 $8.6 $8.8 $9.0 $9.1 $9.3 $9.5 Sales and Use Tax
(Measure G) $1.3 $1.4 $1.4 $1.4 $1.4 $1.5 $1.5 $1.5 $1.6 $1.6 $1.6 Licenses & Permits $6.3 $6.3 $6.4 $6.4 $6.4 $6.5 $6.5 $6.5 $6.5 $6.6 $6.6 Town Services $5.7 $5.9 $6.1 $6.3 $6.5 $6.7 $6.9 $7.1 $7.3 $7.5 $7.7 Business License Tax $2.5 $2.5 $2.5 $2.6 $2.6 $2.7 $2.7 $2.7 $2.8 $2.8 $2.9 Transient Occupancy Tax $2.4 $2.5 $2.6 $2.6 $2.7 $2.8 $2.9 $3.0 $3.1 $3.2 $3.3 Intergovernmental $1.3 $1.3 $1.3 $1.3 $1.3 $1.3 $1.3 $1.3 $1.3 $1.3 $1.3 Franchise Fees $1.0 $1.1 $1.1 $1.1 $1.1 $1.1 $1.2 $1.2 $1.2 $1.2 $1.2 Fines & Forfeitures $0.4 $0.4 $0.4 $0.5 $0.5 $0.5 $0.5 $0.5 $0.5 $0.5 $0.5 Transfers In $0.3 $0.3 $0.3 $0.3 $0.3 $0.3 $0.3 $0.3 $0.3 $0.3 $0.3 Interest $1.6 $1.6 $1.2 $1.2 $1.0 $1.0 $0.8 $0.8 $0.7 $0.7 $0.7 Other Sources $2.8 $2.8 $2.8 $2.8 $2.8 $2.8 $2.8 $2.8 $2.8 $2.8 $2.8 Total Revenues $60.5 $63.0 $64.8 $67.0 $69.2 $71.6 $74.1 $76.8 $79.5 $82.5 $85.7 Percent Change N/A 4.0% 2.9% 3.5% 3.2% 3.6% 3.4% 3.7% 3.6% 3.8% 3.8% Table 56: Detailed General Fund Expenditure Projections, FY2026-2036, in Millions Category 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Operating Expenditures
Salary $22.8 $23.6 $24.5 $25.5 $26.5 $27.6 $28.6 $29.8 $31.0 $32.2 $33.5 Overtime $1.4 $1.4 $1.4 $1.4 $1.4 $1.4 $1.5 $1.5 $1.5 $1.5 $1.5 CalPERS $9.1 $9.7 $10.1 $11.1 $11.7 $12.3 $12.8 $13.5 $13.9 $14.5 $14.7 OPEB $2.1 $2.3 $2.5 $2.7 $2.9 $3.1 $3.3 $3.6 $3.9 $4.2 $4.5 Other Benefits $5.5 $5.9 $6.3 $6.7 $7.2 $7.6 $8.1 $8.7 $9.2 $9.9 $10.5 Materials and Supplies $1.1 $1.2 $1.3 $1.4 $1.5 $1.6 $1.7 $1.8 $1.9 $2.1 $2.2 Internal Service Charges $6.5 $7.0 $7.2 $7.5 $7.7 $7.9 $8.2 $8.4 $8.7 $8.9 $9.2 Grants and Awards $0.2 $0.2 $0.2 $0.2 $0.2 $0.2 $0.2 $0.2 $0.2 $0.2 $0.2 Utilities $0.9 $1.0 $1.1 $1.2 $1.3 $1.5 $1.6 $1.8 $2.0 $2.2 $2.5 Debt Service $2.1 $2.1 $2.1 $2.1 $0.8 $0.8 $0.7 $0.0 $0.0 $0.0 $0.0 Purchased Services $3.2 $3.4 $3.5 $3.7 $3.8 $4.0 $4.2 $4.4 $4.6 $4.8 $5.0 Other Operating
Expenditures $4.2 $4.5 $4.8 $5.1 $5.4 $5.8 $6.2 $6.6 $7.0 $7.5 $8.0 Total Operating
Expenditures $59.1 $62.0 $64.9 $68.4 $70.3 $73.8 $77.1 $80.3 $83.9 $87.9 $91.8 Transfers Out
New Capital $1.0 $1.0 $1.0 $1.0 $1.0 $1.0 $1.0 $1.0 $1.0 $1.0 $1.0 Other $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 Total Transfers Out $1.4 $1.4 $1.4 $1.4 $1.4 $1.4 $1.4 $1.4 $1.4 $1.4 $1.4 Total Expenditures $60.5 $63.4 $66.3 $69.8 $71.7 $75.2 $78.5 $81.7 $85.3 $89.3 $93.1 Percent Change N/A 4.9% 4.5% 5.3% 2.7% 4.8% 4.4% 4.0% 4.4% 4.7% 4.3%
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 41
Table 57: Total General Fund Balance Projections, FY2026-2036, in Millions Category 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Total Revenues $60.5 $63.0 $64.8 $67.0 $69.2 $71.6 $74.1 $76.8 $79.5 $82.5 $85.7 Total
Expenditures $60.5 $63.4 $66.3 $69.8 $71.7 $75.2 $78.5 $81.7 $85.3 $89.3 $93.1 Net Fund
Balance Change $0.1 ($0.5) ($1.5) ($2.8) ($2.6) ($3.5) ($4.4) ($4.9) ($5.8) ($6.8) ($7.5) Total Fund
Balance $34.9 $34.4 $32.9 $30.1 $27.6 $24.0 $19.6 $14.8 $9.0 $2.2 ($5.2) Comparison to Initial Projections
The figure below compares preliminary outlook (projected gap) projections as presented to the Finance Commission on February 2nd compared to the updated projections after incorporating their feedback, continuing to refine for one-time adjustments, and adjusting growth assumptions based on revised “normalized” trends.
Figure 4: Comparison of Projected Gap, in Millions
The following table compares past and current assumptions in greater detail and provides some context for any changes.21
21 It only compares categories where assumptions were reported in the February Finance Commission meeting. $0.5
($0.1)
($1.4)
($2.8) ($2.7)
($3.8)
$0.1
($0.5)
($1.5)
($2.8)
($2.6)
($3.5)
($4.5)
($4.0)
($3.5)
($3.0)
($2.5)
($2.0)
($1.5)
($1.0)
($0.5)
$0.0
$0.5
$1.0
2026 Base 2027 2028 2029 2030 2031
Millions
Comparison of Projected Gap, Finance Commission
Presentation vs. Updated Assumptions
Raftelis Gap - 2/2 FC Presentation Raftelis Model March Update
ITEM NO. 10.
Los Gatos CA / Long-Term Financial Plan 42
Table 58: Comparison of Assumptions by Category
Category
Finance
Commission
Assumption
Updated Assumption Comments
Revenues
Property Tax 5.1% 5.2% Slight refinement based on HdL report and discussions with staff
VLF Backfill 5.2% 5.4% Slight refinement based on updated assumptions on property value trends
Sales and Use Tax 2.0% 2.0%
Licenses & Permits 1.2% 0.4% Revised downward based on trends in building permit value
Town Services 1.1% 3.0% Revised upward because permit valuation trends are not weighted as heavily
Business License
Tax 1.5% 1.5%
Transient
Occupancy Tax 3.0% 3.0%
Investments 2.6% 2.6%
Operating Expenditures
Salary and CalPERS Based on inflation
Based on collective
bargaining agreements
and past history
Changed per Commission direction
Other Benefits 6.6% 6.6%
OPEB 7.7% 7.7%
Materials and
Supplies 10.1% 7.4% Refined with additional feedback on excluded one-time costs Grants and Awards 0.0% 0.0%
Utilities 8.0% 10.6% Refined with additional feedback on projected utility cost trends
Purchased Services 9.8% 4.6% Refined with additional feedback on excluded one-time costs
Other Operating
Expenditures 7.1% 6.7% Refined with additional feedback on excluded one-time costs Internal Service Funds
Liability SelfInsurance Fund 7.0% 7.0%
Workers’
Compensation SelfInsurance Fund2.0% 2.3% Refined based on staffing cost trends Facilities
Maintenance Fund 15.0% 7.2% Refined based on further discussions with staff IT Fund 3.0% 3.0%
Equipment
Replacement Fund 3.0% 3.0%
Next Steps
The Finance Commission and Town Council will have the opportunity to review the detailed assumptions outlined in this memo and provide feedback during regularly scheduled meetings in April. Raftelis will then incorporate recommendations and adjust the model assumptions and baseline financial outlook as appropriate in consultation with Town staff. A final report will then be provided to the Finance Commission and Town Council, as work among the consultants shifts to finalizing detailed scenario analysis that builds from the baseline model assumptions. The scenarios will be used to guide policy discussion during May-June.
ITEM NO. 10.
1 TO: Chris Constantin, City Manager, Town of Los Gatos FROM: Michael Medve, Principal Consultant, Willdan
DATE: April 7, 2026
SUBJECT: Summary of Assumptions in Fiscal Impact Study
In February of 2026, Willdan prepared a Fiscal Impact Analysis for the Town of Los Gatos (the "Town") to evaluate the annual fiscal impacts of residential development considered in the Town's Housing Element and related planning work through 2040.
Community Development subsequently recommended several refinements to the development and revenue assumptions used in the study. The updated assumptions are provided below in bullet point form.
Revenues
Residential development assumptions were updated to use the average of the more aggressive and more conservative development scenarios through 2040, totaling 3,263 units, inclusive of 400 accessory dwelling units (ADUs).
For purposes of the study, the same number of units is assumed to be developed each year during the study period.
ADUs may be rented to or sold to low- and moderate-income households, but no percentage is assumed for the purposes of this analysis.
Affordable units are assumed to comprise approximately 15% of non-ADU units, rather than the 60% estimate cited in the Housing Element. The reduction was applied proportionately across the non-ADU development program, in accordance with Community Development’s recommendation.
Because there was no direct source for the price of a market rate multi-family unit in Los Gatos, Willdan used an amount equal to 70% of the overall median home value (according to Zillow), which is a common assumption. This came out to $1,711,935. Since there is a mix of affordable and market rate units, Willdan disaggregated the development by type of housing unit and calculated the weighted average home value to estimate increase in assessed value.
An ADU is assumed to raise a Bay Area home’s property value by $200,000 to $500,000, based on information from various online sources. ADUs can either be rented or sold, but in either case, the assessed value associated with an ADU is assumed to be $350,000 for the purposes of this analysis.
ATTACHMENT 2
ITEM NO. 10.
2 The weighted average AB 8 apportionment factor for secured property taxes (1% of secured assessed value) was calculated to be about 9.5%. Property Tax In-Lieu of VLF came out to an additional 2.8%.
Sales tax revenues are equal to 1.125% of taxable sales, which includes the general sales tax rate and Measure G.
Taxable sales were estimated by estimating the household income for each type of new unit and deriving the percentage of income that would generate taxable sales from the Consumer Expenditure Survey. This allowed me to estimate the taxable sales for Los Gatos that come from each new household.
A leakage rate estimate of 40% was used for the primary sales tax analysis. Some studies have shown higher leakage rates for small suburban communities, but online retail has increased substantially in recent years, and the use tax mechanism will capture those revenues from Los Gatos residents.
An alternative estimate for sales tax was calculated using a multivariate analysis among cities in Santa Clara County to approximate the increase in taxable sales associated with new residential development. After reducing the number of affordable units, the results are comparable to the household expenditure-based estimate. Other revenues evaluated in the study include Franchise Fees, Licenses & Permits, and Fines & Forfeitures. These were determined using multipliers that account for both residents and employees. The resident estimate at buildout is driven by the updated housing development assumptions summarized above.
Franchise fees are estimated at $23.77 per new resident. Licenses & Permits are estimated at $144.00 per new resident. Fines & Forfeitures are estimated at $7.18 per new resident.
Expenditures
Police Department, Parks & Public Works, Community Development, and Library Services were used to develop multipliers to estimate future expenditures. Non-Departmental, Administrative Services, and Town Council expenditures were considered overhead. After excluding non-operating expenditures, the overhead percentage rate for operations was calculated to be 28.9%.
Adjustments were made to Parks/Public Works, Community Development, and NonDepartmental to account for fees collected for services. The amounts taken from the Adopted Budget were deducted from the expenditure total to arrive at a net cost. Police Department is estimated at $690.26 per new resident. Parks and Public Works is estimated at $332.21 per new resident. The Public Works budget does not include any adjustments to address deficiencies in infrastructure and maintenance budgets identified by Town staff. Community Development is estimated at $121.75 per new resident. Library is estimated to be $141.33 per new resident.
Other Assumptions
Unless otherwise noted, the Fiscal Year 2025-26 Budget estimates were used. Number of residents from CA Department of Finance population estimates equal to 33,355.
ITEM NO. 10.
3 Number of employees comes from the Census Bureau's "On the Map" tool. 2023 "All jobs" estimate was used, yielding 21,105 jobs.
Persons served estimate is equal to population plus 50% of employees.
If you have any questions about this memorandum, please feel free to contact Mike Medve at (951) 587-3575.
ITEM NO. 10.