The $7,000,000 Bond
We must get control of our City’s litigation costs and the City Council must honestly account for our liabilities.
Did you know that earlier this year Los Altos lost a lawsuit against a developer? The owner of 40 Main Street wants to build a 5-story apartment building. The proposed building does not conform to the City’s zoning code. If constructed, it will dwarf the other buildings downtown. Personally, I do not want to see this building constructed.
The outgoing City Council did not meet its Regional Housing Needs Allocation obligations. Therefore, under a new law (SB 35) Los Altos lost the ability to control this project.
Nevertheless, the City did deny the owner’s request to construct the building. In denying the owner permission to build, a judge found that the City acted in bad faith. The City was ordered to permit the construction of the building and to pay the developer’s attorneys’ fees.
For several weeks, the City Council debated appealing the judge’s ruling. To proceed with an appeal, the judge ordered that our City must post a bond in the amount of $7,000,000.
Seven million dollars.
That’s about 15% of the City’s entire annual budget. On September 6, 2020, the City Council reversed itself and dropped the appeal.
If it moved forward with the appeal, how would the City Council have accounted for the $7 million bond? It never told us. A prudent fiduciary would put this liability on the City’s books. That would allow the Council and staff to budget within our means.
We are involved in other lawsuits which also pose large financial risks to the City. Each of these potential liabilities should be accounted for on our City’s books. Anything less is poor financial stewardship and hides crucial information from residents. I believe that our City Council must be truthful with our residents, even when it’s unpopular. If elected to the Council, I will always advocate for the transparency that residents deserve from their government.
By failing to put the financial risks of litigation on our books, the City Council is hiding the financial danger of this litigation from the taxpayers.
Not every lawsuit should be abandoned because of financial risk. But if elected, I will favor transparency - disclosing risks to Los Altos’ residents and accounting for those risks so that we plan our budget prudently and wisely.