"This project is vested to the ordinances, policies, and standards in effect on April 17, 2023." That line is the first condition of approval for North 40 Phase II, the 450-unit plan the Town Council approved on January 13, 2026. It is easy to miss, and it carries a lot of weight for anyone looking at homes near Los Gatos Boulevard.

On September 1, 2026, the Council unanimously adopted tougher objective design standards for multifamily and mixed-use housing. The new rules include a 50-foot stepback for buildings taller than two stories next to single-family homes. If you read those headlines, you might expect them to shape the Boulevard's next buildings. For the three largest proposals on the corridor, they mostly won't. What decides the outcome on Los Gatos Boulevard is when each application was filed.

Three projects, three rulebooks

The table below covers the corridor's three biggest housing proposals. The column that matters most for a buyer is the last one.

None of the three answers to the September 2026 standards. The Los Gatan's report on the vote said so directly: the updated standards apply only to projects approved after adoption, and existing projects stay vested to the standards in place when they were approved.

What the September rules actually say

The updated standards are the Town's second round of objective design rules. The first round was adopted in November 2022 and amended in February 2024. Lisa Wise Consulting drafted this update, and the Planning Commission approved it unanimously on June 24, 2026. The main changes:

• Buildings taller than two stories need a differentiated base, middle and top along street-facing walls.
• Primary building materials must be fire resistant. Wood products are prohibited as primary materials, even those labeled "ignition-resistant."
• Parking structures visible from the street are capped at 50 percent of the building elevation's length.
• Multifamily buildings and townhomes next to residential districts are limited to 25 feet or two stories.
• The required stepback for buildings over two stories next to single-family homes was raised from 40 to 50 feet at the Sept. 1 meeting.

State law creates two more routes around these rules, even for projects filed later. A project that qualifies under the state density bonus law can get an unlimited number of waivers for local standards that "physically preclude" construction. A builder's-remedy project can argue that meeting the standards would make it "economically or physically infeasible." The Council also asked staff to price out a review of the new standards by the Town architect, but staff noted that the project budget is nearly spent.

So the new rulebook is real, but it governs the next wave of applications. The buildings most likely to change the Boulevard in the next few years were filed under earlier rules.

Why the townhomes come first at North 40

North 40 Phase II includes 255 apartments, 127 townhomes and a separate 68-unit affordable building, with commercial space and about 3.5 acres of public open space. Seventy-seven of the 450 units are affordable.

The order of construction is the most useful detail for buyers watching this site. Grosvenor used the state density bonus law. Because 17 percent of the project was set aside for lower-income households, it qualified for two concessions. The first removed the ground-floor commercial requirement from the townhomes and the affordable building. The second let it build the market-rate townhomes before any affordable housing, to cover about $100 million in upfront costs. According to the Los Gatan, the Town got a second opinion and found the developer would be "just barely in the black" after selling all the townhomes. Eden Housing, which is developing the affordable building, said having infrastructure in place first would help it secure funding.

In practice, the townhome sales pay for the infrastructure. The 127 townhomes are both the first homes this phase would put on the market and the money that keeps the rest of the project moving. Margins are thin, so how fast the townhomes sell affects when everything else gets built.

The approval itself was hard-won. Council voted 3–2, with former mayors Mary Badame and Matthew Hudes opposed. The Town Attorney confirmed that a denial would have let Grosvenor come back under builder's-remedy rules with a larger project.

An approved project with a for-sale sign

Four months after approval, the plan went up for sale. The Registry reported on May 15, 2026 that CBRE had begun the formal sale of the entitled 15.67-acre Phase II site as Grosvenor exits U.S. development. We have not seen a confirmed buyer, permit issuance or construction start in the reporting and Town records we reviewed. A deal could have happened since without public coverage, so treat the site's future builder as unknown for now.

The vesting travels with the approval. Any buyer gets the 450-unit plan, the April 2023 standards and the townhomes-first order. The buyer also inherits a deadline. Under the conditions of approval, the approval expires at the later of two dates, the vesting tentative map's expiration or two and a half years after final approval, unless construction has started. If the final subdivision map is recorded in phases, the approval's life is extended. The two-and-a-half-year date works out to July 13, 2028, about 21 months from today. Because of the map provisions, that date is a minimum, not a firm expiration. The approval also requires separate demolition and building permits, and a grading permit generally has to come before building permits.

Phase I has some lessons. During the Phase II hearing, Vice Mayor Ristow said Phase I was held back by height limits of 45 feet in one section and 35 in another, which pushed it toward a boxy design many residents dislike. That design came out of the rules Phase I was built under, which is the same dynamic now playing out on the rest of the corridor.

The Ace Hardware site and the 90-day ruling

Farther along the Boulevard, Arya Properties LLC filed The Arya and The Luxe under builder's remedy. Mercury News explained that builder's remedy allows projects of almost any height and size, in almost any location, when a city lacks a state-certified housing element. The Town sued in April 2025, arguing that developers get only one 90-day window to fix an incomplete application. On January 29, 2026, Santa Clara County Superior Court Judge Helen E. Williams dismissed the suit and agreed with the state that successive 90-day periods are allowed.

On April 21, 2026, Council voted 3–2 to grant both developers' appeals and found that the projects' SB 330 vesting had not expired. A Council amendment directed staff to negotiate with Arya Properties on "the Ace Hardware development" once the 90-day litigation concludes. That hearing settled only whether the applications were still alive. It did not approve either project on its merits. As of April, an EIR was being prepared for The Arya, and The Luxe's initial study was waiting on a revised traffic report.

The Town's housing element is certified now. The Town's annual progress report says HCD certified the revised 2023–2031 Housing Element on July 10, 2024. Certification limits new builder's-remedy filings, but it doesn't undo vesting for applications already filed. The Town is also working toward a state target of at least 1,993 homes over the current eight-year cycle. After the ruling, it said it had approved or was processing applications covering more than 80 percent of that allocation.

Reading a Boulevard address before you write an offer

For a buyer comparing a home near the corridor with options elsewhere in Los Gatos, the zoning map and the September standards answer different questions than the ones that matter here. This order of checks is more useful:

1. Find the nearest active application. Look for a project planner, an application number, and whether it is approved, in review or only proposed.
2. Find its vesting date. North 40 Phase II lists its date in its first condition of approval. Projects vested through SB 330 preliminary applications are measured against the rules in place when they filed.
3. Find its clock. An approved project has an expiration window unless construction starts. A project in review has open CEQA steps.
4. Find the sequencing conditions. At North 40, the townhome-first concession decides which buildings could appear first.

Town staff reports and Council minutes carry this information, and they are public. The Los Gatos neighborhood page and our buyer's guide cover the rest of the Town's context. For a similar story about how state housing law overrode local zoning, see our piece on 349 First Street in Los Altos.

Short answers

Does the 50-foot stepback apply to North 40 Phase II? No. That project is vested to the rules in effect on April 17, 2023, and the September 2026 standards apply only to projects approved after adoption.

Is North 40 Phase II under construction? We found no record of permits issued or construction starting. As of the May 15, 2026 Registry report, the entitled site was being marketed for sale by CBRE.

Are The Arya and The Luxe approved? No. The April 21, 2026 Council action confirmed that their applications remain vested. Environmental review was still underway as of April.

Our team at Moles Group tracks the staff reports and hearings behind addresses like these. If you're looking at a home near Los Gatos Boulevard and want to know which projects nearby are approved, pending or still on the clock, schedule a complimentary consultation and we'll go through it with you.

This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.