Forced by a state housing law and unable to pursue a costly appeal, the Los Altos City Council in a brief Thursday night meeting approved a 66-foot-high, five-story building for 40 Main St.

After agreeing last Saturday to withdraw its appeal of a court decision allowing the project, the council rescinded its previous denial and approved the high-density, mixed-use structure under State Senate Bill 35. The law allows streamlined permit processing for the purpose of generating more housing. The 40 Main St. project includes 15 rental units, two of which are classified as affordable.

In addition to the approval, the council must pay $490,001 in damages to applicants Ted and Jerry Sorensen. Council members also approved that payment Thursday, with funds taken from the city's emergency and operating reserve. Following the council's rejection of the project in April 2019, the Sorensens, joined by the California Renters Legal Advocacy and Education Fund petitioned Santa Clara County Superior Court. A judge ruled in the plaintiff's favor, prompting the city to appeal the court decision July 8. The judge, however, granted the developer's request that the city post a $7 million appeal bond, to be paid by Sept. 17.

"If the city lost the appeal, (Los Altos) would be required to pay the full amount of the bond to the developer, plus any attorney’s fees, which is likely to exceed $10 million," the city council said in a Sept. 5 statement. Given the significant potential costs involved, the council unanimously voted to drop the appeal.

The city could pay even more in the weeks ahead.The plaintiff has filed a demand for an additional $1.8 million in legal fees. A hearing is set for Sept. 30. 

"Following a judge's decision on that demand, the city council will need to authorize a payment at that time," according to the Sept. 10 staff report.