SARATOGA — Michael Burry, a former Wall Street executive who was the subject of the movie “The Big Short,” is leading a lawsuit to undo Saratoga’s approval of a hillside housing project.
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Citizens for Responsible and Equitable Development, for which Burry is the president of, filed a lawsuit challenging an approval by the City Council on Aug. 16 of a 25-unit residential development. The Saratoga Planning Commission rejected the proposal on July 8.
The group claims Saratoga used an environment impact report (EIR) that failed to properly analyze an array of scenarios the project could trigger, according to the lawsuit filed on Sept. 17 in Santa Clara County Superior Court.
The lawsuit, which asks the court to issue an injunction against the city as a way of blocking the project, comes after some residents raised fire safety concerns related to where the housing would be built.
“The city has calculated that at a rate of 2.79 persons per household, the project would result in an increase of approximately 70 residents who would have to use Pierce Road for evacuation in the event of a wildfire,” Citizens for Responsible and Equitable Development stated in the lawsuit.
The lawsuit also claims the project could have an effect on local habitats, saying the “EIR fails to adequately disclose, analyze, and/or mitigate the project’s significant direct and cumulative impacts to biological resources, including numerous special status plant species.”
At the Planning Commission meeting on July 8, Bill Hirschman, the project’s principal developer, said the housing is properly designed to mitigate environmental, habitat and fire safety concerns.
“The EIR is very thorough,” Hirschman said.
The project utilized a builder’s remedy approach to gain approval. In California, a builder’s remedy plan enables developers to bypass local zoning and general plan rules in cities and counties that have failed to adopt a long-range housing strategy that is certified by state government officials.
“We designed this project so that it fits within the community,” Hirschman said. “It is a builder’s remedy project, but it’s not just a builder’s remedy project.”
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The 25 homes would consist of 20 market-rate units and five affordable units, project plans state. They would be built on a 25-acre section of a 72-acre parcel.
Carol Rice, general manager of Wildland Resource Management, said the homes and surrounding areas on the project site were designed to mitigate wildfire risks.
“We made the area ignition resistant,” Rice told the Planning Commission. “The buildings are ignition resistant should a fire come through. Every one of the structures will have 100 feet of defensible space.”
A pro-housing group, YIMBY Action, criticized the lawsuit and its primary backer.
“Michael Burry made his fortune betting against housing. Now he’s doing it again, this time against his future neighbors,” said Leora Tanjuatco Ross, California director of YIMBY Action. “When some of the wealthiest people in one of America’s wealthiest cities go to court to keep out 25 families, that’s not a safety campaign. That’s an effort to establish a red line barrier to entry. Teachers, nurses, and firefighters serve Saratoga but can’t afford to live anywhere near it.”
Burry is a former hedge fund manager and Wall Street investor who in 2005 predicted the subprime mortgage meltdown and housing bubble implosion that followed in 2008.
He invested in financial instruments whose value would skyrocket once homeowners stopped paying their mortgages because the homes were worth less than their loan amounts, a move that equated to a series of bets against the housing market, or a “short.”
In the 2015 movie “The Big Short” about the financial crisis, Burry was portrayed by actor Christian Bale.
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