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BACKGROUND In November 2006, Urban Habitat filed a lawsuit against the City claiming that various City policies and ordinances prevent or hinder the development of affordable housing in Pleasanton during what is known under the State Housing Element Law (Government Code section 65583 et seq.) as the "Third Planning Period" ending in 2009. The Petitioners' complaint, which was amended in 2009 to assert similar claims arising in connection with the City's housing requirements for the Fourth Planning Period, and which the State Attorney General then joined, alleged (among other claims): • That the City's Housing Cap violates state law in a number of respects, including that the Cap prevented the City from accommodating its regional "fair share" housing needs assessment numbers ( "RHNA "), and sought to have the Cap declared invalid. • That the City failed to carry out mandatory duties under Program 19.1 of the 2003 Housing Element, and under the so- called Least Cost Zoning Law (Government Code section 65913.1 et seq.), namely, that the City failed to zone sufficient property to accommodate its regional affordable housing obligations. • That the City failed to carry out mandatory duties under another General Plan program by failing to amend its Growth Management Ordinance to override the annual housing allocation in order to meet regional housing needs. In addition, the Attorney General filed a separate lawsuit in 2009 challenging the City's 2009 General Plan update. That lawsuit asserted claims that the General Plan update Environmental Impact Report (EIR) was inadequate under the California Environmental Quality Act (CEQA), and that the update itself violated State law in several respects. The Attomey General and the City agreed to suspend litigation on the General Plan lawsuit pending the outcome of the Urban Habitat litigation. On March 12, 2010, the Court issued a decision in the Urban Habitat matter which may be distilled as follows: • The Cap conflicts with State law RHNA requirements. • The City cured any defects in its Growth Management Ordinance by its recent (October 2009) amendment allowing the Council to override the ordinance to satisfy RHNA requirements. • The City failed to carry out a mandatory duty, under Program 19.1 of the 2003 Housing Element and under the Least Cost Zoning Law, to rezone sufficient properties to high density residential (e.g., 30 units/acre) in order to accommodate the remaining housing units required for the Third Planning Period. Although in October 2009, the City Council rezoned properties in the Hacienda Business Park to meet this obligation, the Court agreed with Urban Habitat that this rezoning was "illusory," and did not satisfy Program 19.1 or State law because it did not actually allow development to occur until after completion of the Hacienda PUD amendment process that is anticipated to last at least one year. Page 2 of 7