The decision to grant the exception—and the way it is accorded—could potentially affect how the new rules affect other development projects waiting in the wings.

The case before the council concerns developer Joe McCarthy's 58-acre property in the foothills of Los Gatos. McCarthy is asking to be excluded from the new hillside requirements based on the condition of the original site of his property and the risks he assumed in revitalizing the area.

McCarthy bought the site in 1998 when it was the home to Guadalupe College, a former nunnery. At the time, the college was considered both a blight on the landscape and a nuisance to local residents. After the Sisters of Charity of the Blessed Virgin Mary closed the college in 1968 due to a lack of students, the property became a magnet for varying development schemes. Residents fought grandiose plots to revive the property for the next 30 years—from turning the building into a state minimum-security prison for women to turning it into a university for Taiwanese girls—and the site remained unoccupied.

McCarthy's plans for the property call for dividing the lot into six individual plots for subsequent housing developments, as well as dedicating about 20 of the 58 acres of land to open space.

The new hillside requirements, however, would restrict the size of the homes built on the property to 6,000 square feet and limit the visibility of the homes to 25 percent.

Addressing the council Jan. 5, McCarthy's attorney talked about the impact this restriction would have on regaining the expenses of the project to date. The removal of the college alone cost $2.5 million.

"To recoup those costs, you are going to be dealing with the people who are going to spend a good deal of money on those homes," said Thomas O'Donnell, an attorney with Ferrari Ottoboni in San Jose.

"When people spend that much money on their homes, 6,000-square-foot limitations will be very difficult for this project."

More than the costs of the project, McCarthy talked about the service he provided to the community by undertaking the removal of the college.

"If any project has done anything to help the hillside ordinance and the visual condition of the valley, I think this one has," he said.

O'Donnell made it clear that that his client was only asking for flexibility with regard to the size limitations, based on the length and scope of the project.

"We simply want them to remember that he inherited a property that was substantially graded and needed substantial improvement," said O'Donnell.

Most council members appeared to support McCarthy's request for an exception based on the service he provided the community by bulldozing the former college, but wanted to be cautious on how to grant the request.

"I do want to recognize that we have an unusual situation here," said Mayor Steve Glickman. "I would hesitate to do anything that would give leeway to any future developer."

Councilwoman Sandy Decker was the only council member who opposed such a move, arguing that the guidelines provided flexibility with regard to design options.

"Mr. McCarthy has all kinds of options," she said. "He can reorient the house, he can pull it back. This particular set of guidelines gives him many, many options."

"By setting up a grandfather clause or something that sets Mr. McCarthy aside, we are simply negating what we put together," she said.

The council tabled its discussion on both the revised hillside requirements and McCarthy's request until its next meeting.

The next town council meeting will take place Jan. 20 at 7 p.m. in council chambers, 110 E. Main St.