PLEASANTON — The City Council has agreed to kill off a voter-approved limit

on the number of homes that can be built in Pleasanton.

Tuesday night’s 4-0 decision settles a lawsuit filed against the city by Urban Habitat over the city’s 29,000-home cap approved by voters in 1996. Urban Habitat claimed that the limit doesn’t allow the city to meet its obligations to provide affordable housing.

The council will vote Aug. 17 to finalize the agreement, that also requires the city pay $1.9 million in attorney fees to Public Advocates Inc., that represented Urban Habitat. The city also agreed to remove all housing cap references from city documents, including the general plan, by Oct. 19. (editors note:  the city also had $675,000 of their own legal fees to pay.)

The city will also have to work to find places for affordable housing. As part of the March 12 ruling, Alameda County Superior Court Judge Frank Roesch ordered Pleasanton to plan for the construction of 3,277 housing units, including 2,524 affordable homes by 2014. And, he ordered the city to stop issuing nonresidential building permits until it complied with his order.

The city plans to put some of those homes for low and very-low income families on three parcels at the Hacienda Business Park near the BART station, but still has some control over how that is done.

At least 130 units in that area would be restricted for very-low income households, which is about $44,650 for a family of four. Those units would be a mix of bedroom sizes and dispersed throughout the development. Section 8 vouchers would be accepted.

If the city didn’t settle, it could have faced paying attorney fees that could exceed $4 million, according to staff reports. The city also spent $625,000 for its own attorney fees.

Councilman Jerry Thorne, said he is for providing homes for more workers and affordable housing, but wonders how the Tri-Valley can provide resources for those families when the state and the county will not help subsidize them.

While the city is required to plan and zone for the affordable housing, it is under no obligation to build it or subsidize it, said Tom Brown, a private attorney hired by the city.

In a statement released Wednesday, state Attorney General Edmund G. Brown Jr., whose office also joined in the suit, praised the precedent-setting agreement.

“This agreement clears the way for new jobs, less congested freeways and cleaner air,” Brown said. “It requires homes to be built closer to where people work to reduce long commutes and create a more neighborly urban environment.”

Contact Sophia Kazmi at 925-847-2122.