For folks in the comments who didn't bother to read the first 5 pages (the summary)

The judge interpreted the HAA as only applying to units that expand housing beyond single family homes.

The proposed project would be a 4000 square foot single family home in a neighborhood of roughly 1500-1600 square foot homes.

Either way I think the law is absurd here, but it's actually having the INTENDED affect.

Rather than building a luxurious single family home, the developer is encouraged to build a multi family home and actually expand the amount of housing available in the area.

This seems like a "win" if your goal is to increase housing supply.