California sues city for not approving housing project for homeless people

• California has been closely monitoring enforcement of state housing laws at the local level as state officials work flat out to keep up with housing demand.
• Gov. Gavin Newsom’s administration and California Attorney General Rob Bonta jointly sued the Sacramento suburb of Elk Grove for failing to approve a homeless project.
• Elk Grove, California, argued that the housing complex project for the homeless could not be expedited under a 2017 state housing law.

When developers in the California city of Elk Grove proposed two new housing projects last year, the proposals seemed to have a lot in common: Both would build new homes in a quaint part of town affectionately known as “Old Town” because of its attractive historic buildings.

One project was aimed at people who could afford to buy houses at the market price in a state with some of the most expensive real estate prices in the country. The other project was for the homeless. City officials approved the market rate project. However, the homeless project has stalled as officials in the growing suburb of Sacramento argued that it did not qualify for expedited implementation under a 2017 state housing law.

On Monday, California Attorney General Rob Bonta and Gov. Gavin Newsom’s administration jointly sued Elk Grove, arguing that city officials broke the law by rejecting the project and accusing them of discriminating against low-income families.

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The lawsuit escalates a conflict between state and local governments over how many housing projects cities should approve and how quickly they should build them. California, the nation’s most populous state, needs to build 2.5 million homes by 2030 to keep up with demand, according to the California Department of Housing and Community Development. But the state creates on average only about 125,000 new apartments per year, almost two-thirds less than is needed.

Newsom, a Democrat with potential presidential aspirations, and Bonta — a potential candidate for governor in 2026 — have aggressively overseen local enforcement of the state’s housing laws. Last year, Newsom briefly withheld $1 billion in funding from local governments because he was unhappy with their plans to reduce homelessness. In March, the state sued the city of Huntington Beach, accusing its leaders of ignoring state housing laws that required them to build 13,000 new homes over the next eight years.

Monday’s lawsuit was different in that the dispute is over a single 67-unit apartment complex, signaling how far state officials are willing to go.

“That may seem small, but every time we say no to housing, we make homelessness worse in California,” said Megan Kirkeby, associate director for housing policy development at the California Department of Housing and Community Development.

Elk Grove Mayor Bobbie Singh-Allen said the city did not reject the project for people currently homeless, it merely ruled that it was not eligible to be accelerated under a 2017 California housing law . Karen Hallock, an attorney for the project’s developers, disputes this and says the city flatly rejected the project.

Singh-Allen said the city is “doing its part to support affordable housing,” noting that there are more than 1,100 new affordable housing units there at some stage of development.

“The town of Elk Grove is not a bad actor,” she said.

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The dispute revolves around the Oak Rose Apartments, a development proposed by Excelerate Housing Group, a Long Beach-based affordable housing company. The project would include 66 permanent homes for people affected by homelessness and one for a manager. It would include on-site support services such as psychological counseling, job placement and substance abuse support.

A state law passed in 2017 says developers can build projects without going through the normal local government permitting process if a city is not building enough new housing to meet state-approved targets. Builders would still have to follow some rules, including a city’s housing standards.

The Elk Grove Planning Commission rejected Excelerate’s project last year because it said first-floor apartments violated city standards for the borough. Attorney General Bonta argues that these standards are not objective, noting that the city approved a separate project for the same neighborhood that included standard first floor housing.

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“It is clear that this project was rejected because of the intended occupants,” Bonta said. “The main difference between the two projects is that one creates fewer homes at a higher price, the other creates more homes that are more affordable.”

Singh-Allen said the market pricing project approved by the city went through a different review process that gives the city more discretion in applying its standards.

The state’s 2017 housing law is scheduled to expire in late 2025, though the Democratic-controlled Legislature is debating whether it should be permanent. State Senator Scott Wiener is leading the effort, noting that the law has resulted in about 18,000 new housing units since it was passed. However, the bill faces strong opposition from some unions because it would not require a certain percentage of construction workers to have completed a state-approved apprenticeship program.

“We’re trying to take politics out of housing permits,” Wiener said. “If an apartment is approved that meets all our standards, you get your approval and you don’t become political football. That’s called good government.”