California settles lawsuit with Sacramento suburb over affordable housing project

SACRAMENTO, California. – A Sacramento suburb will be required to build more affordable housing for residents at risk of homelessness under a settlement announced Wednesday with California Gov. Gavin Newsom’s administration that comes more than a year after the state alleged in a lawsuit that Elk Grove illegally denied an affordable housing project.

The agreement means the city must identify a new site for affordable housing in an area with good access to economic, educational and health resources by July 1, 2025. The state will also have more oversight over the city’s approval of affordable housing over the next five years, including receiving regular updates on the status of proposed projects.

Attorney General Rob Bonta, a Democrat, said it shouldn’t have taken Elk Grove so long to agree to build more affordable housing.

“Our housing laws are not suggestions,” Bonta said at a news conference Wednesday. “They must be enforced. And if cities try to circumvent them, if they try to avoid building the housing we need, if they try to illegally deny housing proposals, if they discriminate against communities, as Elk Grove did, the Department of Justice will hold them accountable.”

The California lawsuit alleged that the city violated state law by denying a project to build 66 units in an area known as Old Town for residents who were experiencing homelessness. The denial violated laws meant to expedite housing projects and prohibit local governments from making discriminatory decisions, the state argued.

The legal battle escalated a growing conflict between state and local government over how many housing projects cities should approve and how quickly they should build them. In 2022, Newsom temporarily withheld funding to local governments he said failed to adequately reduce homelessness. His administration also sued the Southern California city of Huntington Beach, accusing it of ignoring state housing laws.

Elk Grove must pay the state $150,000 in attorneys’ fees and other legal fees under the agreement. Local officials said they were pleased with the settlement and that it underscored the city’s efforts to build affordable housing.

“Elk Grove is proud of the role it has played as a leader in the development of affordable housing in the region,” the city said in a statement. “The city is hopeful that in the future the state will work more collaboratively with cities to partner in the development of affordable housing rather than using valuable resources in the pursuit of unnecessary litigation.”

The Elk Grove Planning Commission rejected the Old Town project, called Oak Rose Apartments, in 2022, saying having residences on the first floor violated city standards for that part of town.

Elk Grove settled another lawsuit earlier this year over the project and approved an 81-unit affordable housing complex from the same developer at a different location.

The state needs to build 2.5 million homes by 2030 to meet demand, according to the California Department of Housing and Community Development.

Newsom said the Elk Grove legal battle highlighted California’s “original sin”: its housing crisis.

“There is no issue that affects the state in more ways and on more days than the issue of housing,” the Democrat said.

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Austin is a corps member of The Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on under-the-radar issues. Follow Austin on X: @sophieadanna