Attorney General Bonta, Newsom Administration Announce Settlement with City of Elk Grove, Resolving Unlawful Denial of Supportive Housing Project

SACRAMENTO - California Attorney General Rob Bonta, California Governor Gavin Newsom, California Department of Housing and Community Development (HCD) Director Gustavo Velasquez, and California Business, Consumer Services, and Housing Agency (BCSH) Secretary Tomiquia Moss today announced a settlement with the City of Elk Grove, resolving the lawsuit that the state filed on May 1, 2023 against Elk Grove over its unlawful denial of a proposed 66-unit supportive housing project for lower-income households at risk of homelessness (plus one manager's unit). Initially proposed as studio apartments in Elk Grove's historic district by developer Excelerate Housing Group, the supportive housing project was ultimately relocated to city-owned property under a separate settlement reached by Elk Grove and Excelerate Housing Group on February 22, 2024. Under that separate settlement, the supportive housing project will now provide 80 one-bedroom apartments for lower-income households at risk of homelessness (plus one manager's unit). Supportive housing refers to affordable housing that is paired with intensive services meant to promote housing stability, including medical and mental health care. As part of today's settlement with the state, Elk Grove agrees to be subject to reporting requirements to monitor its future compliance with state housing law, identify an additional site for low-income housing development, and pay the State of California $150,000 in attorneys' fees and other costs.

"This settlement reflects what I've said all along: California's housing laws are not optional. Local governments that violate our laws to deny affordable housing opportunities to Californians will be held accountable," said Attorney General Rob Bonta. "While I am pleased that this is now behind us, and that Elk Grove ultimately approved even more homes for those most in need, the city's refusal to do the right thing over and over again cannot be swept under the rug. These are not ordinary times. Millions of Californians are struggling to keep a roof over their heads or lack housing altogether. Every local government therefore has both a legal and moral responsibility to help us meet the moment. If other cities believe they are exempt from that task, Governor Newsom, HCD Director Velasquez, BCSH Secretary Moss, and I will continue reminding those cities that they are in the wrong."

"We can't solve California's homelessness crisis without creating new housing and supportive services," said Governor Gavin Newsom. "Elk Grove is not immune to this challenge, and the city's decision to block these efforts - wasting valuable time and resources - is especially shameful. We expect Elk Grove to follow the law - continued refusal will not be tolerated."

"This is a victory in the state's efforts to expand the availability of much needed supportive housing, consistent with California's strong legacy upholding fair housing rights for people with disabilities and for those experiencing or at risk of homelessness," said HCD Director Gustavo Velasquez. "We are resolute to see that every community in our state affirmatively furthers fair housing and expands integrated communities of opportunities. Our team will work with the City of Elk Grove to ensure this settlement is the first step in a lasting commitment to housing residents in need."

"California needs a broad spectrum of housing solutions to address decades of inaction and underinvestment. This agreement reaffirms the importance of working together - at all levels of government and community - to provide affordable and dignified housing options that Californians deserve," said BCSH Secretary Tomiquia Moss. "I am proud of HCD's Housing Accountability Unit's commitment to working in partnership with local jurisdictions to achieve results that impact the lives of so many Californians."

The terms of today's settlement are as follows:

• Reporting Requirements:
• • For a period of five years, Elk Grove must provide HCD with a copy of any preliminary application or full project application for a housing development that includes affordable or supportive housing within 30 days of receipt of the application. Elk Grove must also submit monthly reports to HCD with the status of proposed housing projects that include affordable or supportive housing. Further, Elk Grove agrees to meet with HCD to discuss the monthly reports.
  • For a period of five years, any time that Elk Grove disapproves an application for housing development that would include affordable or supportive housing, Elk Grove must make factual findings, with analysis, that the disapproval is consistent with the city's obligation to affirmatively further fair housing, or put differently, combat historic patterns of segregation and foster more inclusive communities.
• Additional Housing Site: No later than July 1, 2025, Elk Grove must identify a new site for affordable housing in a highest resource area within the city that has equivalent development capacity to the original location. This new site must not currently be identified in Elk Grove's housing element for low-income housing development, nor can it be currently zoned to accommodate housing for lower-income households. Highest resource areas provide greater opportunities for children to thrive because they are neighborhoods with the most positive economic, educational, and health outcomes in the region. The state's Opportunity Map shows the highest resource areas and can be found here.
• Settlement Payment: Within 30 days, Elk Grove must provide payment of $150,000 to the California Department of Justice. The payment serves as a reimbursement for the attorneys' fees, expert fees, and costs incurred by the California Department of Justice as a result of the 2023 lawsuit.

The 80-unit supportive housing project for lower-income households at risk of homelessness is known as the Coral Blossom Apartments. The state's 2023 lawsuit alleged that the City of Elk Grove's denial of the 66-unit supportive housing project - known as the Oak Rose Apartments - violated numerous state laws, including Senate Bill 35 (SB 35) (Wiener, 2017), the Housing Accountability Act (HAA), the Nondiscrimination in Land Use Law, and the Affirmatively Furthering Fair Housing statute (AFFH). SB 35 requires local governments to provide streamlined, nondiscretionary approval of some projects when they are consistent with objective zoning standards. The HAA also prohibits local governments from enforcing zoning standards that are not objective. The Nondiscrimination in Land Use Law and AFFH prohibit local governments from making land use decisions that are based on discriminatory intent or that have a discriminatory effect. Over the public recommendation of city staff, which referenced the state's lawsuit, Elk Grove on September 27, 2023 decided to postpone the vote on the Oak Rose Apartments. Attorney General Bonta issued a statement the following day, September 28, 2023, criticizing the postponement.

Prior to the filing of the lawsuit, HCD issued a Notice of Violation on October 12, 2022, warning the city that its denial of the Oak Rose Apartments violated state law, and Attorney General Bonta sent a letter on March 16, 2023 urging the city to reconsider its unlawful denial of the Oak Rose Apartments or face the legal consequences.

A copy of the settlement agreement can be found here.

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