Newsom threatens to sue more cities over housing

In signing more affordable housing bills Thursday, Gov. Gavin Newsom boasted of suing cities throughout the state that have resisted his other housing efforts and warned that he would sue any municipality that dared to challenge him.

"Ask the folks in Elk Grove if this accountability unit hasn't been impactful," Newsom said at a bill signing ceremony news conference. "You will soon be able to ask the folks in Huntington Beach if the law I'm about to sign is not impactful. They continue to thumb their nose at the state of California, the people of this great state. They continue to lose decision after decision after decision."

Newsom was referring to the Housing Accountability Unit within the California Department of Housing and Community Development. Created as part of the 2021-22 state budget, it works with the California Department of Justice to ensure local governments comply with state housing laws. The unit will be busy after Newsom announced he will sign 32 more bills on housing and homelessness. But the one with the biggest impact on housing litigation in the state will likely be SB 1037. It will allow the state Justice Department or Department of Housing to fine cities and counties up to $50,000 a month for being out of compliance with housing laws.

Newsom signaled his intention to sign SB 1037 two weeks ago at a news conference announcing a legal settlement with the City of Elk Grove. The suburb south of Sacramento agreed to greenlight a disputed housing development and pay a $150,000 fine.

Huntington Beach, meanwhile, has fought several housing related lawsuits with the state since Newsom became governor. In May, San Diego County Superior Court Judge Katherine Bacal rejecting the city's arguments that the state's housing mandate law did not apply to charter cities.

"The narrative being pushed by the State that it was successful in its lawsuit against the City is inaccurate," said Elk Grove Deputy City Manager Kara Reddig in an email. "The reality is that the City and State arrived at a mutually agreeable settlement that did not impose any significant restrictions or penalties against the City. The City invites anyone to review the settlement, which is on our website at www.elkgrovecity.org/coralblossom. The City remains committed to advancing this important work."

Reddig also touted the $78 million the city has spent on affordable housing projects since 2004 and the recent opening of a new homeless shelter.

Newsom and Attorney General Rob Bonta have repeatedly said that they believe they will continue to succeed in court. The governor called Huntington Beach "Exhibit A" in the "struggle for accountability" on housing. He said Bonta, whom he appointed in 2021, has "put the hammer down" on cities that refuse to comply with state housing laws.

"We're turning up the heat, and Rob Bonta has demonstrably advanced some very aggressive actions that have produced some remarkable results," Newsom said. "7,500 units of housing have been unlocked through the actions the attorney general has taken."

Dozens of local governments opposed SB 1037. In an opposition letter, the League of California Cities said it does not allow "cities to correct an honest mistake or address a genuine difference in interpreting the law."

"Even those jurisdictions acting in good faith could be subject to significant fines and be required to pay the Attorney General for all costs investigating and prosecuting the action, including expert witness fees and attorney's fees," read the letter quoted in a Senate analysis.

But Bonta said the point of the law is to allow him to act quickly. "We believe that when a local jurisdiction commits a violation there needs to be accountability starting at the point of the violation, not much later down the road," Bonta said.

The law requires any civil penalties collected to be deposited in the state's Building Homes and Jobs Trust Fund "for the sole purpose of supporting the development of affordable housing located in the affected jurisdiction," according to the Senate analysis.

Both Bonta and Newsom credited members of the Legislature for passing laws allowing them to pursue cities more aggressively in court. Newsom said current members of the Legislature have accomplished more on housing than their predecessors did "in many decades."

"You've seen this sort of tectonic mind shift away from NIMBYism and towards YIMBYism," Newsom said.

Bonta praised "two of the greatest housing champions I think the California Legislature has ever seen" in Sen. Scott Wiener, D-San Francisco, and Assemblymember Buffy Wicks, D-Oakland. Wiener wrote SB 1037 and several other recent housing laws.

Wicks authored AB 1893, which Newsom also signed. It updates the state's housing element law to make it easier for developers to invoke the so-called "builder's remedy." This allows developers to get nearly automatic approval for some kinds of housing projects in areas that are out of compliance with state housing requirements. At the news conference, Wicks spoke about how the experience of growing up in a trailer made her an advocate for building more housing.

Both laws are likely to be challenged. The League of Cities and other opponents have said that SB 1037 lacks clarity and could expose them to high litigation costs.

Newsom signed several other bills that could force cities to allow more housing. AB 1886 could give courts more say over whether a city is in compliance and allow projects to go through under the builder's remedy even if a city later comes into compliance. SB 1211 will make it harder for cities to block accessory dwelling units with parking requirements or design standards.