California files lawsuit against the City of Elk Grove over denial of homeless housing project

California Attorney General Rob Bonta, Governor Gavin Newsom, and the California Department of Housing and Community Development files a lawsuit today against the city of Elk Grove over the city’s denial of the Oak Rose housing project in the Old Town area of Elk Grove. The city council cited the Old Town Special Planning Area’s zoning as the reason for denying the project. Just over a month ago, Bonta warned the city that it was in violation of the state’s housing laws.

City of Elk Grove Responds to State Lawsuit Over Oak Rose Housing Project

Elk Grove officials were notified today of a lawsuit filed by the State of California against the City over its July 2022 determination that the Oak Rose Apartments, a 67-unit supportive housing project proposed in Elk Grove’s historic district, was not eligible for streamlined approval.

“The City of Elk Grove is not a bad actor,” said Elk Grove Mayor Bobbie Singh-Allen. “Elk Grove has a strong track record for supporting affordable housing projects and continues to engage in good faith discussions with the Oak Rose Apartments applicant in hopes of reaching a mutually agreeable solution.” In the interest of collaboration, the City has kept the Attorney General’s Office informed of the status of those discussions. The City welcomes and invites further dialogue with the Attorney General’s Office in hopes of reaching a resolution that is beneficial to all impacted parties, particularly the City’s low-income households and persons experiencing homelessness.

In February 2022, the State Department of Housing and Community Development certified Elk Grove’s 2021-2029 Housing Element which identified more than 30 sites within the city that could assist with meeting Elk Grove’s share of the Regional Housing Needs Allocation, or RHNA. The City has been actively encouraging developers to build projects that could fulfill the RHNA at these locations. The site identified by the developer for the Oak Rose Project was not included as part of the RHNA designated sites.

“It is important to remember that the City did not disapprove the Oak Rose Project itself,” said Mayor Singh-Allen. “Rather, the City found that the Project was not eligible for ministerial streamlined approval under Senate Bill 35 because the Project did not comply with all of the City’s objective development standards.” Specifically, the Project did not comply with the City’s restriction of residential units on the ground floor in the City’s Old Town Special Planning Area. The other project referenced by the Attorney General underwent a different, and more traditional review process, under which the City retains greater approval discretion.

More than 1,100 new affordable housing units, including permanent supportive housing units, are currently in some form of development in Elk Grove. In February, the City joined developers for the groundbreaking of Poppy Grove Apartments, a 387-unit affordable housing project. Since January 2021, the City of Elk Grove has committed more than $13.4 million in loans for affordable housing projects. Just last week, the City issued a Request for Proposals for the development of 7.5 acres, over two sites, for additional affordable housing units and will commit $9 million in local funding towards the projects.

“Elk Grove is doing its part to support affordable housing in the region and remains open to working with the state, the developers of the Oak Rose project, and other developers to increase the housing supply and offer a full range of housing options for everyone,” said Mayor Singh-Allen.

The Attorney General’s Office issued the following press release:

SACRAMENTO — California Attorney General Rob Bonta, Governor Gavin Newsom, and the California Department of Housing and Community Development (HCD) today filed a lawsuit against the City of Elk Grove, challenging the city’s denial of a proposed supportive housing project in the city’s Old Town Special Planning Area (OTSPA). The lawsuit filed today alleges the city’s denial of the project violates state laws including Senate Bill 35 (SB 35), the Housing Accountability Act (HAA), and fair housing laws intended to prohibit discriminatory land use practices, including the Nondiscrimination in Land Use Law and the Affirmatively Furthering Fair Housing statute (AFFH). The proposed project, known as the Oak Rose Apartments, would add 66 units of supportive housing for lower-income households at risk of homelessness, in a jurisdiction in dire need of low-income housing opportunities.

“Our state is in a housing crisis and local governments must do their part to allow for affordable housing options for all members of our communities, regardless of their income level,” said Attorney General Rob Bonta. “Everyone deserves to have a place to call home. California has critically important laws designed to combat housing discrimination and increase affordable housing opportunities. Today’s lawsuit against Elk Grove sends a strong message to local governments: if you violate fair housing laws, we will hold you to account.”

“Communities that fail to build their fair share of housing, including those refusing to develop desperately needed affordable housing, will be held to account,” said Governor Gavin Newsom. “Under my Administration, the state has provided unprecedented support, including billions in funding and resources to help guide communities as they work to meet their housing needs. However, when local governments repeatedly fail to uphold their obligations and blatantly look for ways to skirt state law, we will use every tool available, including legal actions to ensure that Californians have access to needed housing.”

“Building more affordable housing is the most effective tool to reduce and prevent homelessness – but the City of Elk Grove is blatantly evading fair housing laws and working against solving our housing and homelessness crisis,” said HCD Director Gustavo Velasquez. “HCD is laser focused on helping all jurisdictions meet their housing goals, but when cities like Elk Grove refuse to do so, we will hold them accountable.”

As a supportive housing project, the Oak Rose Apartments would provide permanent housing for individuals and families who previously experienced homelessness, or are at risk of homelessness, as well as off- or on-site services to assist the residents in maintaining housing, improving their health status, and maximizing their ability to live and work in the community. The Elk Grove City Council improperly denied the project, claiming that it did not meet the city’s zoning standards and was therefore ineligible for SB 35 ministerial review. In today’s lawsuit, the state seeks injunctive relief to require Elk Grove to approve the project and realign with state law.

On July 27, 2022, the Elk Grove City Council denied approval of the Oak Rose Apartments. Following that denial, HCD issued a Notice of Violation, warning the city that the denial of the low-income housing project violated state housing laws, including SB 35. SB 35 requires local governments to provide streamlined, nondiscretionary approval of some projects when they are consistent with objective zoning standards. The Elk Grove City Council sent a response letter on November 10, 2022, arguing that the project did not qualify for approval under SB 35 because the multistory project included residential units on the ground floor, which the city contended violates a zoning requirement that ground floor spaces be reserved for commercial uses, such as space for retail, restaurant, or office space.

On March 16, Attorney General Bonta sent a letter to the mayor of Elk Grove, putting the city on notice that contrary to its claims, this use restriction does not qualify as an “objective standard” under SB 35 or the HAA, because its application depends on the exercise of discretion. The city itself acknowledged in its letter that its OTSPA standards — including the ground floor use restriction — involve discretion, noting that the city has a mechanism to deviate from development standards under the OTSPA for projects that meet the goals of the OTSPA, including whether a project is compatible with “community character.”

In today’s lawsuit, the state argues that the city’s denial of the project was based on discretionary exercise and not an “objective standard,” in violation of HAA and SB 35. The lawsuit also alleges that Elk Grove’s unequal application of the cited land use restrictions, and subsequent denial of the Oak Rose Apartments constituted a discriminatory land use practice in violation of the Nondiscrimination in Land Use Law and AFFH. These fair housing laws prohibit local governments from making land use decisions that are based on discriminatory intent or that have a discriminatory effect. The lawsuit contends that there is evidence of both in Elk Grove’s decision to deny the Oak Rose Apartments:

First, the city allowed a market-rate housing development located within the OTSPA, the Elk Grove Railroad Courtyards Project, to move forward despite the presence of ground floor residential units. The city found that Railroad Courtyards was consistent with planning standards, and completely avoided any discussion of the same use restrictions that it cited in its denial of the Oak Rose Apartments, evidencing discriminatory intent.
Second, with the Oak Rose Apartments, the city adopted a strict interpretation of the use restriction, claiming it is an outright prohibition of ground floor residential units, which disproportionately affects the low-income persons who are deprived of that housing.

The city thus adopted two conflicting interpretations of the OTSPA use restriction for two similarly situated projects serving different populations. It applied a more permissive interpretation to approve a lower density market-rate project, and it applied a stricter interpretation to disapprove the Oak Rose Apartments, a higher density lower-income supportive housing project. In fact, city staff had found that the Oak Rose Apartment project was consistent with the city’s land use policies, and therefore, there was no compelling purpose to override the discriminatory effect of the city’s denial. The residents who would benefit from the housing would be needlessly forced to look elsewhere for similar housing opportunities. Today’s lawsuit seeks injunctive relief to require the city to approve the project in accordance with state law.

State leaders stand united in their commitment to enforcing state housing laws and increasing access to affordable housing in California. In 2021, Attorney General Bonta announced the creation of a Housing Strike Force within the California Department of Justice aimed at advancing housing access across the state. The same year, Governor Newsom launched a Housing Accountability Unit to increase stringent enforcement and oversight at the local level to create more housing, faster across California. Members of the public are encouraged to visit the California Department of Justice’s Housing Portal and HCD’s website for more resources and information aimed at supporting access to housing.

A copy of the lawsuit is available here.