The State Is Serious About Forcing Housing Production in Small Cities

What We Learned This Year is a reporting series about some of the biggest stories of 2023. Read more here.

It’s no secret that California is facing a severe housing shortage.  

For years, many cities, especially smaller ones, have gone to great lengths to avoid making way for the housing that’s required by the state. This year, lawmakers and the state attorney general amped up their enforcement of the housing laws cities are required to follow. 

During our Politifest live podcast in October, California Attorney General Rob Bonta spoke about his office’s efforts to make sure cities are complying, saying, “the most brazen violators are the priority.”

Enter Coronado, Del Mar, Encinitas and even a few cities outside of San Diego County that have experienced firsthand what that increased enforcement looks like. 

The Builder’s Remedy Gets Big Endorsements 

We’re starting it off with a recent development in La Cañada Flintridge, a wealthy community with 20,000 residents in Los Angeles County. An announcement about La Cañada by state officials could end up impacting a proposed housing project in Del Mar. 

On Dec. 12, Gov. Gavin Newsom, Bonta and the state housing department (HCD) announced they would be taking legal action against La Cañada after city officials denied an 80-unit, mixed-use, mixed-income housing project. 

Why? Because of a controversial state housing law called the builder’s remedy.  

The builder’s remedy says if a city doesn’t have a compliant housing element, the city can’t use its zoning code or general plan to deny an affordable housing project. A housing element is a state-required plan outlining how a city can accommodate enough new housing to meet its population’s needs.    

“The City of La Cañada Flintridge is legally required to process this affordable housing project under California’s builder’s remedy because they did not adopt a compliant housing element on time,” Bonta said in a press release.  

The builder’s remedy is still virtually untested in California, meaning there have only been a few developers who have tried to use it, and the verdict is still out on whether those developers will come out on top. 

Newsom, Bonta and the HCD are not only validating the builder’s remedy, but are taking legal action against a city based on it. And this isn’t the first time. 

Earlier this year, Newsom and Bonta announced similar actions against Huntington Beach after city leaders attempted to ban builder’s remedy projects. 

These actions could set a precedent for other cities in the state who are pushing back against the law, like Del Mar, for example. 

Del Mar, another small wealthy town, similarly did not have an approved housing element for more than two years. The city’s housing plan was rejected by the state housing department three times before finally getting approved in May. 

But while the city was out of compliance, one developer seized an opportunity to use the builder’s remedy to propose a housing project. That housing project is called Seaside Ridge. 

In this case, the builder’s remedy goes hand in hand with a law called the Housing Crisis Act, which says cities can only rely on rules that were in place at the time the developer’s preliminary application was submitted when they’re reviewing a development project.   

Del Mar officials aren’t on board with the project and have repeatedly said they don’t agree with the developer’s “legal theories.”   

The developer and the city have been going back and forth about this project for months, and it may not be resolved until the state or the courts get involved. 

Coronado Falls in Line  

Until recently, this wealthy town may have been one of California’s biggest violators of affordable housing law. 

For more than two years, Coronado was out of compliance with the state’s housing laws because they didn’t have an approved housing element.  

The state is requiring Coronado to make space for 912 new homes over the next eight years, 70 percent of which should be affordable to low- and middle-income residents. That’s compared to what was expected of Coronado in the past — in 2010, the city was asked to plan for only 50 new homes. 

City leaders were openly resistant to the state’s efforts. They publicly acknowledged their defiance and thought they had a few years before the state would crack down on them. 

And they did. It took more than two years for state officials to do anything about it. Finally, in October, Bonta said during the podcast that his office was very close to getting Coronado into compliance. 

“It’s been on our radar, we’ve been engaged, we haven’t had to sue and if this gets approved, we won’t have had to sue because we will get the outcome that is required by our engagement and our threats to sue and subsequent negotiation to get them in compliance, so they will be in compliance in very short order, if they vote to approve the term sheet,” Bonta said. 

A couple weeks later, Coronado passed a housing element that would later get approved by state housing officials. 

Once a ‘Brazen Violator’

Encinitas, once considered a “brazen violator,” has been experiencing increased enforcement for the past couple of years. 

Over the years, Encinitas has caught the attention of state officials several times. A few years ago, Newsom and Bonta warned Encinitas about its failure to complete its housing element after it repeatedly failed to do so. 

In 2020, Encinitas tried to exempt itself from the state density bonus law, and has faced multiple lawsuits for trying to get around the law by creating policies that would make it harder for developers to consider it as an option.    

Density bonus laws provide incentives for private developers to create affordable housing. Developers can increase the size of their developments in exchange for including a certain number of affordable housing units. 

In 2022, the city received a warning from Bonta about a housing project the City Council had rejected. Encinitas had violated state law, according to the warning letter sent by Bonta. The City Council revisited the project soon after Bonta’s warning and approved it.  

The city has, for the most part, fallen in line after that firm warning from Bonta. But earlier this year, city officials revealed that Encinitas is in danger of triggering the state’s No Net Loss law, which says the assumptions cities make in their Housing Elements must reflect what gets built.  

That’s because Encinitas wasn’t keeping up with the affordable housing units it promised in its housing element.  

When crafting its housing element, the city identified 15 sites, or parcels of land, available and suitable for residential development. Those sites would offer affordable housing.    

But when the city first identified the 15 sites for low-income housing it assumed 100 percent affordability on all of them, meaning it predicted that all 15 sites would be made up entirely of low-income units.    

None of the 15 sites have been 100 percent affordable so far.   

Inclusionary housing requires developers to set aside a certain number of units for low-income residents. Cities implement these policies to ensure that affordable housing units are produced along with market-rate units.   

In Encinitas, the inclusionary housing requirement is 15 percent for very low-income and 20 percent for low-income units. Because developers aren’t obligated to create more affordable housing than what’s required by this policy, all the sites approved so far have fallen short of 100 percent affordability by a lot.   

The city had to then identify more sites to reach their state-mandated affordable housing goals. Encinitas Mayor Tony Kranz said in October that the city plans to move forward with a new development that will be 100 percent affordable and will allow it to reach its goal.  

If that plan doesn’t work out, the city can likely expect state officials to step in. In 2021, after years of defiance from Encinitas, the state housing department told city officials in a letter it would be keeping a close eye on the city.