A high-profile lawsuit targeting Huntington Beach over housing could end in a settlement

SACRAMENTO —  The Newsom administration is nearing a deal with Huntington Beach that would end a contentious lawsuit over the city’s alleged failure to plan for more affordable housing.

In a letter sent to the Orange County city on Friday, state housing officials said a proposal to increase low-income housing development in the city would meet the terms of a state law that requires all communities to zone for enough affordable housing to meet projected population growth.

If the Huntington Beach City Council approves the proposal by March, the letter said, the city would then be in compliance with the state law.

“We want to compliment the team that Huntington Beach put together that worked with [the state housing department] over the holidays,” Gov. Gavin Newsom said during a news conference Friday to unveil his state budget proposal.

Last January, Newsom spearheaded a lawsuit against Huntington Beach, arguing that the city backtracked on its plans to zone for affordable housing along the city’s primary commercial corridors and never took action to replace the planned residential density elsewhere in the city, as required by law. The case, filed in the governor’s first month in office, was widely interpreted to be a warning shot against local governments that have resisted housing development — something Newsom has argued is a key cause of the state’s shortage of homes.

Under the deal, which mainly applies to the commercial corridors, the city would have to allow for more projects that set aside at least 20% of their housing for low-income residents. The terms were negotiated by state and city housing officials.

Huntington Beach’s planning commission is scheduled to consider the proposal on Tuesday. Should the city ultimately agree, the central issue in the state’s lawsuit will be resolved, said Russ Heimerich, a spokesman with the California Business, Consumer Services and Housing Agency.

“The lawsuit against Huntington Beach is about them not being in compliance,” Heimerich said. “If they come into compliance, the lawsuit would likely become moot.”

Huntington Beach Mayor Lyn Semeta could not be reached for comment Friday. In a statement, City Manager Oliver Chi said city leaders were motivated to act because they wanted to tap state homelessness prevention dollars available only to local governments that are in compliance with the broader state housing law.

Newsom said the proposed deal showed how pressure from his administration could force cities to plan for housing. He held meetings last winter with dozens of cities that were out of compliance with the housing supply law. Since then, 17 local governments — most of them small or rural — have reached agreements with the state on their housing plans without litigation.

Still, Newsom said the state needs to do more, including lowering fees and reducing regulations, to ensure that developers are able to build new housing on land that’s planned for it.

“It’s the most vexing struggle that we have,” he said.

Should the city of Huntington Beach pass the proposed development plan, it would not end all housing litigation with the state. The city has challenged four recently passed state housing laws, arguing that they unconstitutionally impinge on the city’s authority to regulate land-use. That case remains pending in court.