ELK GROVE, CA (MPG) - The city of Elk Grove has reached a settlement in a state lawsuit stemming from the city’s rejection of the proposed Oak Rose Apartments.

As part of the settlement, the city has agreed to meet certain reporting requirements, pay the state’s legal costs and find a location for new affordable housing. The agreement brings a close to the remaining lawsuit related to the project, more than a year after it was filed by California Attorney General Rob Bonta, Gov. Gavin Newsom and the state Department of Housing and Community Development.

The dispute between city and state began in July 2022, when Elk Grove City Council voted against approving Oak Rose Apartments, which would have brought 66 affordable housing units to Old Town Elk Grove, along with supportive services for residents.

The state and the developer, Excelerate Housing Group, responded by filing separate lawsuits against the city of Elk Grove. They accused the city of applying its building code inconsistently. City Council cited Oak Rose’s inclusion of ground-floor residential units in their rejection but the lawsuits pointed to an earlier Old Town development that got approval despite also having ground-floor residential.

Relatedly, under California Senate Bill (SB) 35, affordable housing projects must be given an expedited review process if they meet “objective” zoning and design standards laid out ahead of time by a city.

Excelerate’s lawsuit settled earlier this year.

In a statement on Sept. 4, Bonta said exceptions must not be made in state housing laws.

“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,” Bonta said. “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.”

The attorney general continued that, with the state’s ongoing homelessness crisis, local governments have “a legal and moral responsibility” to work with the state to provide housing.

In its own statement, the city of Elk Grove emphasized its investments in affordable housing.

“Today’s settlement announcement underscores Elk Grove’s continued commitment to the development of all forms of affordable housing and its focus on putting its resources towards its housing goals. Since 2004, Elk Grove has provided $78 million in funding for affordable housing projects in Elk Grove, including transitional housing and permanent supportive housing,” the city said.

It called for the state to collaborate more with local governments, saying that “Elk Grove is proud of the role it has played as a leader in the development of affordable housing in the region. The City is hopeful that in the future the State will work more collaboratively with cities to partner in the development of affordable housing rather than use precious resources in the pursuit of unnecessary litigation.”

Newsom criticized the city’s rejection of Oak Rose.

“We can’t solve California’s homelessness crisis without creating new housing and supportive services,” Newsom said. “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.”

In addition to paying $150,000 to cover the state’s legal expenses, for a five-year period the city has agreed to provide the Department of Housing and Community Development with a copy of any application to build affordable housing, as well as submit monthly reports on the progress of proposed affordable housing projects. For that same period, if the city rejects a project that includes affordable housing, it will have to explain how the decision is consistent with its “obligation to …combat historic patterns of segregation and foster more inclusive communities.”

Elk Grove must also identify a new site for low-income housing with equivalent development capacity to the original location. The site will be in an area of the city with the highest economic, educational and health outcomes.

This new location is separate from an affordable development provided for in the settlement with Excelerate. Coral Blossom Apartments, planned for a parcel on Elk Grove-Florin Road, south of Calvine Road, will comprise 66 units for people at risk of homelessness.

The Elk Grove Planning Commission recently allowed Coral Blossom to proceed over objections from nearby residents and business owners, citing SB 35 and the state’s litigation.