Huntington Beach’s Challenge to Calif. Housing Development Law Rejected Again

The City of Huntington Beach, Calif., really doesn’t want to create a state-approved housing development plan, but it’s quickly running out of other options.

The U.S. Court of Appeals for the Ninth Circuit on Monday denied a request from the city to rehear its federal lawsuit challenging the state’s ability to force it to adopt an official housing plan. Huntington Beach’s current lawsuit has been ongoing since early 2023; the city and Gov. Gavin Newsom announced competing lawsuits on the same day, arguing for and against, respectively, the city’s need to comply. 

A three-judge panel for the Ninth Circuit in late October unanimously rejected the city’s complaint, nearly a year after its initial rejection by a District Court judge in November 2023. Huntington Beach had attempted to goad the appellate court into a rehearing en banc in its most recent appeal, a rare measure wherein the entire circuit would hear the case rather than a three-judge panel. The city’s next option is to petition the U.S. Supreme Court.

The city has also so far lost in state court. San Diego Superior Court Judge Katherine Bacal ruled last May that the city must create a new housing plan, which it also appealed.

“We are pleased that Huntington Beach’s latest attempt to exempt itself from our state’s housing laws has failed,” Rob Bonta, California attorney general, said in a statement. “All along, Gov. Newsom and I have asserted that the City’s federal lawsuit is meritless and a waste of the public’s money. Like every other city in California, Huntington Beach has a legal obligation to build its fair share of housing. We will be closely monitoring what the city decides to do next. Our state lawsuit against Huntington Beach is also on appeal. We remain confident we will prevail there, too.” 

Newsom was decidedly less tactful in his response to the ruling.

“In response to another court loss, do Huntington Beach city leaders need a hug?” Newsom posted to X (formerly Twitter) Monday. “Maybe that will help them do their job in building much-needed housing and stop wasting taxpayer dollars on this frivolous lawsuit.”

Californian cities since 1969 have been required to create housing schemes as part of their individual “general plan,” which acts as a blueprint for how a given city will develop over time. Yet for years, many, typically wealthier, Californian cities were out of compliance with state housing rules but faced limited consequences. 

The fight between city and state intensified when a little-known provision of the state’s housing law, colloquially known as Builder’s Remedy, caught the attention of Southern Californian developers like Leo Pustilnikov. Under the provision, which was enacted in the early 1990s, an affordable housing development could essentially bypass a city’s zoning codes if that city was out of compliance with the state. That realization led to a flurry of project applications in certain cities over the following months, with often outsize ambition — Beverly Hills at one point had over a dozen pending Builder’s Remedy applications, many calling for residential towers well above what its local ordinances typically allow. 

The state has since passed a law reforming Builder’s Remedy, and many of the formerly out-of-compliance cities (like Beverly Hills and Santa Monica) have adopted state-approved plans. Huntington Beach is one of the few holdouts. The city’s then-attorney, Michael Gates, claimed in his federal lawsuit that charter cities like Huntington Beach were not bound by typical state law — a claim the appellate panel denied in its October ruling. 

“No matter how California categorizes charter cities, they remain subordinate political bodies, not sovereign entities,” the judges wrote at the time.

City officials already endorsed petitioning the U.S. Supreme Court, saying after the appellate panel’s October decision that the city’s council wanted to take it to the country’s highest court if necessary. 

Michael Vigliotta, the new city attorney, indicated that Huntington Beach could indeed move forward with another appeal.

“We are confident the recent Ninth Circuit decision merits a closer look and rectification by the Nation’s highest Court,” Vigliotta told Commercial Observer in an emailed statement. “I will be discussing this latest ruling with the City Council regarding filing a petition to the U.S. Supreme Court. 

“A city’s right to sue the state in Federal Court is an issue that presents a split among federal circuit courts across the nation. These are the kinds of cases the Supreme Court will sometimes hear to resolve the split among [circuit courts]. We remain determined to challenge Sacramento’s unconstitutional stronghold on cities.  We will not be deterred or intimidated and will continue to fight for Huntington Beach.”

Nick Trombola can be reached at ntrombola@commercialobserver.com.