Consent Item 4p
STAFF REPORT
City Council Consent Item
DATE: June 16, 2025
TO: Honorable Mayor and Council Members
FROM: Shari Meads, Community Development Director
THROUGH: Amy Nilsen, City Manager
SUBJECT: Approve a Response to HCD Letter of Inquiry and Allocate a Senior Planner Position and Supplemental Budget Request to the Fiscal Year 2025-26 Budget
STAFF RECOMMENDATION:
Approve a response to HCD letter of inquiry and allocate a Senior Planner position and supplemental budget request to the Fiscal Year (FY) 2025-26 budget.
EXECUTIVE SUMMARY:
Like all other California jurisdictions, the City of Fortuna must prepare and implement a Housing Element, which includes policies and programs to address existing and future housing needs for all income levels, including various household types and special needs populations. The California Department of Housing and Community Development (HCD) must certify a jurisdiction’s housing element to avoid significant penalties. Fortuna’s HCD-certified Housing Element includes numerous goals, policies, and programs that commit the City to specific actions and achieve certain milestones by specified timelines.
While the City has made progress in implementing the Housing Element, it is still delinquent on many measures, some of which date back over 10 years (see Attachment 1). If a City is found to be noncompliant, various consequences may apply.
First, noncompliance results in ineligibility or delay in receiving state funds that require a compliant housing element as a prerequisite, including, but not limited to, the following:
• Permanent Local Housing Allocation Program
• Local Housing Trust Fund Program
• Infill Infrastructure Grant Program
• SB 1 Caltrans Sustainable Communities Grants
• Affordable Housing and Sustainable Communities Program Second, jurisdictions that do not meet their housing element requirements may face financial and legal consequences. HCD might notify the California Office of the Attorney General, which could file a lawsuit for violations of State Housing Element Law. For instance, Government Code section Consent Item 4p
65585, subdivision (l)(1), sets a minimum fine of $10,000 per month, up to $100,000 per month.
Additionally, state law allows for extra court-imposed penalties for ongoing noncompliance, potentially multiplying those penalties by a factor of six. Other possible consequences may include the loss of local land use authority to a court-appointed agent.
The City of Fortuna has already been sued for Housing Element non-compliance, settling for approximately $52,500 in 2018.
In addition, under the Housing Accountability Act (Gov. Code, § 65589.5, subd. (d)), jurisdictions without a substantially compliant housing element cannot rely on inconsistency with zoning and general plan standards as a basis for denial of a housing project for very low-, low-, or moderateincome households (also known as the “Builder’s Remedy”).
HCD sent a Letter of Inquiry to the City Manager on May 23, 2025, inquiring about the status of five Housing Element Programs (Attachment 2). The City has not intentionally been remiss in Housing Element implementation; it has been due to limited staffing. The Community Development Department is consistently busy with land use entitlements, building plan review, and other significant long-range planning projects, and currently, only the Director can work on these tasks.
As discussed in the City’s response to the HCD Letter of Inquiry (Attachment 3), Council is requested to allocate a Senior Planner position to ensure the City can continue providing essential current planning services such as processing applications for all discretionary land use entitlements, administering, interpreting, and enforcing land use, zoning, and site development standards, reviewing residential and commercial building permits, conducting annual reporting for the State Department of Finance and Housing and Community Development Department, administering the City’s OpenGov online permitting software system, and providing customer service at the public counter. This will allow the Director to focus on necessary long-range planning activities, including Housing Element implementation, Housing Element updates, Regional Climate Action Plan adoption and implementation, Local Hazard Mitigation adoption and implementation, which includes a required Safety Element update, comprehensive General Plan updates, Zoning Code updates, and more.
FINANCIAL IMPACT:
For FY 2025-26, General Fund reserves of $110,000 will be required to fund the Senior Planner position. As part of the FY 2026-27 budget process, staff anticipate incorporating the position cost into the budget without utilizing reserves, most likely with the reduction of projects currently being funded by Measure E, such as storm drain repairs and street maintenance projects.
RECOMMENDED COUNCIL ACTION:
Approve a Response to HCD Letter of Inquiry and Allocate a Senior Planner Position and Supplemental Budget Request to the FY 2025-26 Budget. Consent agenda vote.
Consent Item 4p
ATTACHMENTS:
Attachment 1: Housing Element Programs and Statuses
Attachment 2: HCD Letter of Inquiry dated May 23, 2025
Attachment 3: City Response to HCD Letter of Inquiry
Attachment 4: Supplemental Budget Request