Dan J. Harkey

Master Educator | Business & Finance Consultant | Mentor

When the City of San Diego (or any other municipality) neglects to comply with State Housing Laws such as SB-4 and SB-1037, it faces severe legal consequences.

by Dan J. Harkey

Share This Article

1.  What occurs when a municipality refuses to comply with state housing mandates?

California Law gives the state strong enforcement powers over local governments that fail to follow housing mandates.  Under SB-1037 (effective 1 January 2025), the Attorney General and the Department of Housing and Community Development (HCD) can sue cities that:

  • Fail to adopt a compliant Housing Element.
  • Deny or delay housing projects that qualify for ministerial Approval under state Law (e.g., SB-4, SB-489, Housing Accountability Act).

Consequences include:

  • Civil penalties: $10,000 to $50,000 per month per violation, starting from the violation date until corrected, reinforcing enforcement measures.
  • Attorney’s fees and costs: If the state prevails, the City pays all investigation and litigation costs.
  • Fund interception: Courts can order the State Controller to intercept local funds to pay penalties.
  • Mandatory compliance orders: Courts can require cities to revise housing elements and zoning ordinances under strict timelines.
  • Penalties are deposited into the Building Homes and Jobs Trust Fund for affordable housing in the affected jurisdiction.

2. What happens if San Diego violates SB-4, SB-1037, SB-489, AB-1893, AB-712, SB-908?

  • SB-4 (Affordable Housing on Faith Lands Act): Requires cities to allow faith-based institutions and nonprofit colleges to build affordable housing on their land by right, overriding local zoning restrictions.  Denial of such projects violates state Law and triggers enforcement under SB-1037.
  • SB-489 (Permit Streamlining Act updates): Mandates timely permit processing and transparency.  Failure to comply can lead to litigation and penalties.
  • AB-712: Strengthens enforcement by allowing applicants to recover attorney fees and costs when suing for violations of housing reform laws.
  • SB-908 & AB-1893: These bills generally expand housing accountability and streamline approvals; violations expose cities to similar enforcement actions and penalties.

 In short, San Diego could face lawsuits, steep monthly fines, and loss of state funds if it obstructs these mandates.

3.  Remedies for a church or nonprofit property owner denied an application

Under SB 4, religious institutions and nonprofit colleges have a statutory right to build affordable housing by right if:

  • The institution owned the land before 1 January 2024.
  • The project meets objective building and safety standards.
  • 100% of units are affordable (with limited exceptions for staff housing).
  • Prevailing wage and other labor standards are met.

If a city denies such an application:

  • The applicant can file a Housing Accountability Act lawsuit.
  • Courts can order ministerial Approval of the project.
  • Applicants may recover attorney’s fees and costs under AB 712.
  • The Attorney General or HCD may intervene and seek penalties against the City.
  • Applicants retain vested rights under the Housing Crisis Act once a preliminary application is filed.ca+3

✅ Next Steps for Churches/Nonprofits:

  • Confirm the project meets SB-4 eligibility criteria.
  • Document all communications with the City.
  • Consider filing a Housing Accountability Act petition and notifying HCD and the Attorney General’s Housing Strike Force.

SB 4—the Affordable Housing on Faith Lands Act—overrides local zoning laws in several key ways:

1.  Eliminates Local Zoning Barriers

Traditionally, many faith-based institutions and nonprofit colleges own land zoned for uses that prohibit multifamily housing.

Under SB 4:

  • These institutions can build affordable multifamily housing by right, even if local zoning codes ban such development.
  • Cities cannot require rezoning or discretionary approvals for a qualifying project.

2.  Guarantees Ministerial Approval

SB-4 mandates ministerial (non-discretionary) Approval for eligible projects.

This means:

  • No conditional use permits.
  • No subjective design review.
  • No CEQA-based delays for qualifying projects.  Local governments must approve projects that meet objective building standards and environmental regulations.

3.  Preempts Certain Local Requirements

  • Parking mandates: SB-4 prohibits cities from imposing parking requirements on projects near transit corridors or car-share locations.
  • Density and height limits: These must align with the state housing element Law, not local restrictive zoning.
  • Appeals and lawsuits: SB-4 removes opportunities for local opposition to block projects through appeals or litigation.

4.  Conditions for Override

To qualify for SB-4’s protections:

  • A religious institution or nonprofit college must own land as of 1 January 2024.
  • 100% of units must be affordable (with limited exceptions for staff housing).
  • Projects must comply with state building and safety standards and labor provisions (e.g., prevailing wage).

Bottom line: SB-4 creates a statewide entitlement for faith-based and nonprofit colleges to use their land for affordable housing, effectively nullifying local zoning restrictions that would otherwise block such development.

SB-4 Process Flowchart

Start → Check Eligibility

  • Is the property owned by a faith-based institution or nonprofit college as of 1 January 2024?
  • Is the project 100% affordable housing (with limited staff housing exceptions)?

Yes → Submit Preliminary Application.

  • Includes site details, affordability commitment, and compliance with SB-4 requirements.

Ministerial Review

  • City checks only objective building and safety standards 
  • No discretionary review, rezoning, or CEQA delays.

Labor Compliance

  • Confirm prevailing wage and skilled workforce requirements.

Override Local Zoning

  • SB-4 preempts local zoning restrictions (e.g., use, density, parking mandates).
  • No conditional use permits or subjective design review.

Final Approval

  • The project is approved if all objective standards are met.

SB-4 Process Flowchart with decision points included:

  • Check Eligibility → Decision: Is the property owned by a faith-based institution or nonprofit college as of 1 January 2024?
    • Yes → Submit Preliminary Application → Ministerial Review → Labor Compliance → Override Local Zoning → Final Approval → End.
    • No → Process stops (project not eligible under SB-4)

SB 4 Process Flowchart (with decision points)

Start → Check Eligibility

  • Decision 1: Is the property owned by a faith-based institution or a nonprofit college as of 1 January 2024?
    • Yes → Next step
    • No → Stop (Not eligible)

Decision 2: Does the project meet the affordability requirement?

  • 100% of units are affordable (with limited staff housing exceptions)
    • Yes → Submit Preliminary Application
    • No → Stop (Not eligible)

Submit Preliminary Application → Ministerial Review.

  • City checks only objective building and safety standards.

Decision 3: Does the project comply with objective standards?

  • Yes → Labor Compliance
  • No → Revise and resubmit

Labor Compliance

  • Confirm prevailing wage and skilled workforce requirements.

Override Local Zoning

  • SB 4 preempts local zoning restrictions (use, density, parking).

SB-4 Process Flowchart with timelines and decision points:

  • Eligibility Check → Immediate
  • Affordability Requirement Check → 90 days
  • Preliminary Application Submission → Applicant-driven
  • Ministerial Review → 60 days
  • Labor Compliance Verification → 60 days
  • Override Local Zoning → Automatic upon compliance
  • Final Approval → Within Statutory Deadlines After Review

Enforcement actions for delays would fit into the SB-4 process:

Under SB-1037 and related housing accountability laws:

  • Ministerial Review Delay (60-day deadline missed):
    • The applicant can file a Housing Accountability Act petition.
    • The court may order immediate Approval and impose civil penalties on the City ($10,000–$50,000 per month per violation).
    • Attorney General or HCD can intervene and sue for compliance.
  • Labor Compliance Delay (60-day verification):
    • If the City uses labor compliance as a pretext to stall, the same enforcement applies.
    • Courts can compel compliance and award attorney’s fees to the applicant.
  • Failure to Override Local Zoning or Final Approval:
    • The state can seek mandatory injunctions.
    • Penalties escalate if the City acts in bad faith (up to $100,000 per month in extreme cases).
    • State Controller may intercept local funds to pay penalties.

Timeline for enforcement actions typically works under SB-4 and related laws:

Enforcement Timeline

·       Ministerial Review Deadline (60 days)

·        If the City fails to act within 60 days:

·        Applicants can file a Housing Accountability Act petition immediately.

·        Court hearing is usually scheduled within 90 days of filing.

·        The court may order Approval and impose penalties starting from the missed deadline.

·       Labor Compliance Verification (60 days)

·        If delayed beyond 60 days:

·        Enforcement similar to above; applicants can seek judicial relief.

·        Attorney General or HCD can intervene at any point after the deadline.

·       Final Approval

·        If the City refuses to override local zoning or issue approval:

·        Enforcement action can begin as soon as the statutory deadline lapses.

·        Penalties accrue monthly ($10,000–$50,000 per violation).

·        After 30 days of noncompliance, penalties escalate, and courts may authorize fund interception.

·       Escalation

·        After 90 days of continued violation, courts can impose enhanced penalties (up to $100,000/month) and appoint a receiver to enforce compliance.

Escalation path after 90 days of noncompliance under SB-1037 and related housing enforcement laws:

Day 0–60:

  • The City must complete the ministerial review and issue approval if the project meets the objective standards.
  • Failure triggers the applicant’s right to file a Housing Accountability Act petition and request court intervention.

Day 61–90:

  • Penalties begin accruing: $10,000–$50,000 per month per violation.
  • Attorney General or HCD may initiate enforcement action.
  • The court can order compliance and award attorney’s fees.

After 90 Days:

  • Enhanced penalties: Courts may impose up to $100,000 per month for bad-faith violations.
  • Receivership: The Court can appoint a receiver to take over the local planning authority and approve projects.
  • Fund interception: The State Controller can intercept local tax revenues to pay penalties.
  • Mandatory injunctions: Court orders immediate compliance with SB 4 and related mandates.

Limited exceptions and carve-outs that San Diego could potentially rely on, but they are narrow and highly conditional.

Here’s a breakdown:

1.  SB 4 (Affordable Housing on Faith Lands Act) Exceptions

SB-4 overrides local zoning for faith-based and nonprofit college-owned land, but projects must meet strict criteria:

  • Ownership Date: Land must have been owned by the institution on or before 1 January 2024.
  • Affordability: 100% of units must be affordable to lower-income households (with up to 20% for moderate-income households and 55% for affordable housing allowed).
  • Site Restrictions: The Project cannot be adjacent to land where more than one-third of the square footage is industrial use.
  • Historic & Rent-Control Protections: Cannot demolish rent-controlled units or landmark structures.
  • Environmental & Safety Compliance: Must meet state building standards and fire/life safety codes.  If these conditions are not met, SB 4 protections do not apply, and local zoning may still govern.

2.  SB-1037 Enforcement Exceptions

SB 1037 penalties apply only when a city’s actions are:

  • Arbitrary, capricious, unlawful, or procedurally unfair.  If San Diego can demonstrate that its denial or delay was based on objective standards (e.g., health, safety, or environmental compliance) rather than on discretionary judgment, penalties may not apply.  However, courts interpret this narrowly, and most zoning-based denials will not qualify.

3.  Builder’s Remedy (AB 1893) Conditions

If San Diego fails to adopt a compliant housing element, the Builder’s Remedy applies, allowing developers to bypass local zoning.

The only exceptions:

  • Projects must include at least 20% lower-income units.
  • The City can deny only if there is a specific, quantifiable health or safety Impact that cannot be mitigated.  This is a very high bar—general infrastructure or traffic concerns do not qualify. 

4.  CEQA Streamlining Exceptions

Recent amendments allow limited CEQA review for projects that nearly qualify for exemptions but are missed by a single condition.  This does not exempt cities from housing mandates but may affect environmental review timelines.

A nonprofit or church can sue the City of San Diego for discrimination if the denial of a housing project violates state or federal anti-discrimination laws.

Faith-based institutions and nonprofit organizations hold powerful legal remedies when cities unlawfully deny housing projects.  Beyond the state’s housing mandates, California and federal Law prohibit discriminatory land-use practices that target religious or nonprofit entities.

Legal Foundations for a Claim

  • Unruh Civil Rights Act (Cal. Civ. Code §51): Bars discrimination by public agencies based on religion, race, or other protected characteristics.
  • Fair Employment and Housing Act (FEHA): Prohibits policies that disproportionately burden religious or nonprofit applicants without legitimate justification.
  • Federal Fair Housing Act (42 U.S.C. §§3601–3619): Makes it unlawful for municipalities to impose zoning restrictions or procedural hurdles that discriminate based on religion.
  • SB 4 and Housing Accountability Act: SB 4 guarantees “by-right” approval for qualifying projects on faith-based or nonprofit college land.  Arbitrary denial or delay can trigger litigation under the Housing Accountability Act, with attorney’s fees recoverable under AB 712.

Real-World Case Examples

  • Cottonwood Christian Center v. Cypress (2002): A California city blocked a church’s development plans, citing zoning concerns.  The court found the City’s actions violated the Religious Land Use and Institutionalized Persons Act (RLUIPA), forcing Approval and awarding damages.
  • Centro Familiar Cristiano Buenas Nuevas v. City of Yuma (2011): A federal court ruled that denying a church’s permit for downtown property was discriminatory under RLUIPA.
  • International Church of the Foursquare Gospel v. City of San Leandro (2011): The Ninth Circuit held that the City’s refusal to allow a church to expand constituted a substantial burden on religious exercise, violating federal Law.  These cases illustrate that courts take religious land-use discrimination seriously, and remedies often include mandatory approvals, damages, and attorneys’ fees.

Available Remedies

  • Court Orders: Mandatory Approval of the project.
  • Attorney’s Fees and Costs: Recoverable under AB 712 and Housing Accountability Act.
  • Civil Penalties: Imposed under SB 1037 for unlawful delays or denials.
  • Damages: For proven discrimination under the Unruh Act, FEHA, or federal Law.

Practical Steps for Plaintiffs

·         Document all communications and reasons for denial.

·         File a complaint with the California Civil Rights Department (CRD) or HUD for housing discrimination.

·         Notify the Attorney General’s Housing Strike Force and HCD for enforcement under SB 4.

·         Consider a combined lawsuit under the Housing Accountability Act and anti-discrimination statutes.

Bottom Line: Cities cannot use zoning prerogatives or procedural tactics to sidestep state housing mandates or discriminate against religious and nonprofit entities.  When they do, the Law provides swift and robust remedies—including financial penalties, mandatory approvals, and civil rights enforcement.

Litigation Checklist for Churches and Nonprofits

1.  Confirm Eligibility

  • Verify that your project meets SB 4 requirements:
    • Land owned by your institution before 1 January 2024.
    • 100% affordable housing (with limited staff housing exceptions).
    • Compliance with prevailing wage and objective building standards.

2.  Document Everything

  • Keep detailed records of:
    • Application submissions and timelines.
    • All communications with city officials.
    • Written reasons for denial or delay.
    • Any references to zoning or discretionary review.

3.  Notify State Agencies

  • Contact:
    • California Department of Housing and Community Development (HCD).
    • Attorney General’s Housing Strike Force.
  • These agencies can initiate enforcement under SB 1037 and the Housing Accountability Act.

4.  File Administrative Complaints

  • California Civil Rights Department (CRD): For religious discrimination under the Unruh Act or FEHA.
  • HUD: For violations of the Federal Fair Housing Act.

5.  Prepare Legal Action

  • Consider a combined lawsuit under:
    • Housing Accountability Act (for arbitrary denial).
    • SB 4 enforcement provisions.
    • Unruh Civil Rights Act / FEHA / Federal Fair Housing Act (for discrimination).
  • Seek attorney’s fees and civil penalties under AB 712 and SB 1037.

6.  Escalate if Noncompliance Persists

  • After 60 days of missed deadlines, penalties accrue ($10,000–$50,000/month).
  • After 90 days, courts may impose enhanced penalties and appoint a receiver.

Bottom Line: San Diego cannot opt out of these laws in its entirety.

The only viable defenses are:

  • Demonstrating noncompliance with SB-4 eligibility criteria.
  • Proving objective health/safety conflicts under SB-1037 or Builder’s Remedy.
  • Using CEQA exceptions for environmental review—but this does not override housing mandates.

Conclusion: The High Stakes of Noncompliance

California’s housing crisis has prompted the Legislature to enact sweeping reforms that leave little room for local resistance.  Statutes such as SB-4, SB-1037, SB-489, AB-1893, AB-712, and SB-908 collectively dismantle traditional zoning barriers, streamline approvals, and impose strict accountability measures on municipalities.  For cities like San Diego, noncompliance is not a symbolic act of local control—it is a costly gamble with severe consequences.

Under SB-1037, enforcement is swift and punitive.  Civil penalties start at $10,000 to $50,000 per month per violation, escalating to $100,000 per month for prolonged or bad-faith obstruction.  Courts can compel compliance, award attorney’s fees to applicants, and even authorize the State Controller to intercept local revenues.  In extreme cases, judicial receivership may strip cities of their planning authority altogether.  These measures underscore the state’s intent: housing mandates are not optional.

For faith-based institutions and nonprofit colleges, SB-4 guarantees the right to build affordable housing by overriding local zoning restrictions.  Denials or delays by municipalities trigger immediate remedies under the Housing Accountability Act, including court-ordered approvals and fee recovery.  Combined with AB-712’s attorney fee provisions and SB-908’s expanded accountability framework, the legal arsenal against obstruction is formidable.

San Diego’s refusal to comply would not only invite litigation and financial penalties but also erode public trust and jeopardize its ability to shape future development.  In an era where housing affordability is a statewide priority, municipalities that cling to outdated zoning prerogatives risk losing both autonomy and credibility.  The message is clear: adapt to the new legal landscape or face escalating consequences—financial, operational, and reputational.