California officials have reached a settlement with the City of Norwalk over its ban on new housing intended for vulnerable residents. The agreement, announced by Attorney General Rob Bonta, Governor Gavin Newsom, and California Department of Housing and Community Development (HCD) Director Gustavo Velasquez, resolves a lawsuit filed in November 2024. The state alleged that Norwalk’s restrictions on emergency shelters, supportive housing, single-room occupancy units, and transitional housing violated multiple state laws.
The Los Angeles County Superior Court previously denied the city’s attempt to dismiss the case in February 2025. As part of the settlement—pending court approval—Norwalk will repeal its ban, establish a local housing trust fund dedicated to affordable housing development, deposit $250,000 into this fund, implement overdue housing programs, and take steps to inform stakeholders that applications for new housing projects will now be processed according to state law.
Attorney General Rob Bonta stated: “Before filing our lawsuit, Governor Newsom, HCD Director Velasquez, and I warned the City of Norwalk on several occasions that there would be serious consequences if it moved forward with its unlawful housing ban. Regrettably, our warnings went unheeded, and we were forced to take legal action. We are more than willing to work with any city or county that wants to do its part to solve our housing crisis. By that same token, if any city or county wants to test our resolve, today’s settlement is your answer. All of us have a legal and moral responsibility to help — not hurt — those struggling to keep a roof over their heads or lacking housing altogether.”
Governor Gavin Newsom commented: “The Norwalk City Council’s failure to reverse this ban without a lawsuit, despite knowing it is unlawful, is inexcusable. No community should turn its back on its residents in need – especially while there are people in your community sleeping on the streets. No city is exempt from doing their part to solve the homelessness crisis.”
HCD Director Gustavo Velasquez added: “This case should send a clear message: When a city’s leaders disregard the law to block housing — especially housing for those most in need — this Administration will take swift legal action. This settlement ensures Norwalk will accept and process housing project applications, contribute meaningful funding for affordable housing development, and coordinate with Los Angeles County to address the needs of people experiencing homelessness. Going forward, HCD will continue to provide critical oversight to ensure accountability to that pledge.”
Terms of the agreement require Norwalk’s City Council at an upcoming meeting—either regular or special—to repeal its zoning ordinance banning certain types of new supportive and emergency shelter projects. The city must create procedures for interested parties seeking funding from the newly established trust fund.
Within three business days after repealing the moratorium ordinance, HCD will recertify Norwalk’s housing element as compliant with state law provided key overdue programs are implemented. These include aligning policies with obligations at all income levels and amending planning documents acknowledging past impacts on special needs populations.
Norwalk must submit quarterly reports through 2029 detailing proposed affordable or supportive projects’ status; any denial requires factual findings demonstrating consistency with fair housing requirements.
The city is also required within 15 business days after judgment entry notice to post an official statement about lifting the moratorium on its website for 180 days and notify potential developers as well as relevant employees or officials involved in land use decisions.
In August 2024 Norwalk enacted an urgency ordinance imposing a temporary ban on new supportive projects without required legislative findings or deliberation—a move extended again in September despite warnings from HCD about possible legal consequences if not repealed. Following this extension HCD decertified Norwalk’s planning document; such decertification restricts cities’ ability both to deny certain affordable developments and access key state funds related to housing and homelessness initiatives.
Previously Attorney General Bonta issued guidance reminding local governments about strict standards under California Government Code Section 65858 when enacting urgency zoning ordinances; these require written findings establishing immediate threats necessitating urgent action.
