CP&DR News Briefs August 11, 2026:

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Pasadena, Malibu Agree to Repeal Bans on Lot Splits in Burn Areas

Malibu and Pasadena have settled a lawsuit brought by YIMBY Law, agreeing to repeal their pause on lot splits, per Senate Bill 9, and allowing homeowners to build up to four units on single-family parcels in the Eaton and Palisades fire areas. The settlements come one year after Governor Newsom signed an executive orders allowing recently burned jurisdictions to at least temporarily opt out ( Los Angeles Mayor Karen Bass did the same for burned Los Angeles neighborhoods). Pasadena's city council voted unanimously in July to accept all pending and future duplex applications, while Malibu has until Sept. 29 to repeal their local ordinances and accept all pending and future applications filed under SB9. Many fire survivors object to denser building due to concerns about neighborhood character, housing density in high-risk burn areas, and increased traffic, while YIMBY Law and other pro-development groups present SB9 as an option for homeowners to recuperate losses amid rising labor and materials costs in the wake of the fire. Los Angeles County, the city of Los Angeles, Newsom and Bass are still fighting the suit though most of the destroyed structures were in the city and in unincorporated Altadena. Separately, state Sen. Sasha Renée Pérez of Altadena has introduced legislation to temporarily exempt the town from SB 9. (See related CP&DR coverage.)

Newsom Signs Bill Limiting Impact Fees

In one of the first major housing bills to come out of this year’s session, Gov. Gavin Newsom signed Assembly Bill 179 limiting local development impact fees in an effort to encourage affordable housing construction. Newsom argued the state's housing shortage was the result of deliberate policy choice, and that impact fees in certain areas have grown so steep they can make building affordable housing impossible. Originally intended to help local governments offset the costs of new development, impact fees have increasingly been criticized by developers as a revenue source funding unrelated city priorities like parks and street maintenance. Critics have raised concerns about the resulting loss of fee revenue for local governments. Officials acknowledged the law alone won't trigger a construction boom given other market headwinds, but framed it as a necessary first step toward reversing the state's housing deficit.

Lawsuit Threatens 464-Acre Project in Folsom

A lawsuit filed last week in Sacramento County Superior Court is challenging the City of Folsom's approval of the Toll Brothers at Alder Creek development, a 1,424-home master-planned community. The Laborers’ International Union of North America (LiUNA) Local 185 argues the city relied on an outdated 2011 environmental impact report. The suit argues the project should use "no added formaldehyde resins" building materials for the project as recommended by the California Air Resources Board, as the outdated review never analyzed indoor air quality risks from formaldehyde-emitting engineered wood products. The approximately 464-acre project is planned for western Folsom between Alder Creek and Mangini parkways, including 18 residential villages along with a school site, fire station, parks and open space. City staff fielded objections from LiUNA's attorneys before the vote covering indoor air quality, greenhouse gas emissions and biological resources, but concluded the existing environmental analysis was still adequate and recommended approval. The lawsuit asks the court to rescind the city's approval and require a new environmental review before construction can proceed.

San Francisco Devises Strategy to Compel Developers to Complete Office ProjectsSan Francisco's Planning Department will withhold developers’ Proposition M development allocations if they haven't shown good-faith progress toward construction of stalled commercial office projects. Prop. M is a 1986 ballot measure that caps and regulates the amount of commercial development the city can approve. Director Sarah Dennis Phillips said projects with no demonstrated momentum could have their Prop. M allocation stripped immediately, while those that have delivered on community benefits but haven't pulled permits would get an 18-month grace period. The move targets developers who abandoned office megaprojects in favor of housing but kept their valuable Prop. M allocations in reserve. Prop. M has capped new office space in San Francisco since 1986, but the pool of available allocations has shrunk dramatically since 2020's Proposition E tied replenishment to the city's affordable housing goals, which it is failing to meet.

CP&DR Coverage: Supreme Court Closes Case on Sheetz; Huntington Beach Approves Housing Element

The U.S. Supreme Court has decided not to hear a followup to the Sheetz ruling – essentially choosing not to weigh in on one of the most important issues the justices left hanging as a result of their 2024 decision: whether a broad, mathematical calculation, rather than a project-specific calculation, can be used in determining impact fees. The decision not to take the case essentially leaves in place a ruling by the Third District Court of Appeal in Sacramento that “individualized determinations” of a project’s impact are not required. However, the California Supreme Court depublished that ruling, meaning it cannot be used as precedent.

Facing the possibility of more fines and more losses in court, the Huntington Beach City Council finally approved its 2021-2029 Housing Element. The City Council voted to approve the Housing Element 5-2 after it had been revised to meet changes sought by the Department of Housing and Community Development, especially regarding the city’s proposed overlay zones for housing. The use of overlay zones to meet a city’s housing targets under the Regional Housing Needs Assessment has been under attack in court lately, most recently in an appellate court case from Redondo Beach last fall.

Quick Hits & Updates

Redwood City Council voted 6-0-1 to formally oppose a November ballot measure that would cap annual rent increases at 5% for pre-1995 multifamily properties and add eviction protections, claiming the measure would hurt city income and potentially undermine ongoing existing tenant protections and affordable housing efforts.

The Department of Housing and Community Development decided Grover Beach's Measure F-26, a citizen initiative capping building heights, will be unenforceable because it violates the state's Housing Crisis Act. The initiative would cap mixed-use buildings at 40 feet and industrial buildings at 33 feet, reducing allowed building height from five stories to three and potentially eliminating hundreds of housing units downtown.

Los Angeles County rents fell 3.4% from last year and 9.6% below the mid-2022 peak, hovering around $2,603 per month, according to a report from Realtor.com. Analysts found that affording a typical rental within city limits still requires an annual household income of $109,680, more than 23% above the city's median household income of $88,730.

East Palo Alto City Council approved the Temporary Housing Development Incentive Program, an ordinance allowing developers to skip the city's inclusionary housing requirements for projects with 20 units or fewer. The policy suspends the city's 1994 inclusionary housing ordinance, which normally requires developers to set aside 20% of rental units or pay an in-lieu fee for residents earning 35%, 50% and 60% of area median income, about $114,000. 

A new analysis from Harvard's Joint Center for Housing Studies finds that declining immigration is undermining U.S. population growth, making communities increasingly dependent on domestic migration and natural change to sustain growth. Large metro urban counties are most vulnerable due to steep domestic migration losses. Harris County, Texas lost about 8,000 people in 2025 as net domestic outflow of 43,000 exceeded natural growth of 35,000. While rural counties face risk from natural population decline, non-metro areas are seeing a natural loss of 95,000 barely offset by a domestic inflow of 119,000. 

SMART, the North Bay's commuter rail system, is exploring a new station in Geyserville after roughly 1,800 residents successfully lobbied state lawmakers to allow the stop. Local business owners say the station would boost tourism to the area's 100 wineries, outdoor recreation and historical sites including the River Rock Casino, which is being converted into the 100-room Caesars Republic Sonoma County. (See related CP&DR coverage.)