Submitted By: Community Development
Prepared By: Adam Atamian, Community Development Director
Araceli Mejia, Assistant Planner
Subject:
title
RESPONSE TO 2025-2026 ORANGE COUNTY GRAND JURY REPORT “CALIFORNIA HOUSING MANDATES: THE UNINTENDED RESHAPING OF ORANGE COUNTY NEIGHBORHOODS”
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Summary:
On May 21, 2026, the City received a copy of the 2025-2026 Orange County Grand Jury Report, “California Housing Mandates: The Unintended Reshaping of Orange County Neighborhoods”. That report examines the practical implementation of state housing mandates in Orange County and their effects on local land use planning, infrastructure, public participation, and municipal governance. It evaluates the feasibility, effectiveness, and equity of current state policies, including the extent to which mandated housing targets align with local infrastructure capacity, available funding, and community conditions. The report also identifies opportunities to improve coordination between state housing objectives and local planning priorities while supporting responsible housing production and meaningful community engagement. One of the primary issues raised in the report is that the State’s housing mandates on local governments are unattainable, and cities and counties, on an individual scale, cannot reasonably meet State demands for housing, which have burdened local governments with costly development. Responses to the report are required to be submitted to the Presiding Judge of the Superior Court by August 27, 2026.
Background:
The 2025-2026 Orange County Grand Jury report, “California Housing Mandates: The Unintended Reshaping of Orange County Neighborhoods,” is provided as Attachment 1.
In efforts to match housing production with population and employment growth, the California Legislature has enacted multiple housing policies, such as Senate Bill (SB) 9, SB 10, SB 79, Assembly Bill (AB) 2097, and Accessory Dwelling Unit (ADU) Law, which shifted significant authority from local jurisdictions to the State. The Grand Jury report identifies several key issues created by these mandates. The first is that demands set by the State are too generalized for local agencies to adopt for their land availability, available funds, and infrastructure capacity, and do not accurately account for population projections. According to the report, these mandates are impractical because they don’t account for transit, utilities, schools, parks, public safety, and affordable housing subsidies. Building low-income housing without subsidies is financially infeasible and forces cities to approve developments with higher density in order to meet affordable housing requirements such as the Regional Housing Needs Allocation (RHNA) number.
The Community Development Department has amended three sections of the San Clemente Municipal Code in 2026 due to State mandates: Section 16.50.010 Urban Lot Splits, 17.86.010 Two-Unit Projects, and 17.28.270 Accessory Dwelling Units. During the Planning Commission’s April 22, 2026 meeting on the ADU ordinance update, the majority of the Commissioners noted that State legislation has significantly reduced the authority of cities to regulate Accessory Dwelling Unit projects. They expressed concerns about overdevelopment of residential neighborhoods and utility capacity.
The Grand Jury requires a response from the City on eleven Findings and eight Recommendations in the report. California Penal Code Sections 933 and 933.05 require the City to respond to applicable Findings and Recommendations and establish the requirements for those responses. The applicable California Penal Code sections are included as Attachment 2. Responses must be submitted to the Presiding Judge of the Superior Court by August 27, 2026.
Discussion:
Staff has prepared proposed responses to the applicable Findings and Recommendations for the City Council's consideration. The proposed responses are presented below, and included in the draft response letter provided as Exhibit A of Attachment 3.
Findings
Based on its investigation entitled "California Housing Mandates," the 2025-2026 Orange County Grand Jury identified six findings requiring a response from the City. Below are the findings and proposed responses.
F.1 In recent years, the California Legislature has enacted an unusually large and burdensome volume of housing-related laws intended to strengthen compliance with State Housing Mandates.
Staff Recommended Response: Agree.
F.2 Housing Mandates are implemented through a RHNA process that often lacks transparency and relies on complex methodologies that are difficult for local officials and the public to understand or meaningfully challenge.
Staff Recommended Response: Agree.
F.4 Meaningful participation by Orange County cities in both OCCOG and SCAG meetings is critical to ensuring that local perspectives are represented during the development and implementation of Housing Mandates policies.
Staff Recommended Response: Agree.
F.5 SCAG’s 6th Cycle RHNA assigned Orange County a questionable total of 183,861 housing units for the 2021-2029 planning period, with higher allocations concentrated in cities with major population and employment centers.
Staff Recommended Response: Agree.
F.6 RHNA allocations are unrealistic and not attainable within the current planning cycle due to limited available land, built-out urban conditions, infrastructure constraints, environmental factors, and public health and safety requirements.
Staff Recommended Response: Agree.
F.7 Residents in Orange County consistently express a desire for local planning decisions to reflect community priorities, including but not limited to neighborhood character, safety considerations, the environment, and open-space preservation.
Staff Recommended Response: Agree.
F.8 California’s regulatory construction costs (i.e. permitting fees) present substantial challenges for private housing developers-particularly those delivering affordable units.
Staff Recommended Response: Agree, however, the City of San Clemente has not conducted an independent survey to confirm this finding.
F.9 The cost of constructing a single affordable housing unit in California typically ranges from approximately $500,000 to $800,000 per units when fully complying with current State regulations. New low-income housing is generally not feasible without public subsidy.
Staff Recommended Response: Agree, however, the City of San Clemente has not conducted an independent survey to confirm this finding.
F.10 Prior to their dissolution in 2012, redevelopment agencies served as a primary mechanism for cities and counties to finance affordable housing and related infrastructure. The loss of redevelopment has reduced cities’ ability to support construction of affordable units.
Staff Recommended Response: Agree.
F.11 Because public subsidy is limited and highly competitive, cities seeking to produce meaningful quantities of low-income housing must rely in part on private development incentives, often resulting in higher overall development densities and unit counts than the RHNA allocation.
Staff Recommended Response: Agree, however, the City of San Clemente has not conducted an independent survey to confirm this finding.
F.12 The 6th Cycle RHNA methodology included numerous technical inputs published by SCAG and HCD; however, these inputs were highly complex and difficult for cities to interpret or independently verify.
Staff Recommended Response: Agree.
Recommendations
In accordance with California Penal Code §933 and §933.05, the 2025-2026 Orange County Grand Jury requires (or, as noted, requests) responses from each agency and city affected by the “Recommendations” presented in this section. Each Recommendation lists the associated Finding in brackets “[]”.
Based on its investigation described herein, the 2025-2026 Orange County Grand
Jury makes the following recommendations:
R.7 OCCOG, all Orange County cities and the County of Orange should reassess the current dues structure, by September 30, 2026, to ensure that OCCOG has the resources necessary to effectively represent Orange County jurisdictions in SCAG processes, including RHNA methodology development and appeals. [F3, F15]
Staff Recommended Response: The Recommendation will not be implemented because it is not warranted at this time. This Recommendation should not be implemented until OCCOG provides analysis of resource requirements for effective representation.
R.8 By December 31, 2026, the Orange County Board of Supervisors should partner with cities to evaluate countywide infrastructure capacity-including water, wastewater, flood control, transportation, and public-safety systems-and develop a coordinated regional plan capable of supporting the level of housing growth required under state law. [F6]
Staff Recommended Response: The Recommendation will not be implemented because it is not warranted. Such partnership will also require participation from private and public utilities which may have different incentives and mandates than local agencies. San Clemente Public Works staff advised that even including additional housing development, the demand for water, wastewater, and electricity is generally decreasing year over year due to State and local appliance efficiency requirements.
R.9 By September 30, 2026, the Orange County Board of Supervisors should strengthen its engagement with OCCOG and increase staff support to develop a shared, countywide database of potential housing sites and key development-feasibility factors. [F15]
Staff Recommended Response: The Recommendation will not be implemented because it is not warranted. Individual cities are not in a position to implement this Recommendation, and it is not clear what the City’s role in this process would be.
R.11 The County of Orange and each city should ensure consistent participation in SCAG and OCCOG committees by September 30, 2026, including the Technical Advisory Committee (TAC), to strengthen regional representation during RHNA-methodology development. [F3, F4, F15]
Staff Recommended Response: The Recommendation has been implemented. City staff regularly and consistently engage with SCAG and OCCOG committees, including the Technical Advisory Committee (TAC).
R.12 The County of Orange and each city should designate a single technical representative, by September 30, 2026, along with an alternate, for all RHNA-related SCAG and OCCOG committees to ensure continuity of participation and eliminate gaps in representation across multiple decision-making bodies. [F4]
Staff Recommended Response: The Recommendation has been implemented. The City has a designated single technical representative for all RHNA-related SCAG and OCCOG committees to ensure continuity of participation.
R.14 By April 30, 2027, the County of Orange and each city should publish annual monitoring dashboards showing (a) entitlement pipeline conditions, (b) realistic site yield, (c) assembled funding sources for affordable units, and (d) conversion rates from planned capacity to issued permits and completed units, ensuring that County and city-determined capacity assumptions remain aligned with actual production. [F13]
Staff Recommended Response: The Recommendation will not be implemented because it is not reasonable. This is an unfunded recommendation that the City of San Clemente and smaller cities may not be able to comply with unless additional funding sources are identified.
R.15 By September 30, 2026, and ongoing, the County Board of Supervisors and all city councils should make a coordinated and sustained effort to educate their constituents about the RHNA process-its requirements, its impact on local planning and community character, and the role residents can play in shaping outcomes. Public education efforts should also include guidance on how community members can effectively engage with the California Legislature and advocate for more realistic, data-driven housing policies. [F1, F7]
Staff Recommended Response: The Recommendation has been implemented. The City commits to make a coordinated and sustained effort to educate its constituents about the RHNA process including guidance on how community members can effectively engage with the California Legislature and advocate for more realistic, data-driven housing policies.
R.16 By December 31, 2026, all cities should look to enhance their relationships with not-for-profit affordable housing developers to increase the opportunity to develop more affordable housing. [F8, F10, F12]
Staff Recommended Response: The Recommendation has been implemented. The City’s current Housing Element includes Program 7: Affordable Housing Development, part of the Housing Action Plan, which requires City staff to periodically meet with non-profit developers and housing organizations to evaluate projects for acquisition and rehabilitation/new construction of affordable housing.
Council Options:
• Adopt Resolution 26-133, approving the staff recommended responses to the 2025-2026 Orange County Grand Jury Report “California Housing Mandates: The Unintended Reshaping of Orange County Neighborhoods”.
• Modify and adopt Resolution No. 26-133 by making modifications to the staff-recommended responses to the 2025-2026 Orange County Grand Jury report, “California Housing Mandates: The Unintended Reshaping of Orange County Neighborhoods,” and approve such responses as modified.
• Continue the item and provide staff with alternative direction.
Environmental Review/Analysis:
The proposed action is not a “project” pursuant to the California Environmental Quality Act Guidelines Section 15378.
Fiscal Impact:
Implementation of the Grand Jury recommendations would result in additional costs to the City, in the form of direct payments to the Orange County Council of Governments and additional staff time and travel to OCCOG and SCAG meetings. However, the action to send the draft response letter does not legally commit the City to any payments, travel, or staff time.
Potential Action(s):
recommendation
STAFF RECOMMENDS THAT the City Council adopt Resolution 26-133 entitled, “A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN CLEMENTE, CALIFORNIA, APPROVING RESPONSE TO FINDINGS AND RECOMMENDATIONS IN THE REPORT OF THE ORANGE COUNTY GRAND JURY “CALIFORNIA HOUSING MANDATES: THE UNINTENDED RESHAPING OF ORANGE COUNTY NEIGHBORHOODS,” authorizing the Mayor to respond to the findings and recommendations noted in the report by submitting a letter to the Presiding Judge of the Superior Court by August 27, 2026.
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Attachments:
1. 2025-2026 Orange County Grand Jury Report, “California Housing Mandates: The Unintended Reshaping of Orange County Neighborhoods”
2. Copy of California Penal Code Sections 933 and 933.05
3. Proposed Resolution No. 26-133
Exhibit A - City of San Clemente’s Response to Findings and Recommendations of the 2025-2026 Orange County Grand Jury report, “California Housing Mandates: The Unintended Reshaping of Orange County Neighborhoods”
Notification:
None.