An LA County City Tried To Ban Homeless Shelters. The State Is Making It Pay.

NORWALK, CA — A year after adopting an ordinance banning new homeless shelters and housing, a Los Angeles County city will have to reverse the ban as part of a settlement with California, according to state officials.

In addition to reversing the controversial policy, the settlement requires Norwalk to pay $250,000 into a new trust fund for developing affordable housing, according to the California Department of Housing and Community Development. The state will also monitor the city to ensure it complies with the agreement.

“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," California Attorney General Rob Bonta said in a statement Friday. "Regrettably, our warnings went unheeded, and we were forced to take legal action."

The Norwalk City Council approved the ordinance in August 2024, putting a 45-day moratorium on emergency shelters, single-room occupancy units, supportive housing and transitional housing. City officials cited the Housing Crisis Act, which allows cities and local governments to issue bans on housing facilities if they feel there is an "imminent" threat to public health and safety.

State officials disagreed with that contention, and Newsom warned he'd take legal action against the city if it didn't reverse the policy.

But instead of reversing the policy, the city doubled down and voted to extend the moratorium for at least another 10 months.

In response, state officials sued the city, claiming the policy violated several state laws.

Then-Norwalk Mayor Margarita Rios said at the time that the lawsuit overlooked the city's "long-standing and effective efforts to address homelessness."

According to Rios, the city had made "significant strides" in opening affordable housing for homeless veterans, taking part in the county's Homekey project and funding its own engagement teams without additional funding from the state.

Norwalk officials emphasized in a statement Friday that the city's policy was never about "turning our back on those in need — it was about pressing pause to ensure that the mistakes of past projects weren't repeated in Norwalk."

"Too often, cities have seen homeless programs rushed into place without adequate safeguards, accountability, or coordination," city officials said. "That approach fails both the unhoused and the broader community. Our pause allowed us to insist on collaboration with Los Angeles County, to integrate safety measures from the start, and to align with projects that actually deliver results."

Following the announcement of the settlement agreement, Newsom reiterated that Norwalk's actions were "inexcusable" and that city leaders had essentially turned their backs on Norwalk's most vulnerable residents.

Housing and Community Development Director Gustavo Velasquez said the case sent a clear message to city leaders who choose to disregard or block housing laws that the state will take action against them.

"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," Velasequez said in a statement Friday. "Going forward, HCD will continue to provide critical oversight to ensure accountability to that pledge.”

City News Service contributed to this report.