Officials in Atwater and Merced County say they’ve taken steps to update their housing plans – moves they hope will bring them into compliance with state law.
The city and county, along with 13 other government jurisdictions statewide, were thrust into the spotlight in March, when Gov. Gavin Newsom and California’s Housing and Community Development Department (HCD), threatened to sue and withhold state funding.
The majority of those cities and local governments are located in the San Joaquin Valley.
Jonnie Hanson Lan, community development director for the city of Atwater, is among those Valley officials who’ve worked to update their housing plan, in light of Newsom’s warning.
“I believe that we’re real close…to the golden ticket,” Lan told The Merced FOCUS.
Jurisdictions such as Atwater are not responsible for building homes, but under state law they must adopt policies to help meet statewide housing and community development goals.
Housing element plans require periodic updates, or cycles, every five to eight years. Atwater and Merced County are each undergoing their sixth cycle, which covers the time period from 2024 to 2032.
The state’s original deadline for this cycle passed on Jan. 31, 2024.
State legal action could jeopardize eligibility for key funding for housing and homelessness programs. Additionally, the jurisdictions could be forced to pay hefty fines for noncompliance.
Alicia Murillo, a public information officer for HCD, confirmed Atwater officials submitted their housing element draft by Newsom’s April 23 deadline, and it’s under review.
Merced County officials responded on the day of the deadline with plans to rezone and resubmit a draft this month, Murillo wrote in an email to The FOCUS.
Officials in both jurisdictions plan to change their zoning or land use codes to bring their housing elements into compliance.
Atwater plans to upzone areas from light industrial to commercial in order to facilitate construction and development of multi-family housing near essential businesses and services, such as grocery stores and schools.
Similarly, Merced County plans to rezone more than 500 parcels to mixed-use development, which will allow for higher-density development.
Five Merced County jurisdictions– Atwater, Dos Palos, Livingston, the city of Merced and Merced County – are out of compliance with their Housing Element plans, according to the state’s Housing and Community Development Department website, but only two received final warnings.
Staff turnover in Atwater
Following a mandatory seven-day public comment period, Atwater officials submitted what city planners are confident is their final draft of the housing element to the state on April 9.
“We’ve been working with the state regularly, in spite of having issues with our internal staffing, ” Lan said.
Lan assumed her role in February and manages the department responsible for implementing housing element plans. City officials cited staff turnover as a reason they struggled to meet the deadline to bring the housing element into compliance.
Lan succeeds previous community development director Greg Thompson, who was terminated in March 2025, the Mariposa Gazette reported. Thompson helped submit Atwater’s initial two drafts, which HCD subsequently rejected and returned with feedback.
Last September, HCD officials asked Atwater leaders for an update on the city’s third housing element draft. In response, city planners requested a deadline extension to Jan. 22 and cited staff turnover for delay.
City planners need to address those comments for approval from the state.
“(The issues HCD identified) were actually fairly minor,” Lan said.“One major one had to do with our emergency shelter.”
Historically, cities used warehouses in light industrial zones where mixed-use development is prohibited, to temporarily shelter unhoused people, Lan explained.
“Good planning would be that you want people to be close to where they need to go, and not have to get into a vehicle that they don’t own,” Lan said about Atwater’s plans to rezone.
Merced County upzoning project
Merced County closed its public review period for the third draft of its housing element plan on May 6.
“Our collective goal is to achieve certification by the end of the fiscal year, ensuring a compliant Housing Element that supports responsible growth and expands housing opportunities for our community,” Mike North, Merced County public information officer, wrote in an email statement to The FOCUS.
To gain approval from state authorities, officials also need to rezone parts of Merced County’s unincorporated regions. Elected leaders hope the upzoning of 544 land parcels to mixed-use development will allow for higher-density development and attract investors, including affordable housing developers.
County upzone plans call for rezoning 214 land parcels in Delhi, 105 in Hilmar, 63 in Le Grand and 162 in Planada.
In unincorporated Merced County, investors will have access to 544 additional land parcels for higher-density development, including multi-family or low-income housing, when officials upzone to mixed-use.
Two arms of HCD
Newsom’s March legal threat came as a surprise to many jurisdictions –including Atwater – whose leaders said they were in recent communication with HCD staff over their housing element plans.
That was the review “arm” of HCD’s office, “that we talk to all the time,” said Lan, Atwater’s development director.
But, she said, the violation letter came from an enforcement arm of HCD.
In Lan’s opinion, “the HCD has two arms that don’t talk to each other.”
