With a $100 million trial over a denied housing project just days from starting, homebuilder Lennar Corp. has upped the ante in its battle with the city of La Habra, filing an even more ambitious homebuilding proposal for a golf course in the hills overlooking north Orange County.

And because La Habra has yet to adopt a state-approved housing plan, the city may have few options to stop this new 530-unit homebuilding application.

The proposal includes 110 low-income apartments, enough to meet the 20% threshold necessary for approval under a 1990 state housing provision called the “builder’s remedy.”

If Lennar pursues its new application under that provision, La Habra would become the first city in Orange County — and just the fourth in all of Southern California — to face a builder’s remedy application. Similar applications were filed in Santa Monica, Redondo Beach and Beverly Hills, according to media reports.

Under the state’s Housing Accountability Act, developers can bypass city council review in jurisdictions without state-approved “housing elements,” provided they include a requisite number of affordable housing and comply with environmental laws. Projects meet affordability standards if 20% of the homes are for low-income households or all the homes are for moderate-income households.

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And such plans must be approved even when they conflict with local zoning and the city’s general plan.

La Habra is one of 110 Southern California governments without an approved housing element, which cities and counties were supposed to adopt by October 2021. The state Housing and Community Development Department website lists La Habra’s housing element as under review.

Both Lennar and La Habra officials declined to say if the homebuilder is seeking project approval under the builder’s remedy.

But such applications don’t typically use the words “builder’s remedy” to flag what they’re doing, said Matt Gelfand, attorney for Californians for Homeownership, a Realtor-backed pro-housing group.

When a builder files an application in a Southern California city without an approved housing element — and 20% of the homes in that plan are for low-income households — then “it’s a pretty good guess that they’re filing a builder’s remedy project,” Gelfand said.

The builder’s remedy was meant to serve as one of numerous consequences for failing to meet state housing laws, which require cities and counties to promote homebuilding at all income levels.

“I think the system is working. I mean, it’s doing what it’s supposed to do,” said Elizabeth Hansburg, director of People for Housing Orange County. “Cities all over Orange County have dragged their feet and didn’t do the work to get into compliance on time. Now, it’s come home to roost.”

But Jim Lees, a co-founder of Save La Habra, a group founded to support open space preservation, said he wasn’t aware of the builder’s remedy.

“It’s not fair for somebody like Lennar or some other developer to come in and force something on the community. … That’s not what the community wants,” Lees said. “The community should have a big say in its own fate.”

Seven-year battle

Lennar’s Jan. 17 housing application is the latest salvo in a seven-year battle that pits the nation’s largest homebuilder, with $33.7 billion in total revenue for the year ending in November, against California’s 146th biggest city, with a 2020 population of 63,097.

The conflict centers on efforts to transform the 151-acre Westridge Golf Club into suburban neighborhoods, similar to the gated Westridge community that rings the golf course on the surrounding ridge top.

Companies later acquired by Miami-based Lennar originally filed a plan in 2015 called Rancho La Habra, seeking to build 448 homes, including 277 houses and 171 townhomes. The plan also included more than 80 acres of open space, parks and trails.

The project sparked a citizen outcry that echoed in city council election campaigns and fostered a citizen’s open space initiative, Measure X. In October 2020, the city council denied the Rancho La Habra plan, and Measure X — which requires voter approval to rezone open space — passed by a 75% margin a month later.

Lennar, which claimed the city virtually extorted hundreds of thousands of dollars for environmental studies from them, sued La Habra in January 2021, seeking $100 million in damages. The trial is scheduled to begin Feb. 6.

Lennar maintains the city’s denial was arbitrary and capricious and that Measure X amounts to “spot zoning” because, the company claims, it only affects the golf course. Supporters deny that claim.

In a 2021 press release, the city argued its 2014 general plan determined the golf course would remain a privately-owned open space. It argued further the city had every right to deny Rancho La Habra.

“The city council had complete discretion to either approve or deny the project request,” the city statement said. “The record of the public hearing reveals the many reasons the city council decided that the Rancho La Habra development was the wrong policy choice at this time.”

All that is moot if Lennar’s new application qualifies for the builder’s remedy.

There are some underlying criteria, like health and safety, the city still could use to deny the project, Gelfand said. But those criteria “are pretty darn narrow.”

In addition, the project still would have to comply with the California Environmental Quality Act, or CEQA, which likely would require an environmental impact report.

More housing, less open space

Assuming it meets those qualifications, Lennar’s new plan would produce many more homes and have less open space.

For example, the new application has 82 more housing units than the former plan, which had zero low-income units and fewer multifamily units. The new plan has about 46 acres of open space vs. more than 80 acres under the old plan.

“Something that they’ll ask themselves is ‘would the city have been better off 2 ½ years ago just saying yes to the proposal?’ ” said Hansburg.

Calls to Mayor James Gomez and Councilmember Jose Medrano were not returned.

But Lees, the Save La Habra activist, worries there may not be much the city can do to stop Lennar’s newest development.

“The city wants the open spaces. They want to maintain the open spaces,” Lees said. Residents “would feel that it would be totally improper for the state or the builder (to order) something that the majority, the vast majority, didn’t want.”