THE BUZZ — HOMEKEY HANG-UP — Gov. Gavin Newsom was in Orange County on Thursday to tout a milestone: 15,000 housing units created through Homekey, his signature program to convert hotels and motels into housing for homeless people. But as the governor toured the site of a former Motel 6 in Costa Mesa, attorneys 400 miles away were gearing up for a court case that could pose an existential threat to Homekey’s future. The city of Millbrae, south of San Francisco, filed a lawsuit in San Mateo County Superior Court late last year seeking to block the county from buying a La Quinta Inn and Suites and converting it into housing for homeless families and seniors. The city’s argument hinges on a 73-year-old article in the California Constitution that requires local voters to approve new government-subsidized, low-income rental housing. California lawmakers and some cities have created a host of work-arounds to that constitutional requirement, known as Article 34, so that the vast majority of subsidized housing projects, including Homekey sites, don’t require public votes (which tend to delay projects and increase costs). But in its lawsuit, Millbrae argues the work-around for Homekey is unconstitutional because Article 34 “guarantees Millbrae’s residents the right to vote on the project.” Newsom’s administration and pro-housing advocates are closely watching the challenge, worried it could threaten similar efforts throughout the state. “If the courts rule for Millbrae, Homekey is unconstitutional,” said Keith Diggs, an attorney for YIMBY Law, a pro-housing advocacy group intervening in the case. “If people support any sort of subsidy for housing, Article 34 is a problem.” Newsom’s office declined to comment on the lawsuit. Millbrae Mayor Anders Fung said closing the La Quinta Inn would eliminate nearly $800,000 in local tax revenue and jobs for hotel workers. “We are asking the California Superior Court to decide if the people of Millbrae have the right to weigh the merits of the project,” he said. The Article 34 argument was also invoked in an unsuccessful 2022 lawsuit in which a group of Marin County residents tried to block the county from converting a former nursing home into homeless housing. A Mateo County Superior Court judge is expected to rule next week on Millbrae’s request for an injunction to block the La Quinta Inn project while the case is litigated. In November, California voters will weigh in on a constitutional amendment that would repeal Article 34. State Sens. Ben Allen and Scott Wiener, who spearheaded the legislative effort to place it on the ballot, are now organizing the ballot campaign — and aim to enlist the state Realtors’ association. Assemblymember Alex Lee is also helping lead the campaign. Article 34, which voters adopted in 1950, promoted racial segregation in housing, Allen and Wiener said — but multiple efforts to repeal it have since failed. “It’s a really troubling history,” Allen said of the article’s segregation-era origins. “The good news is that some of the organizations that were involved in the passage of the article, like the Realtors, are convinced we need to repeal it.” GOOD MORNING. Happy Friday. Thanks for waking up with Playbook. Now you can text us at 916-562-0685 — save it as “CA Playbook” in your contacts now. Or drop us a line at lkorte@politico.com and dgardiner@politico.com, or on X — @DustinGardiner and @Lara_Korte WHERE’S GAVIN? Nothing official announced.
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