Eureka Grapples with State Mandate for Drastic Housing Growth

A screenshot of a graphic from the staff presentation before the Board.

Eureka faces an “intimidating” challenge as it plans for meeting a state-mandated housing goal that is nearly double its previous target.

During the Sept. 2 city council meeting, Community Development Director Cristin Kenyon presented the state’s new Regional Housing Needs Assessment numbers, with the Humboldt County region required to plan for 5,962 new housing units by 2035 – a 76% increase from a previous eight-year cycle.

As designated by the Humboldt County Association of Governments (HCAOG), Eureka’s proposed share is 1,740 new units, a big jump from the 952 it was assigned in the last cycle.

Development isn’t required to happen during the new cycle but the city has to demonstrate through its zoning and land use policies that there’s a viable plan to accommodate the growth.

The drastic increase is driven by some new state adjustments, including what known as a “cost burden adjustment.” That’s based on a finding that 42% of Humboldt County’s households spend more than 30% of income on housing.

The housing cost percentage is well above the national average of 32% and the burden adjustment is adding the largest share of the city’s increased housing allotment, at 3,639 units.

And for the first time, the state is figuring in levels of homelessness, which in Eureka’s case adds 769 units. Temporary and transitional housing does not count toward the goal.

Eureka and the region also have housing vacancy rates low enough to be considered “unhealthy,” adding more units to the mandate.

Councilmembers grasped for words to describe the situation, with Councilmember Kati Moulton referring to it as “terrifying” before taking it back.

Councilmember Mario Fernandez suggested “onerous” but “intimidating” emerged as the word of choice.

Failure to comply with the state’s housing element laws would result in severe penalties. The city could be switched to a more demanding four-year housing element cycle, lose out on critical state grants for housing and transportation projects, and face significant financial penalties if sued by the state.

One of the most viable ways to meet the state’s criteria is to plan for housing on vacant, developable properties.

But Eureka is largely built-out, forcing reliance on the redevelopment of existing, occupied sites.

“I picture a scenario where we end up tearing down existing housing in order to build more dense housing. Do you think that’s what is being encouraged here?” Mouton asked Kenyon.

“Yeah, they, the state, anticipates that that may happen,” Kenyon replied, adding that “it stinks that you prove compliance by pointing to vacant sites.”

She said a preferable system would be to give the city credit for its pro-housing moves such as “reducing regulatory barriers”

Councilmember Scott Bauer questioned whether the 1,740-unit mandate is doable.

“Can we physically do it given our space?” he asked.

The city’s downtown area is zoned for 10-story buildings, Kenyon replied, but “I’ve only had people pushing back against our minimum of two stories – there’s no market demand for a 10-story building at this point, nobody’s trying to build that so it’s hard to demonstrate that we have that potential.”

And Bauer said that while “high rise buildings” seem the only way of achieving the state’s high numbers, that style of development will be costly in an “earthquake-prone area” like Eureka.

“So there’s all those things that need be figured out before the state mandates that we build 2,000 units and we’re gonna need a ton of grant money to do this, so I hope somebody’s thinking about that,” he continued.

Councilmember Leslie Castellano said she’s “perplexed” by the situation, given the city’s proactive efforts to encourage housing development.

She questioned how the council and community can best engage with the state to advocate for a more reasonable approach.

City Manager Miles Slattery said state regulations are “blanketed” across all regions without taking “logistics” and “geography” into account.

“We’re so far different from Los Angeles yet we have the same parameters for a lot of different state regs,” he continued.

The final decision on the allocation methodology will be made by HCAOG in the coming months, with the city’s updated housing element due in mid-2027.

Also at the meeting, the council unanimously approved a partnership with the Blue Lake Rancheria to explore the potential for redeveloping a long-neglected section of the city’s waterfront.

The city is entering into a Memorandum of Understanding (MOU) agreement with the Rancheria, a prerequisite for the tribe to apply for federal funding to analyze the viability of redeveloping Eureka’s deteriorated maritime dock and its surroundings.

Known as Dock B and located next to the Wharfinger Building, the city-owned dock’s been reduced to pilings after earthquakes and fires over the years.

But the dock site is designated as a Foreign Trade Zone, which allows businesses to import goods duty-free, assemble them on-site and then either re-export them or pay reduced tariffs.

Ciara Emery, Director of Strategic Initiatives for the Rancheria, said the tribe views this as an opportunity to “realize what tribal sovereignty and tribal economics might mean in a port setting.”

The MOU is the first step in a long process, with an immediate goal of securing the federal grant.

That will provide the necessary funds for preliminary planning, design and market analysis.

The ultimate outcome would be a “disposition and development agreement” between the city and the tribe to rebuild the dock.

The council’s approval opens the door for the Rancheria to submit its grant application, with a Sept. 8 deadline.