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California Gov. Gavin Newsom’s office has reached a settlement with the Sacramento suburb of Elk Grove regarding the creation of new affordable housing.

The Associated Press reported the city will need to identify a new site for affordable housing by July 1, 2025, that has access to economic, educational and health resources. Under the settlement, the state will have new oversight authority over the city’s approval of affordable housing development for the next five years.

Elk Grove was sued by the state for denying approval to a project that would have built 66 housing units for residents experiencing homelessness. As part of the settlement, Elk Grove will pay the state $150,000 for attorney and other legal fees.

The city government issued a statement insisting that it was “proud of the role it has played as a leader in the development of affordable housing in the region.” However, California Attorney General Rob Bonta berated Elk Grove’s leadership for delaying efforts to construct more affordable housing.

“Our housing laws are not suggestions,” Bonta said at a news conference. “You have to follow them. And if cities try to skirt them – try to avoid building the housing we need, try to illegally deny housing proposals, discriminate against communities, as Elk Grove did – the DOJ will hold them accountable.”