California law forced the Arroyo Grande City Council to shoot down an appeal against a proposed 92-unit housing project on James Way.
The April 14 meeting that stretched until almost midnight concluded with a 3-1 vote to deny the appeal of the Arroyo Grande Planning Commission’s approval of a conditional use permit for the planned Creekside Junction homes.
Councilmember Aileen Loe voted in favor of the appeal, while Mayor Caren Ray Russom recused herself because her husband works for the project’s architectural firm, RRM Design Group.
Originally set for March 24, the hearing was postponed at the request of project appellants Pismo Medical Properties LLC, Arroyo Grande Partners, and Ray B. Bunnell Revocable Trust.
The group makes up some of Creekside Junction’s neighbors, with Hope Church, the Best Western Casa Grande Inn, Curl Fitness, and medical facilities and offices flanking the project’s 2-acre site on James Way.
The appeal focused on problems with parking, environmental analysis, and inadequate traffic analysis. Appellants also claimed the project doesn’t qualify for a California Environmental Quality Act (CEQA) exemption because the site abuts Meadow Creek and less than 75 percent of its perimeter adjoins urban uses.
They added that Creekside Junction also doesn’t qualify for preferential treatment under state law.
But two state laws drove the council’s decision.
“[Assemblymember] Dawn Addis and Sen. [John] Laird all voted for these things,” Councilmember Jim Guthrie said at the meeting. “Not one of you said, ‘Well, we need to go to the state, and we need fix this.’ All of you just came to us and said, ‘Yeah we know your hands are tied, but we want you to take the risk of litigation.’”
The Housing Accountability Act limits the city’s ability to reduce a qualifying project’s density or deny it altogether without proving specific adverse impacts to public health and safety.
Under the Density Bonus Law, the Creekside Junction project qualifies for a 50 percent density bonus by reserving 15 percent of its units for lower income households. The law also grants the project certain perks to lower construction costs, like reduced parking, zoning amendments, and other financial incentives and fee waivers.
‘This situation actually makes me really incredibly angry … with state law eroding all of our local control especially affordable housing units, a developer that knows these laws and has taken full advantage of them but not recognized the full consequences of these laws, and you’re all angry at us!’
—Jamie Maraviglia, Arroyo Grande City Councilmember
According to City Planning Manager Andrew Perez, Creekside Junction requested concessions related to building height, landscaping, and parking.
“Since the Planning Commission approval, and subsequent to the filing of the appeal, the applicant has modified its parking concession request,” Perez said. “The original concession request [was] to reduce parking requirement by one space, from 99 to 98 spaces. The revised request modifies the parking requirement from 99 spaces down to 31 spaces.”
He added that state law requires the city to grant Density Bonus Law concessions requested by project applicants, unless there’s a written finding that the concessions don’t actually reduce the cost of building or that they threaten public health and safety.
Not complying with these laws could mean fines and de-certification of Arroyo Grande’s housing element.
“These two laws represent a significant legal mandate from the state Legislature to significantly increase the approval and construction of new housing and reduce local discretion to deny a project that is consistent with the city’s objective standards,” Perez said.
Dozens of locals involved with the church and nearby businesses urged the City Council to uphold the appeal.
Hope Church Pastor Robert Burnett said though project applicant Russell Sheppel even helped rebuild the church roof years ago, Burnett’s obligation is to the church property.
“I’ve seen firsthand two or three little kids almost get hit by cars,” Burnett said. “I’m not against housing, … but if the state of California is strongarming local cities to have to do what they say, then where do we have the freedom to develop what fits for us?”
Resident Jennifer Alvarez was one of the few people who spoke up for the project. The licensed clinical social worker said she can’t afford to buy a home on the Central Coast despite earning a master’s degree and working full time. She also attends Curl Fitness—the gym with many clients and employees against the housing project.
“Instead of focusing on the current needs of the gym, they put up banners and signs to oppose this project,” she said. “Today, the bathrooms did not have enough toilet paper, no toilet seat covers, the gym floor was dirty with trash. … While attending this gym, I have never struggled to find parking at any point in time.”
Councilmember Jamie Maraviglia also expressed frustration despite voting in favor.
“This situation actually makes me really incredibly angry … with state law eroding all of our local control, especially affordable housing units, a developer that knows these laws and has taken full advantage of them but not recognized the full consequences of these laws, and you’re all angry at us!” she said. “As Mr. Guthrie said, please reach out to your state officials to talk about these concerns.” ∆
This article appears in April 16-23, 2026.
Truly appreciate the comments of Jennifer Alvarez…it’s like my mom always said, “don’t go pointing fingers if your house is a mess.” I’m very familiar with this site, and while I think its BS that the developer can reduce parking to such a low level, the State jumped into the housing crunch because local NIMBYism helped intensify the housing shortage. You don’t get to sell out in northern or southern CA, move to paradise and put up the gate…Sad situation, but all of us share the blame.