A state agency has advised the city of Patterson to reconsider its decision to reject a 719-home subdivision known as Keystone Ranch, citing concerns that the April 1 City Council vote may not comply with California housing law.
The California Department of Housing and Community Development (HCD) sent a letter on September 22 stating that the council’s rejection of the project did not align with the Housing Accountability Act. This law is designed to prevent unreasonable delays in new housing construction amid a statewide shortage. The HCD warned that it could refer the matter to the state attorney general if it determines Patterson violated state law, and requested a response from the city by October 22.
City officials are preparing their reply, arguing that they made all necessary findings to deny Keystone Ranch due to water supply issues. According to City Attorney Douglas White, “The problem we have is the state agencies don’t understand the interplay of all the state laws. We will suggest we need to have better collaboration.”
Patterson faces pressure from another agency, the Department of Water Resources, which has called for reduced groundwater use in response to critical overdraft conditions in the Delta-Mendota subbasin. Local agencies across Stanislaus, Merced, Madera, and Fresno counties have developed a unified groundwater plan requiring cities like Patterson to cut groundwater usage by 10 percent and ensure future developments use surface water instead.
Keystone spokesperson Evette Davis said she was pleased with HCD’s intervention: “We are curious to see what the city of Patterson’s response is going to be.” She added that at issue was whether Patterson had legal grounds for denial: “It’s gratifying [that] the state letter confirms Keystone’s position at the April council meeting — that the city didn’t have grounds to deny the subdivision.”
Keystone has actively challenged Patterson’s decision through public campaigns. The proposed development covers 95 acres within a larger master-planned area known as Zacharias.
Water supply remains central in this dispute. In addition to regulatory requirements, Patterson faced litigation from local irrigation districts over environmental review findings related to groundwater impacts from new development.
One key condition imposed by Patterson was for Keystone alone to pay nearly $20 million for constructing a groundwater recharge facility on Del Puerto Creek before any building permits would be issued. The recharge basin would capture stormwater and help stabilize groundwater levels as part of broader conservation efforts.
Davis argued this requirement placed an effective five-year moratorium on new housing: “The city’s requirement for Keystone to construct the recharge facility first… effectively imposed a five-year moratorium on new housing.” She also raised concerns about how council members declared a water emergency after an April closed session and questioned whether this was intended specifically “to derail” Keystone Ranch.
In its letter, HCD noted that some conditions set by Patterson were inconsistent with both the Housing Accountability Act and another law aimed at expediting residential development—the Housing Crisis Act of 2019. The department pointed out that while Keystone represents only about 14 percent of planned homes in Zacharias Master Plan area, it was being asked alone to fund infrastructure meant for all future projects there.
White defended this approach as standard practice: cities often require initial developers “to pay for core infrastructure,” with reimbursement coming later when other projects proceed. He expressed confidence that further documentation would satisfy HCD concerns regarding how decisions were made on April 1.
White also emphasized that developers should bear costs tied directly to their projects and stated efforts continue toward securing surface water supplies so new developments can reduce reliance on local aquifers.
