Patterson illegally denied 719-home development over groundwater dispute, judge rules

A battle over housing and groundwater in Stanislaus County has dealt the City of Patterson another legal setback.

A Stanislaus County judge has ruled the city illegally denied a key application for the proposed 719-home Keystone Ranch development, finding Patterson violated state housing law when it rejected the project's tentative subdivision map.

The ruling marks the latest chapter in an ongoing dispute that began last year over how to address the city's groundwater challenges.

The conflict stems from a decision by the California Department of Water Resources to reject Patterson's groundwater sustainability plan and order the city to reduce groundwater pumping by 10%.

In response, Patterson sought to require Keystone Ranch to pay for and construct a regional groundwater recharge basin estimated to cost roughly $20 million before allowing the project to move forward.

Keystone Ranch attorney Evette Davis says that put a citywide water fix on one developer's bill.

"The city basically said Keystone should have to pay all of the $20 million for this catch basin," Davis said. "It was not something that was required of anybody else."

According to the ruling, Patterson's own city staff and Planning Commission had recommended approving the subdivision map. However, the City Council voted to deny the project.

The judge found the city failed to demonstrate the Keystone Ranch development would create a specific public health or safety risk— a standard required under California's Housing Accountability Act to deny a housing project.

The ruling also found Patterson could not require Keystone Ranch to build the regional recharge basin as a condition of approval.

"The judge ultimately decided that that requirement was both illegal and that there was no basis in any of the evidence in the record to justify that," Davis said.

The decision follows another major court loss for Patterson earlier this year. In January, a judge struck down the city's 2024 development fee increases, ruling officials failed to properly notify the public and adequately justify the higher fees charged to developers.

"Two losses in less than a year for the city attorney — it's sort of unprecedented in my mind as a professional who's been doing this for 30 years," Davis said.

The latest ruling also aligns with concerns raised by the state last fall. In October, the California Department of Housing and Community Development warned Patterson that denying the Keystone Ranch project could violate state housing law.

Now, a judge has reached the same conclusion.

Patterson's city attorney told CBS News Sacramento the city is reviewing the ruling and evaluating its legal options in light of its ongoing groundwater issues.

The ruling does not automatically approve the Keystone Ranch development. Instead, the court has given Patterson 90 days to reconsider the project and issue a new decision consistent with state law.

"We certainly look forward to seeing those updates and to having another session before the City Council," Davis said.