The city of Norwalk is no longer eligible to receive state housing and homelessness funds after the state Department of Housing and Community Development revoked its compliance with the housing element law.  

Additionally, the city can no longer deny certain affordable housing projects, according to Gov. Gavin Newsom.

The announcement comes weeks after the city extended its moratorium on emergency shelters for the homeless, single-room occupancy, and transitional housing. A day earlier, Newsom threatened the city with a potential lawsuit if the ordinance wasn’t reversed.

“After the state has provided cities and counties with unprecedented funding to address the homelessness crisis, it’s beyond cruel that Norwalk would ban the building of shelters while people are living on the city’s streets. This crisis is urgent, and we can’t afford to stand by as communities turn their backs on those in need. No more excuses—every city, including Norwalk, must do its part and follow state housing laws,” Newsom said in a statement.

The Norwalk City Council adopted the ordinance on Aug. 6, putting a moratorium on various establishments, including emergency shelters, along with transitional and supportive housing.

In September, the city council voted to extend the moratorium without discussion. Before city council members voted on the extension, HCD sent city officials a “Notice of Violation and Corrective Action Letter” regarding the ordinance.

In July, Newsom signed an executive order, which, among other things, allowed state and local officials to dismantle homeless encampments.

The executive order was issued in response to a Supreme Court decision in late June that granted officials authority to remove the encampments and ticket people for camping in public in Grants Pass, Oregon. While some city leaders applauded the executive order, others, like Los Angeles Mayor Karen Bass, called the decision “unfortunate.”

While Newsom cannot force local authorities to act, his administration can apply pressure by withholding money for counties and cities.

Norwalk’s moratorium extension will expire on Aug. 5, 2025.