Laguna Beach City Attorney Megan Garibaldi said the city settled a 2020 lawsuit tied to a Development Review Board decision and cautioned that sweeping state housing laws and a new penalty regime raise financial risks for the city.

"The city ended up settling, including the attorney's fees, for 2 and a half million dollars to get out of it," Garibaldi said, describing a case she characterized as involving a reduction in project height and a finding under the Housing Accountability Act.

Garibaldi told host Tom Johnson and Mayor Alex Munnaghi that California's housing legislation has grown extensive — "40 to 50 bills a year that relate to housing," she said — and that Laguna must keep its housing element certified to avoid consequences. She described a complex interaction between state housing law and the Coastal Act that makes issues such as accessory dwelling units (ADUs) harder to administer in Laguna Beach: "we still have to issue a CDP for an ADU," she said, noting coastal rules sometimes require replacement parking that state provisions would not.

Garibaldi also warned about a law taking effect on 2026-01-01 that creates automatic penalties for violations of housing laws. "The penalty is $10,000 per violation," she said, adding that the amount increases for subsequent violations and that courts will have limited discretion under the statute. "So not only are you gonna have the damages, but now you can have these, and the court doesn't have discretion. It has to issue those penalties," she said.

Mayor Alex Munnaghi said hiring an in-house city attorney was driven in part by cost and risk management. "One of the reasons why we brought our city attorney in house was our goal is how can we save money," he said, adding the city hoped to address problems earlier and reduce expensive outside litigation.

Why it matters: Garibaldi framed these developments as reasons Laguna Beach must be meticulous in permit decisions and in preparing the next housing element. The combination of past settlements, evolving state law and coastal permitting requirements, she said, makes proactive legal review and updates to local ordinances a high priority for the city.

The city will begin planning its next housing element cycle in the near future and continues to update local ADU rules and procedures to remain compliant with state law, Garibaldi said.