On August 18, 2026, the board that oversees the Del Mar Fairgrounds voted 5-3 to walk away from a deal it had spent more than two years negotiating with the city of Del Mar. Mayor Tracy Martinez called the outcome a shock. She had reason to think the two sides were making progress right up until the vote.
What died that day wasn't just a real estate negotiation. It was the only site-specific plan Del Mar had for satisfying a state-mandated housing obligation, and its collapse pushes the city toward a second option it has spent three years trying to avoid: a 259-unit apartment complex on a bluff above Del Mar Dog Beach, on a parcel currently zoned for one house per acre.
If you're comparing Del Mar to other North County coastal cities right now, the zoning map you're looking at describes what's allowed today. It does not describe what's legally durable. That distinction is the whole story here, and it's worth understanding before you assume the low-density character you see on a listing sheet is the character you'll still see in three years.
The deal that was supposed to solve this
Del Mar's 6th Cycle Housing Element, covering 2021 through 2029, requires the city to plan for 61 affordable units as part of its state housing allocation. Given the city's limited land and its built-out coastline, the obvious candidate was the Del Mar Fairgrounds, a state-owned property managed by the 22nd District Agricultural Association. In 2024, the city and the DAA signed an Exclusive Negotiating Rights Agreement to study building affordable housing somewhere on Fairgrounds land.
It was never a smooth partnership. The board paused talks once in late 2024 over disagreements about lease terms and legislative strategy, and again in early 2025 after then-Mayor Terry Gaasterland publicly backed a rail realignment route the Fairgrounds board considered damaging to its property. The city received a $1.7 million state Housing Acceleration Program grant for the effort, and roughly $800,000 of that funded feasibility work on sites including the Del Mar Fire Department parcel north of the San Dieguito Lagoon bridge and land near the Fairgrounds' east main stable gate at Jimmy Durante Boulevard and Via de la Valle. By this summer, the site both sides were actually negotiating around was the Surf & Turf RV Park, a Fairgrounds-owned lot that happens to sit inside the city of San Diego's jurisdiction rather than Del Mar's.
That last detail turned out to matter more than anyone expected. When Del Mar started exploring what annexing the RV Park site would take, some DAA board members said the process had become too messy to continue. On August 18, the board ended the agreement outright, with the deadline for a lease sitting just months away and no replacement plan on the table.
Why the bluff above Dog Beach is the fallback
Del Mar's own city officials have acknowledged that if the Fairgrounds plan fails, the fallback is the North Bluff site at 929 Border Avenue, the same 6.9-acre parcel where developer Carol Lazier has spent three years trying to build Seaside Ridge, a 259-unit apartment complex that would include 42 units reserved for low- and extremely low-income households.
The city has repeatedly rejected the application, arguing it is incomplete because it lacks a rezoning application, a Local Coastal Program amendment, a coastal development permit, and conditional use permits. Del Mar's position is straightforward: the site is zoned for one house per acre, any change requires California Coastal Commission sign-off, and that process hasn't started.
Councilmember Terry Gaasterland framed the stakes plainly during the dispute:
"Changing what can be built on a beautiful, fragile bluff like this one is an extreme one."
Lazier's team sees it differently. Under California's builder's remedy provision, a jurisdiction without a housing element in genuine, ongoing compliance cannot deny an affordable housing project for conflicting with local zoning or general plan rules, unless it can point to specific health or safety impacts. Lazier sued the city in 2024, saw the case dismissed on a technicality, and refiled in October 2025. In December 2025, California Attorney General Rob Bonta's office sent Del Mar a warning letter, arguing the city's insistence that the application was incomplete looked like an attempt to avoid a ruling on whether builder's remedy applied at all. The letter also flagged Assembly Bill 712, which took effect January 1, 2026 and imposes court-ordered fines and attorney's fees on public agencies that lose housing law lawsuits. The City Council formally denied the Seaside Ridge application in May 2026, and the legal fight continues in San Diego County Superior Court.
The compliance status was never unconditional
Here's the part that doesn't show up in the coverage of this as a political feud. Del Mar's housing element was found in substantial compliance by the state's Department of Housing and Community Development back on May 31, 2023, after a technical fix to one program. But HCD's own follow-up letters make clear that compliance for Program 3A, the Fairgrounds affordable housing commitment, was never a one-time checkbox. It came with a schedule the city had to keep hitting, and that schedule was already sliding before the board acted.
In a December 2024 letter, HCD told the city it expected all parties to approve a ground lease by October 2025. By the time HCD wrote back in January 2026, that date had already slipped. The revised schedule looked like this:
| Milestone | Target date |
|---|---|
| City and District agree on a final site, execute a ground lease, and begin developer solicitation | November 2026 |
| City secures an agreement with a selected developer | April 2027 |
| CEQA, NEPA, and entitlement processes complete | September 2027 |
| Disposition and Development Agreement executed, Coastal Commission approval obtained | August 2028 |
| Developer secures financing, city executes the ground lease | June 2029 |
HCD's letters state plainly that if the city misses these milestones, it will be required to either activate an alternate program or get back on track with the remaining steps, or risk a corrective action letter and the removal of its compliance finding altogether. With the ENRA terminated on August 18, there is no longer a counterparty to agree on a site or sign a ground lease with. The November 2026 milestone, the very next one on the calendar, is no longer achievable under the plan as written. That's not a hypothetical risk sitting years out. It's the next checkpoint, and the deal that was supposed to meet it is gone.
This is the mechanism worth understanding if you're weighing Del Mar against a neighboring city. The low-density zoning that defines the bluff, and by extension much of the city's coastline, isn't protected by the zoning code alone. It's protected by a compliance finding that depends on the city successfully executing a specific plan on a timeline it doesn't fully control, because the other party to that plan is a separate state board that answers to its own board members, not to Del Mar's city council.
The dispute has stopped being just about zoning
In August 2026, before the Fairgrounds board's vote, the Del Mar City Council held a special meeting and voted 3-0, with Councilmember Dan Quirk absent, to ask the San Diego County District Attorney and the U.S. Attorney to investigate potential misconduct involving Attorney General Bonta and 22nd DAA board member Mark Arabo. The request followed a letter from resident Debrah Barnes flagging that Brian Guiltinan, a broker on the Seaside Ridge development team, was also the real estate agent who helped Arabo and his wife buy their home in 2024. Campaign finance records show Guiltinan donated $18,200 to Bonta's reelection campaign in June 2024, and Arabo separately donated $18,200 to Bonta between 2023 and 2024.
Nobody involved has been accused of wrongdoing, and Seaside Ridge's legal team has called the investigation request an overreach based on unsubstantiated connections. But the fact that a city council took this step, days before its Fairgrounds partner walked away entirely, tells you how far this has moved from a routine entitlement question. This is not a dispute likely to resolve quietly, and it is not one where either side has shown willingness to fold.
What this means if you're weighing Del Mar
None of this means the North Bluff will become an apartment complex next year, or that Del Mar's broader zoning character is about to change overnight. Litigation like this typically takes years, and the Coastal Commission's involvement adds another layer that neither side can shortcut.
What it does mean is that a zoning map, in a built-out coastal city relying on one large idea to satisfy its state housing numbers, is only as stable as that one idea. Del Mar bet its Program 3A compliance on the Fairgrounds, and that bet just failed. If you're evaluating a property near the North Bluff, or comparing Del Mar's density and character against Solana Beach, Encinitas, or another North County city with its own compliance history, the housing element's actual status with HCD, not just the zoning designation on the parcel, is the more useful thing to check. Zoning maps get amended. Compliance findings get revoked. The paperwork explaining which risk applies to a specific address takes more digging than a listing sheet will ever show you.
If you're trying to make sense of what any of this means for a specific property, or how Del Mar stacks up against other North County coastal cities on the fundamentals that actually move value, the team at Fontaine Realty Group has been working this coastline long enough to walk through the details with you. Contact us to talk through what you're looking at.
