📢SPECIAL UPDATE! 📢HOUSING ELEMENT TROUBLES CONTINUE: HCD FLAGS FAIRVIEW DEVELOPMENTAL CENTER SPECIFIC PLAN AND DISABILITY HOUSING BARRIERS📢
On October 30, the California Department of Housing and Community Development (HCD) issued a letter responding to the latest Housing Element revision submitted to it by the City, rejecting the submission and putting the City on notice that either it shapes up, or it faces greater consequences.
But the last we heard from the City was that it needed to rush through changes to the Housing Element, and adopt the Fairview Developmental Center Specific Plan (FDCSP), so we could make a lawsuit filed against the City by the State of California go away.
What happened to make HCD reject our Housing Element and issue a pretty stern letter to the City? First, let’s go over the timeline.
TIMELINE OF HOUSING ELEMENT ISSUES:
February 1, 2022:Â Costa Mesa adopted its 6th Cycle Housing Element. The due date for the submission of a finalized Housing Element to the HCD was October 2022, but the City did not re-adopt the Housing Element until November 15, 2022, meaning the City missed its deadline. HCD did not immediately certify it.
May 2023: HCD notified the City that the element meets statutory requirements on paper but could not be certified until necessary rezoning is completed. That rezoning was required to be completed within one year.
September 2023:Â Costa Mesa commenced work on the FDCSP.
August 22, 2025:Â HCD issued a notice of violation, formally rejecting Costa Mesa's proposed September 2026 rezoning timeline.
March 1, 2026: Approximately 5,863 units of capacity were impacted following a local overlay court ruling in the New Commune DTLA LLC v. City of Redondo Beach case, requiring site recalculations.
April 7, 2026: The City Council adopted Rezoning Ordinance 2026-03 (5–2 vote) and declared itself exempt from Measure Y restrictions that would require voter approval.
June 8, 2026:Â HCD issues a Letter of Technical Assistance to the City with respect to the request for reasonable accommodation by The Ohio House. That letter can be found here:
July 2026: The City released the first draft of the FDCSP document.
July 16, 2026: The California Attorney General filed a lawsuit against Costa Mesa, demanding a compliant housing element, expedited rezoning within 120 days, and associated penalties. The City was required to file a response to the State’s lawsuit by September 23, but was given an extension by the State until October 23, 2026.
August 12–19, 2026: The City released a revised draft of the Housing Element for public review.
August 17, 2026:Â The Planning Commission voted to recommend that the City Council adopt the revised draft.
September 1, 2026: The City Council voted 7–0 to adopt a Housing Element amendment adding 95 sites with roughly 6,996 units of capacity. HCD preliminarily indicates the updated plan meets state requirements. The revised Housing Element is sent to HCD the following day.
September 15, 2026: The City Council approved the FDCSP, but capped development at 2,300 units (with 920 affordable units). You can read our report about that approval and the City Council’s modifications to the plan recommended by Staff here.
October 6, 2026:Â The City Council gave the FDCSP a second reading, further modifying the prior action to add explicit language prohibiting a road across the golf course and eliminating that road from any conceptual graphic in the Specific Plan document.
October 20, 2026:Â A citywide rezoning package went before the City Council, and settlement discussions commenced between the City and State about the lawsuit the State filed against the City.
October 21, 2026: A stipulation further extending the time for the City to respond to the State’s lawsuit was signed by the parties. The stipulation grants an extension to November 23, 2026, for filing of the City’s responsive pleading. It looks like the settlement talks between the State and the City have stalled.
October 30, 2026:Â HCD issued its letter to the City, citing the FDCSP as one of the problematic areas in the Housing Element. You can read the HCD letter here:
Keep in mind that all of this (except for the stipulation and the last letter from HCD) was prior to the actions taken in October to effectively settle the court case The Ohio House had filed against the City, and likely the case the City had filed against The Ohio House. The City has granted the reasonable accommodation that The Ohio House requested, along with a conditional use permit.
How is that relevant? That case had been joined into by the State of California, but the US District Court had denied the State’s claims in the case, citing that the original claims had only related to federal law. The City took that as a win, but the State was obviously upset at its loss, and subsequently filed a lawsuit against the City in July for failing to comply with state housing law requirements. This is critical, because the State has repeatedly instructed the City to repeal and replace its sober living ordinance, as it did in the June 8, 2026 letter above.
In addition, the California Civil Rights Department had an open disability discrimination complaint against the City. Because of the settlement of The Ohio House cases, that complaint could be closed.
ANALYSIS OF HCD LETTER. So what does this all mean? Let’s look at what the letter says minus all the legal gobblygook.
The HCD review found that Costa Mesa is close to, but not yet in, full compliance with California Housing Element Law for its 2021–2029 housing plan and rezoning program.
What HCD Found:
HCD previously found the City’s adopted housing element was statutorily compliant, and its 2026 amendments did not undermine that determination.
The City has completed most required rezoning work, particularly for additional housing sites, but the FDCSP still falls short of state requirements for accommodating lower-income housing.
Required Fixes: The FDCSP must be revised to:
Allow qualifying multifamily projects with at least 20% lower-income affordable units by right, without discretionary review.
Provide a minimum zoning density of 20 dwelling units per acre (du/ac) on lower-income Regional Housing Needs Assessment (RHNA) sites.
In mixed-use areas, require residential uses to occupy at least 50% of total floor area, permit fully residential projects, and prevent 100% nonresidential development on those sites.
Continuing Compliance Risks: HCD also directed the City to implement and annually report on a range of housing programs, including affordable housing, supportive and transitional housing, disability (sober living) accommodations, group homes, parking standards, ADUs, motel conversions, fair housing, and large-site development. It specifically warned the City that its existing zoning still contains barriers to housing for people with disabilities despite programs being marked complete. Note that the sober living ordinance is part of Title 13 of the City’s ordinances, entitled “Planning, Zoning and Development.”
If Costa Mesa does not promptly correct these issues, HCD may review and potentially revoke its substantial compliance status: In its letter, HCD states that “Failure to make expeditious progress will trigger a review of the housing element that may result in revocation of substantial compliance.” Revocation of substantial compliance means that the City (a) loses eligibility or competitiveness for certain state and regional funding programs, (b) becomes a prime target for lawsuits from housing advocates or developers, as well as strict enforcement actions by the California Attorney, and (c) can be subject to court-ordered suspension of local building permit or zoning authority and mandatory compliance deadlines, and (d) other fines and penalties.
That is probably the strongest language we have seen from the HCD yet.
WHAT DOES THE CITY NEED TO DO? The City has already made the first change of 20% by-right entitlements for lower-income housing to its ordinances as it applies to Housing Element and Measure K sites. It needs to apply that change specifically to the FDCSP site, which is a Housing Element site.
The second change will require the City to go back and redo some of the work on the ordinance that was adopted by the City Council with respect to the FDCSP to make certain that any site with lower-income RHNA is zoned a minimum of 20 du/ac.
The third one is a little more difficult. As part of the adoption of the FDCSP, the City Council specified that there would be a range of 15,000 to 35,000 square feet of commercial space. Because this is a Housing Element site, it is subject to the ruling in the New Commune DTLA LLC v. City of Redondo Beach case. In that case, the California Court of Appeal ruled that commercial overlay zones cannot satisfy state housing mandates if they allow developers to build commercial projects with zero residential units. Since the site is a Housing Element site, it appears that the State may view the City zoning any part of the site purely commercial as something it will not allow. At least 50% of the floor area of any development on the site will need to be residential.
HOW DID THIS HAPPEN? Wasn’t this supposed to have been all tied up with a nice bow so the Master Developer could start making its plans? Well, yes. These are all changes that Placeworks, the City’s consultant for the FDCSP, should have made certain were in the Specific Plan documents and related ordinances.
Placeworks overlooked that the Fairview Developmental Center site was a Housing Element site and needed to conform to the revised Housing Element. The State has reminded the City all along that the focus should be on affordable housing, as the State’s legislation governing the site's disposition states. It seems that the Placeworks folks got so wrapped up in creating a Specific Plan document with too much fluffy language and irrelevant pictures that they forgot the substance of what they were doing.
BACK TO OHIO HOUSE AND THE SOBER LIVING ORDINANCE. The HCD stated that the City still has zoning barriers affecting housing for people with disabilities and must promptly fix them.
Programs marked complete are not sufficient:Â Although the City reported completing its reasonable-accommodation, single-housekeeping-unit, and group-home programs, HCD found that the revised zoning still contains several constraints on housing for persons with disabilities.
Required areas for revision:Â HCD specifically identifies:
Program 2N:Â Reasonable accommodation
Program 2O:Â Definition of a single housekeeping unit
Program 2P:Â Group homes (e.g., sober living homes).
Expectation:Â The City should revise its zoning to fulfill the purpose of those programs, consult with public commenters, stakeholders, HCD, and the California Civil Rights Department, and consider the recent Civil Rights Department settlement agreement.
The recent HCD letter also requires continued implementation and annual reporting on Program 2F, Persons with Physical and Developmental Disabilities, along with other housing programs.
CONCLUSION: The October 30 HCD letter makes one thing clear: despite the City’s recent Housing Element amendments and the adoption of the FDCSP, the State does not consider Costa Mesa’s work finished.
While HCD acknowledged that the City has completed much of the required rezoning effort and remains closer to compliance than it was a year ago, the agency identified several remaining deficiencies. Most notably, the FDCSP must be amended to better accommodate lower-income housing opportunities and comply with state requirements for by-right approvals, minimum residential densities, and mixed-use development standards.
The letter also demonstrates that HCD's concerns extend beyond the number of housing units planned for Costa Mesa. The agency continues to scrutinize Costa Mesa’s treatment of housing for persons with disabilities, including group homes and sober living facilities, and it is directing the City to revisit portions of its zoning code that state officials believe continue to create barriers to housing access.
Equally significant is the timing. The letter arrived while the City and State are engaged in ongoing discussions regarding the State's housing lawsuit, and just days after both parties agreed to extend the City's deadline to respond in court. Rather than closing the chapter on Costa Mesa's housing compliance issues, the latest HCD review suggests that additional revisions and negotiations remain ahead.
The City now faces a choice: promptly address the remaining concerns identified by HCD or risk further enforcement actions, potential litigation exposure, and a review that could jeopardize its substantial compliance status. For residents, taxpayers, developers, and housing advocates alike, the question is no longer whether changes are required, but how quickly the City can make them and whether those changes will satisfy State regulators.
For now, the lawsuit remains pending, the Housing Element remains under scrutiny, and the FDCSP appears headed back for further revisions. The next several months may determine whether Costa Mesa finally reaches housing compliance or finds itself in an even more contentious dispute with the State.
When the new City Council is seated on December 1, it will consist of three new members and one vacant seat. With so much institutional knowledge turning over at once, the Council will need to come up to speed quickly and resolve this matter promptly to satisfy HCD and State requirements.
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