Costa Mesa Confidential
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Shifting Sands: Costa Mesa’s Transition from Homeownership to Rentals

Facing a growing trend of renters, Costa Mesa prepares for a landscape change, tackling housing challenges head-on.

Costa Mesa is currently experiencing a notable shift in its population, veering away from homeownership to a more rental-based demographic. The city stands out amongst its neighbors, boasting a 60.9% rate of renter-occupied households – a percentage that eclipses the second-highest city, Irvine, by roughly eight points.

This population migration from homeownership to rentals may foreseeably alter the city’s landscape. Notably, the shift could transition the city from a community primarily composed of vested stakeholders to one primarily catering to consumer needs. Comparing the renter-owner balance of Costa Mesa with nearby cities such as Newport Beach, Huntington Beach, Laguna Beach, and Irvine illustrates a striking imbalance. With an overall reported overcrowding rate of 9% and a renter-occupied overcrowding rate of 7.9%, Costa Mesa exceeds all other cities in this bracket.

While single-family homes are dominant in Orange County, making up just over half of all family residences, Costa Mesa contradicts this trend. Over 50% of residences in the city are multi-family rental units, with single-family homes accounting for only 37.7%. This evolving landscape challenges Costa Mesa to maintain a balance between renters and property-owning stakeholders.

Costa Mesa is preparing for the addition of 11,760 housing units from 2021-2029, a decision derived from the California Department of Housing and Community Development Department (HCD) via the Regional Housing Needs Assessment (RHNA). According to state law, this department possesses the authority to determine existing and projected housing needs for each region, considering the shared housing needs of people across all income levels.

However, the decision to add these units isn’t solely tied to projected housing needs. California’s commitment to reducing greenhouse gasses has influenced legislative provisions. These require affordable housing to be built close to job centers, eliminating commute-related emissions and supporting the state’s climate goals. Non-compliant cities risk losing state funding and community input in city planning through penalties like the Builder’s Remedy.

California’s move towards an affirmative housing policy underscores the state’s commitment to mitigating housing disparities and breaking away from segregated living patterns. This extends to income-based segregation, mandating high-value communities to incorporate low-income housing within their jurisdictions.

The Southern California Association of Governments (SCAG), America’s largest metropolitan planning agency, disseminates the HCD’s housing unit determinations to each county within its jurisdiction. Concerns about these determinations have been raised in recent stakeholder engagement processes for Costa Mesa. It was asserted that factors such as available land and developmental capacity should be considered in regional determinations.

In response, SCAG emphasized that these factors did not influence the state’s regional housing needs assessment or their methodology for allocation. They stressed the need to consider potential residential development under alternative zoning and planning tools, regardless of the existing zoning ordinances and land use restrictions.

Consequently, Costa Mesa is slated to construct the state-mandated 11,760 housing units. The breakdown of these units includes 4,713 units for extremely low-, very low, and low-income households; 2,088 units for moderate-income households, and 4,959 units for households with incomes above moderate levels. In addition, the city plans to add 858 accessory dwelling units, predominantly catering to low and moderate-income households.

The city’s stakeholders have voiced concerns that the Housing Element law fails to consider potential challenges to housing production, particularly for affordable housing. SCAG agreed, acknowledging that factors like land, material, and labor costs are beyond the scope of the planning process and are not addressed in current housing laws.

On May 9, HCD confirmed that Costa Mesa’s plans align with the statutory requirements of the state’s Housing Element Law. This acknowledgment fuels the city’s ongoing evolution, further advancing its transition into a significant rental hub.

Furthermore, Costa Mesa’s development agenda suggests a more considerable rise in rental residents in the years to come, intensifying the city’s grappling with an imbalanced renter-owner ratio. This landscape shift calls for innovative solutions and continuous engagement between stakeholders, local government, and planning authorities, ensuring that the city’s growth is both sustainable and equitable for all its residents.

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