Planning Commission approves conversion of Harbor Boulevard motel into 47-unit SRO housing

The Costa Mesa Planning Commission on April 28 approved a conditional use permit to convert the existing motel at 2205 Harbor Boulevard into a 47‑unit single‑room occupancy development with one manager’s unit and 46 units restricted to very low‑income households.

The commission approved Conditional Use Permit PCUP‑23‑0003 on a 5‑1 vote, with Vice Chair Zick voting no and Commissioner Andrade recused. The resolution finds the project exempt from CEQA under Guidelines §15301 (existing facilities) and approves the project subject to conditions of approval, including updated operational requirements requested by the commission.

The project, proposed by owner Dr. Nikan Khatibi of AHER Investments, would convert the motel building with a minor remodel that includes interior work to meet current building codes, landscape and parking‑lot improvements and removal of the swimming pool. The applicant proposes to rent units on an annual basis at rents targeted to very low‑income households; the project includes four double‑occupancy units (no more than 10% of the total) and the remainder single‑occupancy units. The staff report and applicant materials state the SRO units will be rented at no more than 50% of Orange County median income and that the development will provide annual occupant income verification to the city.

"This is a philanthropic arm for me," Dr. Nikan Khatibi said during the hearing, describing his intent to operate the property as long‑term housing rather than short‑term lodging. He said utilities such as water and electricity would be paid by the owner for tenants, and that the units would be furnished with items often provided by nonprofit partners.

Staff planner Michael Drapkin (filling in for the absent senior planner) told commissioners the site is designated General Commercial (C2) and appears in the city’s Housing Element as an identified housing opportunity site. The Housing Element lists the parcel for 28 units with an income mix (as described in the staff report) and staff said the project would create a shortfall at some income categories relative to that listing but that the city’s overall sites analysis shows capacity to accommodate the shortfall.

Commissioners questioned several operational elements and conditions of approval. Vice Chair Zick pressed the applicant and staff on occupancy rules, asking whether "single‑occupancy" units would be limited to a single person and whether caregiver or visitor allowances were adequately defined. Dr. Khatibi and staff confirmed the intent that single‑occupancy units be occupied by one person, with limited caregiver or visitor access that would not allow overnight stays contrary to occupancy restrictions.

Commissioners also questioned: - Supportive services: The applicant said there will be no full‑time on‑site case manager. Instead, the project team will coordinate with existing county and nonprofit case managers (for example, United Way, PATH, Illumination Foundation, Mercy House and the Orange County Housing Authority) and provide a staff liaison role for coordination. The applicant said tenants would largely be referred by or coordinated through those partners but that the owner would not refuse applicants who come through other channels. - Parking: The project proposes 26 on‑site parking spaces for 46 tenant units; staff and the applicant said cities’ experience with comparable very low‑income projects shows low vehicle ownership (often below 0.5 cars per unit) but acknowledged concerns about spillover and noted an indemnification condition tied to AB 2,097 was included to address potential claims related to off‑site impacts. - Property management plan (PMP): Commissioners asked that references in the conditions of approval be clarified to explicitly require operation consistent with the applicant’s PMP and that any material changes be subject to review and approval by the city’s development services director (or designee). The commission added language to align the conditions with the PMP where appropriate. - Smoking areas: Commissioners asked the applicant to identify a smoking area that complies with the requirement discussed in the PMP (at least 25 feet from building entrances, doorways and operable windows) and requested the condition of approval be revised to explicitly prohibit smoking inside units while permitting a designated outdoor smoking area that meets the separation requirement.

Public comment included past and current tenants and community members who urged clearer tenant protections, faster paths to rental assistance, and that the city consider household needs such as families and single parents who may outgrow single‑person SRO units. Speakers in support noted the need for additional very low‑income housing in Costa Mesa.

In deliberations Commissioners who voted to approve said the project increases the city’s supply of very low‑income housing and complies with the council’s SRO policy and City rules as presented in the staff report. Commissioners who opposed or expressed reservations said the PMP contained inconsistencies and that the project was presented without a prior study session, leaving operational language and the role of supportive services too vague for their comfort.

The commission’s approval includes the staff‑recommended conditions of approval with the following explicit changes adopted by the commission: a) revise condition language to reference the property management plan as the governing operational document and require city review/approval for material changes; b) clarify smoking rules to prohibit smoking inside units and require the designated smoking area to meet the PMP’s 25‑foot separation standard; and c) direct staff to follow up on a public‑comment concern about eviction notice timelines ("pay or quit"). The motion was moved by Commissioner Martinez and seconded by Commissioner Dixon.

The decision is final unless appealed to the City Council within seven days of the Planning Commission action.

Background/technical context: the staff report and applicant submittal cite the Costa Mesa City Council SRO policy (attachment to the staff report), the state CEQA guideline exemption for existing facilities (Guidelines §15301) and the state law referenced as AB 2,097 (indemnification discussion in staff report). The staff report also summarizes how the city’s Housing Element and RHNA accounting were considered in making the required findings for the project.