CITY OF COSTA MESA
REGULAR CITY COUNCIL AND HOUSING AUTHORITY*
Agenda
City Council Chambers
77 Fair Drive
5:00 PMTuesday, September 8, 2026
STUDY SESSION
The City Council meetings are presented in a hybrid format, both in-person at City Hall and virtually via Zoom Webinar.
Closed Captioning is available via the Zoom option in English and Spanish.
Los subtítulos están disponibles a través de la opción Zoom en inglés y español.
TRANSLATION SERVICES AVAILABLE / SERVICIOS DE TRADUCCIÓN DISPONIBLE Please contact the City Clerk at (714) 754-5225 to request language interpreting services for City meetings. Notification at least 48 hours prior to the meeting will enable the City to make arrangements.
Favor de comunicarse con la Secretaria Municipal al (714) 754-5225 para solicitar servicios de interpretación de idioma para las juntas de la Ciudad. Se pide notificación por lo mínimo 48 horas de anticipación, esto permite que la Ciudad haga los arreglos necesarios.
Members of the public can view the City Council meetings live on COSTA MESA TV (SPECTRUM CHANNEL 3 AND AT&T U-VERSE CHANNEL 99) or
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1 REGULAR CITY COUNCIL AND HOUSING
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Agenda September 8, 2026
Members of the public are welcome to speak during the meeting when the Mayor opens the floor for public comment. There is no need to register in advance or complete a comment card. When it's time to comment, line up at one of the two podiums in the room and wait for your turn. Each speaker will have up to 3 minutes (or as directed) to address the City Council.
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Further information regarding the City's regulations on addressing the City Council and expected conduct during meetings are available at the following links.
Title 2: Administration
§ 2-61: Conduct while addressing the council.
https://ecode360.com/42609578
Title 2: Administration
§ 2-64: Disorderliness by members of the audience.
https://ecode360.com/42609598
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https://us06web.zoom.us/j/83997497047?pwd=rptG9usnQwYBhGGK8WI6FnZA9YrHHL.1 Or sign into Zoom.com and “Join a Meeting”
Enter Webinar ID: 839 9749 7047/ Password: 474846
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2 REGULAR CITY COUNCIL AND HOUSING
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Agenda September 8, 2026
Participate via telephone:
Call: 1 669 900 6833 Enter Webinar ID: 839 9749 7047/ Password: 474846 During the Public Comment Period, press *9 to "raise your hand" and to be added to the queue to speak and wait for city staff to announce your name/phone number and press *6 to unmute your line when it is your turn to speak. Comments are limited to 3 minutes, or as otherwise directed.
Note, if you have installed a zoom update, please restart your computer before participating in the meeting.
Additionally, members of the public who wish to make a written comment on a specific agenda item, may submit a written comment via email to the City Clerk at [email protected].
Any written communications, photos, or other materials for copying and distribution to the City Council that are 10 pages or less, can be e-mailed to [email protected], submitted to the City Clerk’s Office on a flash drive, or mailed to the City Clerk’s Office. Note that records submitted by the public will not be redacted in any way and will be posted online as submitted, including any personal contact information. Comments received by 12:00 p.m. on the day of the meeting will be provided to the City Council, made available to the public, and will be part of the meeting record.
All pictures, PowerPoints, and videos submitted for display at a public meeting must be previously reviewed by staff to verify appropriateness for general audiences. No links to YouTube videos or other streaming services will be accepted, a direct video file will need to be emailed to staff prior to each meeting in order to minimize complications and to play the video without delay. The video must be one of the following formats, .mp4, .mov or .wmv. Only one file may be included per speaker for public comments, for both videos and pictures. Please e-mail to the City Clerk at [email protected] NO LATER THAN 12:00 Noon on the date of the meeting. If you do not receive confirmation from the city prior to the meeting, please call the City Clerks office at 714-754-5225.
Items submitted for the overhead screen should be 1 page and provided to the City Clerk no later than 15 minutes prior to the start of the meeting.
Please know that it is important for the City to allow public participation at this meeting. If you are unable to participate in the meeting via the processes set forth above, please contact the City Clerk at (714) 754-5225 or [email protected] and staff will attempt to accommodate you. While the City does not expect there to be any changes to the above process for participating in this meeting, if there is a change, the City will post the information as soon as possible to the City’s website.
Note regarding agenda-related documents provided to a majority of the City Council after distribution of the City Council agenda packet (GC §54957.5): Any related documents provided to a majority of the City Council after distribution of the City Council Agenda Packets will be made available for public inspection. Such documents will be posted on the city’s website and will be available at the City Clerk's office, 77 Fair Drive, Costa Mesa, CA 92626.
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Agenda September 8, 2026
All cell phones and other electronic devices are to be turned off or set to vibrate. Members of the audience are requested to step outside the Council Chambers to conduct a phone conversation.
Free Wi-Fi is available in the Council Chambers during the meetings. The network username available is: CM_Council. The password is: cmcouncil1953.
As a LEED Gold Certified City, Costa Mesa is fully committed to environmental sustainability.
A minimum number of hard copies of the agenda will be available in the Council Chambers.
For your convenience, a binder of the entire agenda packet will be at the table in the foyer of the Council Chambers for viewing. Agendas and reports can be viewed on the City website at https://costamesa.legistar.com/Calendar.aspx. Las agendas y los informes se pueden ver en español en el sitio web de la Ciudad en
https://www.costamesaca.gov/trending/current-agendas/spanish-city-council-agendas.
In compliance with the Americans with Disabilities Act, Assistive Listening headphones are available and can be checked out from the City Clerk. If you need special assistance to participate in this meeting, please contact the City Clerk at (714) 754-5225. Notification at least 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting. [28 CFR 35.102.35.104 ADA Title II].
En conformidad con la Ley de Estadounidenses con Discapacidades (ADA), aparatos de asistencia están disponibles y podrán ser prestados notificando a la Secretaria Municipal. Si necesita asistencia especial para participar en esta junta, comuníquese con la oficina de la Secretaria Municipal al (714) 754-5225. Se pide dar notificación a la Ciudad por lo mínimo 48 horas de anticipación para garantizar accesibilidad razonable a la junta. [28 CFR
35.102.35.104 ADA Title II].
4 REGULAR CITY COUNCIL AND HOUSING
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Agenda September 8, 2026
REGULAR STUDY SESSION MEETING OF THE CITY COUNCIL
SEPTEMBER 8, 2026 – 5:00 P.M.
JOHN STEPHENS
Mayor
MANUEL CHAVEZ ANDREA MARR Mayor Pro Tem - District 4 Council Member - District 3
ARLIS REYNOLDS LOREN GAMEROS Council Member - District 5 Council Member - District 2
JEFF PETTIS MIKE BULEY Council Member - District 6 Council Member - District 1
KIMBERLY HALL BARLOW CECILIA GALLARDO-DALY City Attorney City Manager
CALL TO ORDER
PLEDGE OF ALLEGIANCE
ROLL CALL
STUDY SESSION ITEM:
1. MEASURE Q ORDINANCE REVENUE FUND DISCUSSION 26-372
RECOMMENDATION:
Staff recommends the City Council conduct a Study Session to review the revenue set-aside provisions of the Measure Q ordinance and provide direction to staff.
Agenda Report
1. City of Costa Mesa Cannabis Tax Ordinance
Attachments:
ADJOURNMENT
5 CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 26-372 Meeting Date: 9/8/2026
TITLE:
MEASURE Q ORDINANCE REVENUE FUND DISCUSSION
DEPARTMENT: COMMUNITY DEVELOPMENT DEPARTMENT/FINANCE
DEPARTMENT
PRESENTED BY: NANCY SA, GRANT ADMINISTRATOR AND ANNA ACOSTA-
REYES, FINANCE MANAGER
CONTACT INFORMATION: NANCY SA, GRANT ADMINISTRATOR, (714) 754-5678 RECOMMENDATION:
Staff recommends the City Council conduct a Study Session to review the revenue set-aside provisions of the Measure Q ordinance and provide direction to staff.
6
City of Costa Mesa
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
Item #: 26-372 Meeting Date: 9/8/2026
TITLE: MEASURE Q ORDINANCE REVENUE FUND DISCUSSION
DEPARTMENT: COMMUNITY DEVELOPMENT DEPARTMENT/FINANCE DEPARTMENT
PRESENTED BY: NANCY SA, GRANT ADMINISTRATOR AND ANNA ACOSTA-REYES, FINANCE
MANAGER
CONTACT INFORMATION: NANCY SA, GRANT ADMINISTRATOR, (714) 754-5678
RECOMMENDATION:
Staff recommends the City Council conduct a Study Session to review the revenue set -aside provisions of the Measure Q ordinance and provide direction to staff.
BACKGROUND:
At the June 16, 2026, City Council meeting, staff presented a high‑level framework for a Measure Q First-Time Homebuyer (FTHB) Pilot Program based on revenues collected from the Cannabis Tax Measure in conformance with the Measure Q ordinance. Key program components were identified for Council review and input. The Council voted to receive and file the staff report and requested a Study Session to discuss the use of the funds for a first-time homebuyer program under the Measure Q ordinance and consider potential amendments. In addition, the Council requested an update on the Housing Trust Fund, previously established, and a discussion of the use of the funds.
On November 3, 2020, Costa Mesa voters approved the City of Costa Mesa Retail Cannabis Tax and Regulation Measure (Measure Q), authorizing cannabis retail storefronts and delivery businesses within the City. Following voter approval, on May 4, 2021, the City Council adopted a seven-percent cannabis retail tax and directed that one-half of one percent of Measure Q revenues be allocated to a First-Time Homebuyer (FTHB) Program and one -half of one pe rcent of the reven ues support implementation of the Cultural and Arts Master Plan. Funding for these programs began in Fiscal Year 2022-23.
May 4, 2021, Agenda Report and Attachments:
https://www.costamesaca.gov/home/showpublisheddocument/47786/637557361622170000
Measure Q Funding History
Although voters approved Measure Q in November 2020, the City did not start recognizing revenues until FY 2022-23. As of June 30, 2025, the City has received over $8.5 million in revenue from Measure Q, of which approximately $600,000 has been recognized in each of the affected funds, the Cultural Arts Master Plan Fund 130 and First Time Homebuyer (FTHB) Fund 140. The projected FY 2026 -27 revenue for FTHB from Measure Q is approximately $242,000, resulting in an approximate fund balance of $842,000.
7 Item #: 26-372 Meeting Date: 9/8/2026
First Time Homebuyer Program
A preliminary analysis conducted in 2024 determined that Measure Q revenues were insufficient at that time to support implementation of the FTHB Program. The dedicated fund has since grown to approximately $600,000, which staff deems viable to launch a program.
On June 16, 2026, staff presented City Council with a proposed FTHB pilot program. The City Council voted to receive and file the presentation , schedule a Study Session to discuss the Measure Q ordinance and consider potential amendments, and provide an update on the Housing Trust Fund, including how its funds are used.
June 16, 2026, Agenda Report:
https://costamesa.legistar.com/LegislationDetail.aspx?ID=8069651&GUID=92E52F97-3FE9- 406A-925F-866985CC8FD2
ANALYSIS:
An amendment to the Measure Q ordinance requires approval from at least five City Council Members. This study session requests City Council direction specifically on Title 9, Chapter 1, Article 5, Section 9-29.5(g), which establishes the set-aside provisions for the special revenue funds. Based on City Council feedback from the June 16, 2026 meeting, three ordinance amendment options a re provided for consideration.
Measure Q Revenue Fund
The Cultural Arts Master Plan Fund (Fund 130) and First-Time Homebuyer Program Fund (Fund 140) were established to record the one -half of one percent of Measure Q revenues and expenditures.
Since its inception, Fund 130 has been utilized to fund 1 FTE and various City arts initiatives , along with supplemental funds from the General Fund.
Option 1 – Maintain Measure Q set aside
Staff developed a high‑level framework for a FTHB Program and identified key program components for Council review at the June 16, 2026, City Council meeting. In preparing this framework, staff reviewed comparable programs in neighboring jurisdictions, analyzed current Costa Mesa home prices, and evaluated strategies to ensure the program aligns with local housing needs. The proposed program is intended to advance the City Council’s strategic goal to “Diversify, stabilize, and increase housing to reflect community needs.”
June 16, 2026, Agenda Report:
https://costamesa.legistar.com/LegislationDetail.aspx?ID=8069651&GUID=92E52F97-3FE9- 406A-925F-866985CC8FD2
At that meeting, staff requested Council direction on eight core program elements and recommended implementing a pilot program, followed by a return to Council to evaluate its effectiveness and provide recommendations for future adjustments. Should Council decide to keep the Measure Q set aside for a FTHB Program , staff recommends that Council provide direction regarding the pilot program as previously presented. A summary of the eight core program elements and feedback received from City Council is included in Table 1.
8 Item #: 26-372 Meeting Date: 9/8/2026
Table 1. Summary of Proposed Pilot FTHB Program Core Elements Core Program Element Requested City Council Direction
1. Grant Amount Option 1: $25,000
Option 2: $30,000
Option 3: $35,000
Alternate loan structure
2. Eligible Uses of Grant
Funds
Staff Recommendation: Approve eligible expenses
• Eligible: down payment assistance, closing costs, interest rate buy downs, similar expenses related to the financing aspect of the home purchase
• Ineligible: costs related to home renovations,
improvements, furniture or other household related items
3. Household Eligibility Staff Recommendation: Applicants eligible if they meet criteria • Measure Q Requirements: current Costa Mesa resident,
former resident raised in the City, or graduate of NMUSD • FTHB: never owned a home in California or not owned a home in California within the past three years
• Mortgage preapproval (no all-cash purchases)
4. Income Limit Option 1: 150% (approx. $207,900)
Option 2: 200% (approx. $277,200)
Option 3: 250% (approx. $346,500)
Option 4: No AMI restrictions
Purchase Price Limit in lieu of Income Limit
5. Cash Assets Staff Recommendation: Remove this requirement
6. Eligible Housing Types Staff Recommendation: Approve eligible and non-eligible housing types
• Eligible: Single-family detached home, townhomes,
condominiums, manufactured homes
• Ineligible: Multi-unit properties, recreational vehicles
7. Residency Requirements Staff recommendation: occupy as primary residence for minimum of 5 years
8. Application Review
Process
Staff recommendation: 60-day application window, randomized lottery, 12 month to purchase home, maintain wait list
The FTHB fund has an approximate fund balance of $600,000 for Fiscal Year ending 2025-26 that is available for this program should the funding be maintained. Projected revenue for FY2026 -27 is estimated at $242,000, which increases the available funding for this program to approximately $842,000.
Option 2 – Allocate Measure Q tax revenue set aside to other programs City Council may amend the ordinance so that a percentage of the revenue is set aside for different programs. A supermajority vote of the City Council is required to amend the ordinance. At its June 9 Item #: 26-372 Meeting Date: 9/8/2026
16, 2026 meeting, the City Council raised suggestions including expanding funding for tenant based rental assistance, acquiring land to support affordable homeownership opportunities, supporting affordable housing development projects, or allocating funds to the City’s Housing Trust Fund.
Tenant Based Rental Assistance
The City partners with Families Forward to provide tenant based rental assistance to low-income families with minor children. The City allocates $200,000 annually in HOME Investment Partnerships (HOME) Program funds, supporting rent subsidies for approximately 12-to-15 households each year.
City Council may choose to expand the City’s existing partnership with Families Forward to increase the number of households served. Alternatively, the City may partner with another agency to assist a different population, such as low-income seniors.
Affordable Homeownership Opportunities
City Council may amend the ordinance to set aside a portion of the revenue to affordable homeownership opportunities. Potential strategies include, but are not limited to:
The City may purchase land or property to be managed by an organization specializing in affordable homeownership opportunities for low -income residents. However, the current anticipated annu al revenu e for the set aside is about $240,000, which is not sufficient to purchase property or land in the City.
The City may provide funding to an affordable housing developer specializing in for-sale units for low-income households to create new ownership opportunities in Costa Mesa. The funds may be used to supplement the project as gap financing or provide down payment assistance to future homeowners.
The City may offer subsidies for predevelopment activities, land acquisition, site preparation, or other costs to reduce expenses for developers constructing affordable ownership units.
Affordable Housing Development
City Council may choose to provide gap financing for affordable housing development through a Notice of Funding Availability or a Request for Proposals (RFP). The funding may be structured as a grant or loan and may be combined with other funding sources, such as HOME funds.
Housing Trust Fund
On April 2, 2024, City Council provided direction to establish the Housing Trust Fund (Fund 226) with the available funds of $2.5 million from the American Rescue Act Plan (ARPA) Funds. This direction was provided during the Council discussion and action on the Affordable Housing Ordinance. The Housing Trust Fund was created to address housing affor dability within the City of Costa Mesa and assist in creating a pathway to achieving the long -term goal of housing aff ordability for different income levels, including a first -time home ownership program . The Housing Trust Fund has been utilized for tenant relocation from the Shalimar property and to rehabilitate the City’s low-income rental units on James/18th Street . The Housing Trust Fund has a current fund balance of approximately $2.16 million, of which $2.1 million has been committed to Jamboree Corporation for the Costa Mesa Senior housing project. The available fund balance in Fund 226 is approximately $60,000.
10 Item #: 26-372 Meeting Date: 9/8/2026
The Council may provide further direction on how future HTF dollars may be utilized to further define and prioritize use of the funds.
Option 3 – Allocate entire Measure Q revenue fund to the General Fund City Council may amend the ordinance to remove the revenue set aside so the entirety of the Measure Q revenue funds remains in the City’s General Fund. A supermajority vote of the City Council is required to amend the ordinance.
ALTERNATIVES:
City Council may provide alternative recommendations for updating the Measure Q ordinance.
FISCAL REVIEW:
The FTHB program is funded by Measure Q revenue and will not have an impact on the City’s General Fund. There is currently an available fund balance of approximately $600,000 for the program in the First Time Homebuyers’ Fund (Fund 140). Fund 140 receives approximately $242, 000 in annual revenue from Measure Q. Further, the Housing Trust Fund (Fund 226) has an available fund balance of approximately $60,000 that could be utilized toward the FTHB program. The FTHB program will be administered in accordance with the availability of funds in Fund 140 and Fund 226.
LEGAL REVIEW:
The City Attorney’s Office has reviewed this agenda report as to form.
CITY COUNCIL GOALS AND PRIORITIES:
This item supports the following City Council Goals:
Strengthen the public’s safety and improve the quality of life. Diversify, Stabilize and Increase Housing to Reflect Community Needs
CONCLUSION:
Staff recommends the City Council conduct a Study Session to review the revenue set -aside provisions of the Measure Q ordinance and provide direction to staff.
11 § 9-29.5. Cannabis tax.
Notwithstanding any other provision of this Code, every person engaged in, managing, conducting, or carrying on any cannabis business defined in Chapter VI of this title, or any other marijuana and/or cannabis business, shall pay an annual business tax as follows:
(Ord. No. 16-15, § 3, 11-8-16; Ord. No. 18-04, § 1, 4-3-18; Ord. No. 21-09, § 1, 6-15-21)
(a) Every person who is lawfully engaged in, managing, conducting, or carrying on a business as a cannabis distributor, manufacturer, and/or research and development laboratory, as set forth in section 9-486(a), shall pay an annual business tax of 1% based on the gross receipts of that business.
(b) Every person who is lawfully engaged in, managing, conducting, or carrying on a business as a cannabis testing laboratory, as set forth in section 9-486(a), shall pay no annual business tax.
(c) Every person who is engaged in, managing, conducting, or carrying on a business as a cannabis store-front retailer, as set forth in section 9-486(a), and/or who otherwise sells, dispenses and/or furnishes cannabis anywhere within the city, shall pay an annual business tax of 7% based on the gross receipts of that business. (d) Every person who is engaged in, managing, conducting, or carrying on a business as a cannabis nonstore front retailer, as set forth in section 9-486(a), and/or who otherwise delivers cannabis anywhere within the city, shall pay an annual business tax of 7% based on the gross receipts of that business, subject to the applicable provisions of section 9-40.
(e) Every cannabis business that is engaged as a distributor, manufacturer, or research and development laboratory, that is also engaged in retail sales or delivery of the same cannabis products, shall pay the business tax as set forth in subsections (c) and (d) of this section, as applicable, for the retail sale or delivery of the same cannabis and cannabis products and is not required to pay business taxes set forth in subsection (a). The operator has the burden of proving that the cannabis or cannabis products involved in the distribution, manufacturing, and/or research and development are the same.
(f) The proceeds of the tax set forth in subsections (a), (c), (d), and (e) shall be subject to an annual audit as scheduled by the city manager or director of finance. (g) One-half of one percent of the proceeds of the tax set forth in subsections (c) and (d)
shall be directed toward the implementation of the cultural and arts master plan and one-half of one percent shall be directed towards the implementation of a first time homebuyer program for current residents of the city, former residents who were raised in the city and/or who graduated from the Newport Mesa Unified School District.
City of Costa Mesa, CA
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