California officials are threatening legal action if Cupertino, hometown of Apple, doesn’t meet its housing goals.

The California Department of Housing and Community Development (HCD) said in a letter that Cupertino risks missing its goal of approving 1,064 new housing units by 2023.

The city has said it doesn’t support or oppose a lawsuit by Friends of Better Cupertino, which is seeking to block the city’s largest project at Vallco Shopping Mall, which is a mile from Apple’s $3.5 billion headquarters.

Developer Sand Hill Property Co. has approval to build 2,402 homes, with half of the units reserved for low-income housing. The project also includes 1.8 million square feet of office space and 400,000 square feet of retail on the site.

A hearing is scheduled next month, and if the project is rejected, Cupertino may miss its housing goals.

The move is the latest by Gov. Gavin Newsom’s administration to push cities to build more housing, as the Bay Area grapples with the highest rents in the country. The state sent a letter to San Bruno last week, after it rejected a 425-unit housing project. The state sued Huntington Beach in January over housing policy.

“HCD appreciates the difficulty jurisdictions face in balancing competing interests when making land use decisions,” Zachary Olmstead, deputy director of HCD wrote in the letter to Cupertino on Friday. “If HCD finds that a city’s act or omission does not substantially comply with state law, housing element compliance may be revoked, and HCD may notify the Attorney General’s Office that the city is in violation of state law.

“The city is pleased that HCD recognizes that Cupertino is in full compliance with state housing laws. The city is aware that it will need to take action to ensure that sufficient sites are zoned for housing in the event the SB 35 project is overturned, and will do all that is necessary to remain in compliance with the law,” Cupertino said in a statement. (SB35 was enacted in 2017 to streamline development in cities not meeting housing needs.)

Cupertino Mayor Steven Scharf told The Chronicle last year that he is “sympathetic” toward project opponents. Vice Mayor Liang Chao is a co-founder of Better Cupertino, which opposed the project, but has since stepped away from the group.

Housing advocates welcomed the state’s move.

“It’s really good news. Having Gov. Newsom supportive of holding cities accountable is really critical,” said Leslye Corsiglia, executive director of SV@Home, a Silicon Valley advocacy group. “No one city should be able to decide they don’t want to build housing.”

Project developer Sand Hill also supported the move.

“We have cautioned the city that actions to block housing like repealing last year’s Specific Plan and undermining the legal defense of our SB 35 project would put them out of compliance with state law and expose them to liability,” said Reed Moulds, managing director of Sand Hill Property Co., said in a statement. “We don’t buy the City Council’s lip service on housing and apparently neither does the state.”

Roland Li is a Chronicle staff writer. Email: roland.li@sfchronicle.com Twitter: @rolandlisf