HomeMy WebLinkAbout(2021, 03/09) - K-4 - AdoptedReducing the Barriers to the Creation of Housing
Background
LIMA!
The State of California has declared that the lack of housing is a critical problem that
threatens the economic, environmental, and social quality of life in California. The
consequences of the housing crisis include the lack of housing to support employment
growth, imbalance in jobs and housing, reduced mobility, urban sprawl, excessive
commutes, and air quality deterioration. While the causes of this crisis are multiple and
complex, the State attributes the underlying cause to insufficient housing supply.
On October 15, 2019, the California Department of Housing and Community
Development (HCD) issued a Regional Housing Needs Assessment (RHNA) for the
Southern California Association of Governments (SCAG) region of 1,341,827 units that
each jurisdiction within the region must plan for in the 2021-2029 Planning Permit (Sixth
Cycle). As required under State law, SCAG developed a RHNA Allocation Methodology
to reallocate the regional determination to each of the 197 jurisdictions in the region,
including Newport Beach.
The City of Newport Beach worked diligently for many months in partnership with other
member jurisdictions and stakeholders throughout the RHNA Allocation Methodology
development process to provide comments and recommendations to achieve a RHNA
allocation that is fair, equitable and in consideration of the unique circumstances and local
planning factors inherent in our community. Despite this process and a City -initiated
RHNA appeal, the final adopted RHNA methodology resulted in an allocation of 4,845
units for the City.
The City has successfully obtained and maintained HCD certification of its Housing
Element for both the Fourth Cycle (2008-2014) Planning Period with a RHNA Allocation
of 1,769 units and the Fifth Cycle (2014-2021) Planning Period with a RHNA Allocation
of 5 units. Despite a low Fifth Cycle RHNA Allocation, the City maintained its commitment
to housing programs intended to reduce the barriers to the development of affordable
housing, including preserving the Residential Overlay within the Newport Place Planned
Community. During the first six years of the Fifth Cycle Planning Period, the City has
permitted over 1,768 new units, including 95 lower income units. In addition, the City has
approved entitlements for housing development projects totaling another 662 multi -unit
residential units in the Airport Area, including 13 very low- and 78 low-income units. The
Newport Airport Village Planned Community was also adopted creating the opportunity
for another 444 residential units that would include a minimum affordable housing
component consisting of at least 5 percent very low-income units or 10 percent low
income units. Lastly, the City has committed approximately $2 million to fund the
acquisition and rehabilitation of the Cove permanent supportive housing project a 12-unit
apartment complex for homeless veterans and low-income seniors that opened in 2018.
Despite an immensely difficult -to -attain Sixth Cycle RHNA Allocation, the City remains
committed to addressing the housing crisis by developing a timely and compliant Housing
Element and continuing to support the production of housing for all income levels.
Policy
Recognizing that the City has several major constraints on existing lands that severely
limit or totally restrict the City's ability to accommodate growth to the extent identified in
the Sixth Cycle RHNA Allocation, it shall be the policy of the City Council to consider new
and flexible land use and zoning regulations and strategies in order to reasonably and
practically accommodate this ambitious State housing mandate while protecting the
character and maintaining a quality of life that makes Newport Beach a special place to
live, work, and visit.
The City Council therefore directs City staff and the Newport Beach Planning Commission
to develop, modify as necessary, and aggressively implement strategies and action plans
that are designed to accelerate housing production consistent with this policy as
described in the following sections:
Production of Accessory Dwelling Units
The Legislature approved, and the Governor signed SB 13 (Chapter 653, Statutes of
2019), AB 68 (Chapter 655, Statutes of 2019), and AB 881 (Chapter 659, Statutes of
2019) into law that, among other things, amended Government Code sections 65852.2
and 65852.22 to further impose new limits on the City's ability to regulate ADUs and Junior
Accessory Dwelling Units (JADUs). The Legislature's intent was to reduce regulatory
barriers and costs, streamline the approval process, and expand the potential capacity
for ADUs.
Although the City has revised its ADU regulations to comply with the minimum
requirements of State law, further encouraging the development ADUs is an important
strategy to accommodate future growth in combination with other strategies to meet the
RHNA Allocation. HCD allows ADUs to meet a portion of the City's RHNA based on trends
in past production and more aggressive production estimates based on the adoption of
production programs. Encouraging ADUs allows for the dispersing of density throughout
the City and avoids the need for excessive rezoning and high infrastructure costs
associated with new high -density developments. Because ADUs tend to be relatively
small with modest amenities, they provide more affordable housing options for select
groups, such as students, seniors, caretakers, and people with disabilities.
Therefore, to further encourage and incentivize the development of ADUs, the City should
pursue the following:
1. Interpret ambiguities in code provisions regulating ADUs in a manner that
accommodates and maximizes production.
2. Direct staff and the Planning Commission to review and recommend code changes
that reduce regulatory barriers, streamline the approval process, and expand
potential capacity of ADUs beyond minimum State law requirements.
3. Publicize incentives for construction of ADUs with a systematic approach utilizing
all forms of media and outreach.
4. Prepare and maintain a user-friendly website committed to information related to
codes, processes, and incentives pertaining to the development of ADUs and
JADUs in the City.
5. Develop and administer a program that includes waiving all permit and City fees
for property owners of unpermitted units when they agree to bring units into
compliance with current building and fire codes to ensure the safety of occupants
and structures.
6. Develop permit -ready standard plans to permit new ADU construction to minimize
design costs, expedite permit processing, and provide development certainty for
property owners.
Planninq Commission Review and Recommendations for Mixed -Use Designations
As part of the 2006 Comprehensive General Plan Update and 2010 Zoning Code Update,
new mixed -use housing opportunity zones were created throughout the City as a strategy
to enhance and revitalize underperforming and underutilized properties. These areas
included the Airport Area, Dove r/Westcliff, Newport Center, Mariners Mile, and portions
of the Balboa Peninsula. The Airport Area and Newport Center have proven the most
successful with several approved and constructed mixed -use developments, such as
Uptown Newport and Villas Fashion Island. The Balboa Peninsula has had some limited
success while Dover/Westcliff and Mariners' Mile have not proven successful to -date.
Despite the housing opportunity that has been created on several properties in these
areas, a majority of these sites remain underutilized with a single, non-residential use,
such as retail or office. It is evident the City's existing development standards (e.g.,
setbacks, height, density, parking, dedications, etc.) related to mixed -use development
may create constraints to the redevelopment of these properties. Therefore, to ensure
that mixed -use opportunities envisioned by the 2006 General Plan redevelop to their full
potential, the City should pursue the following:
1. Direct staff and the Planning Commission to review annually the established
mixed -use zones in the City and recommend code changes or policy ideas to the
City Council that reduce regulatory barriers and incentivize mixed -use residential
development.
Mixed -Use Resort Opportunities
Mixed -use resorts are an established trend in the hospitality industry that incorporate
hotel -branded residential units as an accessory use located within a resort hotel complex
where residents enjoy access to the full range of services, facilities, and amenities
provided by the hotel operator or brand. The residential use cannot exist without the
hotel's services, facilities, and amenities.
The hotel industry has been one of the hardest hit industries due to the COVID-19
pandemic and a full recovery of the industry is not anticipated for many years. Mixed -use
resorts provide an opportunity to revitalize older or underperforming hotels and maintain
their competitive standing by creating multiple revenue streams.
Economies of scale created by shared facilities, amenities, and services add additional
benefit to mixed -use resort developments. This cross pollination of business benefits both
the hotel and the resident. It may also increase occupancy rates at the resort by creating
increased synergy between uses and social gathering opportunities, boosting transient
occupancy taxes while providing in -fill housing opportunities to partially assist the City in
meeting its RHNA obligation in highly desirable and built -out areas. Incorporating
residences also helps to off -set cyclical variations in hotel occupancy rates that can, for
instance, result in seasonal decreases in revenue for the hotel's food and beverage
offerings.
Therefore, to further encourage and incentivize the development of mixed -use hotels, the
City should pursue the following:
1. Issue interpretations that interpret ambiguities in General Plan, Zoning Code,
and/or Local Coastal Plan Program provisions to allow hotels and motels, located
outside of the Coastal Commission Appeal Areas, to convert up to thirty percent
(30%) of their permitted hotel and motel rooms into residential units on a one -for -
one basis. Such interpretation would allow for residential units to be deemed an
accessory use to the principal use of a hotel and find that such residential uses are
consistent with the hotel's and motel's underlying General Plan, Zoning Code, and
Local Coastal Plan Program land use and zoning designations.
2. The residential units may be allowed in repurposed hotel and motel rooms and/or
in new residential structures, subject to the City's project approval process (e.g.,
Site Development Review) and including, as appropriate, review under the
California Environmental Quality Act.
3. Consider establishing parking programs (e.g., shared parking) and/or reduced
residential parking requirements that mitigate the need for any additional parking
due to the conversion to residential use.
4. Consider fiscal impact analysis to disclose and mitigate any reduction in transient
occupancy tax due to the conversion.
5. Consider increasing the flexibility in use of transfer of development rights to allow
for transfer of unbuilt residential units to hotel sites.
6. Require property owners converting permitted hotel and motel rooms into
residential units to mitigate impacts as a result of the conversion including, but not
limited to, creating affordable housing units either in the project itself or through a
contribution of in -lieu fees.
Adopted K-4 — 03-09-2021