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Home My WebLink AboutHOUSING ELEMENT ADOPTED 9-28-81, AMENDED 11-22-82 *NEW FILE* HOUSING ELEMENT ADOPTED 8/28/87 , AMENDED 11 /22/82 H O U S I N G E L E M E N T O F T H E N E W P 0 R T B E A C H G E N E R A L P L A N Adopted by the City Council on September 28, 1981 Resolution No. 11051 Amended by the City Council on November 22, 1982 Resolution No. 82-153 TABLE OF CONTENTS PAGE LIST OF TABLES INTRODUCTION 1 I. COMMUNITY HOUSING MARKET ANALYSIS 4 Statistical Summary 4 Newport Beach Within the Region 5 Population Trends 6 Housing Unit and Population Projections 11 Employment Trends 12 Employment Projections 15 Household Characteristics 16 Ethnicity 16 i Household Incomes 17 f Housing Affordability 18 Overcrowding 19 1 Special Population Groups 20 Housing Stock Characteristics 21 Residential Growth and Dwelling Unit Types 21 Residential Densities 26 Housing Tenure 28 Vacany Rates 30 Housing Condition 31 Housing Prices 32 New Homes 32 Existing Homes 37 Rental Housing 42 Mobile Homes 45 Sites for Housing 49 Opportunities for Energy Conservation 52 Statistical Area Analysis 55 II. HOUSING NEEDS ASSESSMENT 69 Estimating Housing Need 70 Housing Demand 71 Supply 71 Housing Need 72 Regional Share 72 1976, 1981, and 1986 City Housing Needs Assessments 75 Newport Beach Housing Needs Assessments: 1976 76 Newport Beach Housing Needs Assessments: 1981 78 Newport Beach Housing Needs Assessments: 1986 82 Five-Year Housing Needs in Newport Beach 84 III. CONSTRAINTS TO HOUSING DELIVERY 86 Market Constraints 86 Socioeconomic Factors in the Newport Beach Market 86 Community Attitudes 87 Market Impacts on Development Costs 87 Financing Constraints 88 i TABLE OF CONTENTS PAGE Governmental Constraints 90 The Planning Process 90 The Subdivision Process 92 The Building Permit Process 93 Environmental Review 94 Environmental Constraints 94 IV. HOUSING PROGRAM/STRATEGY 95 Summary of Principal Findings 95 Housing Program/Goals and Policies 98 PROGRAM OBJECTIVES A. Objective 1 99 B. Objective 2 100 C. Objective 3 101 D. Objective 4 102 E. Objective 5 103 F. Objective 6 104 G. Objective 7 105 H. Objective 8 109 I. Objective 9 109 J. Objective 10 ill K. Objective 11 113 L. Objective 12 114 M. Objective 13 115 PERFORMANCE OBJECTIVES 116 SCHEDULE OF ACTIONS FOR HOUSING PROGRAM 118 APPENDICES 123 A. Inventory of Sites 124 B. Compliance Checklist 127 C. Glossary of Programs 129 ii LIST OF TABLES Page Table # Title 4 1 Housing Unit Mix 7 2 Population Growth, Orange County and Newport Beach 7 3 Persons Per Occupied Housing Unit 9 4 Population by Age 10 5 Changes in School Enrollment 11 6 Population Projections 12 7 Newport Beach Population as a Proportion of Orange County Population 14 8 Locations and Wage and Salary Employment by Industry 15 9 Employee Generation Ratios 15 10 Projected Employment 16 11 1976 Ethnic and Racial Identification 17 12 Actual and Projected Median Incomes 17 13 1976 Income Distribution 18 14 Relationships of Housing Expense Patterns and Median Incomes 20 15 U.C.I. Students by Zip Code Area 20 16 U.C.I. Off-Campus Service Office Housing Costs 21 17 Total Housing Units 23 18 Housing Units and Vacancy Rates 24 19 Housing Unit Types by Statistical Area 25 20 Units in the West Newport Triangle 25 21 Housing Unit Mix 25 22 Housing Unit Comparisons 26 23 Residential Densities by Area 26 24 Densities of Attached Housing 27 25 Building Permits Issued 28 26 Housing Tenure 28 27 Percent of Rental Housing by City 28 28 Major Recent Rental Projects 29 29 Condominium Conversion Applications Approved 30 30 Overall Housing Unit Vacancy 30 31 City Rental Vacancy Rate Survey Results 31 32 Vacancy Rates, July 1980 31 33 Regional Vacancy Rates 32 34 Characteristics of Recently Completed Condominiums 33 35 Value Ratios of New Residential Construction 38 36 Median Sales Prices of Existing Housing 1978-80 39 37 Median Listed Prices for Single Family Homes 41 38 1976 Monthly Payments for Owner-Occupied Housing 42 39 Monthly Rental Prices as of January 1981 43 40 1981 Median Rental Prices by Unit Type 44 41 Average rents by Statistical Area 45 42 Mobile Home Costs 47 43 Mobile Home Parks 49 44 Undeveloped Parcels iii LIST OF TABLES Page Table 1 Title 61 45 Population by Statistical Area 62 46 Number of Households and Household Sizes 63 47 Household Types for Statistical Areas 64 48 1976 Median Incomes by Statistical Area 65 49 1976 Housing Expenses in Relation to Household Income 66 50 1976 Special Population Groups 67 51 Housing Tenure by Statistical Area 68 52 1976 Housing Condition 74 53 Regional Fairshare Allocation 76 54 Newport Beach Housing Needs Assessment: 1976 78 55 Newport Beach Housing Needs Assessment: 1981 79 56 Incomes of New Homeowners, 1981 80 57 Housing Affordability Standards 82 58 Newport Beach Housing Needs Assessment: 1986 83 59 Incomes of Households Purchasing Homes 1976-1986 85 60 Income Categories by Year 85 61 Cost Categories by Year 85 62 1986 Monthly Housing Cost Categories 89 63 Sales Price Components of Residential Projects 96 64 Cast Categories by Year 96 65 1986 Monthly Housing Cost Categories iv INTRODUCTION The Housing Element ,of the Newport Beach General Plan examines residential development within the city and sets forth local policies and programs to facilitate the conservation, improvement, and development of housing for all economic segments of the community. This element presents policies and programs which are intended to guide the city in daily decision-making regarding the provision of residential services. These policies have been developed to reflect local economic and social attitudes in the community, and also to coincide with the attainment of state housing goals. These goals have been declared as follows: a) The availability of housing is of vital statewide importance, and the early attainment of decent housing and a suitable living environment for every California family is a priority of the highest order. b) The early attainment of this goal requires the cooperative participation of government and the private sector in an effort to expand housing opportunities and accommodate the housing needs of Californians of all economic levels. c) The provision of housing affordable to low- and moderate-income households requires the cooperation of all levels of government. d) Local and state governments have a responsibility to use the powers vested in them to facilitate the improvement and development of housing to make adequate provision for the housing needs of all economic segments of the community. e) The Legislature recognizes that in carrying out this responsibility, each local government also has the responsibility to consider economic, environmental, and fiscal factors and community goals set forth in the general plan and to cooperate with other local governments and the state in addressing regional housing needs. This Housing Element has been prepared in accordance with Sections 65580-65589 of the Government Code, which was adopted by the State Legislature in September 1980.* *A compliance checklist, attached as an appendix to this Element, references the reader to portions of the Element which comply with provisions in the new state law. 1 Organization of the Element The Housing Element has been prepared in four parts, as follows: I. Community Housing Market Analysis This section presents the most current information on population growth, employment growth, household characteristics, and the housing stock in Newport Beach. Data presented in this part of the Housing Element form the basis for analysis and discussion in the following three sections of the Element. II. Housing Needs Assessment The "match" between the supply of housing in the city and city household preferences and ability to afford housing is examined. The city's share of the regional housing need is also included. This assessment concludes with a quantification of community housing needs over a five-year period. III. Constraints to Housing Delivery This section provides a general discussion of governmental, market, and financial factors which influence housing delivery in the city. The purpose of this discussion is to identify problems which can be addressed through local actions, as well as constraints which are outside the sphere of local influence. IV. The Housing Program/Strategy This portion of the Element summarizes major findings of the earlier housing assessment, and outlines city objectives in addressing problems and issued identified. Each objective is followed by a programmatic response, or "implementation plan" and target dates for activities. The housing program presents short-range (two-year) and long-range (five-year) plans of action. Quantified goals for the next five-year period are also established for housing production in the city. Citizen Participation The views and proposals of the citizens in the community have been actively solicited in the preparation of this Housing Element. Two citizen forums have been sponsored to obtain public review and comment on each portion of the Housing Element as it was prepared in draft form. The city provided notice of these meetings as well as all public hearings to a mailing list of all interested parties, including groups representing the interests of all economic segments of the community. In addition, all meetings and public hearings were advertised in the legal section a local newspaper and by means of a 3 inch by 5 inch display advertisement in a prominent location of the same local newspaper. One study session and six public hearings before the Planning Commission, and one study session and two public hearings before the City Council, were also held in the process of Housing Element preparation. 2 L Review and Update of the Housing Element The city will review this Housing Element on an annual basis to evaluate the appropriateness of objectives, the effectiveness of programs, and progress in implementation. The Housing Element will be revised not less than every five years, according to state law, and the first revision will be accomplished by July 1, 1984. 3 I. COMMUNITY HOUSING MARKET ANALYSIS STATISTICAL SUMMARY Population: The Newport Beach population reported by the 1980 Preliminary Census was 62,172 persons. This compares to 63,101 persons in 1976 and 49,442 persons in 1970. Employment: In 1977, Newport Beach was the location of 43,000 jobs, or 6.2% of all jobs in Orange County. Finance, insurance, and real estate are major industries. Household Characteristics: The average household size in Newport Beach as of 1980 was 2.2 persons per household. This compares to the Orange County 1980 average of 2.7 persons per household. The median household income for Newport Beach has averaged 29.3% higher than the Orange County median income in 1970 and 1976. The estimated median household income for the city in 1980 was approximately $30,000, compared to $23,000 for Orange County. The last available census (1976) reported that almost 30% of all city households were living on incomes below 80% of the regional median income, and are therefore lower-income households. The city has a high percentage of elderly residents. In 1976, 14.3% of the population was 60 years of age or older. The comparable 1976 figure for the State of California is 13.6%. Several neighborhoods in the city provide housing for college students in the region. Approximately 2,500 students from the University of California at Irvine and Orange Coast College reside in Newport Beach. Housing Stock Characteristics: An average of 365 new housing units have been added to the city housing stock between 1976 and 1980. With the addition of the West Newport Triangle, annexed in December 1980, the city's 1980 housing unit mix was as follows: Table 1 Housing Unit Mix Housing Number Type of Units Percent Single Family 17,593 55.0% Duplex 5,398 16.9% Triplex 915 2.8% Fourplex 874 2.7% Multifamily 6,042 18.9% Mobile Home 1,129 3.5% Miscellaneous 56 .2% TOTAL 32,007 100.0% 4 Over 41% of all units in the city are rental units. The City represents one of the highest proportions of rental housing in Orange County. Vacancy rates for the city in July 1980 were: 2.2% for single-family homes; 2.9% for multi-family; and 0.4% for mobile homes. Only 1.3% of the city's housing stock, as of 1976, was in substandard condition. Most substandard units are concentrated in the following areas: Balboa Peninsula, Balboa Island, and Newport Heights. The average value ratios of homes constructed in Newport Beach increased from $50.00 to $63.00 per square foot in 1975 to $135.00 to $181.00 in 1980. While the median sales price of existing housing in the Newport-Costa Mesa area as of November 1980 was $148,000, the median price of homes selling in Newport Beach in the same period is estimated to be well over $200,000. The median price of units vacant and available for rent in the city in January 1981 was $695. Land Availability: A total of 297 gross acres in the city are designated for residential development and are vacant and uncommitted to any specific project. If all land uses are counted, approximately 448 acres out of 10,089.8 total city acres are vacant and uncommitted to specific use. NEWPORT BEACH WITHIN THE REGION The City of Newport Beach is situated within one of the fastest growing regions in California, in terms of population and employment growth. Development was at first gradual in Orange County and the result of urbanization of areas surrounding Los Angeles. In the 1970's, the growth of Orange County as an employment center accelerated: between 1975 and 1978, an annual county average of 60,000 jobs were added. Since 1975, housing starts and population growth have not kept pace with employment growth in the county. This has resulted in a pent-up demand for housing throughout the region. This demand is indicated by decreasing vacancy rates and increasing housing prices. since 1978, vacancy rates in Orange County among single-family homes have been below 2%. Between 1977 and 1979, the median price of housing in Orange County increased by 40%. The intense demand for housing and the dramatic increase in residential prices that are a characteristic of Orange County are at their height in the City of Newport Beach. The city is rich with amenities which have been enhanced through the development of well-planned residential neighborhoods. Much of Newport Beach is now the most favored residential site for aspiring upper-income families from the entire Orange County area. 5 Many of the older neighborhoods in the city retain the character of Newport Beach before the onset of the 1970's housing demand. These areas are developed in higher density, older housing which was originally constructed to accommodate moderate-income households. In addition, a large percentage of the housing stock in Newport Beach is rental housing. This housing accommodates seasonal visitors as well as moderate- and lower-income working adults and students. The percentage of rental housing in Newport Beach is generally higher than other cities in the area, and is an important supply of student housing for both U.C. Irvine and Orange Coast College. Much of the populous of Newport Beach is therefore composed of renting households, as well as residents who bought housing in the city before housing prices escalated. The city contains many older residents within the latter category. The number of people who live in Newport Beach who could not afford their home if they were buying it today is sizeable. Therefore, at the same time that the city's housing attracts upper-income households, it also houses many persons and families with incomes well below the median income of the area. The intense demand for housing in the city is complicated by the fact that employment growth has also been strong in the area. The city has become one of the most desirable office locations, not only within the region, but on an international basis. It is for this reason that demand for office, commercial, and industrial expansion competes with housing demand in the city. The functional significance of Newport Beach within the region, as a business center, a recreational center, and an attractive residential area brings to the city many undesirable effects. These include acute traffic congestion, extremely crowded conditions in summer months and tourist seasons, and pressures for development of the city with more intense urban uses. Within this context, the housing market of Newport Beach is examined. The present and projected population of the city, as well as the housing stock is examined to determine where housing needs exist and to identify public actions which are appropriate and meaningful to maximize housing services within the city. POPULATION TRENDS The City of Newport Beach was one of the first cities to develop within Orange County. The city's rate of population growth therefore exceeded the county's through 1950. since 1950, however, the city's proportionate gain in population has been substantially less than the county's. 6 Table 2 Population Growth Orange County and Newport Beach: 1910-19801 Orange County Newport Beach Population Growth Rate Population Growth Rate 1910 34,436 445 1920 61,375 78.2% 894 100.9% 1930 118,674 93.4% 2,203 146.4% 1940 130,760 10.2% 4,438 101.4% 1950 216,224 65.4% 12,120 173.1% 1960 703,925 225.6% 26,565 119.2% 1970 1,420,3862 101.8% 49,4422 86.1% 1980 1,919,264 35.1% 62,172 25.7% This latter trend is due to the fact that the supply of vacant land to support new residential development in the City of Newport Beach is rapidly being diminished. Therefore, immigration, which is still a strong factor in population growth in Orange County, is a much lesser factor in Newport Beach. Between 1976 and 1980, Newport Beach actually lost population, despite the fact that approximately 1500 housing units were added in the city. The vacancy rate for all housing units reported by the 1980 Census (Preliminary Counts) was 10.9%. The vacancy rate for all housing units in the city in 1976 was also 10.9%. This relatively high rate of vacant units is attributed to the use of many housing units as second homes for persons who have seasonal business or recreational ties to the area. The use of units as second homes has been relatively consistent in the last five years, and does not explain the reduction in population. This trend is attributed instead to a sizeable reduction in the average size of city households. While the average household size in 1976 was 2.36, the 1980 Preliminary Census Counts reported an average household size of 2.18. Decreases in household sizes are occurring in most communities in California; however, Newport Beach has traditionally had a household size that is smaller than the regional or state average. The continuing decrease in average persons per household is shown below: Table 3 Persons Per Occupied Housing Unit 1960 1970 1976 1977 1978 1979 1980 Newport Beach 2.7 2.6 2.4 2.4 2.3 2.3 2.24 Orange County 3.4 3.2 2.9 2.9 2.8 2.8 2.7 1) Source: U.S. Census of Population and Housing. 2) Preliminary Counts, 1980 U.S. Census 3) Source: State Department of Finance: Population Research Unit. 4) 1980 Census, Preliminary Count 7 l Various factors that contribute to this phenomenon are explored below: - Rental housing in most urban areas is occupied by households for which the average size is smaller than owner-occupied housing. Thus, the supply of rental housing in Newport Beach, which is proportionately higher than the region as a whole, contributes to a household size that is smaller than the region as a whole. - Many predominantly owner-occupied neighborhoods in the city were originally populated by child-rearing families. These families have matured and children have passed through high school and left home in the same general time period. Thus, certain neighborhoods now have sizeable numbers of childless couples in the "empty nest" stage of life, causing a general reduction in neighborhood population. - Limited opportunities exist for children who have been raised in Newport Beach to establish an independent residence in the city and to raise a new generation of children. Many young adults live in the city as renters; however, opportunities to purchase housing as a first-time homebuyer are rare. Young adults who are renting are generally not pursuing a child-rearing lifestyle. Generally, this stage of life coincides with the first purchase of housing. Thus, the city does not offer numerous housing opportunities for households that are producing young children. - Following the national trend, many young couples are postponing child-rearing or electing not to have children at all for a variety of reasons. such childless couples, supported by two professional salaries, are often able to afford housing in Newport Beach. In many neighborhoods or larger, single-family homes where child-rearing families have been predominant, young childless households are now very common. Much of the reduction in neighborhood population can be attributed to this phenomenon. - Many retired persons have moved to Newport Beach in the last ten years. In summary, the reduction in household size in Newport Beach is the result of a reduction of child-rearing households in the city, and a reduction in the child population in the city as well. This trend is further documented on Tables 4 and 5: Population By Age, City of Newport Beach 1960-1976, and Changes in School Enrollment By Grades, January 1976-January 1981. 8 Table 4 POPULATION BY AGE CITY OF NEWPORT BEACH 1960 - 1976 Age 1960 (& of Total) 1970 (8 of Total) 1976 of Total) Under 5 1,823 ( 6.9%) 2,343 ( 4.7%) 1,835 ( 2.9%) 5-13 4,102 (15.4%) 6,434 (13.0%) 6,460 (10.3%) 14-17 1,638 ( 6.2%) 3,799 ( 7.7%) 4,270 ( 6.8%) 18-34 4,715 (17.7%) 13,389 (27.1%) 19,169 (30.5%) 35-64 11,169 (42.0%) 18,602 (37.6%) 24,934 (39.6%) 19 65+ 3,117 (11.7%) 4,859 ( 9.8%) 6,240 ( 9.9%) Source: 1960 and 1970 U.S. Census and 1976 Special Census for Newport Beach. Percentages do not add to 100% due to independent rounding. Table 5 CHANGES IN SCHOOL ENROLLMENT BY GRADES, JANUARY 1976 - JANUARY 1981*1 CITY OF NEWPORT BEACH Grades 1-5 Grades 6-8 Grades 9-12 Percent Percent Percent Area Schools 1976 1981 Change 1976 1981 Change 1976 1981 Change Mariners Elementary 409 437 + 6.8% 107 (6 grd) 116 (6 grd) Newport Elementary 527 374 -29.0% 115 11 104 11 West Newport Heights Elementary 481 430 -10.6% 94 it 97 It of Bay Ensign Middle School 763 591 1079 908 -15.8% o Newport Harbor High School 2924 1855 -36.6% Anderson Elementary 590 375 -36.4% 83 (6 grd) Corona del Mar Elementary 411 227 -44.8% 69 " East Bluff Elementary 403 222 -44.9% 64 " East Harbor View Elementary 532 490 - 7.9% 130 " of Bay Lincoln Middle School 634 1323 980 -25.9% Corona del Mar High School 2129 1885 -11.5% TOTAL 3353 2555 -23.8% 2402 1888 -21.4% 5053 3740 -26.0% 1) Source: Newport-Mesa Unified School District. 2) A school closure in an adjacent area within the school district accounts for this enrollment increase. HOUSING UNIT AND POPULATION PROJECTIONS The ultimate residential capacity within the City of Newport Beach has been projected at 36,859 dwelling units. This projection is based on the General Plan and the city's traffic model. This dwelling unit total includes the West Newport Triangle (A3) , but does not include the Banning Property or the Irvine Downcoast southeast of the city, which are currently unincorporated areas. This ultimate residential capacity provides the most accurate means by which to project population within the city. To project population, the following assumptions have been made: 1. Household size will continue to decrease slightly, but will stabilize by 2000 at 2.1 persons per household. As housing costs continue to rise, more units will be occupied by unrelated persons sharing housing expenses. In addition, the assumption is made that a portion of the younger childless couples within the city will eventually have children, thus providing some natural population increase. 2. Vacancy rates will be reduced as a result of the increased demand for housing and increased price of housing in Orange County. The ability of upper-income households to afford second homes in the city will decrease. An overall vacancy rate of 5% by the year 2000 has been projected. (This 5% vacancy rate includes seasonal units not available for occupancy. The comparable overall vacancy rate in 1976 and 1980 was 11.9%.) 3. Ultimate residential buildout in the city will occur by the year 2000. Constant rates of housing unit additions, vacancy rate reductions, and household size decreases between 1980 and 2000 have been used to project 1985, 1990, and 1995 populations. Table 6 Population Projections City of Newport Beach Housing Units Population 1980 32,007 62,172 1985 33,220 64,938 1990 34,433 67,792 1995 35,646 70,658 2000 36,859 73,534 These projections indicate that the City of Newport Beach will grow at an average rate of .9% per year as compared to a 2.1% annual growth rate which has been projected by the Southern California Association of Governments (Growth Forecast Policy '78) for Orange County. This variance in growth rates is related to the smaller portion of undeveloped residential acreage remaining in Newport Beach. 11 i The past and future populations of both Orange County and Newport Beach are shown below. Newport Beach population will continue to constitute a lesser percentage of the county population. Table 7 Newport Beach Population as a proportion) of Orange County Population Orange Newport 8 of County Beach County 1940 130,760 4,438 3.4% 1950 216,224 12,120 5.6% 1960 703,925 26,565 3.8% 1970 1,420,386 49,442 3.5% 1980 1,919,264 62,172 3.2% Projections: 1985 2,175,500 64,938 3.0% 1990 2,399,700 67,792 2.8% 1995 2,596,800 70,658 2.7% 2000 2,758,100 73,534 2.7% EMPLOYMENT TRENDS Employment growth in Newport Beach in the 1970's was similar to trends within Orange County. Between 1974 and 1977, the city experienced an annual average employment growth of 6.1%, compared to an average growth rate for the county of 6.9%. The city ranked seventh of 30 cities in the county in employment size in 1977, with 6.2% of all Orange County jobs. Service industries as well as finance, insurance, and real estate prevail in Newport Beach. These sectors, in 1977, accounted for 52% of all jobs within the city. Of 15,606 service workers in 1977, 41.0% were in research and development, 21.1% were in medical and dental facilities, 7.7% were in architectural and accounting firms, and 7.7% were in hotels. The 6,731 jobs in finance, insurance, and real estate were divided evenly between these three industries. Many of these jobs are within regional and national corporate headquarters located in Newport Center. Approximately 21% of all jobs in 1977 in Newport Beach were in retail establishments; of these jobs, over half were in restaurants. Factory employment in Newport Beach accounted for 13.5% of all jobs compared to 25.7% in the county. A large majority of manufacturing jobs in the City were concentrated in nine electronics companies. 1) Sources: U.S. Census; 1980 U.S. Census Preliminary Counts; Orange County population projections are from SCAG Growth Forecast Policy '78. 2) Includes incorporated and unincorporated cities. 12 A complete breakdown of jobs in the city is shown on Table 8, Locations and Wage and Salary Employment by Industry. The city was the location of 38,490 jobs in 1976. The number of employed residents in the city in this same year was 29,503. These figures indicate that even if all persons who live in the city also work in the city, a substantial number of employees must be imported from other cities in the area. 13 Table 8 Locations and Wage and Salary Employment by Industryl Newport Beach Orange County CA Industry Locations Employment July 1977 July 177 July '76 July 175 July 174 Total all industries 2,361 42,987 38,490 36,572 36,265 Agriculture 12 83 77 84 134 Mining 8 115 127 46 120 Construction 110 1,088 977 926 1,553 Manufacturing 115 5,805 5,280 6,463 5,630 Non-durable goods 50 373 * 352 638 Food 1 * 0 0 Textile and apparel 11 66 68 96 84 Paper and printing 35 247 169 210 297 Chemicals and petroleum 2 * * * 28 Rubber, plastics, leather 1 * 0 Durable goods 65 5,432 * 6,111 4,992 Lumber and furniture 7 98 106 87 110 Stone, clay, glass 3 59 Primary and fabricated metals 10 306 316 322 333 Non-electrical machinery 10 150 75 * 334 Electrical machinery 9 4,487 4,113 * 3,842 Transportation equipment 15 209 219 195 257 Instruments 4 84 72 61 Misc. durable goods 7 39 48 20 37 Transportation, public utilities 52 1,129 1,017 824 906 Trade 593 9,930 8,965 9,012 8,601 Wholesale 108 1,061 700 953 554 Retail 485 8,869 8,265 8,059 8,047 Finance, insurance, real estate 385 6,731 5,999 4,993 5,462 Services 1,018 15,606 13,571 11,849 11,345 Government 53 2,398 2,368 2,265 2,396 Federal 7 226 211 251 254 State and Local 46 2,172 2,157 2,014 2,142 Uncoded 15 102 109 110 118 Aerospace 2 12 4,551 4,130 3,910 INA 1) Employment reported by place of work excluding self-employed and unpaid family workers and workers involved in labor disputes. 2) Aerospace includes (1972 Edition SIC) : 357 Office/Computing/Accounting Machines; 365-7 Radio/TV Equipment/Electronics; 372 Aircraft; 376 Missiles/Space Vehicles; 382 Measuring/Controlling Instruments. * Entry cannot be shown because of disclosure regulations. INA: Information not available. Source: State Employment Development Department. 14 EMPLOYMENT PROJECTIONS Employment growth in the city, like housing and population growth, will be limited at some point in the future by the finite amount of land and building space available within the city for expansion. The ultimate employment capacity of the city has been estimated at 71,096 employees, through the following methodology: - Ratios of employees per square foot of employment generating land uses were developed by using the city's computer traffic model to compare 1977 employment with 1977 land uses. These ratios are as follows: Table 9 Employee Generation Ratios Land Use Factor Business Office 3.9 employees per 1,000 sq.ft. Medical Office 3.2 employees per 1,000 sq.ft. General Commercial 1.0 employees per 1,000 sq.ft. Restaurant 3.2 employees per 1,000 sq.ft. Industrial 44 employees per acre Hotel/Motel .39 employees per guest room - The total number of employees as of November 2980 was estimated at 61,423 by applying these ratios to 1980 land uses. - The city's remaining buildable square footage for office, medical, commercial, restaurant, industrial, hotel, and hospital uses was then inventoried using the holding capacity ,specified in the existing General Plan. This assessment indicates that another 9,673 employees will be added to the city at ultimate build-out. If it is assumed that office and commercial build-out will occur in the city in the year 2000, and that employment growth will be uniform through the period 1980-2000, employment projections for the city are as follows: Table 10 Projected Employment Newport Beach and Orange County Newport Beach Orange County 1980 61,423 878,900 1985 63,841 1,036,700 1990 66,259 1,162,000 1995 68,678 1,259,300 2000 71,096 1,366,000 1) Orange County employment projections are from the SCAG Growth Forecast Policy 178. 15 - Based on these projections, Newport Beach will comprise a decreasing percent of total employment in Orange County in years to come. While in 1980 the Newport Beach labor force was 7.0% of the county total, in 2000 the Newport Beach labor force will comprise only 5.2% of all employees in the county. HOUSEHOLD CHARACTERISTICS ETHNICITY The 1976 Special Census for Newport Beach reported the following ethnic and racial identification of city households. Comparative figures for Orange County are also provided. Table 11 1976 Ethnic and Racial Identification of Head of Household City of Newport Beach and Orange County Heads of Newport Orange Household Beach County Non-minority white 22,836 85.88% 88.87% Black 57 .21% .78% Hispanic heritage 152 .57% 3.28% Monolingual Spanish speaking 10 .04% N/A American Indian 35 .13% .36% Oriental or Asian heritage 142 .53% .78% Filipino 29 .11% N/A Other 1 96 .36% 1.15% Unknown 3,235 12.17% 4.79% a 1) The accuracy of responses to this census question is diminished by the large percentage of "unknown" responses. a 16 HOUSEHOLD INCOMES The median household income in Newport Beach has traditionally been higher than that of Orange County. In 1970 and 1976, the city's median income averaged 29.3% higher than the county figure. Because no current data on incomes in Newport Beach will be available until the 1960 Census, this percentage has been used to estimate the current median income in the city. Table 12 Actual and Projected Median Incomes Orange County and Newport Beach Orange County Newport Beach 19601 $ 7,219 $ 8,571 19701 $12,244 $16,435 1976 $16,8002 $20,8753 1980 $23,0002 $29,7404(estimate) Sources: 1) U.S. Census; 2) Department of Housing and Urban Development; 3) 1976 Special Census for Newport Beach; 4) Based on multiplier of 129.3%. The most recent income distribution for the City of Newport Beach demonstrates the wide range of household incomes within the city. Approximately 30% of all households in 1976 were living on incomes below 80% of the county median income. Households within this category include students and elderly households, as well as moderate-income households who purchased housing in the city before prices escalated, and many renting households. Table 13 1976 Income Distribution City of Newport Beach % of Responding income Category (in dollars) Households 0-2999 3.6% 3000-4999 4.4% 5000-7999 6.7% 8000-11999 10.6% 12000-14999 9.7% 15000-19999 12.8% 20000-24999 13.1% 25000-49999 27.0% 50000 or more 12.2% Source: 1976 Special Census for Newport Beach. 17 The households which are moving to Newport Beach to purchase housing are likely to be in an income category that is well above the estimated 1980 median income for the city of $29,740. In this regard, many housing market professionals report that an income of at least $60,000 is required in order to seriously consider a housing purchase in the city. It should be stated that the incomes of households purchasing housing in 1981 in Newport Beach do not accurately characterize the average household residing within the city. A review of 1980 Orange County Assessor's Property Tax Rolls indicates that 62.3% of all single-family homeowners bought their housing before January 1, 1977. Before this date, owner-occupied housing in the city was accessible to moderate-income families. HOUSING AFFORDABILITY The most recent data on the amount of income spent on housing expenses in the city of Newport Beach comes from the 1976 Special Census. This information indicates that as of 1976 the majority of families (71.2%) spent 25% or less of their household income on housing. However, another 28.8% of all households spent over the common 25% affordability level on housing expenses. No cross tabulations of this data with income data is available to determine whether lower-income families are those most likely to be "overpaying' for housing. However, a comparison of housing expenditure patterns in lower- and higher-income statistical areas in the city indicates that there is a weak correlation between income and percent of income spent on housing. An average of 29.7% of all families in the six lowest income neighborhoods in the city paid more than 25% of their household income on housing expenditures, while 25.3% of all families in the six highest income neighborhoods of the city were in this same category. Although more of the lower- and more moderate-income households in the city allocate more than 25% of their incomes for housing, by the traditional 25% ratio of housing affordability. Table 14 Relationship of Housing Expense Patterns and Median Incomes for Statistical Areas in Newport Beach Median Income Statistical % of Households (in dollars) Area Overpaying for Housing 14,700 D 29.1% 15,135 E 34.6% 16,430 B 32.2% 17,400 K 26.6% 18,505 H 23.7% 18,575 F 32.0% 21,290 A 31.7% 21,400 J 25.8% 27,285 G 24.6% 31,135 M 28.1% 38,245 C 21.8% 50,000 L 19.9% CITY TOTAL 28.8% 18 The incidence of higher-income households paying more than 25% of their income for housing is an indication of unique standards of housing affordability in Newport Beach. Many households allocate a higher percentage of their income for housing because of the unique environmental features of the community which are purchased with the housing unit. In addition, a higher allocation of income toward housing is justified because of the investment qualities of housing in the city. Finally, higher expenditures on housing are justified when tax advantages of such an arrangement are considered, and also on the expectation that incomes will increase while housing expenses remain fixed. A survey of mortgage lenders in the Newport Beach area indicates that this standard of affordability is being accepted on an institutional level; most lenders now use a more liberal standard in approving loan applications. Loan underwriting standards vary from 28% to 35% as the acceptable ratio of monthly housing costs to gross monthly earnings. The accepted total debt service ratio (between all long-term obligations and gross monthly earnings) varies between 36% and 40%. OVERCROWDING The substantial reduction in the average household size in the City of Newport Beach indicates that the majority of city households are "over-housed" in terms of persons per dwelling unit. The 1980 Preliminary Census figure of 2.18 persons per dwelling unit is well below the state and regional average. In 1976, the most common household type in the City of Newport Beach was couples without children or two-person households. This household type comprised 27.7% of all households. The second most common household type was single-person residence, comprising 26.9% of all city households. Only 25.5% of all households were two-parent families with children. Although the 1976 Census contains no actual data on overcrowded households, the 1970 Census indicated that 134, or 1.2%, of all owner-occupied units and 249, or 2.9%, of all renter-occupied units in Newport Beach in 1970 were occupied by more than 1.01 persons per room. These percentages compare with county figures of 5.2% overcrowding among owner-occupied units, and 7.8% overcrowding among renter-occupied units. The rate of overcrowding, therefore, was substantially less in Newport Beach than it was in the county in 1970, and has in all probability decreased since that time. In 1989, the incidence of overcrowding is most frequent among households where unrelated persons are sharing housing expenses. This household arrangement is common among students as well as seasonal visitors renting units in West Newport, Balboa Peninsula, and Balboa Island. Although the 1980 Preliminary Census reports an average household size in these areas of 2.18, 2.11, and 2.05 respectively, overcrowded conditions have been observed. Overcrowding in such instances is related to the desirability of housing in these areas, especially among students, and the willingness to "double up" in living arrangements in order to decrease housing costs. No information exists to substantiate or quantify the incidence of overcrowded households in the older beach communities. 19 SPECIAL POPULATION GROUPS Students Newport Beach provides a significant supply of housing for students attending both the University of California at Irvine and Orange Coast College in Costa Mesa. The U.C. Irvine Housing Office has used permanent addresses reported on Winter 1981 registration forms to count the number of U.C.I. students living in Newport Beach: Table 15 U.C.I Students by Zip Code Area Newport Beach Zip Code Number of U.C.I. Students 92625 134 92660 183 92661 61 92662 245 92663 351 Total 974 The U.C.I. Housing Office, in a past study of student housing opportunities in Orange County, estimated that 1,500 students attending Orange Coast College also reside in Newport Beach. Thus, a total of approximately 2,500 persons, or 4% of the Newport Beach population, are college students. Most of these students reside in the neighborhoods of West Newport, Balboa Peninsula, and Balboa Island where median rents in January, 1981 were $600, $600, and $500 respectively. These prices are comparable to average costs for off-campus student housing throughout the Orange County Area. Average costs reported by the U.C.I. Off-Campus Student Service Office as of September 1980 were: Table 16 U.C.I. Off-Campus Student Service Office Housing Cost Apartments 1 bedroom, 1 bath $400/mo. 2 bedroom, 1 bath $450/mo. Homes 3 bedroom, 2 bath $640/mo. Irvine Co. Apartments 1 bedroom, 1 bath $469/mo. 2 bedroom, 1 bath $515/mo. Students are able to afford these prices by living with other students and sharing costs. In some cases, this encourages overcrowded conditions. 1) From Survey of Newport Beach Rental Prices, Connerly & Associates, January 1980. 20 Elderly In 1976, 6,024 persons, or 9.9% of the city population, were 65 years of age or older. Those 60 years of age or older totalled 9,026, and made up 14.3% of the population. The elderly population in Newport Beach has grown steadily since 1960, and is expected to continue to increase. The percentage of older persons in the city is large compared to the region; in 1970, when 14.2% of all city residents were 60+ years of age, only 9.6% of all county residents were in this same age category. Many elderly persons residing in Newport Beach are long-time residents of the city. Many others have moved to the city to pursue a retirement lifestyle. Those persons in the latter category are generally well-housed because their housing arrangement has been chosen to match their retirement lifestyle and financial situation. Persons in the former category are in many cases living in the dwelling unit purchased at an earlier stage in their lives. In many cases, this unit no longer matches their housing needs in terms of living space, maintenance, location in respect to community facilities, and cost. Persons living on low, fixed incomes may be "housing rich" in terms of the accumulated equity in their homes, but poorly served by the housing unit itself. In such cases, elderly residents may retain their living quarters only because they wish to remain in the community. Alternative living arrangements in the community, involving smaller units close to commercial and transportation facilities. with some congregate services, would better serve the needs of this population segment. Many elderly residents in the city reside in mobile home parks. A significant number of long-time elderly residents live in the older parks which were developed in the 1950's and 1960's, while others live in parks which are close to the bay and which cater to a retirement lifestyle. Handicapped The 1976 Special Census reported that 834 persons, or 1.3% of the city population, had a permanent physical handicap. This includes persons who are blind, deaf or mute, or who are confined to bed or a wheelchair, or who require crutches. Special housing needs of handicapped persons include structural accommodations, including wheelchair ramps, wide doorways, grab bars, etc. , as well as infrastructure accommodations (Handicapped access ramps) to make neighborhoods accessible. HOUSING STOCK CHARACTERISTICS Residential Growth and Dwelling Unit Types Between April 1976 and January 1980, 1,460 housing units were added to the housing inventory in the City of Newport Beach. This indicates an average yearly increase in the housing stock of approximately 365 housing units. Actual units constructed each year since 1976 are listed in Table 17. 21 Table 17 Total Housing Units Year At Year Start Units Constructed 1976 29,812 330 1977 30,142 507 1978 30,649 348 1979 30,997 275 1980 31,272 The number of housing units in 1976 and in 1980 in each statistical area of the city is shown on the Table 18. This data indicates that four neighborhoods experienced 82% of all dwelling unit growth in the city. In the Hoag Hospital Area (Area A) 214 units were added; in the Harbor Isle, Linda Island, Bayside Drive Area (Area G) 101 units were added; in the Bluffs, East Bluff, and Park Newport (Area K) 156 units were added; and in Harbor View Hills, Jasmine Creek, and Spyglass Hills (Area M) 721 units were added. The housing mix in the city as of January 1, 1980 is shown on Table 19. A comparison of this data with the 1976 housing mix indicates that 894 single-family homes, 482 duplex, triplex, and fourplex units, and 89 multi-family units have been added to the city since 1976. '22 Table 18 HOUSING UNITS AND VACANCY RATES 1976 and 1980 BY STATISTICAL AREA CITY OF NEWPORT BEACH Statistical Areas Housing Units Vacant Units 19761 Jan. 1, 19802 Change 19761 19803 Al, A2 1,156 1,370 +18.5% 257 (22.2%) Bl, B2, B3, B4, B5 4,143 4,219 + 1.8% 610 (14.72%) Cl, C2 910 919 + 1.0% 111 (12.20%) Dl, D2, D3, D4 3,079 3,105 + 1.0% 531 (17.25%) El, E2, E3 2,197 2,216 + 0.9% 371 (16.89%) Fl, F2, F3, F4, F5, F6, F7, F8 4,250 4,339 + 2.1% 251 ( 5.91%) Gl 943 1,044 +10.7% 386 (40.93%) Hl, H2, H3, H4 2,177 2,209 + 1.5% 165 ( 7.67%) w J1, J2, J3, J4, J5 3,952 3,968 + 0.4% 228 ( 5.76%) Kl, K2, K3 3,573 3,572 0.0% 184 ( 5.15%) Ll, L2, L3, L4 572 728 +27.3% 44 ( 6.69%) Ml, M2, M3, M4, M5 2,862 3,583 +25.2% 121 ( 4.23%) CITY TOTAL 29,812 31,272 + 4.9% 3,259 (10.93%) General Plan Area (includes A3 and J6) 30,819 32,277 + 4.7% 3,292 (10.68%) Sources: 1) 1976 Special Census 2) City Planning Department 3) 1980 Census Preliminary Count, data not yet available Table 19 HOUSING UNIT TYPES (JANUARY 1980)1 BY STATISTICAL AREA CITY OF NEWPORT BEACH Single- Multi- Mobile Statistical Areas Family Duplex Triplex Fourplex Family Home Misc. TOTAL Al, A2 854 12 6 52 364 82 --- 1,370 Bl, B2, B3, B4, B5 1,583 1,929 117 40 212 328 10 4,219 Cl, C2 791 48 54 --- 26 --- --- 919 D1, D2, D3, D4 1,460 773 284 161 360 63 4 3,105 El, E2, E3 1,002 1,128 51 21 13 --- 1 2,216 Fl, F2, F3, F4, F5, FG, F7, F8 2,663 1,144 253 68 197 --- 14 4,339 G1 305 108 24 116 479 --- 12 1,044 H1, H2, H3, H4 1,540 126 ill 52 333 46 1 2,209 Jl, J2, J3, J4, J5 2,100 34 6 52 1,671 105 --- 3,968 N K1, K2, K3 1,771 36 6 64 1,389 292 14 3,572 L2, L2, L3, L4 589 6 --- 40 93 --- --- 728 Ml, M2, M3, M4, M5 2,926 46 3 208 400 --- --- 3,583 CITY TOTAL 17,584 5,390 915 874 5,537 916 56 31,272 (56.2%) (17.2%) (2.9%) (2.8%) (17.7%) (2.9%) (.2%) 100%2 Source: City of Newport Beach Planning Department. 1) Does not include group quarters. 2) Percentages do not add to 100% due to independent rounding. The annexation of the West Newport Triangle (Statistical Area A3) in December 1980 added the following additional units within the city: Table 20 Units in the West Newport Triangle Total Dwe�ling Single Mobile Units Family Duplex Multi-family Homes 735 9 8 505 213 With this addition, the housing unit mix in the city is estimated as follows: Table 21 Housing Unit Mix Housing Unit Type Number of Units Percent of Total Single-Family 17,593 55.0% Duplex 5,398 16.9% Triplex 915 2.8% Fourplex 874 2.7% Multi-Family 6,042 18.9% Mobile Home 1,129 3.5% Miscellaneous 56 .2% TOTAL 32,007 100.0% This housing unit mix compares to Orange County and neighboring cities as follows: Table 22 Housing Unit Comparisons 2-4 5 or more Single- Multiple Multiple Mobile Family Units Units Homes Newport Beach 17,593 7,187 6,042 1,129 (55.0%) (22.4%) (18.9%) (3.5%) Costa Mesa 16,781 6,229 9,496 1,141 (49.9%) (18.5%) (28.2%) (3.4%) Huntington Beach 34,030 10,843 15,436 3,056 (53.7%) (17.1%) (24.4%) (4.8%) Laguna Beach 5,740 1,963 1,337 17 (63.4%) (21.7%) (14.7%) (0.2%) Orange County 420,029 93,471 165,917 30,184 (59.2%) (13.2%) (23.4%) (4.3%) 1) As of July 1, 1980. 2) Source: State Department of Finance, Population Research Unit, January 1, 1980. 25 Residential Densities Residential densities in many neighborhoods in the City of Newport Beach are very intense. Densities have been estimated by dividing residential acreage (as of 1972) by current dwelling unit counts: Table 23 Residential Densities by Area Estimated Density (Dwelling Units per Acre) Balboa Peninsula 22.4 West Newport 19.3 Balboa Island 27.7 Old Corona del Mar 16.9 Lido Island 13.9 In addition, many attached housing projects in the city have been developed to maximize land usage. Existing attached projects in the city and their densities are listed below. Table 24 Densities of Attached Housing Number of Dwelling Gross Dwelling Units Per Project Acreage Units Gross Acre Newport Crest 38.0 460 12.1 Versailles Phase I 6.8 255 37.5 Lido Condominiums 1.1 54 49.1 Condominum at 621 Lido Park Drive 1.7 36 21.2 Caribe 1.3 48 36.9 Rendezvous .75 24 32.0 Oakwood 32.3 1,450 44.9 Mariners Square 6.2 114 18.4 Park Newport 53.2 1,302 24.5 Promontory Point 32.8 520 15.8 Bayview Apts. 5.4 64 11.8 Bayport Apts. 5.3 96 18.1 Haywood Apts. 27.4 310 11.3 Newport Terrace 40.0 281 7.0 Granville Apts. 10.16 67 6.59 Dwelling units in these projects when totalled with all units in the neighborhoods listed above account for 18,640 dwelling units, or 60% of all city dwelling units as of January 1980. The trend within the city toward higher density development is demonstrated also by building permit data. Table 25 shows that since 1978, multi-family permits issued have exceeded single-family permits issued in the city. This is exactly opposite the trend state-wide, where single-family permits have exceeded multi-family in recent years. 26 Table 25 NEWPORT BEACH BUILDING PERMITS ISSUED New Residential Units Single Multi- Single Multi- Single Multi- Single Multi- Single Multi- Units Family Family Family Family Family Family Family Family Family Family 700 - 600 - 500 - 400 - 410 300 - 305 N J 200 - 236 200 246 184 150 - 161 100 - 122 144 50 - 73 1976 1977 1978 1979 1980 Source: California Construction Trends Housing Tenure Tenure of housing in Newport Beach has varied as follows between 1970 and 1980: Table 26 Housing Tenure Total Occupied Owner- Renter- Units Occupied Occupied 1970 19,280 10,810 (56.1%) 8,470 (43.9%) 1976 26,553 14,710 (55.4%) 11,8431(44.6%) 1980 28,518 16,735 (58.7%) 11,783 (41.3%) The percentage of rental housing in Newport Beach is higher than that of Orange County. The latest data comparing rentals are from the 1970 Census: Table 27 Percent of Rental Housing by City Percent of Rental Housing Newport Beach 43.9% Costa Mesa 48.0% Huntington Beach 29.7% Laguna Beach 48.6% Orange County 34.5% The percentage of rental housing has increased in the city since 1960, when only 36% of all occupied units were rented. This is due to a sizeable amount of new rental construction in the late 1960's and early 1970's. Such rental projects include the following: Table 28 Major Recent Rental Projects Bayview Apartments 64 units Bayport Apartments 104 units Park Newport 1,302 units Promontory Point 502 units Baywood Apartments 320 units Sequoia Apartments 54 units Big Canyon 74 units TOTAL 2,438 units 1) Estimated as follows: 1976 occupied rentals plus 1976 vacant rentals plus new rental construction minus 1980 rental vacancy rate. 28 In addition to these larger rental projects, and others built earlier, the city contains many rented duplex, triplex, and fourplex rental units in its older neighborhoods. Areas where this type of rental housing is predominant include West Newport, Balboa Peninsula, and Balboa Island. Since 1976, the amount of new rental construction in the city has been negligible; approved condominium conversions, since 1976, total 424 units. In September 1979, the city adopted a new ordinance to regulate condominium conversions. Condominium conversions are restricted as follows: - No condominium conversion may be approved on a lot of less than 5,000 square feet, regardless of when such lot was legally established (Zoning Code, Chapter 20.73.025) . - No condominium conversion use permit shall be approved when the rental dwelling unit vacancy rate in the city is equal to or less than 5% (Zoning Code, Chapter 20.73.035) . This provision can be overridden if two-thirds of the tenants of a project vote to recommend project conversion, or if conversion will minimize vacancies or other wise substantially comply with the intent of the city's zoning code. These restrictions have influenced the incidence of condominium conversions in the City of Newport Beach as follows: Table 29 Condominium Conversion Applications Approved Resubdivisions Tracts Total 1976 0 34 34 1977 12 0 12 1978 60 53 113 1979 7 255 262 1980 11 0 11 1981 (through 2/5/81) 2 0 2 Total 92 342 434 Under this zoning regulation, most rental units in the older beach neighborhoods are preserved as rental housing, because lots in these neighborhoods are generally less than 5,000 square feet. Property owners may not convert rental units, but, in some cases, such units have been demolished and new attached for-sale housing has been built to bypass the city's restrictions on condominium conversions. Review of assessor parcel information indicates that 384 of the 424 units approved for conversion by the City actually converted. This represents ten projects, including two triplexes, one duplex and one project consisting of 225 units. The remaining 7 conversions ranged in size from 8 units to 45 units. Among those units which were approved, but did not convert were nine duplexes and three triplexes. The remaining projects which did not convert contained 6, 10, and it units. The conversion of large rental projects has been restricted by the city's vacancy rate provision. • 29 Vacancy Rates The city's overall housing unit vacancy rate has varied as follows between 1970 and 1980: Table 30 Overall Housing Unit Vacancy Vacant and Available for Occupancy All Vacant Units Total For Sale For Rent 19701 14.2% 6.8% 2.6% 11.6% 19762 10.9% 4.3% 2.3% 6.5% 19803 10.9% N/A N/A N/A Sources: 1) 1970 U.S. Census. 2) 1976 Special Census for Newport Beach; all vacancy rates have been adjusted from actual 1976 data to account for 54.1% vacancy rate within Promontory Point which was recently completed at the time of the 1976 Census. 3) 1980 Census Preliminary Counts. The large discrepancy between overall vacancy rates and vacancy rates among available units is due to the large number of seasonal units and second homes in Newport Beach. Within the 1976 Census, 1,426 of 3,259 vacant units were in the following four categories: "permanent resident elsewhere"; "held for occasional use"; "seasonal occupants"; and "held for other reasons". To assist in the administration of its condominium conversion ordinance, the city has conducted rental vacancy surveys since 1979. The results of these surveys are shown on Table 31. Table 31 City Rental Vacancy Rate Survey Results Vacancy Rates Unit Type October 1979 April 1980 Single-Family 8.68% ----- Duplex 4.66% 3.53% Triplex 3.47% 4.37% Fourplex 1.23% 2.38% 5 or More Units 1.97% 1.25% Mobile Homes .19% ----- TOTAL 4.22% ----- Excluding Single- Family and Mobile Homes 2.93% 2.31% 30 A regional housing vacancy survey for owner- and renter-occupied units provides comparisons between overall vacancy rates in Newport Beach and within the Anaheim-Santa Ana-Garden Grove SMSA. Table 32 Vacancy Rates, July 1980 All Housing Single- Multi- Mobile Types Family Family Homes Newport Beach 2.5% 2.2% 2.9% 0.4% SMSA 1.7% 1.1% 2.7% 1.2% Source: Federal Home Loan Bank of San Francisco According to this Federal Home Loan Bank Survey, vacancy rates in this region have been declining as follows since 1978. Table 33 Regional Vacancy Rates Vacancy Rate All Housing Types May 1978 2.3% July 1979 2.0% July 1980 1.7% The Newport Beach overall vacancy rate reported within the Federal Home Loan Bank survey is higher than the regional May 1978 figure. Housing Condition The most recent survey of housing conditions in Newport Beach was completed as part of the 1976 Special Census. This survey indicated that only 1.3% of all housing units were deficient. Deficient units in this regard include deteriorated, and dilapidated units, as well as those units which were inadequate in original construction, or which were under extensive repair. Three neighborhoods in the city contain slight concentrations of substandard housing. Five and one-tenth percent of all housing units on Balboa Peninsula were in substandard condition, while 2.5% and 2.6% of all units on Balboa Island and in Newport Heights (Statistical Area H) respectively, were in substandard condition. Because of the increasing value of housing in Newport Beach, private investment in housing improvements is a common phenomenon. In 1980, 72% of all residential building permits issued by the City of Newport Beach were for residential alterations or additiTns. The average value of the 676 building permits issued in 1980 was $14,530. 1) Source: California Construction Trends, Security Pacific National Bank. 31 HOUSING PRICES New Homes Prices of new homes in Newport Beach have escalated sharply in the last five years. The increase in price can be estimated by comparing value ratios of homes for sale in 1975 to those for sale in 1980. The following table provides value ratios for 24 new residential projects (or phases of projects) built in Newport Beach in the last five years. Of the seven condominium and planned unit development projects constructed in 1975, average value ratios were $49.69 to $63.78 per square foot. Average value ratios for the four projects constructed in 1980 ranged from $134.51 to $181.50 per square foot. The increase represented by these figures is 170% to 180%. The most significant factor in the increasing prices of new homes in Newport Beach is the increase in land costs. As the supply of vacant residential land decreases, the price of the last remaining residential acres increases. This, in turn, triggers the construction of more luxurious units with more amenities and higher construction costs which "balances" the land price component of the unit selling price. For this reason, units built in 1980 are not necessarily similar in nature to the types of units built in 1975, amenities and luxury features have been increased. New units coming on the market in 1981 include two types. In Statistical Area A, several condominium projects have recently been completed. Sales prices for these units vary as follows: Table 34 Characteristics of Recently Completed Condominiums Projected Square No, of Project Price Feet Units Villa Balboa (third phase of nine) $125,000-$350,000 894-1288 60 Newport Knolls $100,950-$155,450 764-1577 26 Brookview Newport $179,900-$199,900 1324-1675 24 Two higher priced projects are in grading stages in the east side of the city. Sea Island will contain 132 condominiums adjacent and to the south of Newport Center. The projected sales prices for these units will start at approximately $500,000 each. Also in Statistical Area L, 300 units are planned for construction around Ford Aeronutronic. The projected price range for these units is $325,000 to $700,000. 32 Table 35 VALUE RATIOS OF NEW RESIDENTIAL CONSTRUCTION IN NEWPORT BEACH 1975-1980 Condominiums and Planned Unit Developments Value Ratio Development Location, Basic Price Square (Price a Square Date of (Developer) Phase Range Feet Feet) Price Figures 1. Canyon Crest Estates/ 1 $ 76,900-$ 85,500 1,650-2,100 46.61- 40.71 February 1975 Condominium Pacific View Drive & New 2 $ 76,900-$ 88,000 same 46.61- 41.90 February 1976 MacArthur (Estate Builders Inter- national) 2. Deane Homes-Big Canyon/ $125,000-$260,000 1,820-3,695 68.68- 70.37 February 1975 P.U.D. San Joaquin & Big w Canyon Dr. (Ben Deane & Co.) 3. Jasmine Creek/P.U.D. 1 $ 95,500-$112,000 1,857-2,582 51.43- 43.38 February 1975 San Joaquin Hills &� Marguerite 2 $ 98,500-$148,000 same 53.04- 65.05 February 1976 Inlet & Marguerite 3 $168,950-$226,950 1,857-2,323 90.98- 97.70 March 1978 San Joaquin & Marguerite 4 $189,950-$223,950 1,857-2,275 102.29- 98.44 May 1979 (M.J. Brock & Son) �5 $222,000-$395,000 1,850-2,000 120.00-197.50 March 1980 4. Newport Crest/Condominium 1 $ 58,875-$ 68,875 1,242-2,043 47.40- 33.71 February 1975 Superior & Ticonderosa (Pacific Newport Crest) 2 same same same February 1976 5. Sea Wind Newport/Condominium $ 45,000-$ 51,000 1,050-1,300 42.86- 39.23 February 1975 Superior & Ticonderosa (Don W. Woodward) VALUE RATIOS OF NEW RESIDENTIAL CONSTRUCTION IN NEWPORT BEACH 1975-1980 (Cont.) Condominiums and Planned Unit Developments Value Ratio Development Location, Basic Price Square (Price - Square Date of Developer Phase Range Feet Feet) Price Figures 6. Six Twenty-One 1 $135,000-$165,000 2,150-2,632 62.79- 62.69 February 1975 Park Dr./Condominium Lido Park & Lafayette 2 $129,500-$170,000 2,550-2,650 50.78- 64.15 February 1976 (Dan Olmstead) 7. Six Zero One Lido Park Dr./ 1 $110,000-$150,000 1,850-2,000 59.46-125.00 February 1975 Condominium 2 $115,000-$245,000 1,990-2,000 60.53-122.50 February 1976 Lido Park & Lafayette (Swan Construction) 8. The Cove/Condominium $ 85,000-$199,500 1,600-2,386 53.13- 83.61 February 1976 Bayside & Jamboree (Irvine Pacific) 9. Big Canyon Townhomes $136,300-$199,800 1,606-1,986 84.87-100.60 March 1978 Ford & MacArthur (McLain Development) 10. Tract 9810 $105,000-$130,000 1,496-1,967 66.09- 70.19 March 1978 Tustin & Sixteenth (Proposed) (Pacesetter Homes) 11. Harbor Ridge Crest/P.U.D. 1 $275,000-$360,000 1,950-2,967 141.03-121.33 May 1979 Spyglass & Harbor Ridge 2 $310,000-$385,000 1,950-2,967 158.97-129.76 May 1980 (Irvine Pacific) VALUE RATIOS OF NEW RESIDENTIAL CONSTRUCTION IN NEWPORT BEACH 1975-1980 (Cont.) Condominiums and Planned Unit Developments Value Ratio Development Location, Basic Price Square (Price r Square Date of (Developer) Phase Range Feet Feet) Price Figures 12. Harbor Ridge Estates/P.U.D. $345,000-$625,000 2,350-3,804 146.81-164.30 March 1980 Spyglass & Harbor Ridge (Irvine Pacific) 13. The Versailles/Condominiums $ 65,500-$325,500 463-1,586 141.47-205.23 March 1980 Superior & Hoag (Daon Corp.) Ln VALUE RATIOS OF NEW RESIDENTIAL CONSTRUCTION IN NEWPORT BEACH 1975-1980 (Con't) Single-Family Detached Value Ratio Development Location, Basic Price Square (Price r Square Date of (Developer) Phase Range Feet Feet) Price Figures 14. Spyglass Hill $131,000-$215,000 2,239-4,072 58.51-52.79 July 1976 Spyglass Hill & San Joaquin Hills (Lusk Homes) 15. Westcliff Grove $340,000-$445,000 2,508-3,368 135.57-132.13 June 1980 Dover and 17th St. (Pacesetter Homes) w m Source: Residential Sales Survey First American Title Trust Company Existing Homes Prices for existing owner-occupied housing in Newport Beach have also risen sharply in the last five years, reflecting the increased demand for housing in the Orange County area, and the identification of Newport Beach as one of the most desirable areas in the region. Information available from the Newport Harbor-Costa Mesa Board of Realtors indicates that the median price of existing homes rose by 42% between May 1978 and November 1980. (See Table 36) Newport Beach represents only one portion of this real estate area, and approximately one-third of all sales used to determine median prices. While the median sales price of existing housing in the Newport-Costa Mesa area as of November 1980 was $147,777, the estimated median price of homes selling in Newport Beach is well above this figure. Information is not available to determine the actual median selling prices of existing homes within the city. A median figure estimated by several real estate professionals was $250,000. The average price of homes sold in Newport Beach in January 1981 was $213,275. Median listed prices for homes in the seven real estate districts in the city have been recorded on Table 37. These listed median prices do not accurately portray sales prices of existing homes in the city; however, they do give some indication of the different real estate markets within the city. Of 538 class one properties listed for sale in January 1981 in Newport Beach, only 10% were listed at prices below $150,000. These included mobile homes and condominiums. Most of these housing opportunities were in Newport Heights, the West Newport Triangle and Hoag Hospital area, Santa Ana Heights (unincorporated) , West Newport, and in various mobile home parks in Statistical areas A, B, and K. These facts demonstrate that the purchase of existing housing within Newport Beach is not possible for a vast majority of first-time homebuyers. The existing owner-occupied housing market in the city serves persons who are moving up in their housing purchase either from another area of the county or from another neighborhood in Newport Beach. Even for these homebuyers, a housing purchase in the city is probably not possible unless down payments are larger than 20% of the purchase price, and incomes are well above the regional median. 1) Single-family properties 37 Table 36 MEDIAN SALES PRICES OF EXISTING HOUSING 1978-19T0 NEWPORT HARBOR-COSTA MESA REAL ESTATE AREA May 1978 Nov. 1978 May 1979 Nov. 1979 May 1980 Nov. 1980 2 Bdrm. or less $ 89,500 $ 78,888 $ 88,332 $ 89,999 $134,999 $115,713 3 Bdrm. $ 92,321 $ 89,860 $ 97,856 $112,856 $121,905 $130,769 4 Bdrm. $124,615 $118,823 $131,111 $147,272 $159,999 $207,143 All Homes $104,054 $ 96,034 $108,723 $119,687 $128,000 $147,777 Sample Size 406 289 319 169 208 141 w m Source: California Association of Realtors Monthly Existing Home Sales Survey. 1) Newport Harbor-Costa Mesa Real Estate Area is shown on the following map. Table 37 MEDIAN LISTED PRICES FOR SINGLE FAMILY DETACHED AND �TTACHED HOMES IN NEWPORT BEACH BY REAL ESTATE DISTRICT Multiple Listing Median Price Real Estate District (See Map) Aug. 1 Sept. 26 Nov. 28 Jan. 30 1980 1980 1980 1981 6. Newport Heights $165,000 $174,500 $179,900 $182,500 7. Westcliff $275,000 $265,000 $288,000 $250,000 B. West Newport & Lido Island $325,000 $290,750 $282,500 $280,000 9. Balboa Island, Linda Island Harbor Island $519,500 $508,750 $549,500 $542,000 10. Balboa Peninsula $425,000 $365,000 $465,000 $439,000 w 11. East Bluff, Big Canyon, Harbor View $254,900 $274,750 $284,250 $330,750 12. New and Old Corona del Mar $379,000 $427,250 $444,450 $549,000 1) Medians were calculated using multiple listing of the Newport Harbor-Costa Mesa Board of Realtors on four dates in a six-month period. Median prices listed are asking prices rather than sales prices. J J MESA- , .,4 i r ilk •'T\ \-/ '• \•\ • ., Id" •c.r"�� .e•'rn 1 I CITV OFBEACH 41, , i1p4j , o :x" _� .. ` `' 1 ` , ;�f t5 , # f : jar, • s r ' Ca — FI�'PpQr��_i• r � a ci�IHJ_ .�f� �� '.✓,: to P yI .^ ^v i t l v/ Newport Harbor-Costa Mesa Board of Realtors Area 40 The accessibility of owner-occupied housing in Newport Beach was much broader before 1977. The increase in real estate values throughout Orange County started as early as 1973. However, property values did not begin their dramatic increase until 1976 and 1977. Before 1977, a housing purchase by a first-time home buyer was still possible in Newport Beach. The actual housing costs of 1976 homebuyers in the city is documented by the 1976 Special Census: Table 38 1976 Monthly Payments for Owner-Occupied Housing City of Newport Beach 0- $150- $250- $300- $350- $400- $450- $500- $600+ $149 249 299 349 399 449 499 599 No. of Responses 2434 1574 952 885 822 756 613 895 1368 Percent 23.6% 15.3% 9.2% 8.6% 8.0% 7.3% 6.0% 8.7% 13.3% The median monthly housing payment of owner-occupied households in the city as of 1976 was $310 per month. Only 13.3% of all owners made housing payments over $600 per month. For those owner-occupants in the city who have not sold their homes since 1976, housing payments have remained fixed, while property values have escalated. Households in this category generally have incomes which would not be sufficient to buy their own home at its current market price. Within the city there are a sizeable number of owner-occupant households who are not upper income, but who live in an area where most homes are selling for more than $200,000. Research was conducted to obtain an estimate of the number of households in this category. A review was made of all class one residential properties (single-family) in Newport Beach, utilizing the Orange County Assessor's Roll of Secured Property, current through March 1, 1980. Under Proposition 13, all properties are assigned a base year for assessment purposes, which indicates the most current date in which the property was sold or in which a change of ownership occurred. Any conveyance of title will trigger a property reassessment and will change the base year shown on the assessor's rolls. This review indicated that 62.3% of all class one properties in the city had a base year of 1976 or earlier, indicating that no sale had occurred since January 1, 1977. Many single-family properties in the city are rented units. Regardless of whether such properties have been sold, rents will rise or fall with market demand. The 1976 Census indicated that 22.9% of all rented units in the city were single-family homes. The assumption is made, then, that approximately 2900 single-family properties (of a total of 17,584) were rental properties in 1980. As of January 1, 1980, 14,684 single-family properties were owner-occupied, and 62.3% of these, or 9,148, are available to their owners at 1976 cost levels. 41 Rental Housing A survey of Newport Beach rents conducted in January 1981 revealed the following distribution of prices for vacant rentals in the city. Table 39 Monthly Rental Prices As of January 1981 City of Newport Beach 0- $200- $300- $400- $500- $600- $700- $800- $900- $1000+ $199 299 399 499 599 699 799 899 999 0 5 15 28 53 62 41 34 20 58 1.6% 4.7% 8.9% 16.8% 19.6% 13.0% 10.8% 6.3% 18.3% Source: Survey of Newport Beach Rental Prices, Connerly & Associates, Inc. , 1981 , The median rent for all types of vacant rental housing in the city shown by this survey is $695. Median rents for houses and apartments by size are shown on the following table. The median rent reported by the 1976 Census was $274. It should be noted that the 1981 median rent reflects vacant rentals in the city, while the 1976 median reflects occupied rental properties. Therefore, the 1976 and 1981 medians are not directly comparable. The median for occupied rentals will generally be lower than the median for vacant rentals, because long-term tenants usually pay lower rents, and because vacant units are in most cases those experiencing rent increases to reflect market conditions. Real estate professionals in the area note that the traditional rule that rental prices equal 1% of the market value of a unit does not apply to the Newport Beach rental housing market. Rents are closer to 0.5% of the housing unit market value. This is possible because many rental properties, especially duplexes, triplexes, and fourplexes in the older neighborhoods of the city, have been held by the same owner for many years. Rents in these neighborhoods (Statistical Areas B, D, E, and H) are generally lower than the median rent for the city. Rents have risen over time, but not at the same rate as prorperty values. Sale of such rental property is made difficult by the fact that rental incomes usually will not cover the financing costs in purchasing rental property. Conversion of these units to owner-occupied housing is not possible under the city's condominium conversion ordinance. 42 Table 40 1981 Median Rental Prices By Unit Type 1 Bd. 2 Bd. 3 Bd. 4-5 Bd. Rented Houses Furnished $ 750 $1200 $1200 $1600 Unfurnished $ 400 $ 695 $ 825 $1100 Rented Apartments Furnished $ 425 $ 550 $ 700 $ 750 Unfurnished $ 430 $ 550 $ 750 $ 795 Source: Survey of Newport Beach Rental Prices, Connerly & Associates, Inc. , 1981. Medians calculated from rental prices of units listed in Orange Coast Daily Pilot January 23, January 30, February 8, February 15, 1981. 43 Table 41 AVERAGE RENTS BY STATISTICAL AREA 1976-1981 CITY OF NEWPORT BEACH Estimated 19812 Statistical Areas 1976 Median Rent1 Median Rent Al, A2, A3 $294 $ 500 B1, B2, B3, B4, B5 $276 $ 600 Cl, C2 $400+ $1200 D1, D2, D3, D4 $211 $ 600 El, E2, E3 $269 $ 500 F1, F2, F3, F4, F5, F6, F7, F8 $263 $ 700 G1 $400+ Hl, H2, H3, H4 $224 $ 500 J2, J2, J3, J4, J5 $241 $ 600 K1, K2, K3 $307 $ 825 Ll, L2, L3, L4 $400+ $ 950 Ml, M2, M3, M4, M5 $327 $ 850 City Total $274 Source: 1. 1976 Special Census. 2. Survey of Newport Beach rental prices, Connerly & Associates, Inc. , 1981. * Sample size too small to obtain median. Mobile Homes There are presently 1,133 mobile home spaces in thirteen mobile home parks in Newport Beach. of these 1,133 spaces, 867 or 76.5% are occupied by permanent residents. The remaining homes are occupied by persons who use their mobile homes for vacations and weekend visits to the area. The character of the city's 13 mobile home parks varies. Six of the parks are located on or close to Newport Harbor. The character of these parks appeals to retirees, and many weekenders. Sixty percent of all spaces in these parks are occupied by permanent residents. Space rents range from $280 to $450 a month, depending on the location of the space in relationship to the bay and the size of the mobile home. one of these parks, Bayside Village, is occupied primarily by retired persons, a large portion of whom have occupied their mobile homes for 15 years or more. The remaining seven mobile home parks are located either in West Newpot (Statistical Area B) on the north side of Pacific Coast Highway or in the West Newport Triangle area (Statistical Area A) . Space rents in these parks range from $85 to $233.50 per month. Many of these mobile homes are older, having been in parks since their development usually in the 1950's or 1960's. Many of the residents of these parks are also older. Most parks in the city do not permit children as residents. In some cases, the age limit is 16 or 18, and in others it is 35, restricting residency to middle-aged or older adults. For mobile home residents who own their mobile home and who bought them when interest rates were lower, or who made a cash purchase, housing payments will be affordable on moderate incomes and, in some cases, lower incomes. For those who are purchasing a new or used mobile home in 1981, housing costs may be similar to conventional housing. The median listed price for a used mobile home for sale in January 1981 within a Newport Beach park was $51,900. Local credit underwriting standards in regard to mobile homes require a 20% downpayment for a 17% interest rate loan with a 20-year term. These standards apply to both new and used mobile homes. Under these loan terms, the monthly cost for the purchase of a mobile home in Newport Beach has been estimated as follows: Table 42 Mobile Home Costs Purchase Price $51,900 Down Payment $10,380 Loan Balance $41,520 Monthly Loan Payment (20 years at 17%) $ 609 Space Rent $ 118-$450 Monthly Housing Cost $727 - $1,059 1) The housing cost in this circumstances would be further increased by a property or motor vehicle tax, which has not been estimated. 45 This monthly cost would not be affordable to a lower income household. Based on a 28% ratio of housing cost to gross monthly income, a $2,596 to $3,782 monthly income would be required. Based on a 30% ratio of housing cost to gross monthly income, $2,423 to $3,530 in monthly income would be required. These monthly incomes are 126% to 197% of the county median income in 1980. 46 Table 43 MOBILE HOME PARKS Spaces Occupied Number of Units/ By Permanent Permanent Space Rent Acres # Spaces Acre Residents Residents Per Month Bayside Village 26.46 291 11.0 265 400 $280 - $450 300 E. Coast Highway Beach & Bay 1.405 47 33.4 41 71 $225 7204 W. Coast Highway Cannery Village 1.4 34 24.3 30 56 $370 700 Lido Park Dr. Ebb Tide 4.16 80 19.2 80 106 $150 - $175 1560 Placentia Zj Flamingo .31 20 64.0 18 24 $165 7000 W. Coast Highway Harbor 1.92 40 20.8 40 55 $130 - $140 1535 Superior Lee Haven .73 25 34.2 12 14 $ 85 - $125 2940 W. Coast Highway Lido Mobile Home Park 12.4 214 17.3 124 188 N/A 710 Lido Park Dr. Lido North .3 6 20.0 6 11 N/A 701 Lido Park Dr. Table 43 MOBILE HOME PARKS (Con't) Spaces Occupied Number of Units/ By Permanent Permanent Space Rent Acres # Spaces Acre Residents Residents Per Month Marinapark 4.94 60 12.2 24 37 $288 - $342 1770 w. Balboa Blvd. Newport Dunes 5.90 146 24.7 3 3 $ 90 - $ 65 a week Coast Highway & Jamboree Newport Terrace 4.27 56 13.1 56 75 $118 - $175 824 W. 15th St. Seacliff 9.12 114 12.5 112 168 $233.50 890 W. 15th Street m SITES FOR HOUSING As part of the Housing Element Study it was determined that seventeen of the twenty-nine undeveloped parcels in the Newport Beach planning area are appropriate for residential development. This inventory included a review of the General Plan designations, existing zoning, site areas, and allowable uses for each vacant parcel. The information presented here summarizes this study, by listing all vacant residential sites within this inventory. Sites are located by number on the following index map. Table 44 Undeveloped Parcels Site Number Acreage Planned Use Constraints 1 71 acres Low density residential Environmental: 40 dwelling units Proximity to 12.4 acres parkland Upper Newport 10 foot bikeway and Bay pedestrian easement along bluff 3 88 acres Low density residential Archaeological 212 clustered dwelling and marsh sites units 4 15 acres Medium density residential 80 dwelling units 5 65 acres Low density residential Environmental: 151 dwelling units Proximity to 5 acres: Recreation and Upper Newport Marine Commercial Bay 50 foot pedestrian and bike trail easement 6 35 acres Low density residential 108 dwelling units 8 25 acres Low density residential 76 dwelling units 9 9 acres Medium density residential 68 dwelling units: approved for construction 12 50 acres Low density residential 13 102 acres 300 dwelling units: approved for construction 14 10.6 acres Low density residential: 21 lots approved 15 19 acres Open space with alter- native use Low density residential 49 Site Number Acreage Planned Use Constraints 22 68 acres Planned Community 120 dwelling units possible 24 57.6 acres Open Space with an Slopes and alternative of low density other environ- residential mental constraints 26 122 acres Mixed uses: 505 additional dwelling units 27 69.83 acres Unclassified Impacted by (unincorporated) Local Coastal Plan airport noise proposes a combination of open space and residential development between 35 and 18 dwelling units per acre 28 9,370 acres Purchased for development (unincorporated) as public urban park Limited residential development in north area 29 450 acres Presently in use as oil (unincorporated) field. City specific Area plan designates harbor development with alternative residential uses allowing 2408 dwelling units 50 21 ?I{' :ri'``\'�;_J�_i.�i\(s\ %/'�,f /�•�'l✓ �/.,-�- la .-. ._ a_ 1. '.a:� ��.,.'.✓/� .. _ _ \ �I LL .22 �%\ /i• \� !�i- a%(��P.� eta�i_ r A� X I ��' I � •( \ /j. %`t�v{1��. - / � �1�� y7;.,��.tip� y r •\ :�*_`:' ',��11}z�,; ', `_ /.! sf1W i .,'i• 1✓ ��- . .1� � mil, � 2 y"=J•r,� ) ;.mil J, \ '� •\ •�Tiv'°'ary.`,j\\\l r.S�f931 r 15-�'� '_.�°1 ±Sl: i�, %•_\\ii�__ '.�.' N �- �� 16 r•r`"" n/A, J:=\!L_ .�\ `\ ash).! \a,. j,^�L I-� '�•i7, ::` - � .. .: ,`.,,•_ -.. ' e>h`= \ r { �•.'•:`c�0� .,s, v�-. p,. ^..--_ z,.,s \i •/•:r �':.S�1S1i y^� �_ �.., \•� �\ •=,:{fi1t t l/ __ \!r`ti` � 'l� / "" l i ;b a • o,` _"-a._.'r_'".'�{ NODr i 1-•r/� ?C:a�:; .-•:��•"%_ l _ '�`'r 'fEo- '_'� .( 1 6 o ii •r� t�`^-r / 7m _ �. •S Y l•,e� ..r71'fl ll•1, .�i� '� 3„-cr��C _: `°�^^ �__ r iit�'��3311•• y � .n.� J `/il_ `a SCe` -�..J "ril•`� _•�''3rr 1. Tz_aei' •`;L„�'::^•..n (.. ` `y -'_`'^ 1\i+. ..,:: �, s�� -mod F5.r%r� (\: 4 � -�-_ �•.�_,'yr:ai, c:.L 5-- _ +l li iiii i7il,f';'i i••....+ 7 . -�� \ a� ' :�y—•-�,T •28 .. i �\..�`e .�'ii��.• �JJa 1.: • - {3�a1��1'1��'-�^."'•_�•?'i�,•..,�,.'"S�Y�-.x�� .,r��t•}T:'..^..._- ' ,\.-•_ 1 liil __ <'fa\i�-:'. _. "rs-n.�i�F(�/i`'•'��`')'^e.,i A1. - _ �_ - p "/r ..l�q-2��.�"��/ [.fit ;'tt � !•!' 1- �.�ur.�. \ - _ _ _ \� ��,• •! O � „'Alyii"' BEA�tl.♦^��^,r CITY OF NEWGOifT BEACH F- A' INDEX MAP Non-committed vacant land within city limits for which a residential use is planned totals 297 acres. This includes easements and park dedications on various sites which are not buildable. When all non-committed land within the city is counted, the city contains 448 vacant acres, which is 4.4% of the total city acreage. Sites With Redevelopment Potential It has been stated earlier in this Housing Element that substandard housing totals 1.3% of the city housing stock. In a housing market such as Newport Beach, private housing improvement occurs, because housing demand justifies capital investiment in the housing stock. Substandard housing that does exist correlates strongly with two factors: the age of the housing stock and redevelopment potential. Blighted structures are found primarily in older neighborhoods in the city, and in areas where a higher economic use of the land would be feasible and is anticipated. Thus, the occurrence of blighted housing indicates sites with potential for redevelopment. An additional possible site for residential redevelopment is the Corona del Mar Elementary School, located on Carnation Avenue near Pacific Coast Highway, in Corona del Mar. This school will be closed in June 1981 because of declining school enrollment. No plans for use or disposal of the site have been proposed by the Newport-Mesa Unified School District. However, suggestions have been heard for sale of the site for residential development and for redevelopment of the facility for elderly housing. ENERGY CONSERVATION OPPORTUNITIES The City of Newport Beach is fully enforcing the provisions of Title 24 of the California Administrative Code, which provides for energy conservation in new residences. The standards found in Title 24 create energy savings of approximately 50% over residential construction practices utilized prior to the Standards' enactment. The building department of the city evidences an awareness of energy conserving design innovations and solar technology. The department utilizes the Solar Systems Code Review Manual and its companion document, the Pool and Spa Solar Systems Code Review Manual, both published by ICBO to facilitate the installation of appropriate solar systems. Under the existing state law (the California Resources Code) , local jurisdictions may adopt structural energy conservation standards in excess of the existing state standard. In the moderate climate of the City of Newport Beach, such an increase in standards would be of dubious value. Additionally, it should be noted that increases in conservation standards generally increase homebuyers' costs and will therefore exacerbate the existing housing affordability concern. The City of Newport Beach has a relatively small remaining amount of land available for residential development. As such, land use standards which would require proper orientation of subdivisions to take advantage of solar energy would be of limited value. The city may wish to explore this option; however, care should be taken to insure that densities, and therefore affordability, are not unduly affected. 52 A major concern in the area of energy conservation is the relationship of housing to employment and the necessary transportation lines between them. While specific energy savings are difficult to quantity because of the myriad of variables involved in our transportation system, it is generally true that a physical proximity between home and work provides transportation energy savings. With regard to Newport Beach, the existing affordability concern increases energy use by forcing workers employed within the city to seek less expensive housing outside of the city. Again, it should be noted here that the relatively small amount of remaining land for residential development cannot in itself mitigate this concern. The jobs/housing imbalance in the city cannot be expected to be totally mitigated by residential development within the city. With regard to other "alternative" energy sources, iti should be noted tha� Newport Beach is not in an area of either geothermal or significant wind activity and, therefore, cannot take advantage of these sources. It appears that the city, through the enforcement of Title 24 and by its sensitivity to innovative design is making excellent use of residential energy conservation opportunities. 1. California Energy Commission, Geothermal Energy Resources in California: Status Report, June 1976. 2. California Energy Commission. 53 I i a f city ofu y - r Newport Beach o _ r + statistical divisions '•�•. statistical areas W \'I'✓• ® a�o1� I� /(�� _ � Ill�. \ �i��4� �.�. © .�� '.'+r �I 13 Yll NE, ` ` Al •' '" - ,� • 4�Q� � ��,� `{� �� r%' t ) Q0 1 Q ti .;jf�Jyi: ov � . �'� a✓ 'c-" co ��l° ===—r" � a' '' � i`— J_�...--�— O` C prepared by Advance Planning STATISTICAL AREA ANALYSIS In the following section of this Housing Element, the 12 neighborhood areas within the City of Newport Beach are examined in closer detail. various information on housing costs, housing unit types, and household characteristics are discussed individually for these geographic areas within the city. Statistical divisions which form the basis for this analysis are shown on the map provided. This discussion is followed by Tables 45 to 52 which summarize housing information by statistical area. STATISTICAL AREAS Al, A2, A3 BANNING PROPERTY, HOAG HOSPITAL AREA, WEST NEWPORT TRIANGLE Statistical Area A contains a mix of industrial, commercial, and office uses, as well as a diversified housing stock. of all residential units, some 40% are single-family, 40% are multi-family, and 14% are mobile homes. Group quarters in the area are convalescent facilities near Hoag Hospital. In 1980, the average household size in this area was 1.74, the smallest in the city. A majority of households are either couples with no children or single- person residences. The area houses relatively few students (5.1%) and a high percentage of elderly residents (18.6%) . Many residents are employed by the area's medical facilities; in this respect, the area may have the most closely matched employment/housing land use in the city. The median income for the area, as well as the median rent in 1976 were only slightly higher than city medians. The median price of owner-occupied housing in Statistical Area A is among the lowest in the city. This is attributable to the supply of mobile homes, as well as condominiums selling for $95,000 to $140,000. Between 1976 and 1980, the housing stock in this area increased by 13.3%. New housing has generally been condominiums selling for $100,000 to $200,000. The area has potential for further residential development. The Banning property, at present an unincorporated area of Orange County, consists of 450 acres. The city's Specific Area Plan for the Banning Property includes development of either a harbor or residential uses, with associated retail and service commercial, recreational, and open space development. Much of the residential land in Statistical Area A3 is developed in mobile home parks at densities which are less thin the 20 unit per acre maximum established at the time Area A3 was annexed . Public action may be required if these sites are to be preserved in their present use. STATISTICAL AREAS B1, B2, B3, B4, B5 WEST NEWPORT West Newport, together with Balboa Peninsula and Balboa Island, makes up the area of older, more densely developed beach neighborhoods in the city. Housing types are predominantly single-family units and duplexes on small lots, and are predominantly rental housing (56% to 58%) . 1) The maximum density in all other areas of the city is 15 dwelling units per acre. 55 The 1980 average household size in West Newport was less than the city median. The majority of households are couples without children, single-person residences, or unrelated persons sharing housing expenses. Along with Balboa Peninsula and Balboa Island, West Newport in 1976 had one of the three highest concentrations of student residents and one of the three lowest median incomes of city neighborhoods. Unlike Balboa Island and Balboa Peninsula, prices for ownership housing are below the city median. Housing demand is less here because the area does not have the aesthetic appeal of the other two beach neighborhoods, and because housing structures are more uniform. Many of the residents in West Newport are employed by the city's retail and service commercial facilities; thus, the area provides a reasonable match between local housing and employment opportunities. No vacant developable land remains in West Newport. The existing net density in the area is 20 units per acre. STATISTICAL AREAS Cl, C2 LIDO ISLAND Lido Island is a fairly homogeneous residential neighborhood of approximately 800 households. The predominant housing type is single-family. Average household size (2.52) as well as incidence of two-parent households (37%) on Lido Island is substantially higher than in surrounding beach neighborhoods. The area's 1976 median income was the second highest of the city's 12 statistical areas. Finally, 90.7% of all housing is owner-occupied, by far the highest percentage in the city. Because the area is fully developed and stable, no new construction is expected. However, redevelopment of existing older homes occurs on a regular basis. STATISTICAL AREAS D1, D2, D3, D4 BALBOA PENINSULA In 1976, Balboa Peninsula had the lowest median income in the city, the highest incidence of substandard housing (5.1%) and the highest percentage of rental housing (58.6%) . This is not an indication of marked deterioration but of the attraction and availability of the area to a variety of population segments. These include students (10.7%) , long-time residents who bought on the peninsula when housing was very affordable, and seasonal visitors. Household size in this neighborhood, like Balboa Island and West Newport, is below the city average. The growing attraction of the peninsula contributes to the rising prices of ownership housing. The median list price of housing for sale in early 1981 was well over $400,000. Rental prices, however, were below the city median in 1976. Balboa Peninsula is fully developed with no vacant and developable land remaining; existing net density in this area is 20 units per acre. The character of households in the neighborhood is expected to change in the next ten years, as older residences of greatly appreciated value are sold to higher-income buyers. 56 STATISTICAL AREAS El, E2, E3 BALBOA ISLAND Balboa Island is predominantly residential, with 45% of all housing being single-family and 51% duplex. The average net density on the island is 25 dwelling units per acre. Like west Newport and Balboa Peninsula, Balboa Island houses a large concentration of students (15.0%) . As in these other neighborhoods, the median income is among the lowest in the city, rental housing is plentiful (57.4%) and substandard housing is present (2.5%) . Housing prices are slightly higher than those on Balboa Peninsula; however, the median rent in 1976 was similar to the city median. As turnover of owner-occupied housing on Balboa Island occurs, higher-income residents will replace present moderate-income homeowners. STATISTICAL AREAS F1, F2, F3, F4, F5, F6, F7, F8 CORONA DEL MAR The Corona del Mar area contains both older neighborhoods (F2, F3, F4) and newer neighborhoods developed since 1965. Old Corona del Mar contains a mixture of single-family homes (53%) and duplexes (36%) developed at a net density of 16 dwelling units per acre; while newer sections of this area are developed at lower densities and are predominantly single-family neighborhoods. Household characteristics vary between the new and older sections of Corona del Mar. Old Corona del Mar houses families which are smaller in size than the city average. The predominant household types are single-person residence (32%) and couples without children (27%) . Household sizes in newer areas of Corona del Mar are larger than the city average, and the predominant household types are couples without children and two-parent families. Owner-occupied housing in Corona del Mar has traditionally been higher in price than in the city as a whole. The median rents in 1976, on the other hand, are close to the city median. The area as a whole has a balanced mix of rental (43.9%) and owner-occupied housing (56.1%) . Corona del Mar contains one of the highest concentrations of elderly residents in the city. The median income, in 1976, was lower than the city median; however, this will change as older residents sell homes to new buyers. There are no large vacant parcels within this neighborhood. STATISTICAL AREA Gl PROMONTORY POINT AND BAYSIDE DRIVE AREA This area of the city contains a diverse and relatively new housing stock. Forty-five percent of all units are multi-family; 29.2% are single family; and 23.7% are duplex, triplex, and fourplex. All units, as of 1976, were in sound condition. 57 Household size in this area in 1980 was one of the lowest in the city at 1.92 persons per household. The most common household type is the childless couple, followed by single-person residences. The median income of the area in 1976 was the fourth highest of the 12 statistical areas in the city. The large supply of rental housing, primarily Promontory Point Apartments, in 1976 was among the highest priced in the city. owner-occupied housing along the harbor is also the most highly priced in the city. There are no vacant parcels which could accommodate substantial new development. STATISTICAL AREAS Hl, H2, H3, H4 MARINER'S MILE, NEWPORT HEIGHTS, CLIFFHAVEN Statistical Area H contains the oldest inland single-family neighborhood in the city (H1 and H2) ; the housing stock is therefore older and contains a greater degree of deficiencies (2.6%) than the city as a whole. The entire area continues to be predominantly single-family (70%) , although some multi-family projects contribute to the rental housing stock (33.3%) . Owner-occupied housing is among the lowest priced in the city, as are median rents. This area has experienced a reduction in household population in the last decade as child rearing households experience the "empty nest" syndrome. The average household size is now similar to the citywide average. The most common household type in 1976 was couples without children (29.4%) , along with two-parent families (28.9%) and single-person residents (24.1%) . The area has a high concentration of elderly residents (12.3%) and a median income which is less than the city median. Statistical Area H is fully developed; however, some of the medium and higher density areas are developed in single-family housing. However, market conditions are not likely to induce any higher intensity private redevelopment. STATISTICAL AREAS Jl, J2, J3, J4, J5, J6 WESTCLIFF, DOVER SHORES, BAYCREST, AND SANTA ANA HEIGHTS Most of the residential land in Area J is developed in newer single-family neighborhoods at three to five dwelling units per acre. However, several multi-family projects on the west side of Area J add a sizeable portion of rental housing to the area: 46.3% of the housing stock in 1976 was rental housing. This area is the only one in the city which gained in household size from 1976 to 1980. Two-parent families predominate in the single-family neighborhoods, while single-person households are most common in multi-family dwellings. The median income in 1976 in Area J was just above the city median. The median listed housing prices in 1981 for this real estate district was $250,000. The newest development in this area contains 2,500 to 3,300 square foot single-family dwellings selling for $340,000 to $445,000. 58 Santa Ana Heights (J6) is an unincorporated area of the county which is not included in the above statistical information. The area is developed in residential-agricultural uses. Area J contains two of the largest developable vacant parcels within the city. These two sites, West Bay (71 acres) and Castaways (65 acres) are adjacent to Upper Newport Bay. Low density residential development at four units per acre is the designated land use for the Castaways site. The West Bay parcel will include recreational open space as well as low density residential development. A third vacant parcel in Area J, North Bay (81 acres) , is in the unincorporated area adjacent to the city. A combination of open space and residential development has been proposed for this site. STATISTICAL AREAS K1, K2, K3 BLUFFS, EASTBLUFF, PARK NEWPORT Area K is divided into three distinct newer residential developments: Eastbluff (K3) is a 456-unit, single-family subdivision built at four units to an acre; the Bluffs (K2) is a large condominium development with a density of ten units to an acre; and Park Newport is a 1300+ unit rental project built at 24.5 units to an acre. Area K1 also contains a 292-unit mobile home park. The area is equally divided between rental and owner-occupied housing. The average household size for Area K is well below the city average, due to the predominance of single-person residences and couples without children in Areas K1 and K2. K3 contains a large number of two-parent families. The median income for Area K was below the city median in 1976. The area contains a large concentration (13.1% in 1976) of elderly residents. Area K can accommodate additional residential development on an 88-acre site (Newporter North) designated for low density residential development. A smaller 25-acre site at Pacific Coast Highway and Jamboree may also accommodate limited residential development. STATISTICAL AREAS L1, L2, L3 L4 NEWPORT CENTER, BIG CANYON Area L contains most of the city's commercial, office, and industrial land uses within Koll Center (L4) , Ford Aeronutronic Center (L3) , and Newport Center (L1) . The 700+ existing residential units in the area, as well as the residential development planned for the area, are among the highest priced in the city. The residential population of Area L in 1976 had the highest median income in the city. Area L2, Big Canyon, is the only predominantly residential area in Statistical Area L. Most of this area has been developed in single-family residences. Present residential development in Newport Center consists of one 68-unit medium density condominium project. A 132-unit condominium project is being built on 26 acres in the southwest corner of Newport Center: projected sales prices will begin at $500,000 per unit. The city's long-range plan is to develop 505 additional residential units within Newport Center. 59 Residential development has also been planned within the Ford Aeronutronic Center. Three hundred units will be constructed on 114 acres: projected sales prices are $575,000 to $700,000 per unit. one remaining vacant site within L3 will accommodate additional residential development: this is the North Ford Site, consisting of 68 acres. Vacant parcels are present north of this site and within Koll Center; however, all have been designated for uses other than residential development. STATISTICAL AREAS Ml, M2, M3, M4, M5 HARBOR VIEW HILLS, SPYGLASS, JASMINE CREEK Statistical Area M is largely residential, developed in low-density, hillside neighborhoods. The area is 75% owner-occupied. The predominant household type is the two-parent family, 54.1% in 1976. In 1980, statistical Area M had the largest household size in the city. The median income in this area is the third largest of the city's 12 statistical areas; housing prices are also among the highest in the city. This area experienced a 25% gain in residential development between 1976 and 1980. Various vacant parcels designated for additional low density residential development total approximately 80 acres and could accommodate the construction of close to 300 additional residential units. 60 Table 45 POPULATION BY STATISTICAL AREA CITY OF NEWPORT BEACH Group Quarters Statistical Areas Total Population Population 1 Household Populationl 1976 1980 1976 1980 1976 1980 Al, A2 2,011 280 1,761 B1, B2, B3, B4, B5 7,992 9 7,983 Cl, C2 2,138 0 2,138 D1, D2, D3, D4 5,553 3 5,550 El, E2, E3 4,015 0 4,015 F1, F2, F3, F4, F5, F6, F7, F8 8,866 6 8,860 G1 1,173 0 1,173 H1, H2, H3, H4 4,934 6 4,928 J1, J2, J3, J4, J5 8,992 0 8,992 K1, K2, K3 7,250 5 7,245 N LI, L2, L3, L4 1,456 0 1,456 Ml, M2, M3, M4, M5 8,697 0 8,697 CITY TOTAL 63,101 62,172 309 357 62,792 61,635 General Plan Area (includes A3 & A6) 65,337 398 64,939 Source: 1976 Special Census for Newport Beach and 1980 Census. 1) 1960 Data not yet available. Table 46 NUMBER OF HOUSEHOLDS AND HOUSEHOLDS SIZES BY STATISTICAL AREA CITY OF NEWPORT BEACH Statistical Areas Number of Householls Average Population �er Household 1976 1980— 1976 1980 Al, A2 899 1.96 1.74 Bl, B2, B3, B4, B5 3,533 2.26 2.18 (B2-B5 only) Cl, C2 799 2.68 2.52 D1, D2, D3, D4 2,548 2.18 2.11 El, E2, E3 1,826 2.20 2.05 Fl, F2, F3, F4, F5, F6, F7, F8 3,999 2.22 2.03 (Fl-F5, & F7) 3.08 (F6, F8) G1 557 2.11 1.92 Hl, H2, H3, H4 2,012 2.45 2.26 Jl, J2, J3, J4, J5 3,724 2.41 2.45 n° K1, K2, K3 3,389 2.14 2.00 L1, L2, L3, L4 528 2.76 2.47 Ml, M2, M3, M4, M5 2,741 3.17 3.08-3.01 Total 26,553 2.36 General Plan Area (includes A3 and J6) 27,527 2.36 Source: 1976 Special Census for Newport Beach and 1980 U.S. Census. 1) 1980 U.S. Census Data by Statistical Area not yet available. Table 47 HOUSEHOLD TYPES FOR STATISTICAL AREAS CITY OF NEWPORT BEACH Unrelated 1976 Persons Total Two- Single- Single- Sharing House- Parent Parent Childless Person Housing Statistical Areas holds Family Family Couple Residence Costs Other Al, A2 897 13.5% 6.3% 41.2% 32.2% 4.1% 2.7% Bl, B2, B3, B4, B5 3,533 17.1% 6.9% 24.4% 24.4% 24.2% 2.9% Cl, C2 799 36.7% 8.3% 31.8% 17.7% 1.4% 4.1% D1, D2, D3, D4 2,548 16.9% 6.5% 24.5% 31.3% 16.4% 4.4% El, E2, E3 1,826 15.9% 7.8% 20.8% 32.1% 21.0% 2.4% Fl, F2, F3, F4, F5, F6, F7, F8 3,999 21.3% 9.5% 30.1% 27.5% 8.7% 2.9% G1 557 16.4% 3.8% 41.1% 31.5% 4.0% 3.2% w Hl, H2, H3, H4 2,012 28.9% 8.4% 29.4% 24.1% 5.8% 3.3% J1, J2, J3, J4, J5 3,556 29.8% 5.4% 23.8% 32.0% 6.0% 2.9% K1, K2, K3 3,389 20.5% 8.4% 30.6% 34.6% 3.4% 2.5% L1, L2, L3, L4 528 37.1% 4.1% 40.9% 12.9% 1.1% 3.9% Ml, M2, M3, M4, M5 2,741 54.1% 7.5% 24.8% 10.6% 1.5% 1.4% City Total 26,553 25.5% 7.3% 27.7% 26.9% 9.7% 2.9% Source: 1976 Special Census for Newport Beach, State Department of Finance does not include A3 or J6, both unincorporated at the time of the 1976 Census. Table 48 1976 POPULATION BY STATISTICAL AREA CITY OF NEWPORT BEACH % Of All % Of All Households Households Responding Which Are Low- To Income Or Moderate- Statistical Areas Question Median Income Income Householdsl Al, A2 51.0% $21,290 25.7% B1, B2, B3, B4, B5 55.5% $16,430 40.0% Cl, C2 50.2% $38,245 10.7% D1, D2, D3, D4 56.5% $14,700 45.3% El, E2, E3 60.2% $15,135 42.9% Fl, F2, F3, F4, F5, F6, F7, F8 60.7% $18,575 34.3% Gl 45.2% $27,285 13.7% Hl, H2, H3, H4 62.6% $18,505 34.0% J1, J2, J3, J4, J5 59.1% $21,400 27.5% Kl, K2, K3 61.6% $17,400 24.7% Ll, L2, L3, L4 58.4% $50,000+ 4.9% Ml, M2, M3, M4, M5 66.7% $31,135 10.6% City Total 59.2% $20,875 29.8% Source: 1976 Special Census for Newport Beach, State Department of Finance, does not include A3 or J6 both unincorporated at time of 1976 Census. 1) Defined as a household income which is below 80% of the area median household income. (1976 Orange County median income was $16,800. 80% x 16,800 = $13,440) Table 49 1976 HOUSING EXPENSES IN RELATION TO HOUSEHOLD INCOME BY STATISTICAL AREA CITY OF NEWPORT BEACH Percent of Household Income Spent on Housing Expenses 0-25% 26-30% 31-35% 36-40% More than 40% Total Households Households Households Households Households Statistical Areas Households # M # M # M # M # M Al, A2 897 613 (68.3%) 106(11.8%) 59(6.6%) 39(4.3%) 80( 8.9%) Bl, B2, B3, B4, B5 3,533 2,367(67.0%) 286( 8.1%) 230(6.5%) 162(4.68) 488(13.8%) Cl, C2 799 625(78.2%) 59( 7.4%) 49(6.1%) 25(3.1%) 42( 5.2%) D1, D2, D3, D4 2,548 1,806(70.9%) 194( 7.6%) 166(6.5%) 135(5.3%) 247 ( 9.7%) El, E2, E3 1,826 1,194(65.4%) 153( 8.4%) 117(6.4%) 108(5.9%) 254(13.9%) Fl, F2, F3, F4, F5, F6, F7, F8 3,999 2,719(68.0%) 465(11.4%) 304(7.6%) 180(4.5%) 340( 8.5%) G1 557 420(75.4%) 50( 9.0%) 23(4.2%) 21(3.8%) 42( 7.6%) Hl, H2, H3"H4 2 2,012 1,535 (76.3%) 157( 7.8%) 103(5.1%) 70(3.5%) 147( 7.3%) J1, J2, J3, J4, J5, (J6) 3,724 2,763(74.2%) 283( 7.6%) 197(5.3%) 160(4.3%) 320( 8.6%) Kl, K2, K3 3,389 2,488(73.4%) 261( 7.7%) 234(6.98) 122(3.6%) 285( 8.4%) Ll, L2, L3, L4 528 423 (80.1%) 30( 5.6%) 27(5.28) 19(3.6%) 30( 5.6%) Ml, M2, M3, M4, M5 2,741 1,970(71.9%) 326(11.9%) 175(6.4%) 121(4.4%) 148( 5.4%) City Total 26,553 18,906(71.2%) 2,363( 8.9%) 1,699(6.4%) 1,168(4.4%) 2,416( 9.1%) Source: 1976 Special Census for Newport Beach, State Department of Finance, does not include A3 or J6, both unincorporated in 1976. (Only 55.3% of all households surveyed responded to this question.) 1. Defined as rent or total housing payments and utilities. Table 50 1976 SPECIAL POPULATION GROUPS BY STATISTICAL AREA CITY OF NEWPORT BEACH Population Age Students 16 Years Handicapped 65 And Over Of Age Or Older Statistical Areas # % # % # 8 Al, A2 379 18.6% 105 5.1% Bl, B2, B3, B4, B5 529 6.6% 967 12.1% Cl, C2 225 19.5% 157 7.3% D1, D2, D3, D4 543 9.8% 595 10.7% El, E2, E3 434 10.8% 601 15.0% F1, F2, F3, F4, F5, F6, F7, F8 1,182 13.3% 735 8.3% G1 89 7.6% 80 6.8% H1, H2, H3, H4 608 12.3% 393 8.0% J1, J2, J3, J4, J5 803 8.9% 906 10.1% K1, K2, K3 949 13.1% 633 8.7% L1, L2, L3, L4 155 10.6% 134 9.2% M1, M2, 143, M4, M5 344 4.0% 777 8.9% City Total 6,240 9.9% 6,385 10.1% 834 1.3% Source: 1976 Special Census for Newport Beach, State Department of Finance, does not include A3 and J6, both unicorporated in 1976. Table 51 HOUSING TENURE BY STATISTICAL AREA CITY OF NEWPORT BEACH 1976 8 Of Rental Units Vacant And April 19802 1976 Occupied Units l Available Rental Statistical Areas S % Rented % Owned For Rent Vacancy Rate .Al, A2 42.0% 58.0% 10.3% N/A3 B1, B2, B3, B4, B5 56.2% 43.8% 8.2% 3.8% Cl, C2 9.3% 90.7% 11.3% N/A3 D1, D2, D3, D4 58.6% 41.4% 7.1% 5.0% El, E2, E3 57.4% 42.6% 5.0% 3.5% F1, F2, F3, F4, F5, F6, F7, F8 43.9% 56.1% 4.9% 2.4% Gl 54.0% 46.0% 54.1%4 .2% Hl, H2, H3, H4 33.3% 66.7% 5.9% 1.0% J1, J2, J3, J4, J5 46.3% 53.7% 8.7% 2.2% K1, K2, K3 49.2% 50.8% 5.5% .8% Ll, L2, L3, L4 27.4% 72.6% 2.7% 1.4% Ml, M2, M3, M4, M5 24.9% 75.1% 3.4% 1.0% City Total 44.6% 55.4% 8.6% 2.2% Sources: 1. 1976 Special Census for Newport Beach, State Department of Finance. 2. Newport Beach Planning Department Rental Vacancy Rate Survey, April 1980. 3. The Planning Department Rental Vacancy Survey was conducted only in selected statistical areas. 4. Promontory Point was 50% vacant at the time of the 1976 Census, because construction was only recently completed. 5. Does not include A3 or J6, both unincorporated in 1976. I Table abl 52 1976 HOUSING CONDITION BY STATISTICAL AREA CITY OF NEWPORT BEACH Statistical Areas % Sound Units Deficient Units Al, A2 99.6% .4% Bl, B2, B3, B4, B5 98.3% 1.7% Cl, C2 99.4% .6% D1, D2, D3, D4 94.9% 5.1% El, E2, E3 97.5% 2.5% Fl, F2, F3, F4, F5, F6, F7, F8 99.1% .7% G1 100.0% .0% Hl, H2, H3, H4 97.4% 2.6% Jl, J2, J3, J4, J5 99.9% .1% Kl, K2, K3 99.7% .3% Ll, L2, L3, L4 99.0% 1.0% co Ml, M2, M3, M4, M5 99.8% .2% City Total 98.7% 1.3% Source: 1976 Special Census for Newport Beach, State Department of Finance, does not include A3 or J6, both unincorporated in 1976. 1. Defined as units which are deteriorated, dilapidated, inadequate in original construction, or under extensive repair. II. HOUSING NEEDS ASSESSMENT The principal factor to be considered in formulating a local housing policy/strategy is that of need. Unfortunately, however, the "state of the art" of measuring housing need is quite primitive. The primary reasons for this situation are as follows: 1) existing data are often unreliable or out-of-date; 2) original data is difficult to obtain because of its cost or because of inadequate cooperation from data sources - collectors and consumers; 3) the devices currently available for collecting data essential to public policy-making do not lend themselves to accurate forecasts; and 4) housing need is as much a political determination as it is a planning exercise. Another factor which frustrates local assessment of housing need is that of inconsistent interpretation of housing affordability indices on the part of governmental agencies - federal, state, and regional - and private market institutions. The most visible discrepancy is generally found in the gross income/housing expense ratio applied to housing consumers. For example, many governmental agencies still employ the 25% of income standard, while private loan underwriters and landlords utilize a much higher figure. In the final analysis, the most reliable barometer for measuring need is the determination of what housing consumers are willing to pay for residential facilities. If housing consumers elected, clearly as a matter of choice, to allocate 50% of their gross income toward housing, there would not be a housing "need" in most communities, from a market perspective. There would be a need, however, from a governmental view, because housing public policy is based on the premise that there are definable limits to what a household can pay for housing and yet have available for a satisfactory standard of living in terms of food, medical care, education, recreation, etc. A 50% gross income/housing expense ratio would stretch the limits of affordability in most governmental policy settings. It should also be noted that in many instances the consumer's choice to spend a disproportionate amount of income for housing may be an involuntary one. This is especially the case in housing markets where housing supply is grossly inadequate to satisfy demand. In these instances, the consumer may "choose" to spend 50% or more for housing because the alternative is a 120 miles of commute distance each day. If this choice impedes the ability of a family to reasonably feed itself, for example, then this family represents a housing need. On the other hand, if another family were faced with the same dilemma, and could solve the problem without sacrificing other living essentials, then that family would not represent a housing need. The above discussion illustrates that housing need is a function of many market factors - consumer willingness to pay and the budget management abilities of respective households, to name a few. A cursory examination of housing need in several communities indicates that governmental definitions of "need" generally yield a substantially greater magnitude of problem than the market perception. It shall be the theme of this analysis to rely most heavily on circumstances which prevail within the Newport Beach housing market. This is based on the premise that housing affordability is a reflection of community standards, not federal or state. Market realities will be moderated, however, by local govenmental definitions, particularly with respect to low- and moderate-income categories. 69 ESTIMATING HOUSING NEED To estimate housing need in Newport Beach, a demand-supply model has been employed. This approach is the basis of the Southern California Association of Governments' (SCAG) Regional Housing Allocation Model. The foundation of this model is the following formula: Demand minus Supply equals Need This model contrasts with other models which attempt to estimate the number of individual households which are inadequately housed within any one community. The supply-demand approach compares total population with total housing supply to arrive at a community-wide "diagnosis" based upon the match between these two components of the housing market. The strength of this model is that it can be based on available data, with updates to reflect current market conditions. It also focuses on an assessment of housing needs within different economic segments of the community. Because of the city's data limitations until the 1980 Census is available, and because of the need to focus the housing needs assessment on the issue of housing affordability, this model has been chosen as a foundation for this analysis. The weakness of this model, as with virtually all housing models, lies in the fact that it employs a rather loose definition of demand. In basic economic terms, demand is defined in terms of what the consumer is willing to pay for goods or services. In housing planning terms, however, demand is often defined in terms of total projected households. Ability to pay is usually interjected as a measurement of need, not demand. It must be emphasized, however, that demand is a function of the marketplace; it is not to be equated with the number of households in a community and the housing aspirations of those households. The distinction between "demand" and "need" must be clearly drawn in any analysis of the Newport Beach housing market. The former is triggered largely by the community amenity factor, and is tempered only by housing prices and quality. There is strong reason for believing, however, that housing prices could climb quite high and there would be little lessening of total demand; it is strong and deep in Newport Beach, and probably cannot be satisfied within the bounds of acceptable community standards of environmental preservation and fiscal integrity. Housing needs, on the other hand, lend themselves to reasonable and approximate quantification. Moreover, a framework can be established which allows the community to refine its fiscal and environmental mitigation measures so as to promote increased attainment of community housing needs. Demand is an economic interaction between supplier and consumer; the interpretation of demand is best left to the private housing industry. The assessment of need is a process involving the collaborative efforts of producers, consumers, taxpayers, community groups, and local government. Housing need in the final analysis, is a local government judgement based on economics, fiscal constraints and political acceptability. Although there are significant weaknesses in the basic supply/demand model, particularly as it is applied to housing markets such as Newport Beach, for purposes of providing for the housing needs of all economic segments of the 70 community, it has been decided to use this model in the interest of maintaining uniformity of housing need assessment methodology throughout the region. The three basic components of the model used herein are described below: HOUSING DEMAND: The measurement of "demand" in this model is based on the total number of households in the community divided into four household income categories. These four income categories represent four economic segments of the Newport Beach community and are based on the city median income for the year in which the analysis takes place. The categories are as follows: 1. Household incomes which are below 50% of the city median. These households are characterized as "low-income" by community standards. 2. Household incomes which are between 50% and 80% of the city median. These households are "moderate-income" by city standards. 3. Household incomes between 80% and 120% of the city median. These households are characterized as "middle- income." 4. Household incomes above 120% of the city median. These households are "upper-income." Demand, as it is used in this model, is more accurately characterized as "potential demand." Instead of counting just those households which are in the market looking for housing, demand in this model includes all households in the community, a majority of which are housed to their satisfaction under current conditions. In addition to the number of households in each segment of the market, housing demand includes the number of additional housing opportunities needed in each category, determined by applying an ideal vacancy rate, in order for that segment of the market to operate effectively. SUPPLY: Housing supply is based on an inventory of the housing stock by its cost. Four housing cost categories are defined on the basis of affordability to various income categories in the demand side of the model. Rental and owner-occupied housing units are inventoried separately by their cost, and then added together. All units except those seasonally-occupied and group quarters are counted. Housing costs are based on the actual housing expense for the occupants of the units. In the case of rental units, housing costs for occupied units are reflected by the actual rents paid by tenants. In the case of owner-occupied housing, the actual monthly mortgage payment (plus additional housing expenses) , is used to measure housing cost. 71 An alternate to this approach would be to use the value of the property, or the monthly housing payment that would be required if the unit were purchased in the current market. To use this latter measure would greatly exaggerate the affordability problem in Newport Beach. Using the current vacancy rate in the rental and owner-occupied segments of the market, the number of vacant units is estimated and added to the housing supply. Vacant units are allocated to different cost categories according to the price at which they are available on the market. Housing units needing replacement, or units that have deteriorated beyond rehabilitation, are subtracted from the available housing supply. HOUSING NEED: Need is defined as the disparity between the demand for housing and the available housing stock. The available supply of housing in each cost category is subtracted from demand in the corresponding income category to determine either the amount of additional units needed to satisfy existing demand, or to determine the amount of units available in excess of demand. Positive numbers indicate a housing need, or an "excess demand" which is not satisfied by the existing housing supply. REGIONAL SHARE: The "regional share" in this model represents Newport Beach's share of the need for housing by households throughout the region. Under current state law, each community's assessment of housing need shall include the locality's share of the regional housing need. The regional need used in this model is the "fair share allocation" which has been developed by the Southern California Association of Governments (Regional Housing Allocation Model, April 1977) . This allocation is the most current documented estimate of regional housing need available at the time this housing element was prepared. SCAG has determined regional housing needs using the same supply-demand model described above on a regional basis. Allocation of regional need to various cities and counties has been performed on the basis of four criteria: - Proximity of the community to employment; - Ability to provide public service and facilities in support of housing; - Achievement of an even subregional income distribution; - Expected growth in the community. Unfortunately, SCAG's Housing Allocation Model provides an assessment of the city's regional fair share only for 1975, 1976, and 1980. In order to project the city's housing need through 1986, a regional share has been estimated based on past allocations. These regional share allocations are shown on Table 53. Housing allocations are presented in terms of seven income categories which reflect the income distribution of the regional population. To 72 integrate the regional allocation into the city housing needs assessment, the numbers have been allocated to the appropriate city income categories. In other words, the city's allocation of 50 units of moderate income housing may appear within the city needs assessment as 50 units of lower income housing, reflecting the fact that a county "moderate" income is a "low" income in Newport Beach. 73 Table 53 CITY OF NEWPORT BEACH REGIONAL FAIR SHARE ALLOCATION Income Categories 1 2 2 2 3 2 4 3 5 4 6 7 0-20% 208-47 47%-80% 80%-107% 107%-147% 1478-240% 240%+ 1975 665 1151 1218 560 -1340 -1625 -629 1976 3127 1980 741 1367 1445 653 -1632 -1861 -761 1986 840 1675 1768 783 -2029 -2157 -880 (estimate) a Negative numbers indicate surplus, positive numbers indicate need. 1) Expressed in terms of percent of area median income. 2) Low and moderate-income categories. 3) Middle-income category. 4) Middle-income category up to 120%. 1976, 1981 and 1986 CITY HOUSING NEEDS ASSESSMENTS The needs assessment process described above has been completed for three different time periods. The assessment starts with 1916, because this is the last date for which complete census data is available. Income distributions and housing costs reported in the 1976 Census are reflected in the 1976 assessment which follows. This data is then updated, using a variety of new information and assumptions regarding the housing market, to produce the 1981 and 1986 assessments. The 1986 assessment provides a five year projection of the city's housing needs for all economic segments of the community. The housing needs assessment for each year is accompanied by an appendix which explains methodologies and assumptions which were employed. 1) An alternative would have been to use the 1970 Census to provide base year information. A comparison of the 1970 and 1976 census was conducted and a determination was made that the 1976 Census provides a more accurate reflection of current distributions in terms of both income and housing cost. 1976 Census data was verified by a variety of other available sources including 1976 income information provided by an inventory of IRS tax returns by zip code and housing cost information listed in part one of this Housing Element. 75 Table 54 NEWPORT BEACH HOUSING NEEDS ASSESSMENT: 1976 1976 DEMAND 1. Household Income Categories (as % of City Median of $20,875) 0-50% 50%-808 80%-120% 120%+ TOTALS 2. Income Amounts 0-$10,438 $10,438- $16,700- $25,050+ $16,700 $25,050 3. Number of Households 5,603 4,806 5,735 10,409 26,553 4. Vacancy Allowance 235 202 241 437 1,115 5. CITY DEMAND 5,838 5,008 5,976 10,846 27,668 1976 SUPPLY 6. Housing Expense Category 0-$217 $217-$348 $348-$522 $522+ 7. Affordability Ratio 25% 25% 25% 25% 8. Existing Units 8,673 8,913 5,955 4,120 27,661 9. Owner-Occupied 5,116 3,401 3,521 3,010 15,048 10. Rentals 3,557 5,512 2,434 1,110 12,613 11. Needing Replacement 9 5 0 0 14 12. CITY HOUSING SUPPLY 8,664 8,908 5,955 4,120 27,647 1976 NEED1 13. CITY NEED - 2,828 - 3,900 + 21 + 6,726 14. REGIONAL SHARE + 2,447 + 1,082 + 158 (no need) 1) Positive figures indicate need. 76 i 1976 Assessment: Explanation of Methodology Line l: These four income categories describe four basic income segments of the Newport Beach Community. The first two categories describe household incomes below $20,875, the 1976 city median income. The third category describes a moderate income for Newport Beach as of 1976. The fourth category includes all incomes above 120% of the city median income. Line 2: Income limits for each category are shown. Line 3: The household income distribution shown on the 1976 Census is allocated to these four income categories. Line 4: The vacancy allowance is based on an ideal vacancy rate of 4.2%. This vacancy rate is applied to the number of households in each of the four income categories to obtain the added number of housing units needed to create a healthy market for each income category. Line 5: City demand is determined by adding households in each category with the vacancy allowance. These totals„ by income category, describe the potential demand for housing in four'economic segments of the community as of 1976. Line 6: Housing expense categories are based on the amount of housing expense affordable to households within each income category. Line 7: Affordability is based on the traditional 25% ratio of monthly housing expense to gross monthly income. This affordability ratio was applicable in 1976. Line 8, 9, and 10: The 1976 Census has been used to determine the distribution of housing units - owner and rental - by cost. Housing expense distributions shown on the 1976 Census were divided into these housing expense categories. The total housing supply is based on all occupied housing plus 1976 vacancy rates for rental housing (6.5%) and owner-occupied housing (2.3%) . Housing costs for owner-occupied housing are based on actual monthly mortgage payments rather than property values (i.e. a unit with a market value of $100,000 for which monthly mortgage payments are $60 would be listed in the first housing expense category) . Line 11: Units needing replacement are determined by applying the 1976 Census data on housing condition. This census found 0.05% of all units to be dilapidated or inadequate in original construction. Such units have been allocated to the two lowest housing expense categories. Line 12: This line equals line 8 minus line 11. Line 13: City demand has been calculated by subtracting housing supply from housing demand. Positive numbers indicate that supply is not adequate to meet housing demand and that a housing need exists. Positive numbers indicate the number of units of housing demand which exist in excess of supply. Negative numbers indicate that housing supply exceeds housing demand. Line 14: The city's share of the regional housing need, as determined by SCAG, has been separated into the city income categories. 77 Table 55 NEWPORT BEACH HOUSING NEEDS ASSESSMENT: 1981 1981 DEMAND 1. Household Income Categories (as of City Median of $34,300) 0-50% 50%-80% 80%-120% 120%+ TOTALS 2. Income Amounts 0-$17,150 $17,150- $27,440- $41,160+ $27,440 $41,160 3. Number of Households 5,782 5,054 6,279 12,103 29,218 4. Vacancy Allowance 243 212 264 508 1,227 5. CITY DEMAND 6,025 5,266 6,543 12,611 30,445 1981 SUPPLY 6. Housing Expense Category 0-$429 $429-$686 $686-$1,132 $1,132+ 7. Affordability Ratio 30% 30% 33% 35% 8. Existing Units 9,781 7,751 7,034 5,538 30,104 9. Owner-Occupied 7,383 2,520 3,220 4,028 17,151 Vacancies 0 30 112 235 337 (2.2%) 10. Rentals 2,353 4,996 3,523 1,195 12,067 Vacancies 45 205 179 80 509 (4.22%) 11. Needing Replacement 10 2 0 0 12. CITY HOUSING SUPPLY 9,771 7,749 7,034 5,538 30,092 1961 NEED 13. CITY NEED -3,746 -2,483 -492 +7,073 14. REGIONAL SHARE +3,054 +1,152 (no need) (no need) 1) Positive figures indicate need. 78 1981 Assessment: Explanation of Assumptions The methodology described for the 1976 assessment has been used in the 1981 housing needs assessment. In order to estimate both income distribution and costs of all housing units in the city, the following assumptions have been applied: Line 1 and 2: Income categories are based on the projected city median income of $34,300 in 1981. This median figure is the result of the assumptions regarding income distributions described below. Line 3: The total number of households has been estimated by adding all households shown on the Preliminary 1980 Census with an estimated 700 additional households residing in the recently annexed county triangle. Income distributions have been used based on the following assumptions: - All renting households and all owner-occupied households which have not sold their homes since 1976 have experienced an increase in income similar to the increase in the county median income. This increase is estimated to be 48.8%, based on a county median income of $16,800 in 1976 and $25,000 (estimate) in 1981. Incomes of these households are assumed to be distributed in the same proportions as indicated by the 1976 Census. An estimated 22,752 households are in this category. - The incomes of new homeowners in the city have been estimated according to the following distribution: Table 56 Incomes of New Homeowners, 1981 Income Category (as percent of County median) $20,000-$26,750 10% $26,750-$36,750 25% $36,750-$60,000 30% $60,000 + 35% An estimated 37.7% of all 1981 homeowners have incomes corresponding to this distribution (6,466 households) . Line 4: An ideal vacancy rate of 4.2% has been applied. Line 5: This is a total of lines 3 and 4. Lines 6 and 7: Housing expense categories are based on new standards of housing affordability which reflect market trends in housing expenditure and emerging policies of major financial institutions such as the Federal National Mortgage Administration and the Federal Home Loan Bank Board. These standards incorporate the expected demise of the fixed rate mortgage and the institutionalization of a mortgage instrument which carries a rate directly related to lenders' costs of funds at the time of loan origination. 79 The assumption is made that mortgage interest rates will stabilize at around 12% to 13%. Under such conditions, housing consumers will experience the necessity to allocate greater portions of their monthly household income to housing expenses. The following "affordability standard" scenario is assumed: Table 57 Housing Affordability Standards Income Category Affordability Ratio (as % of median (Housing expense to income) gross monthly income) 0-50% 30% 50-80% 30% 80-120% 33% 120%t 35% Lines 8, 9, and 10: Costs of the 1981 housing supply have been estimated as follows: - Rental Housing: Between 1976 and 1981 rents escalated sharply in Newport Beach. the rental survey conducted as part of this element revealed that the median price of available rental housing was 250% higher than the 1976 median price for occupied rental housing. Because available rental housing is higher in price generally than occupied rental housing this 250% charge is somewhat exaggerated. To project increases in occupied rentals, a slightly lower figure of 225% has been applied to the 1976 Census rental cost information. (This reflects rent increases of 25% per year between 1976 and 1981) . Vacant rental units have been distributed to higher price categories reflecting the distribution of vacant rental prices shown in the 1981 Survey (See Part 1 of this element) . - Owner-Occupied Housing: Housing costs of homeowners who have not sold their homes since 1976 have been estimated according to the same distribution as shown in the 1976 Census. It is estimated that 62.3% of all 1981 homeowners are in this category. The housing costs for remaining homeowners have been correlated exactly with the assumed income distribution reported above. A vacancy rate of 2.2% has been used (See Part 1 of this element) . Vacant units have been distributed only in the higher cost categories reflecting the increased price of for sale housing. Line 11: It is estimated that 12 units exist within the city which need replacement. Line 12: This equals existing units minus units needing replacement, or line same distribution as shown in the 1976 Census. It is estimated that 62.3% of all 1981 homeowners are in this category. The housing costs for remaining homeowners have been correlated exactly with the assumed income distribution reported above. A vacancy rate of 2.2% has been used (See Part 1 of this element) . Vacant units have been distributed only in the higher cost categories reflecting the increased price of for sale housing. 80 Line 11: It is estimated that 12 units exist within the city which need replacement. Line 12: This equals existing units minus units needing replacement, or line same distribution as shown in the 1976 Census. It is estimated that 62.3% of all 1981 homeowners are in this category. The housing costs for remaining homeowners have been correlated exactly with the assumed income distribution reported above. A vacancy rate of 2.2% has been used (See Part 1 of this element) . vacant units have been distributed only in the higher cost categories reflecting the increased price of for sale housing. Line 11: It is estimated that 12 units exist within the city which need replacement. Line 12: This equals existing units minus units needing replacement, or line 8 - line 11. Lines 13 and 14: Housing supply has been subtracted from housing demand to determine 1981 housing needs. Regional share of housing needs are 1980 fair share allocations, because no 1981 allocation is available. 81 Table 58 NEWPORT BEACH HOUSING NEEDS ASSESSMENT: 1986 1986 DEMAND 1. Household Income 0- 50- 80- 120%+ Totals Categories (as % 50% 80% 120% of City Median of $52,250) 2. Income Amounts 0- $26,070- $41,720- $62,580+ $26,070 $41,720 $62,580 3. Number of 4,721 6,091 6,684 12,890 30,386 Households 4. Vacancy 198 256 281 541 1,276 Allowance 5. City Demand 4,919 6,347 6,965 13,431 31,662 1986 SUPPLY 6. Housing Expense 0- $652- $1,043- $1,721+ $652 $1,043 $1,721 7. Affordability 30% 30% 33% 35% Ratio B. Existing Units 9. Owner-Occupied 3,713 3,213 3,834 7,517 18,277 Vacancies 0 78 109 215 402 (2.2%) 10. Rentals 605 3,185 5,982 2,337 12,109 Vacancies 12 81 237 94 424(3.5%) 11. Needing Replacement 0 0 0 0 0 12. CITY HOUSING SUPPLY 4,330 6,557 10,162 10,163 31,212 1986 NEED1 13. CITY NEED +589 -210 -3,197 -3,268 14. REGIONAL SHARE +4,081 -985 (no need) (no need) 82 Ali 1986 Assessment: Explanation of Assumptions Lines 1 and 2: Income categories are based on a projected city median income of $52,150 in 1986. Assumptions used to make this projection are listed below. Line 3. The total number of households in Newport Beach as of 1986 is estimated at 30,386, based upon population projections contained in Part 1 of this element. The 1986 projected income distribution is based on the following assumptions: - All renting households and all owner-occupied households which have not sold their homes since 1976 are assumed to have experienced an increase income similar to the increase in the county median income. This increase is estimated to be 36.8%, 'based on an estimated county median income of $25,000 in 1981 and $34,200 in 1986. Incomes of these households are assumed to be distributed in the same proportions as indicated by the 1976 Census. An estimated 16,309 households are in this category. - Based on past volume in housing sales and new units expected in the city through 1986, it is estimated that 14,077 households will have purchased new or existing homes in the city between 1976 and 1986. Households in this category must necessarily have higher incomes reflecting the increased price of housing since 1976. The 1986 income distribution of these households has been estimated as follows: Table 59 Income of Households Purchasing Homes 1976-1986 Income Category Number of Households $27,360-$36,594 1408 $36,595-$50,274 3519 $501275-$82,080 4223 $82,081+ 4927 Line 4: An ideal vacancy rate of 4.2% has been applied. Line 5: This is a total of lines 3 and 4. Lines 6 and 7: Housing affordability ratios described in the 1981 assessment have been used to define housing expense limits for the four income categories. Lines 8, 9, and 10: Housing costs in 1986 have been estimated as follows: Rental Housing: The 1981 survey of rental prices has been used as a base to project 1986 rental rates in the city. A 75% increase has been applied to all rent categories of this survey. The result is a median rent of $1,216 for the city in 1986. While this rate seems high, it is entirely possible that rents will reach these levels because of the 1976. The 1986 income distribution of these households has been estimated as follows: - Decreasing opportunities for first time homebuyers may result in greater demand for rental housing. 83 - More moderate- and high-income households may be held in rental housing because of the shortage of affordable owner-occupied housing. - Decreasing rental vacancy rates may result because less new rental housing is being built. Owner-Occupied Housing: Housing costs of homeowners who have not sold their homes since 1976 have been estimated according to the same distribution as shown in the 1976 Census. It is estimated that 4,200 households will remain in this category in 1986. The housing costs for remaining homeowners have been correlated exactly with the assumed income distribution reported above. A vacancy rate of 2.2% has been used. Vacant units have been distributed only in higher cost categories. Line 11: It is projected that by 1986, because of private redevelopment taking place in the city, the amount of the housing stock which needs replacement will be negligible. Line 12: This equals line 8 minus line 11. Line 13: Housing supply (line 12) has been subtracted from housing demand (line 5) to determine 1986 city housing needs. Line 14: Regional share of housing need has been estimated for 1986 by projecting figures based on the 1976 and 1980 assessment completed by SCAG (See Page II-8) . FIVE-YEAR HOUSING NEEDS IN NEWPORT BEACH The needs assessment presented on previous pages, as well as the discussions in Part I of this housing element demonstrate that the Newport Beach housing market has traditionally served an economically diverse community. The older housing stock in the city as well as the large supply of rental housing have complimented primarily single-family neighborhoods in the evolution of a diverse housing stock. Regional growth and high housing demand in recent years have led to the identification of Newport Beach as an upper income housing market. Prices of new and existing single family homes have risen to the point where they are affordable primarily to those in upper income categories. In 1981, however, much of the existing housing stock -- rental housing and owner-occupied housing purchased before market escalation in the area -- continue to house families from a variety of income categories. Current trends projected to 1986 indicate that this housing diversity will shift. As existing owner-occupied housing turns over and rental prices increase with the desirability of the area, this existing supply will serve more upper income and less lower income families. This trend is shown by the percentage of households in each economic segment of the community in 1976, 1981, and 1986: 84 Table 60 Income Categories (as a percent of City Median Income) 0-50% 50-80% 80-120% 120%+ 1976 21.1% 18.1% 21.6% 39.2% 1981 19.8% 17.3% 21.5% 41.4% 1986 15.6% 20.0% 22.0% 42.4% In both 1976 and 1981, the housing needs assessment has indicated that the housing supply affordable to households in the first three income categories has been and is currently sufficient to meet city demand. By 1986, much housing will be available in all cost categories; however, housing in the lowest cost category will not be sufficient to meet demand in the city. The percentage of all units available in each cost category in 1976, 1981, and 1986 is shown below: Table 61 Cost Categories 1 2 3 4 1976 31.3% 32.2% 21.6% 14.9% 1981 32.5% 25.8% 23.4% 18.4% 1986 13.9% 21.0% 32.6% 32.6% By 1986, 15.6% of all city households will be in the city's lowest income category, while only 13.9% of the supply of housing will be available at costs affordable to this group. If current housing trends in the city continue, this slight 1986 shortage will grow with each successive year. If the city's 1986 housing supply is viewed in terms of regional housing needs, the shortage of lowest cost housing becomes acute. The SCAG fair share allocation of housing needs indicates that over 4,000 additional units of lowest cost housing will be needed, if the city is to equally share in housing the lowest income households of the region. This constitutes a demand that is double the 1986 supply of lowest-cost housing in the city. Both the city and regional housing need shown by the 1986 housing needs assessment are summarized below: Table 62 1986 Monthly Housing Cost Categories 0-$652 $652-$1,043 $1,043-$1,721 $1,721+ City Need +589 -210 -3,197 +3,268 Regional Need +4,081 +985 no need no need While the city is required to analyze and quantify its existing and projected housing needs for all income levels, including the city's share of the regional housing need, there is no requirement that the city undertake to address a larger share of the housing problem than it is fiscally, economically, and environmentally capable of achieving. 85 III. CONSTRAINTS TO HOUSING DELIVERY This section of the housing element discusses various factors within the housing market which may interfere with the adequate provision of housing for all economic segments of the community. The purpose in outlining these constraints is twofold. First, some of the problems identified may be suitable for correction through governmental action at the local level. Second, it is important, in the formulation of a local housing policy to realize that a variety of factors interact in the housing delivery process. Some of the factors which constrain housing delivery may be outside the sphere of local influence, and therefore uncorrectable within a local housing policy. This section of the housing element will provide background for determining realistic and appropriate local actions which will assist in the adequate provision of housing. Constraints will be discussed in three categories: Market constraints, governmental constraints, and environmental constraints. MARKET CONSTRAINTS Socioeconomic Factors in the Newport Beach Market The State of California has mandated that local governments use the powers vested in them to facilitate the improvement and development of housing and to make adequate provision for the housing needs of all economic segments of the community. one of the greatest challenges to the achievement of this goal in Newport Beach, and in most cities in the state, is the reality of residential land use patterns in metropolitan areas. Many urban communities do not house a broad spectrum of income groups. Moreover, the neighborhoods of many communities are usually developed in homogeneous housing forms, affordable to only certain segments of the population. This socioeconomic homogeneity extends across sectoral lines through the urban landscape. Urban communities which are only a portion of a larger metropolitan area, such as Newport Beach, in many cases reflect a homogeneous socioeconomic sector of the urban area. Once such a socioeconomic character is established in an area, the introduction of housing for a variety of economic segments may be difficult, if not impossible. This difficulty poses a serious constraint to housing delivery in Newport Beach. The community area does contain a variety of neighborhoods which have been developed at different time periods and in different housing forms. These factors account for the housing diversity that does exist in the city. However, intense housing demand throughout the Orange County region, and the variety of amenities within the city has led to the identification of the entire city as an upper income market. Most for-sale units--whether new or existing--in a majority of locations in the city are affordable only to those in higher income categories. This market identification of the city as an upper income area influences the financial aspects of providing more affordable housing and the political climate in regard to reaching consensus on local housing policies. Local efforts which strive to provide housing for all economic segments of the population must run against the greater market forces ,in the community. 86 r' Community Attitudes The citizenry in Newport Beach is well-organized through neighborhood homeowners associations and community environmental groups. In these circles, a strong public sentiment pervades in regard to preserving the suburban environment in the city. In the past, opposition has been voiced against increased commercial and office uses in the city and against expansion of the adjacent John Wayne Airport. Medium and high density residential development is also opposed by much of the populace in Newport Beach. Because of the upper income character of the city, many residents view their residence in Newport Beach as a symbol of personal achievement. To a large extent, residential opportunities in the city are seen as the top rung in the ladder of upward mobility. "It took me 40 years to get here," is the sentiment of many residents of the city. The goal of socioeconomic diversity runs at cross purposes with this type of thinking. To some extent, preservationist attitudes are changing with awareness of housing shortages for elderly parents and grown children. Others have changed their point of view because of awareness of the need for housing to compliment employment growth. However, a large number of residents in the city believe that residential opportunities in Newport Beach are appropriately preserved as a reward for, and a symbol of, upward mobility. It would be a mistake for the City Council to disregard the reality of this view in trying to shape a viable and politically acceptable housing strategy. There exists a growing public attitude in Newport Beach, as well as in the country as a whole, that government regulation of the market place should be limited. Therefore, housing policies which guide development toward social goals rather than regulate development are generally more compatible with local public attitudes. The regulation of housing prices is an unacceptable area for government intervention for a majority of Newport Beach residents. Public sentiment is noted as a constraint because of its influence on local officials and because of the recent Supreme Court ruling that all zoning is a legislative process which can be modified by ballot initiatives (North Costa Mesa Homeowners Association vs. Arnel Development Company and South Coast Plaza) . The implication of this case is that the use of undeveloped land can be decided through the initiative process, regardless of general plan designations. Market Impacts on Development Costs The growing market demand for housing in Newport Beach and the relatively small supply of remaining vacant residential acreage in the city has had a strong impact on the financial aspects of residential development in the city. The greatest impact of this market demand on cost of new housing is seen in the price of residential land in the city. Land costs vary as much within Newport Beach as they do within Orange County. Generally though, they are much higher than land costs in other areas of the country, reflecting the desirability of the area for its proximity to amenities, and its reputation as a favored residential community. Current land prices are demonstrated by two residential projects in the grading stage within Statistical Area L. Due to locational factors, one site sold for over $300,000 per acre, while the other was sold at over $800,000 per acre. 87 Land constitutes a larger proportionate share of the total cost of housing units in Newport Beach than in other Orange County communities. A review of components of development cost in three recent projects in the city revealed that land cost constituted an average of 24% of the sales price of units. This is double the proportionate share of sales prices attributed to land in developments throughout Orange County as of 1978. (See Table 63) . Density increases are often set forth as a method to decrease land cost components of housing costs. The city has attempted, on an experimental basis, to grant density increases in some projects on the west side of the city as a method to increase housing affordability. Density increases in this instance did not decrease the cost of the unit to an affordable level. In this instance, units of 1,324 to 1,675 square feet built at 25 units to an acre sold in a range from $179,900 to $199,900. Therefore, density increases granted without price control mechanisms have not substantially reduced the cost of housing in the city, at least in the example cited. in addition, high residential densities involving buildings taller than three stories will greatly increase unit marketability because of the addition of a view factor. Regardless of square footage or density, a unit with a Newport Beach view can be marketed as a luxury condominium and will command an extremely high price on the market. Higher land costs in the city are the main factor in higher square footage costs for housing provision. High land costs also trigger higher costs in other areas of development. To balance the price of land, developers must increase amenities within the housing unit as well as within the community area in order to justify the higher prices paid for land. Thus, a higher land price is the factor that triggers increased development costs "across the board." While the average value ratio of condominium and planned unit development housing built in Orange County as of April 1980 was $83.76, it was $130.00 to $180.00 in Newport Beach. Financing Constraints The recent federal involvement in fighting inflation through restrictions on the cost and supply of mortgage capital has had an insurmountable impact on the housing market throughout the country. Higher interest rates substantially reduce the home purchasing potential of homebuying households. New homebuyers especially find that the housing product they can afford is substantially less than their expectation. The difficulty in producing housing which is affordable to first-time homebuyers is thus compounded. While the cost of production has increased, the purchasing power of customers has decreased. Because development costs in Newport Beach are higher than in other areas of the state, housing is even further out of the reach of first-time homebuyers. Accentuating this problem is the current instability in the home mortgage market with respect to mortgage instruments. With savings and loan institutions and other home loan lenders experiencing volatility in the money market, and with no end in sight to this problem, it is extremely difficult for the fixed rate, long-term mortgage to be utilized as the primary mortgage instrument for housing finance purposes. Consequently variable rate mortgages, equity appreciation mortgages, and other techniques are being promoted. This smorgasbord of "creative financing" helps to maintain at least minimal activity in the housing market during the current period of economic 88 Table 63 SALES PRICE COMPONENTS OF RESIDENTIAL PROJECTS IN NEWPORT BEACH AND ORANGE COUNTY Single-Family Townhouses and Detached Condominiums Sales Price Category Orange County Newport Beach Orange County Newport Beach Direct Costs Land 12% 28% 11% 11% Site Improvements 13% 8% 11% 4% Community Amenities 2% 0 58 3% Construction 51% 26% 51% 42% m — D TOTAL 78% 62% 78% 60% Indirect Financing 5% 16% 6% 19% Sales & Marketing 4% 9% 4% 5% Gross Profit 10% 8% 88 12% Overhead and Contingencies 3% 5% 3% 4% TOTAL 22% 38% 21% 40% Sources: 1) The Cost of Housing in Orange County, The Orange County Cost of Housing Committee, February 20, 1978. Total projects surveyed: 11. 2) Based on one single-family and one condominium project constructed and sold in Newport Beach in 1981. recession, but this innovative approach to housing finance also serves to confuse the homebuyer. Unless home purchasers can be secure about being able to handle their future monthly housing expenses, they will simply delay the decision to participate in home purchase mortgage. The absence of a universally-accepted mortgage instrument that is understandable to the consumer is a major constraint to the provision of housing opportunities for all economic segments of Newport Beach. GOVERNMENTAL CONSTRAINTS Local Governmental Constraints This section of the Housing Element addresses actual and potential city governmental constraints upon the development of housing for all income levels. Examples of such constraints include land use controls (zoning) , building codes and their enforcement, site improvements, fees and local processing, and permit procedures. In many of these areas, localities have varying degrees of discretion to modify state standards for local implementation and/or conditions. In addition to the above-mentioned constraints, the designation of land in the general plan process can, in many instances, be considered a constraint on the development of housing. In Newport Beach, as previously mentioned in the discussion of site availability, there is a relatively limited supply of land remaining for development. It is estimated by the city that less than 5% of its developable land remains vacant. This limitation on the supply of land, and the accompanying existing urban development patterns of the city, serve to shape its land use regulations. This analysis of the regulations is cognizant of these circumstances and provides comment as appropriate, in this regard. This analysis includes a review of the planning process, the subdivision process, the building permit process, and the environmental review process. The Planning Process •A. General Comments - The City Planning Department is divided along traditional lines into sections for current and advance planning. The Current Planning section does zoning administration and related functions. The Advance Planning section concerns itself with the general plan, local coastal plan, and related types of activities. The organization of the department is rather typical and appears to function well, as the formal and informal coordinating methods facilitate communication and minimize redundancy. It should also be mentioned, that the Building Department recently became a separate entity. However, it appears that the essential communication between these now distinct departments has remained open. The critical relationship of zoning administration and the building permit process is working well and does not cause undue delays in processing. 90 B. The City Council maintains a "Council Policy Manual" on a formal basis. This manual is comprised of Council Policies formulated on a motion of a council member and voted by a majority of the quorum present. The manual has no force or effect of law, however it does have a binding effect on the council (and city staff) . The manual allows the council to express policy regarding planning and land use issues without the formalities (due process) of an ordinance proceeding. While review for the purposes of preparing this element found no abuses of this policy-making system, the potential for the avoidance of due process in housing and land use decision-making should be noted. C. The General Plan of the City was most recently comprehensively updated in 1973. Its provisions receive frequent review, however, in the amendment process, and through adoption of related policies, documents, and ordinances such as the local coastal plan and the traffic phasing ordinance. The City General Plan Amendment (GPA) process is somewhat unusual. All amendments are initiated by the City, at the recommendation of a property owner. This system eliminates the need for a comprehensive application process and for an amendment fee. It also provides the City with substantial control over the amendment process. In practice, the major difference between the City's procedure and an application process is as follows. The City has the ability to decide if the amendment will be initiated (heard) . This decision process need not include an exposition of the merits of the request for amendments. In the case of an application process, while ultimately the application may be denied, it cannot be summarily dismissed without a hearing on its merits. The application has paid a fee which entitles the applicant to a hearing through a specified process. The "recommending" property owner in the city has no such guarantee. It should also be noted, because GP amendments are city initiated, the time limitations of state law (AB 884 do not apply to this process. D. The zoning code of the city is complex but not atypical for an already highly urbanized community with environmentally and aesthetically sensitive areas such as the coast and marshland habitats. The code uses a district concept which is appropriate to the diverse urban patterns and topography found in the city. The zoning code establishes different buildable area coverage standards for various residential districts within the city. Within the R-1.5 District, gross floor area cannot exceed 1.5 times the allowable building area, while the R-2 District allows a 2.0 maximum coverage of the buildable area. Both districts permit duplexes. Although this may be restrictive to maximum residential usage, it is justified because of limited parking area and street capacities. The zoning ordinance is currently under study to "modernize" its provision. It is recommended that the site coverage issue be considered for review as part of this revision process. It is appropriate to include also, in the commentary on zoning, a description of the city's traffic phasing ordinance which directly impacts the allowable land uses in the community. The traffic phasing ordinance (TPO) was adopted by the Council in response to a growing community concern over traffic congestion at critical intersections. The 91 TPO provides that each development which qualifies must be analyzed to determine which intersections it impacts and the level of impact. If the anticipated generation will produce a level "D" situation at the intersection, or increase traffic flow 1%, mitigation measures must be provided by the developer. The "qualifying" threshold which brings a development under the TPO is 10,000 covered square feet for a commercial or industrial development and ten dwelling units for a residential subdivision. While the TPO is a rational method of dealing with exacerbation of intersection congestion, it should be reviewed periodically to insure that the trip end generation of the threshold qualifications remain relatively equal. Should an imbalance occur here, it is possible to subject housing to a higher level of scrutiny and possible mitigation than other development forms. Another component of the zoning code which impacts allowable land uses is the City's condominium Conversion ordinance. This ordinance requires, in addition to the provisions of the subdivision map act, a use permit for conversions. Chapter 20.73 of the Zoning Code specifies that no condominium conversions will be permitted on lots small than 5,000 square feet or under market conditions where the multi-family vacancy reate is less than 5%. Overriding considerations are provided; however, these standards have acted to substantially limit the number of conversions in the city since adoption of the ordinance in 1979. Several affects of this ordinance have been observed within the Newport Beach housing market: - The ordinance acts to preserve a concentrations of rental housing in older beach neighborhoods which are developed at higher densities and where infrastructure deficiencies are evident. - To make the rental of duplex housing financially feasible, owners frequently rent units at winter rates to students and at higher summer rates to vacationing households. To afford winter rates, students often "double up" causing overcrowded conditions. Parking demand is also increased by this type of usage. Thus, rental beach area housing, and especially duplex housing, causes a higher rate of utilization and a greater demand on neighborhood services than owner-occupied housing. - Incidence of crime is greater in older beach areas than in other areas of the city. On fifth of total city crimes in 1980 occurred in West Newport Beach, which comprises 12.6% of the city's population. E. The processes of the city for use permits and variances are reasonably typical. An analysis of these process does not indicate that they present unreasonable requirements or fees on applicants. The Subdivision Process The City of Newport Beach implements the State Subdivision Map Act through a local implementation ordinance. This appears as Title 19 of the City Code, and is titled, "Subdivisions." the basic text of the ordinance was published in January 1974. 92 The basic provision of the Subdivision Code are similar to most jurisdictions of this size. The Planning Commission has all powers delegated to it for purposes of the tentative and final maps except when the City Council by an affirmative vote of four members excercises a right of review. The Code also contains design standards which provide minimum criteria for development. The standards set forth are not unreasonably restrictive and, as in the case of street width, provide for reductions of standards if appropriate. Such reductions are made at the Planning Commission level based on a demonstration of justification for reasons of topography or the number of lots served. Such provisions allow flexibility in the enforcement of the ordinance and potentially reduce development costs. In addition to the above-described design standards, the Code also addresses "Improvements". This section requires street trees, the undergrounding of utilities, and the use of ornamental street lighting. While such improvement standards may be deemed important for quality of life considerations, they are not essential to maintain minimum health and safety requirements and will add to the cost of development. Also included in the Code is a provision for the dedication of parkland. The dedication of parkland and/or the provision of in lieu fees is a requisite to the approval of a final subdivision map. While this type of provision is found with relative frequency in localities, the standards set by this ordinance are quite high. As an example, there is no "credit" provided for private open space or recreational facilities within a development. Such a strict requirement does not consider that the use of public facilities will be reduced by private facilities. Additionally, no provision is made for an exemption of this requirement for low- and moderate-income housing or development undertaken with state or federally provided subventions. This approximately four years of experience with the provision. The Building Permit Process The Building Department of the city has recently undergone a number of changes in organization and procedures. Recently, as an example, a new system was instituted requiring three sets of plans to be submitted by a permit applicant. While this presents a higher "upfront" cost to the applicant for printing or blueprinting, it allows for concurrent review of plans by the current planning section, the fire department, and the building department. This, and other changes, have reduced the plan check period to 1i of the previous time. The Building Department is currently using the following codes: Uniform Building Code 1976 Uniform Housing Code 1976 Uniform Mechanical Code 1973 National Electrical Code 1975 Uniform Plumbing Code 1976 93 The State Housing Law requires that the most recent edition of the model codes be adopted at this time. The above named codes do not represent the most recent edition of the codes and the city is therefore not in compliance with state law. As a part of the current revisions to the departmental procedures, the codes will be updated to the state requirements. The fee schedule of the building department is provided in the 1979 edition of the Uniform Building Code. This schedule is well accepted throughout the state and is generally believed to put a department or a "break even" basis with regard to revenues and expenditures. Environmental Review With regard to housing, the City has required only one environmental impact report in recent history. It is safe to conclude, therefore, that few residential developments are subject to the full effect of the review process. The city does maintain, however, a very thorough and comprehensive review process. The initial steps, which include an "initial study" can be time consuming and occasionally expensive. So, while few developments are subject to the full review process, there are expenses and delays involved. It should be noted that the City's process is responsive and well coordinated and meets CEQA requirements. The review of this process for purposes of the preparation of this element illustrates that it is not excessive or overly restrictive, at least in terms of what is required by CEQA. ENVIRONMENTAL CONSTRAINTS Concern for the protection of natural resources within Newport Beach has required in the past and will continue to require modifications to the intensity of residential development and the design of projects in the city. Environmental issues which affect residential development include: - sediment flows into the Upper Newport Bay, usually due to the denuding of natural ground covers; - water pollutants which are surface runoffs from subdivision streets; - preservation of riparian habitats and archeological sites; - preservation of ocean views, which most often requires limits on building heights; and - reduction of air pollution. These constraints will be the subject of more careful review in the EIR for the Housing Element. 94 IV. HOUSING PROGRAM/STRATEGY In earlier sections of this element, the major characteristics of the Newport Beach housing market were identified, as were the principal constraints which interfere with the ability of the housing industry to respond to the housing demand and needs of Newport's population. Earlier discussions also centered upon unmet housing needs, as well as the powers and limitations of the city with respect to influencing the provision of housing. A summary of the principal findings of earlier chapters is provided below: Community Housing Market Analysis Because of a strong employment base, well-planned residential neighborhoods, and an attractive coastal environment, Newport Beach is a community of intense demand for housing. There is inadequate supply, however, to satisfy that demand. As a result, housing costs are among the highest of any area in California. There are also significant demographic factors which shape the Newport Beach housing market. Specifically, household size continues to decrease; the population of 50 years of age and older remains high; and a substantial increase is occurring within the 18-34 year old population category. In recent years, the production industry has responded to these household characteristics by marketing a higher proportion of multi-family units than is developed on a countywide or statewide basis. Although housing costs are high in Newport Beach, incomes are also high for a large segment of the population. This fact, coupled with other indices, seems to suggest that housing affordability is being handled reasonably well by existing homeowners, moderate-income tenants who share housing expenses, and market rate households willing to allocate 30-35% of their incomes for housing. The greatest difficulty with regard to housing affordability is among new entrants to the ranks of homeownership and lower-income households, generally. Housing Needs Assessment As of 1981, the housing supply affordable to households in most income categories has been and is currently sufficient to meet city demand. By 1986, much housing will be available in all cost categories; however, housing in the lowest cost category will not be sufficient to meet demand in the city. The percentage of all units in each cost category in 1976, 1981, and 1986 is shown in Table 64: 95 Table 64 Cost Categories 1 2 3 4 1976 31.3% 32.2% 21.6% 14.9% 1981 32.5% 25.8% 23.4% 18.4% 1986 13.9% 21.0% 32.6% 32.6% By 1986, 15.6% of all city households will be in the city's lowest income category, while only 13.9% of supply of housing will be available at costs affordable to this group. If current housing trends in the city continue, this slight 1986 shortage will grow with each successive year. If the city's 1986 housing supply is viewed in terms of regional housing needs, the shortage of lowest-cost housing becomes acute. The SCAG fair share allocation of housing needs indicates that over 4,000 additional units of lowest-cost housing will be needed, if the city is to equally share in housing the lowest-income households of the region. This constitutes a need that is double the 1986 supply of lowest-cost housing in the city. Both the city and regional housing needs allocation, as shown by the 1986 housing needs assessment, are summarized below: Table 65 1986 Monthly Housing Cost Categories 0-$652 $652-$1,043 $1,043-$1,721 $1,721+ City Need +589 -210 -3,197 +3,268 Regional Share +4,081 +985 No Need No Need Governmental and Market Constraints There are five principal factors which impede the ability of the city and the housing industry to satisfy identified housing needs. They are as follows: 1. Land Availability It is estimated that there are only 297 acres of buildable, residentially-zoned land in Newport Beach (this does not include land currently being developed or being processed for development) . All vacant, non-committed acreage totals 448 acres, or 4.4% of the total acreage in the City. In effect, Newport Beach is rapidly approaching its residential land development capacity ("build-out") . 96 2. Housing Finance The economy, in general, and the housing finance sector, in particular, are experiencing substantial disruptions. A high rate of inflation, confusion about mortgage instruments, a shortage of mortgage capital, and high interest rates are the conditions which characterize the housing market. 3. Fiscal Considerations As the number of households that are unable to participate in the housing market without governmental assistance increases, the amount of public resources available to assist those in need is on the decline. At the federal level, budget cuts are curtailing federal expenditures for housing assistance programs. At the state level, few forms of assistance are available, and those which are on the books are burdened with program deterrents and fiscal limitations. Even local tax-exempt bond financing is frequently frowned upon by state officials. At the local level, the effects of the 1978-79 tax revolt in California are evidencing themselves, as local jurisdictions, including Newport Beach, weigh which programs to eliminate; new programs, however worthy, cannot be undertaken in such a fiscal atmosphere. 4. Land Costs The cost of land in Newport Beach is extremely high. on two recent projects, land costs ranged from $300,000 to $800,000 per acre. The cost of land becomes a very significant component of development expenses, and reduces the developer's flexibility in producing all housing product types. 5. Environmental Considerations The proximity of Newport Beach to the beach and the Upper and Lower Bays causes environmental considerations to emerge. The location of the city - surrounding 1,216 acres of bay and bordering 6.1 miles of ocean beaches - makes it a popular recreational site for tourism, which increases traffic congestion in the area as well as the regional demand for recreational and commercial facilities. The coastal access issue and concern for preservation of the coastal environment, including wetlands, riparian areas, and archaeological sites, limits the extent to which housing can be produced. Therefore, major increases in residential densities are not housing development alternatives available to the city. Additional discussion of environmental constraints is provided in the Environmental Constraints Section of Part III of this document. 97 Housing Program/Goals and Policies The city's goals for housing are formulated around a two-fold purpose. First, the physical and visual character of the city's residential neighborhoods are the key to the provision of a quality living environment. Therefore, one city goal is: 1. To promote quality residential development through the application of sound planning principles, and through policies which encourage preservation, conservation, and appropriate redevelopment of the housing stock. Secondly, the city's housing stock must provide for the housing needs of all present and future residents of the city. Market forces have increasingly identified Newport Beach as an upper-income housing market. Therefore, it is a city goal to encourage diversity in the housing stock, through development of all types and designs of housing for all economic segments of the community, and through the preservation of the housing stock, where appropriate, to serve an economically diverse community. In this regard, city goals are: 2. To provide a balanced community, with a variety of housing types and designs and housing opportunities for all economic segments of the community: low- and moderate-income as well as middle- and upper-income households. 3. To extend ownership opportunities to as many households as possible, particularly those of moderate, middle, and upper incomes. This is where the demand is projected. 4. To preserve and increase affordability, through rental housing, for low- and moderate-income households. This is the projected area of greatest need. The four basic policies which describe the city's role in the attainment of these goals are as follows. The city's role will include: 1. Enabling private industry to function more effectively, as a result of constraints being eliminated, wherever possible, and allowable density being increased. 2. Providing governmental cooperation and leadership to assist the industry in producing a variety of product types and uses that are most responsive to the emerging demography of the community. 3. Providing incentives and direct assistance to industry, within the limitations of available resources, to facilitate the provision of housing for low- and moderate-income households. 4. Providing incentives and direct assistance to property owners, within the limitations of available resources, to facilitate the rehabilitation of the existing housing stock. 98 Program Objectives The city acknowledges its responsibility to adopt a housing element consisting of "standards and plans for the improvement of housing and for provision of adequate sites for housing." in addition, the city recognizes that its housing element must "make adequate provision for the housing needs of all economic segments of the community" (Section 65302(c) of the Government Code) . It is within the context of this general mandate, and the community assessments which have been discussed previously, that the following housing program objectives are adopted, responsibilities are assigned for implementing those objectives and target dates are established for under-taking the various activities outlined. A. objective 1: To promote and facilitate the improved capability of the private housing industry to produce and provide housing for the population of the city. 1. Finding: The production and provision of housing is primarily a private sector activity. Although government has a significant effect on certain aspects of the housing delivery system, there are definite limitations on the positive contributions which government can make in this field. in fact, the contention has often been made that government has a greater capability to negatively influence the housing market than to do otherwise; this results essentially from its regulatory powers affecting land use and development review. Throughout the public meetings and individual interviews conducted relating to this element, various segments of the community acknowledged that the housing market has entered a difficult period of readjustment, and that one of the components of the housing delivery system which will require continuing assessment and revision is the role of city government in the housing market. While too little is known at this time to specifically define the character of the role to be performed by local government in the provision of housing opportunities in Newport Beach, it is apparent that a device must be established to better enable the city to monitor activities of the housing market, and to be responsive to the need for governmental actions which will improve the efficiency and effectiveness of that market. 2. Implementation Plan: The Planning Department shall assign to one of its staff members the responsibility of continually monitoring the housing delivery system. The primary approach to be utilized shall involve this staff member maintaining liaison with major segments of the housing industry - developers, realtors, and lenders, for example - and submitting a semi-annual report to the City Council outlining the basic needs of the industry, and recommending actions to be taken by the city to assist the industry in meeting its objectives. 99 3. Target Dates: The first report to the Council shall be submitted g within six months from the adoption of this element and every six months thereafter. Special reports may be submitted as deemed appropriate. B. Objective 2: To support the development of a stable flow of mortgage capital to the housing market at affordable interest rates and with favorable terms. 1. Finding: The attitude of the federal government about housing, as reflected by federal monetary policies, has definitely changed in recent years. This fact, coupled with a prolonged period of spiraling inflation and high interest rates, has produced general recognition that revolutionary changes are imminent in the techniques utilized for financing housing. With mortgage money likely to be more costly in the future, and with the probability that monthly housing payments will fluctuate instead of remaining fixed, there is every reason to believe that consumer attitudes and expectations about housing will change dramatically. This change will affect not only the production of new housing, but the sale of existing housing as well. If the housing consumer does not readily adjust to the new realities of housing finance, it is indeed possible that the equity values which have been amassed by existing homeowners will be threatened because of their difficulty in marketing the resale of their properties. The consequence of an unstable housing finance market extend beyond the individual property owner; an entire community is affected by this phenomenon. It is therefore imperative that local governments participate along with other segments of society in promoting the evolution of new mortgage instruments that are acceptable to lenders and consumers. 2. Implementation Plan: The City Council shall support efforts to design and implement new mortgage instruments which accommodate the consumer's ability to pay, and at the same time satisfy lenders' needs for market rates of return on their investment. One approach toward implementing city involvement in this matter is for the Council to conduct a public hearing, at which representatives of lending institutions, builders, realtors, and consumer organizations are invited to submit testimony. As a result of the public hearing, it would be appropriate for the Council to adopt a policy position and to promote such position through the state legislative process. 3. Target Dates: This activity should be initiated as soon as possible, and completed in sufficient time to have impact on the legislative process. 100 C. Objective 3: To promote the development of an increased level of new housing production, consistent with sound planning and environmental standards. 1. Findings: A major problem confronting the housing market and communities throughout the state is the fact that total housing production is occurring at a level that is less than necessary to satisfy the needs of the community. This "shortfall" in production has created a housing shortage with many adverse effects, not the least of which are low vacancy rates, higher prices, and less consumer choice in housing opportunities. While the volume of housing production is primarily determined by national economic conditions, a fact over which local governments have no control, there are several actions which a local jurisdiction can take to stimulate increased production within its boundaries, assuming suitable economic conditions exist. Among the usual techniques utilized by local governments to influence residential development are land use policies and development standards. While land use policies, generally, either frustrate or facilitate housing development (depending on the nature of such policies) , it appears that development standards and project reviews associated with those standards have a much more limited effect. Put another way: it is reasonable to expect that local governments can influence the rate of development through their adoption and enforcement of land use policies; it is less reasonable, however, to draw a similar conclusion with regard to the adoption and enforcement of development standards. The effect of such standards is more directly related to housing costs, not rates of development. The vacant land inventory and site analysis identified seventeen sites available for residential development. These sites will provide for a variety of housing types and incomes. Existing plans for these sites will permit residential densities to range from four to twenty-four dwelling units per acre. Additionally, four of these sites have been planned for residential and commercial/industrial land use mixes. The most direct and significant action which the City can take to improve the supply/needs imbalance is to increase the allowable residential density of development within the City, consistent with applicable fiscal and environmental considerations. The policy of allowing increased residential density is only meaningful, however, when it is applied to specific sites within the City. Since the adoption of the Housing Element the Planning Commission and City Council have held General Plan Housing Element Implementation hearings which have resulted in the initiation of General Plan Amendments on five (5) specific sites to consider increased residential densities: 2. Implementation Plan: The following activities shall be undertaken in support of this objective: 101 a. The City of Newport Beach shall conduct General Plan Amendment Hearings to consider increased residential densities on the following sites: Site Buildable Acreage CalTrans West 10.1 acres Freeway Reservation West (Big Canyon Area 10) 8.7 acres Fifth Avenue Parcel 10.0 acres Marguerite Avenue Parcel 6.8 acres North Ford 29.5 acres The hearings shall be conducted in conformance with the Planning and zoning Law, California Government Code Section 65356.1. Necessary environmental documentation shall also be prepared, as required by the California Environmental Quality Act. b. The Planning Commission shall continue to conduct public hearings designed to identify which of the remaining non-committed sites will be appropriate for increased levels of allowable density without engendering adverse environmental and other community conditions. 3. Target Date: The following implementation schedule shall be observed: a. The General Plan Amendments identified in 2(a) above will be processed during 1983. b. Public hearing shall be conducted within six months after the completion of the General Plan Amendment hearings discussed in 2(a) above, and recommendations for further action shall be submitted to the City Council within one year after said hearing. D. Objective 4: To encourage, wherever feasible, mixed use development that achieves a balance between residential and appropriate commercial/industrial activities. 1. Finding: There is evidence that development patterns which segregate housing from places of work, contribute to increased traffic problems, automobile fuel consumption, and fiscal demands on local governments. Moreover, such patterns may directly impact housing affordability, to the extent that they enhance or diminish the relationship between jobs and housing opportunities of the given labor force. It is recognized that the consumer is the ultimate judge of which development patterns are most preferable; this is the principle of supply and demand operating in its purest form. There is little that local government can or should do to influence where 102 its citizens choose to live. It is indisputable, however, based on housing marketing studies, that consumers are showing an increasing preference for housing opportunities that are in close proximity to their employment. The basis of this tendency are higher fuel costs and the psychological frustrations of commuting. It is appropriate for the City to evidence its support of development patterns which mix residential and commercial/ industrial uses to encourage such patterns, as a policy matter, when it is feasible to do so. The City has a Commercial- Residential Zoning District which provides for a mixture of commercial and residential uses. This Zoning District is utilized on small parcels in appropriate locations throughout the community. The General Plan and P-C zone are used on larger parcels to accomplish mixed use development. 2. Implementation Plan: In major projects involving commercial and industrial uses, the City shall encourage wherever feasible, the development of housing that is geared to the affordability range of the projected labor force. 3. Target Dates: This policy objective shall be initiated immediately. E. Objective 5: To achieve an appropriate balance between between employment and housing. 1. Finding: Employment population and housing supply are the principal factors to be considered in assessing the growth of Newport Beach. These factors are interrelated; they influence each other as well as the overall character and magnitude of growth in Newport Beach. Orange County experienced phenomenal growth in employment during much of the 19701s. Newport Beach was a leader in the county's emergence as a major employment market. Employment development proceeded, however, with little attention being given to its relationship to and impact upon housing supply and affordability. The lack of attention to the correlation between employment and housing is the principal factor creating the jobs/housing imbalance that characterizes certain regions of California. The imbalance in Newport Beach is not only one of an absolute shortage of housing, it is also an imbalance in terms of the existing housing supply and its price accessibility to the labor force. The clear lesson to be learned is that local governments must more properly plan for housing. While it should not be the city's objective to slow the economic growth of the region, it is important that such growth be placed in a rational planning context and that housing needs be a major part of that context. Housing impact should be a fundamental 103 city concern regarding major proposed commercial/industrial projects. 2. Implementation Plan: The Planning Commission and the developer of proposed major commercial/industrial projects shall assess the housing impact of such projects during the development review process. Prior to project approval, a housing impact assessment shall be developed by the city, with the developer's active involvement. Such assessment shall indicate the magnitude of jobs to be created, where housing opportunities are expected to be available, and what measures - public and private - are necessary, if any, to ensure an adequate supply of housing for the projected labor force. 3. Target Date: This policy shall be implemented immediately. F. Objective 6: To encourge the housing development industry to respond to the housing needs of the community as well as the demand for housing as perceived by the industry. 1. Finding: while the concept of "community planning" implies a governmental role in land development decision-making, the basic decisions about housing have traditionally been considered the exclusive province of private industry. The role of local government has been viewed as one of protecting the environment and ensuring compliance with community development standards. The typical expression of this role is to "preserve the character of the community." It is obviously the responsibility of the city of perform the functions described above. The city recognizes, howeve, that "preserving the character of the community," in a strict sense, may result in a development posture that resists change and responsiveness to emerging situations. The city seeks to avoid a planning process that is static and inflexible to changing needs and market demand. The city hereby acknowledges its responsibility to actively participate withthe housing industry in determining the type of development which is most appropriate for the community. This approach, often called "negotiated development", has the potential to yield housing products and prices that respond to community needs, instead of solely demand. "Negotiated development" should be used judiciously, however; it should not unreasonably prolong the development review process and it should not superimpose the local government perception of need unreasonably on private industry. "Negotiated development" is not to be confused with "inclusionary housing". Negotiated development does not mandate a specified product mix for each residential project, but, rather, includes a negotiation stage within the development review process. During this stage, overall city goals are presented, and development 104 incentives are offered. The developer determines whether or not the city's affordability objectives are financially feasible. The city will not require production of any project that is not financially feasible. Negotiated development gives the city discretion in suggesting when and where product affordability is desirable. Feasibility is a private determination. The city may elect to transfer all affordability objectives to one or two sites. The process of negotiation and site transfer is particularly amenable in Newport Beach because most vacant residential sites are held by one landowner. This objective, as with most others being proposed, does not have to be applied on a project-by-project basis. 2. Implementation Plan: The Planning Commission, in proposed developments of 10 or more units, shall seek to achieve a price distribution that bears a reasonable relationship to Performance Objective 2. A 3. Target Date: The implementation of this objective shall be initiated immediately upon the adoption of this element. G. Objective 7: To promote and assist in the development of housing for low and moderate income households. 1. Finding: For a variety of reasons, the private housing market does not provide an adequate choice of affordable housing opportunities for low and moderate income households. Such opportunities are not available in the supply of new housing construction, and they are becoming increasingly less available as a result of the "filtering process" - the traditional process by which older housing is "handed down" to households of lower incomes. The underlying premise of this process is that the upward mobility of middle and higher income households triggers the release of their housing, upon their purchase of new housing, to households of lower incomes. The validity of this concept weakens considerably in housing markets where there is intense higher income demand and extreme shortage. Newport Beach is such a market. If the housing needs of low and moderate income households are to be adequately addressed, in most housing market areas of California, it will be necessary for local governments to design and implement a comprehensive strategy for achieving this objective. This strategy must not only seek to guide and encourage the private market to respond to the needs of low and moderate income households, it must provide a framework for the judicious, affirmative, and cooperative use of local regulatory powers to achieve such objective. While it is clear that local government must affirmatively use its powers to help provide for the housing needs of lower income segments of the community, it is not clear at what point local 105 government can intervene in the housing market without causing serious disruptions in the marketplace. The factor of project size in determining the appropriate "threshold" for government regulation is well-established. In addition to the examples cited by the Coastal Commission, there are countless other federal, state, and local incidences where the imposition of government regulation is withheld because the small size of the project makes it incapable of absorbing the impact of the proposed regulation. The "economies of scale" principle, which holds that small size new construction projects should be treated differently in the face of certain governmental regulations, does not dissipate once new construction is completed. The inability to absorb the impact of government regulations which may require the provision of private market housing "subsidies" is no less for the owner of an existing project than for the developer of a new one. In fact, the builder may be able to redesign the project or utilize government incentives to mitigate the adverse effects of regulations; the owner of existing units has no such options. Governmental efforts to provide housing for low and moderate income households through the regulation of private property, such as rent control, inclusionary housing programs, and prohibitions on the conversion of rental units to ownership, have one thing in common: they attempt to control housing prices within the private market. Regardless of the social or political merits of such efforts, they are not without economic consequences. In housing markets of extreme shortage and intense demand, conditions which exist in most coastal communities, any governmental efforts to benefit one segment of the community are likely to adversely affect another. To illustrate: rent controls may result in affordable housing for renters, but they may also result in financial hardship for property owners. Inclusionary housing programs may provide affordable housing for low and moderate income households, but such programs may also reduce developers' profits, and increase housing costs for households that do not qualify for the inclusionary units. Ironically, such programs may benefit low income households and diminish housing opportunities for moderate income households, and vice versa, at the same time. Policies restricting changes in housing tenure, such as the conversion of rentals to ownership, may preserve affordable rental housing for some low and moderate income households, but such prohibitions may also limit ownership opportunities for low and moderate income households who are capable of entering the housing market through the conversion process, and who would benefit from ownership as a result of the tax policies which favor ownership. 106 In short, governmental efforts to tinker with the housing market will beneficially affect some, and negatively affect others. Unfortunately, the issues of who will be affected, and the extent of the effect, cannot always be determined at the time governmental regulations are adopted. It is therefore incumbent upon the adopting unit of government to make every attempt to anticipate consequences, to proceed cautiously, and to balance or mitigate any anticipated detrimental effects. This shall be the overriding policy governing all attempts by the City to provide housing for all economic segments of the community. Since the adoption of the Housing Element the Planning Commission and City Council have held General Plan Implementation hearings which have resulted in the formation of the Housing Task Force on Government Funding. The City Council and Housing Task Force have identified the use of Community Development Block Grant Funds as a source of assistance for low and moderate income households within the Community. The City has also adopted a Mobile Home Park Zone to preserve and encourage a variety of housing types and preserve an existing source of housing for law and moderate income households. The rezoning hearings involving mobile home parks within the City have been initiated. To date one mobile home park has been rezoned (291 units) , one is currently being considered (60 units) , and three additional parks (210 units) have been identified for consideration. In addition to being identified as a site for density increase hearings, the North Ford site has been identified as a potential housing site for low and moderate income households. Federal financing and subsidy programs have been used in the City of Newport Beach since the mid 1970's. The City of Newport Beach utilized CDBG funds to acquire land and construct a senior citizen center to provide services for a large identifiable lower income segment of the community needing services not otherwise provided. The federally funded Section 8 Rent Subsidy Program currently subsidizes 30 lower income renters in the City. Approximately 75% of these renters have very low incomes. There has been a 30% increase in utilization of the Section S Federal Rent Subsidy Program since the adoption of the Housing Element. The City of Newport Beach and a non-profit corporation made a cooperative effort to construct a senior citizen housing project of 101 units for low and moderate income households. The City made the project possible by amending its Zoning Code to include senior citizen housing as an institutional use. The parking standards were relaxed and all in-lieu fees were eliminated. The non-profit corporation received a low interest 202 construction loan from the Federal Government and the tenants receive Section 8 rental assistance. 107 2. Implementation Plan: The following activities will be undertaken in support of this objective: a. The City's Housing Task Force on Government Funding shall evaluate the use of the Community Development Block Grant and Tax-Exempt Mortgage Revenue Bond Programs to facilitate the development, construction and financing of housing for low and moderate income households. Use of these programs shall be considered for projects which include the construction of housing for low and moderate income households. b. Rental housing shall be encouraged on sites identified for housing for low and moderate income households when the construction of ownership housing in a price distribution consistent with the Housing Element is not feasible. c. The City shall seek to maintain rental opportunities by restricting conversions of rental units to condominiums unless the vacancy rate in Newport Beach for rental housing is 5% or higher for four consecutive quarters. d. The City shall preserve mobile home park land uses through a continued program of mobile home park evaluation to determine which mobile home parks should be rezoned with the Mobile Home Park Zone. e. The City shall continue to work in cooperation with the orange County Housing Authority to provide Section 8 Rental Housing Assistance to residents of the community. The City will actively pursue modification of the fair market rent structure limits for the community in order to increase the number of Newport Beach housing units that will be eligible to participate in the program. f. For new developments proposed in the Coastal Zone, the City shall require the provision of housing affordable to persons or families of low and moderate income, where feasible. The units shall be located on-site where feasible, or off-site and inside the Coastal Zone, or off-site and within three (3) miles of the Coastal Zone (within the City) . Feasibility will be determined in accordance with Government Code 65900. The number of units will be determined in accordance with the other provisions of this Housing Element. g. The City shall use its discretionary authority to review and waive planning fees for projects with low and moderate income housing. Because rental housing is recognized as a significant source of low and moderate income housing, park dedication requirements shall not be extended to rental projects providing low and moderate income housing. h. On sites where a density increase has not been granted as part of the density increase program defined in Objective 3, and a developer proposes a tract map which includes at least 108 25 percent of the total units for persons of low and moderate income, the City shall grant at least a 25% density bonus or alternative incentives mutually acceptable to the City and the developer. 3. Target Date: The following implementation schedule shall be observed: a. Program 7a: This shall be done as projects with housing for low and moderate income households are proposed. b. Program 7b: This shall be done when ownership housing is not feasible on sites designated for housing for low and moderate income households. c. Program 7c: This ordinance is currently in effect. d. Program 7d: These rezonings shall be done on an ongoing basis. e. Program 7e: This program shall be implemented immediately. f. Program 7f, 7g, 7h: These programs shall be utilized as projects are proposed. H. Objective 8: To improve the efficiency of the development permit process. 1. Finding: While the city's permit process has been applauded by many users as being relatively efficient and free from obstacles, there were several observations that the process could be improved if a single, comprehensive document were made available to the development industry explaing the various procedural steps involved in developemtn review and the anticipated time frames. Although such a document is not likely to be of value to large development firms, or those which have a history of involvement firms, or those which have a history of involvement with the city, there may be merit to such a document for smaller, less informed developers. 2. Implementation Plan: The Planning Deparmtent shall develop a Development Review Procedural Guide which outlines and explains the various steps and time demands of the city's housing development review process. 3. Target Dates: This objective shall be completed within six months from the adoption of this element. I. Objective 9: To promote the conservation, rehabilitation, and redevelopment of the existing housing inventory. 109 1. Finding: The City's existing housing supply is important for many reasons. Among them are the following: the character of the community is shaped largely by its residential neighborhoods; much of the City's tax base is in its housing inventory; housing opportunities for lower-income households are almost exclusively confined to existing housing; and a large portion of the individual wealth of many Newport Beach residents may be found in the equities of their homes. The existing housing supply also represents essentially the last hope for homeownership for many moderate and middle income families who find themselves priced totally out of the new home market. Because of the many functions which existing housing serves, special policy consideration must be given to its use and occupancy. Efforts must be expended to protect existing equities, preserve affordability for lower income households, deter the spread of physical blight, preserve and strengthen the tax base, and extend opportunities for entry into homeownership. These varied objectives are not always compatible; extreme caution must be exercised by the City to balance these objectives and to avoid disrupting reasonable interaction within the housing market. The three principal objectives which should be pursued by the City with respect to its existing housing supply are 1) to conserve housing which complies with applicable housing codes; 2) to rehabilitate and upgrade deteriorating inventory; and 3) to promote the redevelopment of blighted, obsolete, or inefficiently utilzed housing resources. In general, housing conservation, rehabilitation, and redevelopment are best handled by the private sector. Local government can stimulate or deter such activities, however, by the nature of the policies which they adopt and enforce. The range of actions which the City may take to spur housing conservation, rehabilitation, and redevelopment include housing code enforcement, land acquisition, the provision of low interest loans, and the facilitation of private redevelopment through tenure conversion. If demand is strong, housing rehabilitation and redevelopment will occur without governmental involvement. All that is necessary are appropriate public policies which allow the law of supply and demand to operate. It is indisputable that areas which are characterized by physical blight, and which give indications of future deterioration, have a high incidence of rental properties and absentee ownership. Increasing the rate of homeownership is often all that is necessary to stabilize a deteriorating neighborhood and to redevelop that neighborhood. 2. Implementation Plan: a. The City shall submit an application to the Department of Housing and Urban Development for CDBG Funds to financially 110 assist the rehabilitation of housing for low and moderate income households. The Planning Department shall monitor the CDBG Program and make recommendations regarding the program to the City Council. b. The City shall require the replacement of housing demolished within the Coastal Zone when it is occupied by low and moderate income households. The details of these requirements are contained in adopted Council Policy P-1. 3. Target Dates: a. The CDBG application shall be made for 1982 funds. b. This program shall be utilized as projects are proposed. J. Objective 10: To promote housing opportunities for all persons regardless of race, religion, sex, marital status, ancestry, natural origin, or color. 1. Finding: Substantial legislation has been adopted at the federal government level to prevent discrimination in the sale or rental of housing. Such legislation includes the Civil Rights Act of 1866, Title VIII of the Civil Rights Act of 1968, Title VI of the Civil Rights Act of 1964, and Executive Order 11063. The State has also enacted anti-discrimination legislation, including the Unruh Civil Rights Act and the California Fair Employment and Housing Act. The City supports these federal and state actions to promote housing opportunities for all persons. At the same time, the City recognizes that the goal of equal housing opportunities will not significantly be advanced through the creation of a redundant local enforcement agency, with limited fiscal and investigatory resources, that cannot realistically complement the anti-discrimination enforcement agencies of the state or federal governments. Accordingly, the City perceives its most appropriate and effective role is in assisting these state and federal agencies in the enforcement of enacted legislation to prevent housing discrimination, and in disseminating information informing residents of their civil rights with respect to the purchase or rental of housing, and the administrative and legal remedies available to them. 2. Implementation Plan: a. The Planning Department shall assign to the City's staff liaison identified in Objective 1 the responsibility for lodging and referring to the proper agency all complaints transmitted to the City regarding discrimination in the sale or rental of housing in Newport Beach. Depending upon the nature of the complaint, the staff liaison shall refer the complainant to the more appropriate of the following enforcement agencies: ill (i) State of California Department of Fair Employment and Housing 28 Civic Center Plaza Santa Ana, CA 92701 (714) 558-4159 (ii) United States Department of Justice office of the United States Attorney 312 N. Spring Street Los Angeles, CA 90012 (213) 688-2434 The staff liaison shall provide the complainant with the address and telephone number of each of these agencies, explain the applicable filing procedures to the complainant, and, if requested, assist the complainant in forwarding information to the appropriate agency. b. The staff liaison shall maintain records on all housing discrimination complaints forwarded to the City and referred by the complainant to enforcement agencies, and shall request information from the appropriate enforcement agencies in order to monitor the progress, status, and resolution of such housing discrimination complaints. c. The staff liaison shall prepare and submit quarterly reports to the Planning Director listing the number of housing discrimination complaints forwarded to the City and, utilizing data provided by the California Department of Fair Employment and Housing or the United States Department of Justice, describing the status or resolution of these complaints. This information shall be used to determine the progress of equal opportunity efforts in Newport Beach, and will be made available to anti-discrimination enforcement agencies and groups and persons interested in equal housing opportunities. d. Upon request from the involved governmental enforcement agency, and to the extent permitted by fiscal resources and law, the City Attorneys shall assist in the investigation and prosecution of housing discrimination complaints. e. Upon request, the City shall provide, free of charge to any interested person, informational material explaining federal and state civil rights with regard to the purchase and rental of housing. 3. Target Date: a. Program 10: This shall be implemented immediately. b. Program 10b: This shall be implemented immediately. 112 c. Program 10c: This shall be implemented within three months from the amendment of this objective. d. Program 10d: This shall be implemented immediately. e. Program 10e: This shall be implemented within three months from the amendment of this objective, or when the City receives or causes the informational materials to be prepared, whichever is earlier. K. Objective 11: To promote a greater choice in housing opportunities for elderly residents of the community. 1. Finding: Elderly persons comprise a substantial segment of the population of the community. As discussed earlier in this element, many elderly residents of the City are long-time residents who live in homes purchased during the child-rearing stage of their lives. These persons in many cases, are living on low, fixed incomes, and although their homes have escalated greatly in value since the time of purchase, maintenance, utility, and property tax expenses may be beyond their present financial capacity. Moreover, the occupied housing unit may not match their present housing needs in terms of square footage, location in respect to community facilities, and maintenance requirements. In most cases, these persons desire continued residence in their same neighborhood or community, but not necessarily in the same dwelling unit. Alternative living arrangements are desired, such as smaller, attached condominiums located proximate to transportation and commercial facilities, and offering some social and medical services. Such housing opportunities would serve the needs of elderly residents and would also promote greater utilization of the existing housing stock, as homes occupied by elderly residents would become available for other families. 2. Implementation Plan: The City will take a facilitator role in encouraging the development of increased housing opportunities for the elderly through the following actions: a. Planning Department staff will meet initially with groups in the community which represent the interests or serve the needs of elderly residents. Housing needs will be discussed and a position paper will be drafted, and further needs will be identified to obtain a measure of the market for increased retirement housing. b. If further research is needed, the Planning Department shall act as the coordinator, unless other agencies have a suitable research capacity. 113 L c. Suitable sites for such housing will be identified by the Planning Department and development incentives in terms of zoning, processing, etc. will be identified. Available state and federal housing resources will also be considered. d. Documented housing needs and site information will then be discussed in a roundtable setting with community groups and local landowners. The Planning Department will facilitate this discussion. 3. Target Dates: This process shall be complete within 18 months of Housing Element adoption. L. objective 12: To provide for the development of a variety of housing types and products for all income levels of the community. 1. Findings: If the housing goals of Newport Beach are to be attained, the producers of housing must be allowed to exercise maximum flexibility in the design and development of product types. While the decision to develop certain housing products, such as rental housing, mobilehomes, or manufactured (factory-built) housing, is primarily a function of the interaction between producers and consumers, there is a significant role which the California Legislature believes local governments can perform in this regard. Section 65583 (c) (1) of the Government Code requires that the City do the following: "Identify adequate sites which will be made available through appropriate zoning and development standards and with public services and facilities needed to facilitate and encourage the development of a variety of types of housing for all income levels, including rental housing, factory-built housing and mobilehomes, in order to meet the community's housing goals as identified in subdivision (b) ." Because of the extremely limited supply of undeveloped land in Newport Beach, it would not be appropriate for the City to zone that limited supply for the specific products identified in Section 65583. According to housing producers doing business in the City, such an approach would frustrate, not facilitate, the production of varied housing types. The market place, not the City, can best determine whether a specific site should be utilized for mobilehomes, factory-built housing, rental housing, or another housing type. The City should direct its efforts toward permitting and encouraging those products which are demanded by the consumer and which facilitate the provision of housing to the widest possible segment of the community. Consistent with this view, it is best for the City to merely assure itself that whatever product is 114 proposed for a specific site is compatible with the neighborhood, and satisfies the overall development requirements of the community. 2. Implementation Plan: a. Available sites for residential development have been identified in this document. b. The City will permit the installation of mobilehomes, factory-built housing, or any other construction technology, provided that such product complies with the development standards of the community and is compatible with the planning aesthetic, and other applicable considerations of the specific neighborhood in which such product is proposed. This policy shall apply to all non-committed sites existing within the City and identified in the Housing Element. c. The Planning Department shall review the provisions of SB 1960 (1980 Statutes) and determine whether City criteria for judging "compatibility" are appropriate and necessary, or whether "compatibility" should be left open to interpretation on each project. 3. Target Dates: a. Program 12a has been implemented as part of this document. b. Program 12b shall be implemented immediately. c. Program 12c shall be completed within three months following the adoption of this element. M. Objective 13: To review the housing element on an annual basis to determine the appropriateness of goals and programs and the progress of the City in housing element implementation. 1. Findings: To guarantee the effectiveness of policies and programs in this document, timely review and evaluation are appropriate. 2. Implementation Plan: a. The City Planning Department will monitor progress on each of the objectives in the housing element program, and present this information to the Planning Commission and the City Council on an annual basis. b. The first full revision of the housing element will be completed on the basis of annual monitoring reports and will incorporate most current data on housing and house-hold characteristics, as well as housing market trends. 115 3. Target Dates: a. Monitoring reports will be prepared on an annual basis starting 12 months after housing element adoption. b. The first revision of the housing element shall be completed by July 1, 1984. Performance Objectives Section 65583 of the Government Code requires that the Housing Element also include a "statement of goals, policies, quantified objectives and scheduled programs for the preservation, improvement, and development of housing." It is the purpose of this section of the Element to quantify the results of program objectives previously established. The projected results will be stated in terms of performance objectives. The City's housing program is designed to address the regional housing needs, as defined in Section 65584 of the Government Code. Because of the constraints outlined in this element, however, it is not physically, environmentally, or fiscally possible for the City to satisfy the regional need. Such a magnitude of need, as the legislature recognized in Section 65583(b) of the Government Code, is beyond the ability of the City. The program outlined herein represents the most diligent effort which the City of Newport Beach considers possible. In attempting to quantify the impact of the housing program objectives established in this Element, it is important to make a determination about the capability of the housing industry. In this respect, the industry has produced 1,785 new units over the past five years, for an annual average of 357 units. In view of the constraints identified, it is not reasonable to believe that the industry, acting alone, can exceed the annual average of the past five years. In fact, it may be extremely difficult for the industry to achieve even 80% of the annual average, if present economic and market conditions persist. The City, nonetheless, adopts the historical pattern of the 1976-1980 period as the basis of its projections of the maximum number of units that can be constructed by the industry, in the absence of the program established herein. Based on this projection, there are several alternative strategies which could be adopted: 1. The City can do nothing, except perform its traditional role of planning and regulating land use and leave the provision of housing to the marketplace. This is primarily a "free market" approach to housing. Implicit in this approach is the assumption that the forces of supply and demand will dictate the allocation of housing to the residents of the community. The implication of this approach is that certain segments of the community, primarily low- and moderate-income people, will be unable to participate in the housing market of Newport beach. Because of the intense demand for housing, prices would be bid up to a point at which low- and moderate-income people simply could not afford to live in 116 Newport Beach, based on the imbalance of high demand in relation to short supply. Such a strategy would not allow the City to comply with the requirements of AS 2853. 2. The City can allow the marketplace to function as it would under a free market approach, except that the City could direct assistance to low- and moderate-income people to the extent that such households are unable to participate in the Newport Beach housing market. There are limitations - political, fiscal, and program impact - to this approach. First, there is strong sentiment within the community against participating in federal and state subsidy programs. To ignore this sentiment would not serve the best interest of the community nor those few people who would directly benefit from such subsidy programs. In a fiscal sense, the City does not have the capacity to provide direct assistance to a significant number of households. From the standpoint of a program impact, any subsidy funds which the City might receive, such as Section 8, Section 235, and other forms of direct assistance, would have minimal impact numerically. Because of the high cost of housing in Newport Beach, extremely large subsidies are necessary to meaningfully benefit low- and moderate-income households. Therefore, a more tangible impact could be achieved, in a regional sense, if such subsidies were applied to areas with housing costs that are not as high as those of Newport Beach. It is estimated that the program objectives strategy will at best achieve the following performance objectives. Should the housing program objectives demonstrate different capacities than those estimated below, the performance objectives will be directly affected: 1. To increase the ultimate allowable density on the remaining 297 acres of non-committed, undeveloped land by 25%. This increase need not 'be uniformly applied to all sites; rather densities designated will cumulatively total a 25% increase in residential capacity of remaining sites. This could potentially increase new housing construction from the annual average of 357 to 446 units. (Program Objectives 1, 2, 3, and 8) 2. To provide new housing opportunities for low- and moderate-income households, wherever possible, and to encourage the industry to allocate at least 10% (45 units) of the annual production goal to affordable housing for low- and moderate-income households. "Affordable" housing shall be defined as housing units that sell for no more than three times the City's estimate of city median annual income at the time of project approval, in the case of for-sale housing; and units that rent for no more than 30% of the city's estimate of median income. (Program Objectives 4, 6, 7, 9, and 12) . 3. To preserve rental housing opportunities for all income segments of the community, including low- and moderate-income households, by regulating the conversion of multiple-family residential developments of five or more units to condominiums, thereby preserving 5,537 rental units; establishing a Mobile Home Park 117 i Residential Zone, potentially preserving an additional i 600 units; and continued cooperation with the Orange County Housing Authority Section 8 Rental Assistance Program. The number of Section 8 units is determined by the availability of funds and program participation criteria. (Program Objective 7) . 4. To annually conserve and rehabilitate 3% of the approximately 340 substandard duplex, triplex and fourplex units in the beach areas of the community. (Program Objective 9) . Schedule of Actions for Housing Program Implementation Implementation of the Housing Element is expected to take place within a two-phase time frame: Short-Range Activities: The first time period involves all actions taking place within two years of Housing Element adoption. During this period, the city will initiate activities in a variety of areas to institute policies within the Housing Element. Such efforts will include: initial efforts to investigate federal, state, and local tax-exempt mortgage revenue bond funding sources; identification of specific sites for increased densities; improvement of the housing delivery process; the establishment of criteria for mixed use development policies and housing impacts of employment growth; etc. Long Range Activities: After short-range activities have been completed, the city will begin the second phase involving five year implementation efforts. This will involve ongoing program administration and efforts to evaluate progress and program effectiveness. The first Housing Element revision will take place in the first year of this phase. It should also be mentioned that certain implementation activities will commence during the first phase of the Housing Element time frame. Short-range and long-range activities have been summarized on the attached matrix. 118 HOUSING ELEMENT ADOPTION 6 MONTHS 1 YEAR 18 MONTHS Z YEARS 3 YEARS . 4 -YEARS 5 YEARS SHORT RANGE ACTIVITIES LONG RANGE ACTIVITIES HOUSING ELEMENT OBJECTIVES : 1. . . ESTABLISH HOVISING INDUSTRY LIJISON * ■ 1p I ■ - ■ I HOUSING INDUSTRY REPORTS TO CITY qOUNCIL OPROGRAM=EVALUATIO4 I 2. .PUBLIC HEARI�G ON NEW MORTGAG9 INSTRUMENT I I .LEGISLATIVE RECOMMENDATIONS 3, .PUBLIC HEARINGS ON INCREASED. DENSITIES ( I I ,RECOMMLNDATIONS LAND USE 'AND TNING AMENDMENTS;I GENERAL -PLAN ADMIINISTRATION i •PROGRAM -EVALUATION 4. .MIXED—USE DEIELOPMENT POLICY " 1 POLICY ADMINIISTRATION • PROGRAM EVALUATION KEY: Ak INITIAL ACTIONS : POLICY FORMATION, GRANT APPLICATIONS., PUBLIC HEARINGS ■ ONGOING ACTIONS : PERIOD REPORTSo PROGRAM ADMINISTRATION PROGRAM EVALUATION HOUSING ELEMENT ADOPTION 6 MONTHS I YEAR IS MONTHS 2 YEARS 3 YEARS . 4 -YEARS 5 YEARS SHORT RANGE ACTIVI"TI'ES LONG RANGE ACTIVITIES " HOUSING 5 .HOUSING IMPA�TS OF COMMERCIAL INDUSTRIAL ELEMENT DEVELOPMENT: �'POLICY FORMATION i OBJECTIVES: POLICY ADMINISTRATION *PROGRAM EVALUATION i 6. . PRICE DISTRI$UTION POLICY : NEW HOUSING DEVELOPMENT I POLICY ADMINISTRATION o •PROGRAM EVALUATION 7A, INVESTIGATE 'PARTIC-I- �- PAIrIoN LN .ISSUANCE OF TAX- XEMPT MORTGAGE REVENUE BONDS 1 - B. . I NVEST'I GATE--RENEWED - ' CADTBCG. PURAM' I KEY: . INITIAL ACTIONS : POLICY FORMATION, GRANT APPLICATIONS, PUBLIC HEARINGS ONGOING ACTIONS : PERIOD REPORTS_ ,- PROGRAM ADMINISTRATION S PROGRAM EVALUATION HOUSING ELEMENT ADOPTION 6 MONTHS 1 YEAR IS MONTHS 2 YEARS 3 YEARS 4 -YEARS 5 YEARS SHORT RANGE ACTIVI-TYES LONG RANGE ACTIVITIES HOUSING ELEMENT . EXAMPNE:RENTAi: " OBJECTIVES : HOUSINf INCENTIVE { { D. CONDOMINIUM CONVERSION POLICY I _ POLICY { ADMINISTRATION MOBSLE_HOME-_PARK 30NE 1 . { `�• rSECTI0! 8 REys�L H�OUS ING 1 *, PROGRAM EVALUATION ' ~ S. .DEVELOPMENT REVIEW' { i PROCEDUTAL GUIDE 9A. .,CONDOMINIUM ONVERSION POLICY REVISION POLICY ADMINISTRATION i 1{ KEY: . INITIAL ACTIONS : POLICY FORMATION, GRANT APPLICATIONS, PUBLIC HEARINGS - ONGOING ACTIONS : PERIOD REPORTS,- PROGRAM`ADMINISTRATION PROGRAM EVALUATION HOUSING ELEMENT ADOPTION 6 MONTHS I YEAR IS MONTHS Z YEARS 3 YEARS . 4 -YEARS 5 YEARS SHORT RANGE ACTIVITIES LONG RANGE ACTIVITIES HOUSING ELEMENT B� f OBJECTIVES: .CONSIDER HOUING CEDABIGITP Sp ROGRAMN 10. A k\JEQUAL OPPORTUN$TY POLICY ESTABLISHED � I I 1 1 � PQLiI'CY ADMINISTRATION II. FACILITATE AEVELOPMENT ` -c OF HOUSING 'OR ELDERLY 1 N . � 1 I ,PROGRAM EVALUATION FIZA , - ADEQUATE SITEII INVENTORIED I - B. MOBILE HOMEIFACTORY BUILT HOUSING POLICY I i C. .COMPATABICITY CRITERIA ESTABLISHED POLICY ADMINISTRATION I3'. HOUSING ELEMENT'* PROGRAM PROGRAM . FIRST HQUS.I-NG i PROGRAM EVALUATION MONITORING MONITORING. ELEMENT RE- - MONITORING VISION1- KEY: . INI.IAL ACTIONS : POLICY FORMATION, GRANT APPLICATIONS, PUBLIC HEARINGS ONGOING ACTIONS : .PERIOD REPORTS,- PROGRAM ADMINISTRATION PROGRAM EVALUATION TABLE 1: SUMMARY OF VACANT LAND Gross Less land Less Less land vacant under BALANCE committed BALANCE currently in acreage construction land review process Residential Sites 592.1 48.6 543.5 122.0 421.5 125.0 Non-residential Sites 360.4 31.9 338.5 171.9 156.6 5.0 TOTAL 952.5 80.6 872.0 293.9 578.1 130.0 N N A Plus sites BALANCE designated Less sites Estimate of (total non- 'Open Space BALANCE without BALANCE Buildable Acreage committed with Alter- development on remaining non- acreage) nate Use" potential committed land Residential Sites 296.5 86.6 383.1 57.6 325.5 223.96 Non-residential Sites 151.6 0 151.6 0 151.6 134.64 TOTAL 448.1 86.6 534.7 57.6 477.1 358.6 APPENDIX A TABLE 2: RESIDENTIALLY DESIGNATED SITES Site Estimate of Status Parcel Area Buildable of (Acres) Acreage Site Haywood Expansion 9.0 7.3 Under Construction Beeco 50.0 28.0 In Process Big Canyon Area 10 15.0 11.57 In Process Castaways 60.0 34.8 In Process Eastbluff Remnant 8.0 0 Committed Fifth Avenue Parcels 35.0 28.0 Non-committed Ford Aero 114.0 68.0 Committed Freeway Reservation East 25.00 20.0 Non-committed Harbor Point 10.6 6.89 Under Construction Newport Center Block 800 7.0 5.6 Non-committed Floating 18.5 14.8 Non-committed Sea Island 29.0 20.31 Under Construction Newporter North 88.0 58.24 Non-committed North Ford 37.5 28.20 Non-committed Westbay 71.0 33.84 Non-committed 125 I APPENDIX A TABLE 3: NON-RESIDENTIALLY DESIGNATED PARCELS Site Estimate of Status Parcel Area Buildable of (Acres) Acreage Site Caltrans East 22.0 0 Committed Caltrans West 17.0 0 Committed Castaways 5.0 4.0 In Process Deane Property 4.5 4.05 Committed Emkay 20.00 18.00 4 Committed 16 Non-committed Ford Aero 18.6 18.6 Committed Jamboree/MacArthur 2.0 1.8 Non-committed Koll Center 34.7 31.23 Committed courthouse 7.8 7.02 Committed Mouth of Big Canyon 48.5 0 Committed Newport Center Block 600 10.0 9.0 Non-committed Block 800 10.7 9.63 Under Construction Civic Plaza 21.2 19.08 Under Construction Corporate Plaza 14.8 13.32 Committed Corporate Plaza West 10.0 9.0 Non-committed North Ford 54.6 49.14 Non-committed San Diego Creek North 12.0 10.8 Non-committed San Diego Creek South 47.0 42.3 Non-committed 126 APPENDIX B COMPLIANCE CHECKLIST The following document lists specific provisions of Section 65580-65889 of the Government Code (Housing Element) and references there to page numbers within this element which address each provision. This has been done to assist the reader in locating specific policies and discussions as they relate to the state law. GOVERNMENT CODE HOUSING ELEMENT SECTION NUMBER PROVISION REFERENCE Page 65583(a) (1) -Population, employment trends, and projections 6-16 65583(a) (2) -Household characteristics 16-21 65583(a) (3) -Inventory of suitable residential sites 49-52 65583(a) (4) -Analysis of governmental constraints 90-94 65583 (a) (5) -Analysis of non-governmental constraints 84-88,94 65583 (a) (6) -Analysis of special housing needs 20-21 65583(a) (7) -Opportunities for energy conservation 52-53 65583(b) -Community goals, policies 95-113 -Quantified objectives 113-117 65583(c) -Five year housing program 117-121 65583(c) (1) -Identify sites 97-115 Objectives 3, 12 65583(c) (2) -Assistance for low- and 97-115 moderate-income households Objective 6, 7, 11 65583(c) (3) -Remove government constraints 97-115 Objective 1, 2, 4, 8 127 GOVERNMENT CODE HOUSING ELEMENT SECTION NUMBER PROVISION REFERENCE Page 65583(c) (4) -Conserve and improve existing 107-109 affordable housing Objective 9 65583(c) (5) -Promote equal housing opportunities 109-110 Objective 10 -Identification of responsible 97-115 parties (Implementation Plan of All Objectives) -Public participa pr ocess rocess Introduction 2 65588(a) -Housing Element update and review Introduction 3 112-113 - objective 13 128 APPENDIX C GLOSSARY OF PROGRAMS Brief explanations and background information on several programs referred to in Part IV of this Housing Element are provided below. 1. COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM The Community Development Block Grant Program was introduced in Title I of the Housing and Community Development Act of 1974. The program replaced several "categorical" grant programs which allowed cities and counties to apply for funding for district purposes on a case-by-case basis. The "block grant" approach allocates funds for a variety of activities which are packaged into community development programs at the local level. Program Purpose The purpose of the CDBG Program is described in the following legislative objectives: - To support realistic and attainable strategies for expanding low- and moderate-income housing opportunities; - To promote deconcentration of lower-income housing; - To promote more rational land use; - To provide increased economic opportunities for low- and moderate-income persons; and - To correct deficiencies in public facilities which affect the public health or safety, especially of low- and moderate-income persons. Application Process: Communities with populations over 50,000 are "entitlement" communities, and receive an allocation of CDBG funds on the basis of population. An application must be submitted to the Department of Housing and Urban Development, usually in June or July preceding the fiscal year which begins October 1. The application must contain an assessment of housing and community development needs and a comprehensive, three-year strategy to address needs identified. A Housing Assistance Plan must also be included, which assesses housing needs of lower-income households and housing conditions within the community, and sets forth a three-year Housing Assistance Plan which describes the types of housing programs needed to address needs identified. +' 129 Eligible Activities: A summary of activities eligible for CDBG funding is provided below: - Acquisition of real property that is blighted or deteriorated; appropriate for rehabilitation; appropriate for historic preservation; or suitable for public uses. - Acquisition, construction, or rehabilitation of public works or facilities, including neighborhood facilities, senior centers, historic properties, utilities, streets, street lights, water and sewer facilities, etc. - Code enforcement. - Clearance, demolition, removal and rehabilitation of buildings and improvements, including financing rehabilitation of privately owned properties. - Removal of architectural barriers which restrict mobility of the elderly or handicapped. - Payments for loss of rental income. - Disposition or retention of acquired real property. - Provision of public services (in special circumstances only) . - Relocation payments. - Cost of preparing CDBG applications. - Payment of costs in administration of the CDBG program. - Certain economic development activities. - Grants to private nonprofit community development organizations and small business investment companies to undertake community development efforts. 2. TAX-EXEMPT MORTGAGE REVENUE BONDS Tax-exempt mortgage revenue bonds are a relatively new source of financing for housing. The enabling legislation for the issuance of mortgage revenue bonds in California was passed in 1973. Since the passage of Proposition 13 and curtailments on the use of general obligation bonds, the use of tax-exempt housing bonds in California has escalated. Concerns regarding oversaturation of the bond market have arisen in California as well as across the nation. Revised state and federal policies on the use of housing bonds are presently evolving. In general, greater restrictions will be placed on the use of tax-exempt housing bonds to ensure their use in the public interest. In short, housing bond programs must be targetted to 130 households in need of housing assistance, and, in some circumstances, to neighborhoods with greatest housing needs. Tax-exempt mortgage revenue bonds are generally attractive to investors because of the tax-exempt interest paid on long-term rates. Although housing bonds generally pay lower interest yields, a 7% to 9% tax-exempt return can. compete favorably with a 12% to 15% return which is taxed at a high level. Before a municipal tax-exempt bond issuance can be made, legal authorization and a legal opinion on the specific use of the bonds is necessary. When the municipality has issued the bonds, private sector participants use the proceeds to make mortgages to program participants. Mortgage payments are then collected to pay off the bonds. There is typically a 1% interest override in the bond interest rate; this means that if the bond is issued at 8%, the mortgage rate is 9%. New federal regulations on the Mortgage Subsidy Bond Act of 1980 will determine the viability of using tax-exempt bonds in Newport Beach. These regulations are expected to restrict use of the bonds to first-time homebuyers, set limits on maximum housing unit sales prices, restrict assumability of mortgages, and require that a percentage of bonds be used only in targetted areas. In addition, a ceiling limit on the amount of bonds issued in each state has been imposed. The California allocation then will be dived between state and local programs. In its last bond issuance, Orange County offered all cities in the county the opportunity for participation. This is a possible avenue of pursuit for Newport Beach. A sunset provision within new federal legislation prohibits the issuance of tax-exempt, single-family housing bonds after 1983. Therefore, this program option must be pursued in a timely manner. i31 f City Council Meeting November 24, 1980 Agenda Item No . G-2 CITY OF NEWPORT BEACH TO : City Council FROM: Planning Department SUBJECT: Selection of a consultant to assist City Staff in the preparation of a revised Housing Element, and the necessary environmental documentation , of the General ' Plan for the City of Newport Beach Suggested Action If desired , authorize the Mayor and City Clerk to enter into an agreement with Connerly and Associates , Inc . to prepare a revised Housing Element of the General Plan , and necessary environmental documentation , for the City of Newport Beach . Background During September of this year, the State approved AB2853 ( Roos ) . This bill amends Section 65302 of Chapter 3, Division 1 , Title 7 , of the Government Code which relates to local planning concerning General Plans , and more specifically , the contents of housing elements . This legislation also adds Article l'O . 6 , commencing with Section 65580 . This Article places the substantive provisions of the 1977 Housing Element Guidelines prepared by the California Department of Housing and Community Development in State statute . Therefore housing elements will be evaluated according to the language in the statute rather than by what is contained in the 1977 HCD Guidelines . The City of Newport Beach Housing Element was adopted on February 11 , 1974 under the General Plan Provisions established by State statute in the late 1960 ' s . Under the newly-adopted statutes , local govern- ments are required to bring their Housing Elements into conformance with the provisions of Article 10.6 by October 1 , 1981 . In view of the pending October 1 , 1981 deadline , Staff was directed to seek technical assistance to prepare a revised Housing Element. Staff contacted the following firms and asked for bids on the project: 1 ) Connerly and Associates - Sacramento 2 ) Gruen , Gruen & Associates - San Francisco 3) William C. Lawrence Company - Irvine 4) Phillips Brandt Reddick - Irvine 5 Jack Raub Company - Costa Mesa 6) Larry Seeman & Associates - Newport Beach 7 ) EDAW , Inc. - Newport Beach 8) The Planning Center - Newport Beach 9) WESTEC Services , Inc . - Santa Ana r r TO: City Council - 2. Proposals were developed by Phillips , Brandt, Reddick and Torres , Diaz , Castenada Planning; Connerly and Associates ; Gruen , Gruen and Associates ; and William C . Lawrence Company . Staff has reviewed the proposals and held interviews with consult- ing firms who submitted bids . Staff recommends the selection of Connerly and Associates for this project. The proposal has a total budget of $56 , 233. 00 which includes $19 ,233.00 for preparation of the Environmental Documentation . Patricia A. Butler will prepare the EIR as a Subconsultant to Connerly and Associates . Attached are copies of the contract and proposal for Housing Element services . Respectfully submitted, PLANNING DEPARTMENT JAMES D. HEWICKER, Director Q/ by ( rCRAlT L Senio CTB/kk Attachments for City Council only • AGREEMENT THIS AGREEMENT is made and entered into on this day of November 1980, by and between the CITY OF NEWPORT BEACH, a municipal .corporation, hereinafter referred to as "CITY", and CONNERLY AND ASSOCIATES, INC.,•hereinafter referred to as "CONSULTANT". W I T N E S SET H WHEREAS, the CITY has determined that assistance to City Staff i5 required to q prepare a revised Housing Element of the Newport Beach General Plan in a timely manner; and WHEREAS, CONSULTANT has submitted to CITY a 'proposal to prepare said revised Housing Element of the Newport•Beach General Plan; N • and WHEREAS, CITY desire's to accept said proposal, NOW, THEREFORE, in consideration of the 'foregoing, the parties hereto agree as follows: 1. GENERAL CONSULTANT agrees to prepare the subject revised Housing Element of the Newport Beach General Plan in accordance with the .requirements set forth in Paragraph 2 of this' Agreement. CITY agrees a to remit to CONSULTANT the amounts• set forth in Paragraph 3 of this Agreement i.n accordance with the terms and conditions set forth in a this document. 2. SCOPE OF WORK The subject revised Housing Element of the Newport Beach General Plan will be prepared in accordance with the CONSULTANT'S proposal •dated November 18, 1980, and the Subconsultant's proposal dated November 15, 1980, which are attached -to this Agreement, marked as Exhibit "A" and by reference incorporated herein at this point as if fully set forth. ' f 2 3. BILLING AND PAYMENT CONSULTANT shall be paid under this Agreement on a time and material basisiand in no event shall the maximum amount of this Agreement exceed Fifty-Six Thousand Two Hundred and Thirty- three Dollars ($56,233.00). Partial payments shall be made by CITY to CONSULTANT upon CONSULTANT'S presentation of statements verifying the time anA material costs incurred by it in connection with this Agreement. 4. FAITHFUL PERFORMANCE CONSULTANT shall use diligent efforts to complete this contract as expeditiously as possible and properly timed to coincide with established Planning Commission and City Council agenda dead- lines. The subject revised Housing Element of the Newport Beach General Plan must meet the approval of City staff. S. TERMINATION This Agreement is subject to termination by the CITY at any 4 time upon serving written notice to CONSULTANT. The CITY shall thereafter be liable to CONSULTANT only for fees and costs incurred as of the date CONSULTANT receives such notice of termination. IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date and year first above written. APPROVED AS TO FORM CITY OF NEWPORT BEACH ss stant C ty ttorney By rector Planning Department CITY CONNERLY AND ASSOCIATES, INC. By CONSULTANT II PROPOSAL FOR HOUSING ELEMENT SERVICES November 18, 1980 EXHIBIT "A" , • 0 OBJECTIVE The objective is to prepare and submit to the City *of Newport Beach by July 6, 1981 , a Final Revised Housing Element which accurately assesses housing needs in the City, sets forth a housing program that is both compatible with related local policies , and effective in addressing identified needs , satisfies the requirements of AB 2853, meets with the approval of the Newport Beach City Council and Planning Commission, and is internally consistent with other adopted elements of the General Plan , I'. SCOPE OF SERVICES The consultant proposes and agrees to provide the following services to achieve the objective stated above: A. The consultant will design a public participation process that en- sures adequate involvement of all economic segments of the community in the development of a revised Housing Element. B. The consultant will comprehensively analyze population and housing trends in the City of Newport Beach through use of existing date and original research , where necessary. C . The consultant will evaluate the ability of the City 's housing stock and other housing resources to adequately meet housing needs of all economic segments of the community. D. The consultant will evaluate all market, regulatory, and environ- mental factors which affect the cost, timing, and quanity of housing productioniin the City . E. The consultant will work with the City to select a housing strategy which addresses unmet housing needs identified in the Newport Beach community. F. The consultant will be responsible for preparation of the environ- mental documentation necessary for environmental assessment of the Housing Element so as to comply with the requirements of the Cali - fornia Environmental Quality Act. G. The consultant will submit a draft revised Housing Element to the California Department of Housing and Community Development and co- ordinate its review with that Department. H. The consultant will 'arrange, provide, and be responsible for all support services required to prepare the Ho-using Element. 'y r -2- ' II . PROJECT METHODOLOGY The services identified in Section I of this proposal will be under- taken in accordance with the following methodology described by the tasks to be performed . A. Task One : Public Participation The consultant will design a public participation process that ensures adequate involvement of all economic segments of the community in the development of a revised Housing Element . 1 ) Submit proposed public participation process for City approval . 2) Conduct public participation process/Community forum necessary for preparing the revised Housing Element. 3) Attend all public hearings related to the development and adoption of a revised Housing Element . Budget: 1 ) Principal Consultant $2,800 .00 70 hours @ $40 2) Senior Consultant 720 .00 24 hours @$30 3) Associate Consultant 1 ,200 .00 48 hours @ $25 Subtotal . . . $4, 720. 00 B . Task Two : Community Housing Market Analysis The consultant will comprehensively analyze population and housing trends in the City of Newport Beach through use of existing data and original research , where necessary . _ 1 ) Analysis will be completed for the community as a whole , as well as for statistical areas within the community, and will include but not be limited to : - Population trends and growth patterns . - A socio-economic profile of community households , including household formation trends and housing preferences . - Economicstrends and projections for the area . - An inventory of the housing stock , including housing types , prices , vacancy rate , locations , and housing conditions . 2) The consultant will identify and initially confer with repre- sentatives of principal participants in the Housing Element process ( including each member of the City Council and Planning Commission) . 4 • -3- A. 3) The consultant will provide a draft Community Market Analysis for City review. Budget: 1 ) Principal Consultant $ 640.00 16 hours @ $40 2) Senior Consultant 960 .00 32 hours @ $30 3) Associate Consultant 5,10o.00 204 hours @ $25 4 Subtotal . . . $6, 700.00 C. Task Three: Assessment of Housing Needs in Newpore t Beach The consultant will evaluate the ability of the city ' s ' housing stow and other housing resources to adequately meet housing needs of all ' a • economic segments of the community. °k 1 ) Central in this work element will be the consultant ' s analysis of housing affordability in Newport Beach , utilizing recent ; y studies on lending patterns in the Los Angeles and Orange County i area. .The consultant has found that market trends have altered + housing investment patterns , and have Justified greater expen- ditures of household resources for housing. Thus , the tradi- tional rules of affordability in housing must be carefully examined in any application to a housing market in Southern California . The consultant will carefully consider this issue in the assessment of housing needs . 2) The housing needs of non-market rate households within the City will be comprehensively analyzed. Analysis will include an evaluation of the manner in which the present housing market in Newport Beach provides housing for this segment of the community, and the extent to which such households are currently underhoused. 3) The consultant will evaluate the SCAG Regional Fair Share Allo- cation Model as it has been applied to Newport Beach . Alternate methodologies and data sources will be explored in response to any inaccuracies and inequities found in the SCAG plan. 4) The consultant will provide a draft assessment of housing needs for City review. Budget : 1 ) Principal Consultant $1 ,280,00 32 hours @ $40 2) Senior Consultant 480.00 16 hours @ $30 3) Associate Consultant _ 6 ,800.00 272 hours @ $25 Subtotal . . . $8,560 .00 D. Task. Four: Assessing Market Constraints • -4- • The consultant will evaluate all market, regulatory , and environ- mental factors which affect the cost, timing, and quantity of housing production in the City. 1 ) An analysis shall be performed to identify and assess the impact of factors - governmental and market-related - which impede the effective functioning of the housing market. Special considera- tion shall be given to those constraints which directly relate to the production and delivery of housing affordable to those) low- and moderate-income households to be served by the Newport Beach housing market. I 2) The consultant will )provide a draft copy of the Market Constrd•ints for City review. Budget: 1 ) Principal Consultant $ 960.00 24 hours @ $40 �- 2) Senior Consultant 1 ,320.00 44 hours @ $30 3) Associate Consultant 1 ,778. 00 ! ± 71 hours @ $25 .t Subtotal . . . $4 ,058.00 E. Task Five: Formulation of a Housing Program The consultant will work with the City to select a housing strategy which addresses unmet housing needs identified in the Newport Beach community. 1 ) Based on previous analysis , the consultant will set forth several alternative housing strategies for the City ' s consideration , de- tailing impacts a•nd implications of each approach . Based on City input, the consultant will formulate both short-range ( two-year) and long-range (five-year) implementation strategies for the . selected Newport- Beach Housing Program, including objectives to be accomplished, financing to be utilized, time frames , and parties responsible for implementation . 2) The consultant will provide a copy of the Housing Program section for City review. >• Budget: 1 ) Principal Consultant $1 , 920 .00 48 hours @ $40 2) Senior Consultant 2 ,400 ,•00 80 hours @ $30 3) Associate Consultant 5 ,500 .00 220 hours @ $25 Subtotal . . . $9 ,820 .00 F. Task Six: Environmental Documentation The consultant will be responsible for preparation of the environ- mental documentation necessary for environmental assessment of the Housing Element so as to comply with the requirements of the Cali- fornia Environmental Quality Act. 1 ) Coordinate the preparation of the environmental documentation for the Housing Element with the environmental consultant. (The scope of services for the environmental documentation is provided as Attachment A to the project methodology . ) Budget: 1 ) Principal Consultant $ 600 .00 15 hours @ $40 2) Senior Consultant 900.00 30 hours @ $30 3) Sub-Consu-ltant 17 ,733.00 Subtotal . . . $19,233.00 G. Task Seven : Coordination of State Review The consultant will be responsible for coordination of state review of a draft revised housing element by the California Department of ti Housing and Community Development. 1 ) Submit and coordinate the review of the draft revised housing element with the California Department of Housing and Community Development. 2) Consider State Findings prior to adoption, advise the City of their importance and prepare responses if appropriate . ) Principal Budget: 1 al Consultant $ 640.00 9 p 16 hours @ $40 2) Senior Consultant 240 .00 8 hours @ $30 3) Associate Consultant 600 .00 24 hours @ $25 Subtotal . . . $ 1 ,480 .00 H. Task Eight: Support Services The consultant Will arrange , provide, and be responsible for all support services required to prepare the Housing Element. PP P p 9 1 ) The consultant will arrange and provide for all travel and lodging required by the consultant. 2 The consultant will be o res sible for all telephone communi- cat ion initiated by the consultant. 3) The consultant will provide the city with one reproducible original Housing Element and forty-nine copies . q 00 6 Budget: 1 ) Travel and Lodging $1 , 200 .00 2) ifelephone 300 . 00 3) . Printing (50 copies 162 .00 @ $3. 25 each ) Subtotal . . . $1 , 662 .00 TOTAL Budget $56 ,233.00 , 1 Q S ATTACHMENT "A" Patricia A. Butler Environmental Planner - 1223 Rutland Road, Newport Beach, CA 92660 (714) 548- 0062 505 LomaSanta Fe Drive,SolanaBeach, CA92075(714)481-5501 November 16, 1980 Mr. Bob Lenard ( Advance Planning Administrator Planning Department City of Newport Beach 3300 Newport Boulevard Newitort Beach, Ca. 92663 Subject: Environmental Impact Report (EIR) for the Revised Housing Element of the Newport Beach General Plan - Proposal Dear Mr. Lenard: In response to our phone conversation on Thursday, November 13, 1980 I am pleased to submit this proposal for provision of professional services ne- cessary to conduct an environmental assessment for the revised Housing Ele- ment and complete the required EIR. As you requested, I contacted Mr. Ward Connerly of Connerly and Associates on Friday, November 14, 1980 to discuss Elemur enteandaEIR. Mr. Connerly and Iofeelethattwen of can formulhe ateeanHexcellent project team and would like -to assure you of our initiated interest in work- ing together on this important planning project. Based on tily conversation with Mr. Connerly regarding Connerly and Associates' proposed approach revising gest ave p edthe rition obasic worktasks and cost esimate for theEIR shownnAttach- ht A. Adtt ed in ltic l have e can svide tescope ofenvonmentaserves fnt or about $17,73000. thesetaksand level of effort are responsive to completion of the scope of work for on EIR for the revised Housing Element as briefly described below. Scone of Work As I indicated to City staff previously, the State EIR Guidelines specifically define the need for an element of the General Plan to address all content requirements for an Environmentallmpact Report. It is proposed that this requirement can best be met through preparation of a separate environmental document accompanying the revised Housing Element. Moreover, I recommend preparation of a programmatic document such as a "program EIR" as described in Section 15069.8 of the State EIR Guidelines. The proposed approach will Allow thorough attention to policy and program issues to be discussed in the Element, and evaluation of specific project impacts to the level of detail available in the Draft Housing Element. Most importantly, the proposed ,` • -8- • u Mr. Bob Lenard November 15, 1980 page two program or master EIR provides the most efficient method of allowing subse- quent supplementation of the EIR for specific projects to be implemented under t the program presented in the revised Housing Element. The primary feature of the proposed approach is to conduct a three-tiered environmental impact/analysis which will present an evaluation of the poten- tial environmental and community impacts of the policy, program and potential- ly specific projects to be described in the revised Housing Element. Each area of environmental concern (i.e. land use, population and housing, traffic) will be addressed as follows: 1) Evaluate the consistency of the proposed housing policy and its effects with other relevant General Plan and City policies, and applicable county or state policies (i.e. potential land use im- pacts relative to the Land Use and Noise Elements and Local Coastal Plan; population and housing impacts relative to the Residential Growth Element). 2) Examine potential general environmental, and community impacts of implementation of the program described in the Draft revised Housing Element. 3) Analyze potential environmental and community impacts of speci- fic projects within the housing program to the extent that spe- cific data regarding such projects are presented in the Draft revised Housing Element. The format of the analysis will be conducive to future supplementation of the EFR, as necessary, for foeused assessments of future specific projects to be implemented as part of the proposed housing program. The contents ff the environmental document will comply with the content requirements for an EIR as described in the State, EIR Guidelines and according to the City's pro- cedures for compliance with CEQA. Moreover, I plan to fully utilize the proposed initial public involvement meetings to identify critical environ- mental issues and major areas of environmental concern early in the formu- lation of the scope of.the analysis. Information gained from the public involvement program and from responses to the Notice of Preparation will assist in the design of specific treatment of each area of environmental concern, alternatives, and growth-inducing and energy-related impacts. A pre- liminary identification of potentially significant issues indicates that primary attention will likely be devoted to the areas of land use, population and demography, housing, economics and community impacts. Other major areas of analysis will include traffic and circulation, air quality, noise and aesthetics. Secondary environmental issues will likely be water quality, bi- ology, geology and soils, and historic and cultural resources. Mr. Bob Lenard November 15, 1980 page three Schedule_ and Cost It is recommended that the specific schedule for preparation of the EIR be t discussed upon negotiations with Connerly and Associates and City staff. However, for the purpose of this proposal, I have identified the following general scheduling needs: 1) Prepare the Screen Check EIR - Six to eight weeks 2 Review Screen Check EIR with staff and prepare Draft ,EIR - Three to four weeks 3 Public review of Draft EIR and public hearings - Four to eight weeks 4 Revise Draft EIR, prepare Final EIR - Two to four weeks This schedule assumes that 1 Will be involved in preliminary environmental tasks prior to actual preparation of the Screen Check document, such as issuance of the Notice of Preparation, scoping the environmental analyses and participation intthe initial public involvement meetings. However, it is estimated that data from the revised Housing Element draft document should become available for the bnvironmenpal analysis at least nine to ten weeks prior to the planned submittal date of the Draft revised-lHousing Element and Draft EIR. As project manager and principal investigator for the EIR, I will attend all meetings shown under the public involvement task in Attachment A, and will conduct the majority of the technical analyses. I will utilize other pri- mary technical support staff as necessary and subject to the approval of the City's Environmental Coordinator as necessary. The cost estimate shown in Attachment A is proposed as a time and materials estimate not to exceed the amount of Seventeen Thousand Seven Hundred and , Thirty Dollars ($17,730.00) for the proposed scope of services. The terms of thfayproposai may be considered valid for acceptance up to six months from toddy's date. Any additional services required by the City or Connerly and Associates are offered on a time and materials basis according to the Stan- dard hourly rate schedule shown in Attachment A. b I look forward to providing the City of Newport Beach with these environmental services, My association with Connerly and Associates promises to be parti- cularly productive for the purpose of preparing the revised Housing Element of the Newport Beach General Plan and accompanying EIR. If you have any questions regarding the contents of this proposal , ,please call me at (714) 232-5980. Yo truly, Patricia A. Butler Ehirinnmental planner -10- Mr. Bob Lenard November 15, 1980 ATTACHMENT A Basic Task Description and Cost Estimate EIR for Revised Housing Element Newport Beach General Plan TASK HOURS COST 1. POparation of notices - Notice of Preparation, including mailing list - Notice of Completion - Notice of Determination - Assist Connerly & Assoc. with preparation of notices for public involvement mtgs. as necessary Total Cost Task 1 20 700 2. Public Involvement Program Preparation for and attendance at: - Three (3) public involvement mtgs. - One (1) CEQAC mtg. - Four (4) public hearings Total Cost Task 2 60 2 100 3. Preparation of Screen Check EIR Professional and technical labor 210 7,350 w - Production support labor 56 1,232 (i.e. production typing, graphics) - Project management and coordination with 48 1,680 Connerly & Assoc. and City staff Total Labor Task 3 314 $10,262 Misc. reimbursable expenses 150 (i.e. xerox, data purch.) Print five (5) copies of Screen Check EIR 35 for staff review, incl. binding Total Non Labor Task 3 $ 185 Total Cost Task 3 $10,447 4. Preparation of Draft EIR - Revise Screen Check as necessary 40 1 ,400 - Production of reproducible master 8 160 of the Draft EIR Total Labor Task 4 , 46 $ 19560 h Mr. Bob Lenard November 15, 1980 ATTACHMENT A (continued) TASK HOURS COST R 4. Preparation of Dra t 'f EIR cont d. - Estimated cost to print fifty (50) copies $ 760 of the Draft EIR Total Non Labor Task 4 $ 750 Total Cost Task'4 2,310 S. Preparation of Final EIR - Respond to comments from public review period, 48 $ 19680 revise Draft EIR as necessary, prepare addendum (Note: estimated effort) - Production of reproducible master of 8 160 the Final EIR Total Cost Task 5, l 840 6. Miscellaneous - Total clerical typing 48 336 (i.e. for notices.,,presentation materials) TOTAL PROFESSIONAL/TECHNICAL LABOR 426 $140910 TOTAL PRODUCTION SUPPORT LABOR 120 $ 19888 TOTAL NON LABOR $ 935 TOTAL ESTIMATED COST $1727 33 Standard Hourly Rate Schedule Professional/Technical (average) $ 35 Project Manager $ 35 Production typing $ 20 Graphics $ P7 Clerical typing $ 7 �+l • -12- III . TIME"SCHEDULE OF ACTIVITIES The schedule of activities is based on the actual starting date and may require modification due to changes in starting date . 1 ) Selection of Consultant. October 29 , 1980 2) Contract Execution . November 28, 1980 3) Estimated Date of Work Start. November 28, 1980 Task One : Public Participation ? 14) Finalize Public Participation Process December 1 , 1980 and Submit for City. Approval . 5) Conduct Public Participation Process . December 1 , 1980- June 10 , 1981 6) Conduct Public Hearings on Draft March 9 , 1981 - Revised Housing Element. May 6, 1981 Task Two : Community Housing Market Analysis 7) Assemble and review all existing date November 28, 1980- regarding community profile, housing December 1 , 1980 stock condition, population charac- teristics , etc . , and identify needs for original research . 8) Identify and initially confer with November 28, 1980- representatives of principal par- December 17 , 1980 ticipants on the Housing Element process (including each member of City Council and City Planning Commission ) . 9) Initiate original research . December 1 , 1980- December 17 , 1980 )0) Submit draft community market February 6, 1981 analysis for City review . Task Three: Assessment of Housing Need in Newport Beach 11 ) Determine existing and projected November 24 , 1980- housjng needs , incoFporating the December' 10, 1980 review and anl.ysis of the SCAG Regional Fair Share Allocation Model . 12) Identify and analyze special housing January 9, 1981 - needs . January 30, 1981 13) Complete assessment of housing need, January 9, 1981 - incorporating acceptable community February 6 , 1981 staridards of affordability, and re- late to needs identified in Activity 11 . Y � Y t� • -13- 14) Submit draft assessment of housing needs February 6, 1981 for City review. Task Four: Assessing Market Constraints 15) Begin Builder/Developer Surveys . December 15, 1980- December 260 1980 16) Identify and analyze governmental December 1 , 1'980- constaints on the housing delivery February 6, 1981 system, 17) Identify and analyze market constraints December 1 , 1980- on the housing delivery system. February 6, 1981 18) Submission of market constraints February 200 1981 section for City review. Task Five: Formulation of a Housing Program 19) Identify opportunities for energy December 5, 1980- conservation. January 30, 1981 20) Formulate and quantify goals , January 30 , 1981- objectives , and policies . February 26, 1981 21 ) Develop recommended housing January 30, 1981- strategy and programs . March 3, 1981 22) Submission of housing prggram February 7, 1981- section for City review. March 2, 1981 Task Six: Environmental Documentation 23) Prepare Environmental Documentation March 2 , 1981- for Environmental Assessment and May 229 1981 State Clearance. Task Seven: Coordination of State Review 24) Finalize Draft Revised Housing March 9, 1981- + Element and Submit for State June 1'0, 1.981 Review. 25) Consider Suggested Revisions to May 7, 1981 - Draft Document and Prepare Final June 10, 1981 Revised Housing Element. 26) Consider State Findings Prior to June 10, 1981- Adoption. July 6 , 1981 27) Adopt Final Revised Housing Element. About July 6 , 1981 Summary of Time Frame --- October 29, 1980-July 6, 1981 '�' • • � . -14- IV . FISCAL A. Professional Services Budget Summary Task One : Public Participation 1 ) Principal Consultant/70 hours @ $40 $ 2 ,800 .00 2) Senior Consultantt24 hours @ $30 720 . 00 3) Associate Consultant/48 hours @ $25 1 , 200 . 00 Subtotal . . . $ 4, 720. 00 Task Two : Community Housing Market Analysis 1 ) Principal Consultant/16 hours @ $40 $ 640 . 00 2) Senior Consultant/32 hours @ $30 960. 00 3) Associate Consultant/204 hours @ $25 51100 . 00 Subtotal . . . $ 6 ,700 .00 1 Task Three: Assessment of Housing Needs 1 ) Principal Consultant/32 hours @ $40 $ 1 , 280 .00 2) Senior Consultant/16 hours @ $30 480. 00 3) Associate, Consultant/272 hours @ $25 6 ,800 .00 Subtotal . . . $ 8 ,`560 . 00 Task Four: Assessment of Market and Public Constraints 1 ) Principal Consultant/24 hours @ $40 960 . 00 2) Senior Consultant/44 hours @ $30 1 , 320 .00 3) Associate Consultant/71 hours @ $25 1 . 778.00 Subtotal . . . $ 4 , 058 . 00 Task Five: Formulation of a Housing- Program 1 ) Principal Consu ltant/48 hours @ $40 $ ls920 .00 2) Senior Consultant/80 hours @ $30 2, 400 .00 3) Associate Consultant/220 hours @ $25 5, 500 . 00 Subtotal . . . $ 9, 820 .00 Task Six: Environmental Documentation 1 ) Principal Consultant/15 hours @ $40 $ 600 .00 2) Senior Consultant/30 hours @ $30 900.00 3) Sub-Consultant 179733. 00 Subtotal . . . $19 ,233.00 Task Seven: Coordination of State Review 1 ) Principal Consultant/16 hours @ $40 $ 640.00 2) Senior Consultant/8 hours @ $30 240.00 3) Asso@iate Consultant/24 hours @ $25 600.00 Subtotal . . , $ 1 ,480 .00 Task Eight: Support Services a . Travel and Lodging $ ls200 ,OO b. Telephone 300 .00 c. Printing 162.00 (50 copies @ $3.25 each) Subtotal . . . $ 1 , 662 .00 Housing Element Budget 37 ,000.00 Environmental Documentation Budget 19,233.00 TOTAL Budget $56,233 .00 * This is a "Not to Exceed" proposal . As a result, the consultant will be compensated only for actual services rendered, in accordance with a schedule of fees . If existing data - that is reliable and current is available, and/or if the City participates in the data collection process, the need for consultant services with regard to such activi ties may be reduced. Budget savings may also result in other areas as well . B. Payment ,for Additional Services Reo.uested by City Should the City require additional services beyond those specified in the contract with the consultant, during the term of such con- tract, said services shall be furnished pursuant to a separate agreement mutually negotiated between City and consultant. Con- sultant agrees to provide such service in accordance with the Schedule of Fees contained i.n the original contract. �p • -16- • C. Schedule of Fees Principal Consultant $40/hour Senior Consultant $30/hour Associate Consultant $25/hour Assistant Consultant $20/hour Research Analyst $20/hour f Secretary $12/hour D. Method of Payment The consultant shall invoice City on a monthly basis for actual services rendered during the preceding month . a ram OCT2 7' 1980.�o_ i, SANTIAGO LIBRARY SYSTEM ; A LIBRARY COOPERATIVE !� J` 431 CITY DRIVE SOUTH ORANGE,CALIFORNIA 92868 f7141e34-7137 �r HOW WELL DO YOU KNOW THE COMMUNITY YOU SERVE? -What is the population density in Orange County by age, sex, income, ethnicity - broken down by the county as a whole, cities and census tracts? -How does Orange County's unemployment rate compare with other California areas? -How many Orange Countians are employed in electronics, finance, mining, restaurants, government - and over 100 other fields? -What is the organizational structure of specific cities in Orange County? -What will commuting problems be like in the '80's? Find the answer to these and hundreds of other questions essential to men and women in public service in a Population Profile just published by the Santiago Library System. This 462-page document provides data on the history, size, distribution and vital statistics of communities within the county as a whole, with individual sections on the cities and unincorporated areas which make up the Santiago Library System. SLS is a cooperative of some 50 public libraries in Orange County working to- gether to upgrade library resources and make them more readily available. Publication of the Population Profile is the first phase of a Community Analysis Project undertaken by SLS with a view of helping local libraries to meet the changing needs of the county's diverse communities. The document was compiled by Susan Luevano, SLS Community Services Librarian, who is also directing Orange County's four public library systems' Community Analysis Projects. Topographical features, transportation and communication patterns, commercial activities and recreational facilities are other characteristics documented in the study, which is based on the 1976 Special Census. The document will fill the gap for analytical and statistical data until the 1980 Census information is available in late 1981 or early 1982. MEMBERS ANAHEIM PUBLIC LIBRARY ORANGE COUNTY PUBLIC LIBRARY BUENA PARK LIBRARY DISTRICT ORANGE PUBLIC LIBRARY FULLERTON PUBLIC LIBRARY PLACENTIA LIBRARY DISTRICT YORSA LINDA LIBRARY DISTRICT SANTA ANA PUBLIC LIBRARY NEWPORT BEACH PUBLIC LIBRARY HUNTINGTON BEACH INFORMATION S:CULTURAL RESOURCE CENTER COMMUNITY PAGE 2 The volume will be made a part of the reference collections of all public libraries in the county. A limited number of copies are available for purchase. We believe you will find the Population Profile a valuable index to a better understanding of your community. To order your copy, at $13, (including shipping and handling) , please detach, fill out and mail the form below. '(/, eo '-t � Susan Gilroy SLS Executive Director Santiago Library System SG/alm ------------------------------------------------------------------------------ Santiago Library System Orange County Public Library Headquarters 431 City Drive South Orange, Calif. 92668 ATTN: Susan Luevano, Community Services Office Please send me copies @ $13. , of your Population Profile. Enclosed is my check for $ made payable to the Santiago Library System. Please send the Population Profile and forward an invoice to the below listed address (check) Name Organization Dept. Address City Zip Code Phone ( ) You may phone in your order to the SLS Community Services Office at (714)634-7091. ` I STATE OF CALIFORNIA EDMUND G.BROWN JR.,Governor DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT Division of Research and Policy Development Co 921 Tenth Street Sacramento, CA 95814 o °a (916) 445-6501 c p September 15, 1980 r� Q1 •,1 r�o�' ' Mr. Robert L. Wynn, City Manager ,. City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92663 Dear Mr. Wynn: The Department of Housing and Community Development has reviewed the City of Newport Beach's Housing Element adopted February 11, 1974 for conformity with General Code Section 65302(c) and the 1977 Housing Element Guidelines pursuant to a July 29, 1980 request from the Western Center on Law and Poverty. The Department is authorized by Section 50459 of the California State Health and Safety Code to review local housing elements for conformity with the requirements of Section 65302(c) of the Government Code and guidelines adopted pursuant thereto." The Department adopted revised regulations entitled, "Housing Element Guidelines," on November 17, 1977; the Guidelines set forth operative dates by which localities were required to adopt housing elements in conformity with the 1977 Guidelines. The operative date for the City of Newport Beach was July 1, 1979. Thus, the City of Newport Beach 's housing element has been reviewed in accordance with Section 65302(c) of the Government Code and the 1977 Housing Element Guidelines. Section 65302(c) of the Government Code requires that the housing element contain "standards and plans for the improvement of housing and for the provision of adequate sites for housing" and is to make "adequate provision for the housing needs of all economic segments of the community. " The primary components of a housing element are: (1) an analysis of the housing problem, and (2) a description of housing programs which are being or will be implemented to address identified needs. In accordance with the Guidelines, we review the identification of the housing problem, including housing needs, market and govern- mental constraints. Secondly, we review the housing program component for the following elements : (a) adequate provision for • housing for all economic segments of the community; (b) preserving affordability; (c) standards and plans for adequate sites ; and (d) preserving housing and neighborhoods. Additionally, we assess the extent to which the housing program addresses categories of greatest need and contains commitments for implementation. Mr. Robert L. Wynn September 15, 1980 Page Two To summarize our findings provided below, the existing Newport Beach housing element does not "make adequate provision for all economic segments of the community" and does not provide "standards and plans for adequate sites for housing" as required by Section 65302(c) of the Government Code. Major deficiencies of the City's housing element involve an incomplete and out-of-date documentation and analysis of the housing problem, which should include an analysis of existing, prospective and fair share need, as well as an analysis of governmental constraints. Most significant, however, is the lack of a housing program to address a fair share of the City and region's housing needs and to make adequate provision for the housing needs of all economic segments of the community. Despite rapid employment and population growth in the community during the past decade, none of Newport Beach's residential growth has been affordable to low or moderate income households. The burden and responsibility for providing shelter opportunities to many of the low and moderate income wage workers employed in Newport Beach has thus been shifted to other communities in the region. I. ANALYSIS OF THE HOUSING PROBLEM AND HOUSING NEEDS Section 6438 of the Housing Element Guidelines sets forth those aspects of housing needs that must be identified in the housing element. A locality must consider the housing needs of households residing within its jurisdiction and the prospective need for (1) market-rate housing and, (2) a fair share allocation of the nonmarket-rate housing need within the general housing market area of which it is a part. The data contained in Newport Beach's housing element is out of date and incomplete. It does not adquately define the City's housing need as required by Section 6438. Appropriate housing needs data is available for Newport Beach from the Regional Housing Allocation Model developed by the Southern California Association of Governments (SCAG), and the 1976 Special Census conducted by the State Department of Finance. Other data regarding characteristics of the current housing supply should be available from City planning department studies and building department records, etc. Up-to-date housing cost information can be determined from the multiple listing services, local relators, and residential development managers. Of particular importance is the need for data and analysis indicating estimates of current population and households; projections of population and household growth over a five-year program period; income characteristics; ethnic characteristics; characteristics of the housing stock by type of unit, tenure, condition and age; current housing costs; recent employment growth and employment projections; analysis of current land use and zoning characteristics ; analysis •of currently vacant land and its development potential during the next five years ; affordability needs; rehabilitation needs; and identified special needs. Y Mr. Robert L. Wynn" September 15, 1980 Page Three Because local housing policies have regional as well as local impact, each locality shares with other localities in its general housing market area the collective responsibility for making adequate provision for the housing needs of all economic segments of the population and labor force (see Section 6418 of the Guidelines). Therefore, in analyzing housing need, a locality must address its fair share of nonmarket-rate households within the general market area, not just the housing need of the current resident population. Newport Beach's housing element does not include any assessment or recognition of the City's fair share housing need. The Southern California Association of Governments has identified a fair share need of approximately 3,100 households, the largest fair share figure identified for any municipality in Orange County. When added to existing affordability need of current households, the City's total adjusted fair share low income need is more than 6,500 households. While Newport Beach is not expected to accommodate this entire need in its housing program, all California communities are expected to adequately accommodate a reasonable share of the low and moderate income housing demand created by their population 's service needs and employment within their jurisdictions. By accepting this responsibility, cities such as Newport Beach will avoid overburdening other communities in the region which do not benefit from the assets of commercial and industrial development. With the current population of 65,300, the City of Newport Beach has increased its population by more than 32 percent since 1970. Further, by the City's own projections, its population is expected to grow by approximately 20,000 (31 percent) to reach a total of 85,000 persons by the time the City is fully developed. This population growth has created and will continue to create many low and moderate wage jobs to serve the needs of the City residents. In addition, a significant part of the City's economy relies on the recreation and tourist industries, which creates low and moderate wage jobs. Also, during the past decade, the City has experienced rapid development of the Newport Center and Knoll Center which have generated numerous retail trade and business service jobs. Although ,up-to-date employment data is not available for Newport Beach, information from the State Employment Development Department indicates that employment in Newport Beach grew from approximately 24,000 in July, 1970 to approximately 43,000 in July, 1977, an increase of more than 77 percent during a period of seven years. The City still has a considerable amount of commercially and industrially zoned undeveloped property, which will further increase Newport Beach's employment base as these tracts are developed. The City must bear responsibility for accommodating the housing needs of a reasonable portion of the existing and anticipated local low and moderate income labor force generated by its policies and actions in order not to impose this burden on neighboring communities. Population growth and job creation must be linked to one another and be brought into l Mr. Robert L. Wynn September 15, 1980 Page Four balance by the City. It cannot continue to create employment which "imports" low and moderate wage workers but "exports" the responsibility for housing them to other communities in the region. Other adverse regional effects of a jobs-housing imbalance in Newport Beach could include increased traffic congestion, air quality degradation, and energy consumption which result from excessive levels of commuting. II. MARKET AND GOVERNMENTAL CONSTRAINTS The Newport Beach housing element should include an analysis of those private market and public sector factors which operate to restrict housing opportunities for low and moderate income households (see Section 6444 of the Guidelines). The discussion of market constraints should include a housing cost analysis which examines the relative cost factors contributing to the sales price and rental cost of local housing. This information and analysis will help the City determine which local strategies and programs can be most effective in reducing the cost or increasing the supply of low and moderate income housing. Factors which should be analyzed are listed on page 50 of the Housing Element Manual, which has been sent to the City. Current estimates for these factors can be obtained from local realtors, developers, housing development managers, and bank appraisers. The City's housing element also lacks a discussion of governmental policies which constrain the development of housing and what steps the City can take to remove or minimize those barriers over which it has control. Governmental actions that should be considered include land controls, permit procedures, and fees (see Section 6446 of the Guidelines). Land use controls relate directly to a locality's . ability to provide adequate sites for housing.1/ Sites are adequate to the extent that they allow for the development of housing that is responsive to the needs of all economic segments of the community. An analysis of Newport Beach's Housing, Land Use, and Residential Growth Elements and its Subdivision Regulations and Zoning Map raises serious concerns about constraints preventing the development of affordable housing caused by the City's policies and regulations. Although the City had approximately 1,000 additional acres of residential land to be developed at the time of Newport Beach's General Plan adoption in 1974, the major thrust of the Plan's policies and programs (and subsequent General Plan and zoning amendments) has been to limit residential densities in new development. The housing element states: "It is the conscious intent of the City of Newport Beach, as stated in the Residential 1/Government Code Section 65302(c) requires that the housing element contain "standards and plans for. ..provision of adequate sites for housing." ' Mr. ' Robert L'. Wynn ' September 15, 1980 Page Five Growth Element, to limit the number of dwelling units which can be constructed, thereby limiting potential population." The preface to the Residential Growth Element notes that, "There are apparently no physical and economic constraints to residential growth within the limited range from the lowest feasible limit and the 'Trend-Growth' projection. The question is not 'What can we su ortV or 'What can we afford?' ie uest�ion is, What do we want? An policy #7 of tFe esi entia7Growth Elements states:"density of all future residential development shall be limited to the lowest feasible and reasonable density." By limiting the supply of new development, the City's policies have contributed to market pressures which increase the costs of the existing and new housing stock and prevent the provision of adequate sites to address the housing needs of all economic segments of the community. These types of policies, in the absence of any mitigating measures on the City's part, are inherently exclusionary and, therefore, incompatible with the spirit and letter of State housing and planning law. All residential tracts of any significant size in Newport Beach are designated as Planned Community (PC) on the Land Use Plan. Most of these sties have their densities designated at no more than 4 units per buildable acre. The General Plan's definition of "buildable acre further limits residential development densities below this level.2/ Thus, the actual average maximum allowable densities are likely to be three or fewer units per gross acre. Given the extremely high costs of land in Newport Beach, such low density restrictions assure that new development will be very costly--well beyond the reach of low and moderate income households. Other local constraints, such as fees, dedication- requirements, and permit processing requirements also increase the cost of new residen- tial development in Newport Beach. A study done by the Orange County Chapter of the California Building Industry Association found that "park in lieu" fees in Newport Beach exceed $3,000 per dwelling unit, the highest in Orange County. Street right-of-way dedication requirements and street paving with requirements tend to be excessive in relation to typical planning standards. Processing periods for development permits average 12 months, which also adds to the ultimate cost of new residential units. is definition excludes from the acreage used to calculate the ' total number of allowable residential units any land which: is to be used for street purposes, is requred to be dedicated for park purposes, has a slope greater than two-to-one, has sensitive environmental constraints. Mr. Robert L. Wynn September 15, 1980 Page Six Since the 1974 Housing, Land Use, and Residential Growth Elements were adopted, the City has restricted the supply of land on which multi-family rental dwellings could be developed. According to City staff, since 1974 none of the multiple family units that have been constructed (in structures of five or more units) are apartments. The only rentals developed since 1974 are approximately 100 new infill duplexes. III. HOUSING PROGRAMS Section 65302(c) of the Government Code requires the housing element "make adequate provision for the housing needs of all economic segments of the community. " The Guidelines interpret this requirement to mean the locality must demonstrate that it is undertaking a "good faith, diligent effort" to accomplish this goal through the development and implementation of a housing program. (See Section 6460 of the Guidelines. ) In general , the housing program should describe what a locality is doing and will do over the next five years to address identified housing needs. Housing programs are to focus on (a) adequate provision for the housing needs of all economic segments of the community; (b) preserving afford- ability; (c) standards and plans for adequate sites for low and moderate income housing; (d) accessibility, and (e) the preservation of housing and neighborhoods. The Guidelines call for a housing program to be described in the following terms: (1) Specific objectives to be accomplished (quantified, where possible); (2) actions which are being or will be untertaken; (3) source of financing or funding; (4) agencies with primary responsibility for implementing the plan; and (5) an implementation schedule. Assessed by these standards, we find the City of Newport Beach's existing housing element to be incomplete and inadequate. It does not contain programs to make adequate provision for the housing needs of all economic segments of the community. Since adoption of the 1974 General Plan, with one exception, there have been no programs implemented by the City to address existing or fair share afford- ability needs. The exception involves a 100-unit Section202/ Section 8 elderly rental development which will be constructed under the sponsorship of the Church of the Lutheran Master on one-half acre of the church's land. While this elderly development is commendable Mr. .' Robert L.. Wynn . .: September 15, 1980 Page Seven and will meet a need in the community, Newport Beach has made no effort to address its most important and significant need: provision of housing opportunities for non-elderly low and moderate income households who may be employed in the City. SCAG data indicates that low-income family households comprise 78 pecent of Newport Beach's adjusted fair share housing affordability need, while elderly households comprise 22 percent of this need. Clearly, non-elderly affordability needs must also be addressed in the City. While there are long-time residents in the community who may be of low or moderate income, there is no indication that the City's existing housing supply provides any significant opportunities for low and moderate income households to live in Newport Beach today. Although Newport Beach 's condominium conversion ordinance limited conversion of apartments to approximately 350 units, the City's remaining supply of nearly 4,000 apartment units is not affordable to low and moderate income households. A telephone survey conducted on September 5, 1980 by HCD of Newport Beach apartment complexes with a total of 3,853 units, indicated that the average rent for a two-bedroom unfurnished apartment was $688/month-3/ This rent exceeds the affordability capabilities of low and moderate income families of three and four persons. in Orange County. The City also has approximately 7,000 units in duplex, triplex, and quadplex structures primarily located on Balboa, Island, the Balboa Penninsula, West Newport, and Corona del Mar. The proximity of these units to the beach and harbor causes their rents to be extremely high, particularly during the summer months. The costs of Newport Beach's rental housing supply has limited its ability to be used for the Section 8 existing housing rental assistance payments program. With only ten units participating in this program, Newport Beach has one of the lowest ratios of households assisted in Orange County (0.15 households per 1,000 population). Further, of the ten households receiving Section 8 housing assistance payments, nine are elderly and only one is a family household. Again, there appears to have been little effort on the part of the City to assist low income family households who may be employed in Newport Beach. We also find that the City's existing Housing, Residntial Growth and Land Use Element do not contain policies and programs which provide for adequate sites to address the housing needs of all economic _ segments of the community. The City's General Plan, zoning and subdivision regulations constrain development of affordable units for .I/Complexes surveyed included: Oakwood Gardens , Mariner's Square, Park Newport, Promontory Point, Bayview, Bayport and Baywood. Mr. Robert L. Wynn September 15, 1980 Page Eight low and moderate income households. As indicated in our review of government constraints, the current densities allowed for development of the City's remaining supply of vacant land are quite low, and preclude any significant development of affordable housing by either the private sector or public sector using State or Federal housing subsidy programs. The City has in excess of 300 acres of vacant land designated as "Planned Community" on which low density residential development will be permitted, but which would also be topographically suited for higher density residential development. While increased density in and of itself may not provide units, increased densities, together with the use of other local powers and/or the use of Federal and State funding programs, have successfully provided low income units in some of the highest land cost areas in the State. Following are examples of the use of Section 8 projects in some other high land cost coastal areas. Location Developer Type Required Density Marina del Ray Tom Saffran Family 17 d.u./ac. Huntington Beach Goldrich & Kest Family 13 d.u./ac. Laguna Hills AFCOM Family 14 d.u./ac. Redondo Beach Goldrich & Kest Elderly 80 d.u./ac. HUD and California Housing Finance Agency (CHFA) financing are available to reduce interest rates for developing family Section 8 housing in Newport Beach. The City can help make low income housing developments more feasible for private developers by using such funds as Community Development Block Grants to write-down the costs of land or to pay for off-site improvements. We note that the City of Newport Beach has not participated in the Community Development Block Grant Program since 1978. The Block Grant Program provides a valuable source of funds which the City could use to address its identified housing needs, and we encourage the City to take advantage of this resource. We wish to point out that Section 6460 of the Housing Element Guidelines states in part that "adequate provision for the housing needs of all economic segments of the community... must also include a commitment to pursue and cooperate in available Federal and State housing programs or indicate the manner in which the locality intends to address its housing needs without such assistance." The City's housing element should describe what alternative resources and use of local public powers it intends to use to provide for affordable housing opportunities if it does not intend to participate in State or Federal housing programs. Mr. Robert L. Wynn September 15, 1980 Page Nine We also wish to point out that large sites are not necessarily required in order to develop affordable subsidized family housing projects. Following is a list of sites of less than five acres on which Section 8 family units will be developed in Orange County. Community Size No. of Units Placentia 3.5 acres 58 Colinas de Capistrano 3.5 60 Colinas de Capistrano 3.5 60 Laguna Hills 3.2 51 Laguna Hills 3.2 51 South Laguna 4.7 65 Anaheim 4.0 30 Irvine 3.8 60 It appears that the City's efforts during the past six years to implement its 1974 housing element policies and programs have been directed only towards increasing residential development standards and decreasing densities, activities which are antithetical to meeting the statutory "adequate provision" requirement. The latter has been accomplished primarily through General Plan Amendments 78-2 and 79-1. General Plan Amendment 79-1 involved a net reduction of nearly 1,500 units, which further reduced the City's potential residential supply and increased development cost on most remaining available sites. Although the 1974 housing element indicates that a systematic code enforcement program and rehabilitation program would be initiated in Newport Beach, there is no indication that these programs were implemented. If there is no need for such programs, the City's housing element should so indicate. Section 6458 of the Housing Element Guidelines requires that localities, through their housing programs, seek to reduce the effects of discrimination in housing based on race, religion, sex, family size, national origin, or other arbitrary factors to provide safeguards against future discrimination in housing. Data indicates that Newport Beach's minority population is considerably smaller than that of Orange County as a whole. Results of the 1975 Special Census indicate that 97.9 percent of the City's households heads were non-miniority white, while only 0.9 percent where reported to be either latino or black.4/ This contrasts with the 1976 Orange Countywide ethnic distribution of 88.0 percent non-minority white household heads and 9.4 percent latino or black heads of households. 4/Based on an 88 percent response to the Special Census question on ethnicity of household head. Mr. Robert L. Wynn September 15, 1980 Page Ten We note that the City of Newport Beach is one of the few jurisdic- tions in Orange County that does not provide any support to the Orange County Fair Housing Council . The Fair Housing Council was established to help prevent discrimination in housing and provide assistance in residential issues, such as mediating landlord-tenant disputes throughout Orange County. The City's lack of support to the Fair Housing Council , in essence, requires other Orange County cities to subsidize the cost of Fair Housing Council 's services which are available to existing and prospective Newport Beach residents. We also note that Newport Beach's 1974 housing element states that the City would "develop, adopt, and enforce, an 'open housing' ordinance, which will prohibit discrmination in the sale or rental of housing. " However, according to City staff, no such ordinance has ever been developed or adopted by Newport Beach. The City's disproportionately low distribution of minorities could be a result of very high housing costs, discrimination, or a combination of these factors. The City should attempt to find out the cause or causes of this problem and take actions addressed at alleviating it. IV. ADDITIONAL COMMENTS The Guidelines require that the housing element be revised as need dictates, but no less than once every five years. In addition to the periodic update, the locality should re-evaluate its housing programs and monitor implementation progress at more frequent intervals. Newport Beach's 1974 housing element states that, "Annual updatings and reprintings of the Housing Element will be submitted to the State Department of Housing and Community Development for their review." However, according to City staff, there have been no updates, amendments, or revisions of Newport Beach's housing element since adoption in 1974. And, although the City applied for and received a 90-day extension from the July 1, 1979 deadline for submitting a revised housing element pursuant to the 1977 Housing Element Guidelines, no update was submitted or had even commenced by the extended deadline of October 1, 1979. Internal consistency among General Plan elements is required by Section 65300.5 of the Government Code. Therefore, in revising the housing element to comply with the Guidelines, Newport Beach must examine the interrelationship with other elements of the General Plan to assure that policies are consistent. Specifically, it is essential that any conflicts between the land use and residential growth elements and the housing element be resolved. On January 1, 1980, AB 1564 became effective. This bill requires that housing elements consider all aspects of current housing technology, including manufactured housing, as a possible means of making adequate provision for the housing needs of all economic segments of the community. Your housing element revision should also include this analysis. Mr. 'Robert'•L.' Wynn• .. September 15, 1980 Page Eleven V. CONCLUSION In conclusion, we find that the City of Newport Beach's 1974 housing element is not adequate when assessed by the standards of Government Code Section 65302(c) and the 1977 Housing Element Guidelines. In our preceding comments we have pointed out that the City's present housing element contains an out-of-date and incomplete analysis of housing needs and constraints, and that its housing program does not make adquate provision for all economic segments of the community and does not provide standards and plans for adequate sites for housing. We hope that these comments will be helpful to the City in the process of revising its housing element. If you have any questions or if we can be of further assistance, please contact Bob Stone at (916) 445-6501. Sincerely, Purn r, ief Division of Research and Policy Development cc: Mr. Johathan Lehrer-Graiwer, Western Center for Law and Poverty -,Mr. Robert Lenard, Advanced Planning Administrator Mr. Mark Pisano, Executive Director, SCAG Orange County Housing Coalition* Legal Aid Foundation of Orange County* *The Orange County Housing Coalition and Legal Aid have standing requests on file with HCD to receive a copy of all office corres- pondence relating to housing element reviews for jurisdictions in Orange County. We are forwarding a copy of this letter to them in accordance with the Public Information Act. RS#3/1 i CITY OF NEWPORT BEACH OFFICE OF THE CITY MANAGER S RECEIVED R'a,,nuU August 26, 1980 b --•;m.„� 9 AUG281980 - �� clr, ,,; `tp NEINFUR r 3;;;Cy i CALIF. TO: PLANNING DIRECTOR 2 >> N FROM: City Manager SUBJECT: HOUSING ELEMENT Please prepare RFP' s and receive proposals to redo the City's Housing Element. The consultant proposal, along with recycled legal reports on the law suit, will be reviewed with the City Council in Executive session on September 22nd, 1980 . ROB wN CC: City Attorney III • (1 CITY OF NEWPORT BEACH PLANNING DEPARTMENT August 18, 1980 TO: Hugh Coffin, City Attorney FROMa Bob Lenard, Advance Planning Administrator SUBJECT: Housing Element - HCD Guidelines_ - General Plan Amendment CURRENT GENERAL PLAN HOUSING ELEMENT Section 65302 of the California Government Code requires all cities and counties in the State to prepare a local housing element of the general plan . In compliance with State law, the City of Newport Beach adopted a Housing Element on February 11 , 1974. The Newport Beach Housing Element was prepared in accordance with the State Administrative Regulations which were in effect at that time . The "Action Program" contained in the current Newport Beach Housing Element is based on the "General Plan Policies " report adopted by the City Council on Ma.rch 13, 1972. The general objective of the City ' s Housing Element follows : "It is the objective of the City of Newport Beach to preserve and enhance the community' s quality living environment; to maintain and improve the visual character and physical quality of all existing neighborhoods , and to encourage the development of a variety of new housing to adequately serve the needs of all present and future residents of the community. " In support of this general objective , the Housing Element further states the following policies : " 1 . The City shall retain the present predominance of single- family residences throughout the community while continu- ing to provide for a variety of housing types and a diversity of housing needs . "2 . A variety of housing types and designs shall include multiple-family apartments and townhouses , as well as attached and detached single-family homes in convenient and compatible locations so •as to offer a broad housing choice to a variety of family sizes , types , a.nd incomes . f . S • TO : City Attorney - 2 . 113. All new housing shall be developed to include suitable and adequate landscaping, open space , parks and recrea- tion features , and other design amenities to meet• the prevailing community standards of environmental quality. "4. The City shall encourage and assist in the conservation , maintenance , and improvement of all existing residential neighborhoods so as to maintain optimum local standards of housing quality and design . "5 . Existing housing which fails to meet prevailing standards of health and safety shall be rehabilitated through a systematic program of building and housing code enforce- ment so as to maintain the residential character and quality of the community. "6 . The City shall support ' open housing' for all persons to purchase or rent adequate housing facilities of their choice , regardless of their age , race , religion , creed, color, or national origin . "7 . The City shall cooperate with the various local and regional agencies , both public and private , to identify and assist in solving the housing problems of the broader regional community . " The Housing Element then states an "Action Program" to implement the general objective and supporting policies . Following is a sum- mary of these implementing actions : 1 . Adopt P-C zoning to allow "density averaging, " permit- ting clusters of higher density residential mixed in with the lower densities . 2. Examination of residential development standards to - assure adequate landscaping, open space , parks , and recreation facilities . 3. Establish liaison with neighborhood associations on needed public improvements (streets , sidewalks , trees , etc. ) , and step-up Code Enforcement. Program. 4. Initiate a housing quality inspection and rehabilitation program. 5 . Adopt an "open housing" ordinance to prohibit discrimina- tion in the sale or rental of housing. 6 . Cooperate with "Orange County Housing Authority. " LEGISLATIVE REQUIREMENT FOR HOUSING ELEMENT Section 65302 of the Government Code requires that: TO : City Attorney - 3. "The general plan shall consist of a statement of develop- ment -policies and shall include a diagram or diagrams and text setting forth objectives , principles , standards , and plan proposals . The plan shall include the following elements : . . . " (c) A housing element, to be developed pursuant to regu- lations established under Section 41134 of the Health and Safety Code, consisting of standards and plans for the im- provement of housing and for provision of adequate sites for housing. This element of the plan shall make adequate provision for the housing needs of all economic segments of the community. . . " REVISED HCD GUIDELINES The State Department of Housing and Community Development, on Novem- ber 17, 1977, promulgated revised housing element regulations for the purpose of assuring that State housing policies are reflected in local housing elements . These revised regulations require the City to amend its Housing Element to be consistent with these new regulations . The State Housing Element Guidelines contemplate an active role for local governments in attaining the goal of "a decent home in a suit- able living environment for all . " Accordingly, the local housing element is intended to accomplish the following : 1 ) To establish standards and plans for the improvement of housing and for the provision of adequate sites for housing. 2) To make adequate provision for the housing needs of all econ.omic segments of the community. In order to comply with the housing element guidelines , the Newport Beach Housing Element would need to be amended to include : 1 ) An evaluation of the local and regional housing problem, including an analysis of the ability of the existing housing supply to provide housing for all economic segments of the community . 2) Establishment of local housing goals , policies , and priorities aimed at alleviating unmet need. 3) A housing program to implement these goals . Fair Share Allocation Plans . The housing element guidelines require the local government to look beyond the housing needs of its resident population . This is based on the premise that local housing and development policies have a regional market-area impact as well as a local impact. Further, each locality within a general housing market area shares with other localities the collective responsi - bility for making adequate provision for the housing- needs of all TO: City Attorney - 4. economic segments of the market-area population . Therefore , the housing element is required to be responsive to the needs of a "fair- share" of those households who do not live in the locality , but whose housing opportunities may be affected by planning decisions of the locality . In this region . SCAG has been responsible for preparing a fair share allocation plan which may be used by local government in amending their housing elements . The SCAG Housing Allocation Model indi - cates that the City ' s fair share of regional housing need for low- or moderate-income families is 3, 127 units , with an additional 3,424 existing households in need of some form of housing assistance. If the SCAG allocation is taken as the goal for affordable housing in Newport Beach , the Housing Element would have to make provision for 6,551 households which are in need of housing assistance . Housing Need and Income . Housing need is defined i.n terms of the number of families who cannot afford market-rate housing without paying more than 25% of their income. Lower-income households eligible for assistance are classified in relation to median family income in the County. The median family income in Orange County as determined by HUD is $23,000 per year for a family of four persons . The following table illustrates "affordable" expenditure for housing costs based on this median. Max. Yearly Income Monthly Housing Cost Very Low Income (50%) $11 ,500 $239. 58 Low Income - (80%) 18,400 383. 33 - Moderate Income ( 120%) 27,600 575 .00 In revising the City ' s Housing Element, the regulations require that an estimate be made of the immediate housing need analyzed in terms of affordability, overcrowding, and condition of dwelling. In addi - tion , an estimate would be made of projected housing need over a five year period. The 1976 Special Census - P p s is the most recent data avail - able able to make housing cost and family income projections . The age of this data makes such projections very difficult to do. Additionally, the statistical validity of any such projection is questionable due to low response rates on the income and housing cost questions . The 1980 Federal Census data will not be available until approximately January of 1982. The Housing Program. Based on the assessment of housing -needs , a statement of goals and policies to address those needs would be included TO: City Attorney - 5 . in the City' s Housing Element. In this regard, the State has estab- lished the following policy objectives as guidelines : 1 ) The provision of decent housing in a satisfying environment for all persons regardless of age , race, sex; marital status , ethnic background, source of income or other arbitrary factors . 2) The provision of housing selection by location , type , price , and tenure . 3) The development of a balanced residential environ- ment with access to employment opportunities , community facilities , and adequate services . The Housing Element would further identify plans and programs to implement adopted goals , including a description of actions to be taken in meeting housing needs , and how the programs will be financed. The housing program must describe steps to preserve existing housing and neighborhoods , through such measures as rehabilitation, main- tenance, or code enforcement. Actions affecting affordability would need to be accounted for. Sites adequate to accommodate additional housing for a range of income groups would need to be identified. Im lementation of Housing Element Policies . In terms of implementa- tion , t e ousing element guidelines s require that local of make adequate provision for housing needs as follows : "Adequate provision for the housing needs of all economic segments of the community requires each locality, through its housing element, to make a good faith , diligent effort to provide opportunities for and to facilitate the maintenance, •improvement and development of an appropriate variety and choice of housing for all economic segments of the community, consistent with its identified need and fair share responsibilities . A local- ity is not required. to undertake programs which •are econom- ically infeasible in order to make a good faith , diligent effort. Such effort, however, must emphasize the use of those public powers which impact on housing, including but not limited to , land use controls , development controls , and regulatory concessions and incentives . Such effort must also include a commitment to pursue and cooperate in available federal a-nd state housing programs or indi - cate the manner in which the locality intends to address its housing needs without such assistance . In fulfilling its responsibilities under Government Code Section 65302( c) , a locality also may, but is not required to , expand local revenues to provide rental subsidies to finance the acquisi- tion of land for construction of housing, or to finance the actual construction of housing, except as otherwise provided by law. " TO: City Attorney - 6 . Public - Participation . The guidelines specify that the Housing Element shall be developed through a decision-making process which involves all economic segments of the community . Public •involve- ment from the earliest stages through final adoption is encouraged. It is possible that a Citizens Advisory Committee would be necessary to meet this requirement. ENVIRONMENTAL REVIEW Any amendment to the Housing Element would be subject to the pro- visions of CEQA . It is anticipated that an amendment to comply with the "revised guidelines" would require an Environmental Impact Report, and consequently a lengthy review period by various State agencies . CONSULTANT ASSISTANCE Currently the Advance Planning Division is working on a major General Plan Amendment, the County Triangle Annexation , the Local Coastal Program, and 208 Planning Studies . If it becomes necessary to start processing major revisions to the Housing Element in the immediate future, the selection of a consultant to provide planning and environ- mental assistance should be considered. ROBERT P . LENARD Advance Planning Administrator RPL/kk L f CITY OF NEWPORT BEACP Department of Community Development DATE: November 1 , 1979 TO: Robert Wynn , City Manager FROM: James Hewicker, Acting Director SUBJECT: Housing Element Revision The revised State Housing Element Guidelines contained in Title 25 of the California Administrative Code set July 1 , 1979 , as the operative date for compliance for all jurisdictions in the SCAG region . On June 27, the City requested a 90 day administrative extension to this compliance date . The Director of Housing and Community Development approved an extension of the deadline to October 1 , 1979 (attached) . Due to staff turnover and the need to concentrate Departmental efforts on the Local Coastal Program and General Plan Amendment 79-1 , the extended deadline has not been meta Section 65302. 2 of the Government Code allows the Director of Planning and Research to grant time. extensions not to exceed one year ( from the original July 1 , 1979 deadline) . Mr. Leonard 'A. Hampel , City Attorney for Yorba Linda and Villa Park , and the City Attorneys ' Department of the League of Cali - . fornia Cities has jointly published a paper which discusses the Housing Element Guidelines and various positions on the manda- tory or advisory nature of the Guidelines . Mr. Hampel concludes that the Guidelines are advisory in nature. This opinion is sup- ported by this Department and the City Attorney ' s office (see attached memo from City Attorney dated August 24, 1979 ) . During September, Department staff consulted other jurisdictions on their position with respect to the hdvisory nature of the guidelines , and formal extension requests (see attached memo to Hugh Coffin dated September 26, 1979) . None of the Cities sur- veyed indicated an intent to apply for further extensions . As I indicated to you at lunch on Tuesday, October 30, 1979, I do not intend to apply -for any formal extension of the deadline contained , in the Housing Element Guidelines . The reasons for this decision are twofold. First, a formal request for an extension to the dead- line would lend support to the argument of the State that the Guidelines are mandatory in nature. The second and most important reason is that it is a discretionary action of the State which allows conditions to be placed on the approval . These conditions could include limitations on subdivision approval unsatisfactory to this City. . As soon as availability of staff time permits , this Department will commence drafting a revised Housing Element utilizing the State Guidelines as appropriate to the City of Newport Beach . We will keep you informed on the progress of the revision in order to commence the required public hearings in as expeditious a manner as possible . Jam D. Hewicker, Acting Director JDH/RPL/nm Attachment cc : Jim Hewicker Patricia Temple p Departflnt of Community DeApment M c'141t1)Is& DATE : September 26, 1979 TO: Hugh Coffin, Acting City Attorney FROM: Bob Lenard, Advance Planning Administrator SUBJECT: Extension to Housing Element Revision Deadline The revised State Housing Element Guidelines contained in Title 25 of the California Administrative Code set July 1, 1979 as the operative date for compliance for all jurisdictions in the SCAG Region. On June 27, 1979, the City requested a 90 day extension to this compliance date. The Director of Housing and Community Development approved an extension of the deadline to October 1, 1979. The Community Development Department would like your opinion as to whether the City should now proceed with an application for a formal extension to the compliance deadline for revision of the Housing Element in view of the City`s position that the Guidelines are advisory in nature: On September 25, 1979, a survey of six Orange County cities progress on new or revised Housing Elements in relation to the State Housing Element Guidelines was performed. The cities "surveyed were Costa Mesa, Huntington Beach, Laguna Beach, Garden Grove, Irvine, and Anaheim. Questions were asked on whether the locality was in the process of revising the housing element with respect to the State Guidelines, whether the guidelines we're felt to be mandatory or advisory in nature and, since none of the cities surveyed have completed the new housing elements, whether a formal extension has been applied for. Responses can be" divided into two catagories. The cities of Huntington Beach, Garden Grove, and Anaheim are all relatively close to adopting housing elements which conform to the State Housing Element Guidelines. While none of these cities have taken a position as to the mandatory or advisory nature of the guidelines, the housing elements prepared do conform to the guidelines provisions. None of these localities have applied for formal extensions to the July 1 , 1979 deadline shown for the SCAG Region; Anaheim and Garden Grove because of the close proximity of approval dates, and Huntington Beach because of concern over potential conditions placed on the City approval of new subdivisions by the State. The cities of Costa Mesa, Irvine, and Laguna Beach are all either in the draft stages or about to commence drafting the housing element. Each of these cities has taken the position that the guidelines are advisory in nature. While drafts have or are being prepared utilizing the guidelines, staff in these cities feel TO: Hugh Cof*_ 2. • that the final product may not conform in all respects to the State Guidelines. None of these cities have applied for a formal extension; Costa Mesa and Irvine because they feel applying will give credence to the State argument of the mandatory nature of the guidelines and Laguna Beach because they are proceeding as quickly as their limited staffing will permit. We would appreciate your opinion on this •matter as quickly as possible. If you require any information from our files to research this question, please call Pat on extension 261 . Thanks, Robert P. Lenard Advance Planning Administrator RPL/dlt �V STATE OF CALIFORNIA EDMUND G,BROW/N JR., ovarnor DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT 921 Tenth Street Sacramento, CA 95814 (916) 445-4725 FILE COPY Ln DO NOT REMOVE 1 July 26, 1979 AUGz S 1979 Js, City 01 ry Wa�ggeaory <As Mr. Robert L. Wynn City Manager City Hall 3300 Newport Blvd. Newport Beach, CA 92663 Dear Mr. Wynn: Thank you for your letter of June 27, 1979 in which you request a 90 day extension for adoption of a revised housing element. Your request also .►: includes a work program indicating adoption of the City's housing element by October 1 , 1979. We are pleased to inform you that your request for an extension of the July 1 deadline to October 1 , 1979 has been approved. We look forward to receiving a copy of the draft element for our review. Our experience with these reviews suggests that when we are invited to participate with you early in the update process, we can develop a better sense of your critical housing issues, and what reasonable alternatives are available to address these issues. If you have any questions or if we can be of any assistance in your efforts to revise the City's housing element prior to its submittal for our review, please contact Teri Bressler at (916) 445-4725. Sin r , I. Don ld erner Di ecto n c 14 e�ycy lrr �EWPpRT CITY OF NEWPORT BEACH Lj OFFICE OF THE CITY MANAGER �<rFoaN�r rt (714) 640-2151 FaTt F040 June 27, 1979 y�o Department of Housing and Community Development 921 Tenth Street Sacramento ,'Ealifornia 92814 Attention : Mr. D'ayid Williamson Re : Ninety Day Extension - of Housing -Element Deadline Dear Mr. Williamson : The City of Newport Beach hereby requests a ninety day extension of the July 1 , 1979 operative date for compliance with the re- vised State Housing Element Guidelines contained in Title 25 of the California Administrative Code. The City has recently completed major revisions to the Land Use and Residential Growth Elements of the General Plan . In addition , staff is in the process of de::el.oping a Local Coastal Program to comply with the requirements of the Coastal Act of 1976•. These and other Advance Planning projects have consumed large amounts of staff time . Consequently the revision of the Housing Element has not been accomplished on schedule . It is estimated that approximately three months will be required to prepare amendments to the City ' s Housing Element in accordance with State Regulations . Following is a work program and schedule for completion : Date of Completion Task July, 1979 Assessment of data requirements ( 2 weeks ) July, 1979 Analysis of housing needs and (8 weeks ) evaluation of City housing supply August, 1979 Development of housing policies (6 weeks ) and housing program City Hall 9 3300 Newport Boulevard, Newport Beach, California 92663 v + 0 Department of Housing and Community Development Page 2. June 27, 1979 Date of Completion Task — — September, 1979 Pu_ ic hearings before the Plan- (4 weeks ) ning Commission and City Council Thank you for your consideratior. : this matter._ Sincerely, ZIL'I J OBE T L . WY , City Manager RLW/kk • STATE OF CALIFORNIA EDMUND G. BROWN JR., Governor DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT Division of Community Affairs One Manchester Blvd. , Suite #1 Inglewood, CA 90301 (213) 673-3703 May 30, 1979 9 S Debel�m��ityD i MAY J Mr. Mike Ocorr Newport Beach City Planning Department 3300 Newport Blvd, Newport Beach, CA 92663 Dear Mr. Ocorr: In response to your request, we are forwarding an Office of Planning and Research application packet for housing element time extensions. This packet includes a copy of the procedures, application forms, and sample resolution. A copy of AS 1788, the legislation that established the extension process, is also attached. Prior to drafting a Council resolution requesting the City's extension, please contact Dick Damm, Bill Abbott or Larry Mintier of the OPR Local Government Unit at (916) 445-1114. Sincerely, ^ 3� Bob Stone Community Development Representative BS:et Enclosure Y • r .. v n , • City Council Meing March 12, 1979 Study Session Agenda Item No . 5(c)l CITY OF NEWPORT BEACH March 6, 1979 FILE COPY DO NOT REiNOVE TO : City Council FROM: Department of Community Development SUBJECT : Housing Element Revision Project Requirements of State Housing Element Guidelines , and possible work program for bringing City' s Housing Element into compliance . Background Section 65302 of the California Government Code requires all cities and counties in the State to prepare a local housing element of the general plan. In compliance with State law, the City of Newport Beach adopted a Housing Element on February 11 , 1974 . The Newport Beach Housing Element was prepared in accordance with the State Administrative Regulations which were in effect at that time . The State Department of Housing and Community Development, on Novem- ber 17, 1977, promulgated revised housing element regulations for the purpose of assuring that State housing policies are reflected in local housing elements . These revised regulations require the City to amend its Housing Element to be consistent with these new regulations by July 1 , 1979 . The purpose of this memo is to inform the City Council as to what is required of the City in this regard and to describe a possible work program leading to amendments to the Newport Beach Housing Element. The Planning Commission received a report on this matter at its study session of February 22, 1979 . Housing Element Requirements State Housing Legislation contemplates an active role for local governments in attaining the goal of "a decent home in a suitable living environment for all . " Accordingly, the local housing element is intended to accomplish the following: • 1 . To establish standards and plans for the improvement of housing and for the provision of adequate sites for housing . 2 . To make adequate provision for the housing needs of all economic segments of the community . _ • ' TO: City Council 2. f In order to comply with the revised housing element guidelines , the Newport Beach Housing Element would be amended to include: 1 . An evaluation of the local and regional housing problem including an analysis of the ability of the existing housing supply to provide housing for all economic segments of the community. 2. Establishment of local housing goals , policies , and priorities aimed at alleviating unmet need; and a housing program to implement these goals . Fair Share Allocation Plans The Housing element regulations require the local government to look beyond the housing needs of its resident population . This is based on the premise that local housing and development policies have a regional market-area impact as well as a local impact. Further, each locality within a general housing market area shares with other localities the collective responsibility for making adequate pro- vision for •the housing needs of all economic segments of the market- area population. Therefore, the housing element is required to be responsive to the needs of a "fair-share" of those households who do not live in the locality, but whose housing opportunities may be affected by planning decisions of the totality. In this region, SCAG has been responsible for preparing a fair share allocation plan which may be used by local government in amending their housing elements. The SCAG Housing Allocation Model indicates that the City' s fair share of regional housing need for low or moderate-income families is 3,127 units, with an additional 3,424 existing households in need of some form of housing assistance. If the SCAG allocation is taken as the goal for affordable housing in Newport Beach, the Housing Element wo.uld have to make provision for 6 ,551 households which are in. need of housing assistance. Housing Need and Income Housing need is defined in terms of the number of families who cannot afford market-rate housing without paying more than 25% of their income. Lower-income households eligible for assistance are classified in relation to median family income in the County ($19,500) as follows : Law Income: 50% or less of median income ($0-9 , 750) Moderate Income: 51 % to 80% of median income ($9 ,751 -15,600) Medium Income: 81 % to 120% of median income ($150601 -23,595) In revising the City' s Housing Element, the regulations require that an estimate be made of the immediate housing need analyzed in terms of affordability, overcrowding, and condition of dwelling-. In addition, an estimate would be made of projected housing need over a 5-year U .S .period. This would involve .S . Census , andtheCitys Special Census , and eSCAG ed the data . TO: City Council - 3. The Housing Program Based on the assessment of housing needs , a statement of goals and policies to address those needs would be included in the City ' s Housing Element. In this regard, the State has established the following ; policy objectives as guidelines : 1 . The provision of decent housing in a satisfying envi.ro.n.ment for all persons regardless of age, race, sex, marital status, ethnic background, source of income or other arbitrary factors , 2 . The provision of housing selection by location , type, price, and tenure. 3. The development of a balanced residential environment with access to employment opportunities , community facilities , and adequate services . The Housing Element would further identify plans and programs to implement adopted goals , including a description of actions to be taken in meeting housing needs , and how the programs will be financed. The housing program must describe steps to preserve existing housing and neighborhoods , through such measures as rehabilitation, maintenance, or code enforcement. Actions affecting affordability would need to be accounted for. Sites adequate to accommodate additional housing for a range of income groups would need to be identified. Implementation of Housing Element Policies In terms of implemenation, the housing element regulations require that local governments make adequate provision for housing needs as follows : "Adequate provision for the housing needs of all economic segments of the community requires each locality, through its housing element, to make a good faith , diligent effort to provide opportunities for and to facilitate the maintenance , improvement and development of an appropriate vaM ety and choice of housing for all economic segments of the community, consistent with its identified need and fair share responsibilities . A locality is not required to undertake programs which are economically infeasible in order to make a good faith, diligent effort. Such effort, however, must emphasize the use of those public powers which impact on housing, including, but not limited to land use controls , development controls , and regulatory concessions and incentives . Such effort must also ,include a commitment to pursue and cooperate in available federal and state housing programs or indicate the manner in wht.ch the locality intends to address its housing needs without such assistance. In fulfilling . its res,ponsibili•ties under Government Code Section 65302(c ) , a locality also may, but is not required to , expand local revenues to provide rental subsidies to finance the acquisition of land for construction of housing, or to finance the actual construction of housing , except as otherwise provided by law. " r TO: City Council - 4. Public Participation The regulations specify that the Housing Element shall be developed through a decision-making process which involves all economic seg- ments of the community . Public involvement from the earliest stages through final adoption is encouraged. Work Program Staff estimates that approximately four to six months will be required to prepare amendments to the City' s Housing Element In accordance with State regulations . A possible work program and schedule is suggested as follows : Date of Completion Task March, 1979 Approved as to approach by Planning Commission and City Council . March , 1979 Assessment of data require- ( 2 weeks) ments . May, 1979 Analysis of housing needs and (12 weeks ) evaluation of City housing supply. June, 1979 Development of housing policies (8 weeks) and housing program. June/July, 1979 Public hearings before the Planning Commission and City Council . Relationship to Local Coastal Program The LCP is required to address the issue of housing for low- or moderate- income families . the emphasis in the LCP project will be on Preserva- tion of existing low- or moderate-income housing in the Coastal Zone. The LCP activity parallels the Housing Element revision, but is not a substitute for compliance with the regulations promulgated by the State Department of Housing and Community Development. Environmental Review Any amendment of the Housing Element would be subject to the provisions of CEQA. Either a Negative Declaration or an Environmental Impact Report will be prepared for this project. TO: City Council - 5 . Suggested Action Staff would welcome any comments or suggestions which the City Council may have regarding the approach to revising the City ' s Housing Element outlined above . Respectfully submitted, DEPARTMENT OF COMMUNITY DEVELOPMENT R. V . HOGAN, Director by t DAVID DMOHOWS I Advance Planning Administrator DD/kk 141anning Commission Meetilp February 22 , 1979 Study Session Agenda Item No . 7 T BEACH P CITY OF NEWPOR �� D© NIOT ' February 16 , 1979 T0 : Planning Commission FROM: Department of Community Development . SUBJECT: Housing Element Revision Project Requirements of State Housing Element Guidelines , and possible work program for bringing City' s Housing Element into compliance. Background Section 65302 of the California Government Code requires all cities and counties in the State to prepare a local housiing element of the general plan . In compliance with State law, the City of Newport Beach adopted a Housing. Element on February 11 , 1974 . The Newport Beach Housing Element was prepared in accordance with the State administrative regulations which were in effect at that time . The State Department of Housing and Community Development , on November 17, 1977, promulgated revised housing element regulations for the purpose of assuring that State housing policies are reflected in local housing elements . These revised regulations require the City to amend its Housing Element to be consistent with these new regulations by July 1 , 1979 . The purpose of this memo is to inform the Planning Commission as to what is required of the City in this regard and to describe a possible work program leading to amendments to the Newport Beach Housing Element. Housing Element Requirements State housing legislation contemplates an active role for local governments in attaining the goal of "a decent home in 'a suitable living environment for all . " Accordingly, the local housing element is intended to accomplish the following : 1 . To establish standards and plans for the improvement of housing and for the provision of adequate sites for housing . 2 . To make adequate provision for the housing needs of all economic segments of the community. .� TO: !inning Commission - 2 . • In order to comply with the revised housing element guidelines , the Newport Beach Housing Element would be amended to include : 1 . An evaluation of the local and regional housing problem including an analysis of the ability of the existing housing supply to provide housing for all economic segments of the community : 2 . Establishment of local housing goals , policies , and priorities aimed at alleviating unmet need; and a housing program to implement these goals . Fair Share Allocation Plans The Housing element regulations require the local government to look beyond the housing needs of its resident population . This is based on the premise that local housing and devel'opment policies have a regional market-area impact as well as a local impact. Further, , each locality within a general housing market area shares with other localities the collective responsibility for making adequate -pro- vision for the - housing needs of all economic segments of the market- area population . Therefore, the housing element is required to be responsive to the needs of a "fair-share" of those households who do not live in the locality, but whose housing opportunities may be affected by planning decisions of the locality . In this region , SCAG has been responsible for preparing a fair share allocation plan which may be used by local government in amending their housing elements . The SCAG Housing Allocation Model indicates that the City ' s fair share of regional housing need for low or moderate-income families is 3 , 127 units , with an additional 3,424 existing households in need of some form of housing assistance . If the SCAG allocation is taken as the goal for affordable housing in Newport Beach , the Housing Element would have to make provision. for 6 ,551 households which are in. need o•f housing assistance . Housing Need and Income Housing need is defined in terms of the number of families who cannot afford market-rate housing without paying more than 25% of their income. Lower-income households eligible for assistance are classified in relation to median family income in the County ($19 , 500) as follows : Low Income : 50% or less of median income ($0-9 , 750) Moderate Income : 51 % to 80% of median income ($9 , 751 -15 , 600) Medium Income : 81 % to 120% of median income ( $15 ,601 -23,595) In revising the City' s Housing Element, the regulations require that an estimate be made of the immediate housing need analyzed in terms of affordability, overcrowding, and condition of dwelling . In addition , an estimate would be made of projected housing need over a 5-year period. This would involve a data-gathering exercise , using the U .S . Census , and the City' s Special Census , and SCAG data . .�.TO : Pleing Commission -- 3. • The Housing Program Based on the assessment of housing needs , a statement of goals and policies to address those needs would be included in the City ' s Housing Element . In this regard, the State has established the following policy objectives as guidelines : 1 . The provision of decent housing in a satisfying enivornment for all persons. regardless of age , race, sex, marital status , ethnic background , source of income or other arbitrary factors , 2 . The provision of housing selection by location , type , price , and tenure . 3. The development of a balanced residential environment with access to employment opportunities , community facilities , and . adequate services . The Housing Element would. further identify plans and programs to implement adopted goats , including a description of actions to be taken in meeting housing needs , and how the programs will be financed . The housing program must describe steps to preserve existing housing and neighborhoods , through such measures as rehabilitation , maintenance , or code enforcement. Actions affecting affordability would need to be accounted for. Sites adequate to accommodate additional housing . for a range of income groups would need to be identified. Implementation of Housing Element Policies In terms of implemenation, the housing element regulations regdire that local governments make adequate provision for housing needs as follows : "Adequate provision for the housing needs of all economic segments of the community requires each- locality, through its housing element, to make a good faith , diligent effort to provide opportunities for and to facilitate the maintenance , improvement and development of an appropriate variety and choNce of housing for all economic segments of the community, consistent with its identified need and fair share responsibilities . A locality is not required to undertake programs which are economically infeasible in order to make a good faith , diligent effort. Such effort, however, must emphasize the use of those public powers which impact on housing , including , but not limited to land use controls , development controls , and regulatory concessions and incentives . Such effort must also include a commitment to pursue and cooperate in available federal and state housing programs or indicate the manner in which the locality intends to address its housing needs without such assistance . In fulfilling its responsibilities under Government Code Section 65302 (c ) , a locality also may, but is not required to , expand local revenues to provide rental subsides , to finance the acquisition of land for- construction of housing , or to finance the actual construction of housing , except as otherwise provided by law. " TO : Aning Commission - 4 . • Public Participation The regulations specify that the Housing Element shall be developed through a decision-making process which involves all economic segments of the community . Public involvement from the earliest stages through final adoption, is encouraged. Work Program Staff estimates that approximately 4 to 6 months will be required to prepare amendments • to the City ' s Housing Element in accordance with State regulations . A possible work program and schedule is suggested as follows : Date of Completion Task March , 1979 Approved as to approach by Planning Commission and City Council . March , 1979 Assessment of data requirements . (2 weeks ) May, 1979 Analysis of housing needs and (12 weeks ) evaluation of City housing supply. June , 1979 Development of housing policies (8 weeks ) and housing program. June/July, 1979 Public hearings before the Plan- ning Gommts8�.yon and City' Council .. Relationship to Local Coastal Program The LCP is required to address the issue of housing for low or moderate-income families . The emphasis in the LCP project will be on preservation of existing low-or moderate-income housing in the Coastal Zone . The LCP activity parallels the Housing Element revision , but is not a substitute for compliance with the regulations promulgated by the State Department of Housing and Community Development. Environmental Review Any amendment of the Housing Element would be subject to the provisions of CEQA . Either a Negative Declaration or an Environmental Impact Report will be prepared for this project. Suggested Action Staff would welcome any comments or suggestions which the Planning Commission may have regarding the approach to revising the City ' s Housing Element outlined above . TO : �anning Commission - 5 . DEPARTMENT Of COMMUNITY DEVELOPMENT R . V . HOGAN , DIRECTOR BYil .rX David Dmohowski Advance Planning Administrator DD/dt 7.1 California- Statewide Housing Plan The housing, process is dynamic - needs change over time. So the state must look to its residents' housing needs as they exist now (how to adequately house our present residents) and as they extend through time (how to adequately house the additional households we will gain over the next five years). r The condition of the state's total housing supply is such that to adequately house today's 7-1/2 million California households by the standards of quality and cost the Legislature has set. 765,000 homes would have to be rehabilitated. 325,000 homes are so run down they would have to be darolished and replaced with new units suitable for and accessible to their present occupants. 1 ,780,000 lower-income households would have to be financially assisted if the 25-percent-of-income standards is accepted. And to serve the needs of the some 150-160,000 new California households expected each year through 1982 and to replace housing units that will become obsolete during that period. 240,000 apartments, houses, and mobilehomes would have to be built during each of the next five years. The Plan Focuses on Five Issues The Plan addresses the mpst basic housing issues facing California today. These issues provide the context in which the state's housing neeeds take on meaning. - The housin and nei hborhoods we have are a valuable resource, and the s ou a ma ntaine an Improved. m rov . Most Californians live in good housing n good neighborhoods. These should be preserved. Where needed, rehabilita- tion of existing housing and neighborhood revitalization should be encouraged and assisted. - New housing, for owners and renters, is needed. Some old homes need to be replaced and new households need housing. T e state should work with the. . private sector to promote the construction of needed new housing. And ways to slow the rise in housing costs are suggested. - Lower-income eeople in urban and rural areas cannot nGrmall find decent, safe, an satisfying housing at prices they can _ af-ford. The state, using financial resources of the California H ousing Finance Agency, together with the financing resources of the federa- and local governments, should assist lower-income people to obtain good housing - Housing discrimination prevents many Californians free access to existing ct�housing. Discrimination may be directed at ethnic minorities and others. are recommended to reduce housing discrimination. 0 California Statewide Housing Plan Page 2 - Tenants and landlords, home buyers and sellers have rights that require protection. Present laws, regulations, and policies do not adequately ref ect the rights and responsibilities of the participants in what might be called the "housing contract" -- buyers and sellers, landlords and tenants. Changes are recommended to reduce the likelihood of conflict and misunderstanding. Note: For each issue there is a set of findings and state policies recommended for legislative adoption. The Plan Establishes Housing Objectives California's basic housing issues and our most pressing housing needs establish the framework for the state's housing objectives. To this framework, we apply a sense of responsibility -- what the state should do -- and a sense of realism -- what the state can do and chooses to do to help solve housing needs in light of the competition for lim t-ed public funds. The objectives recommended here are based on the expected housing production, rehabilitation, and assistance that the proposed housing actions will produce if the Legislature adopts the actions at the support levels suggested. California's annual housing "objectives" (for the results of actions pursuant to this Pan for 978 through 1982 are: 1978 1979 1980 1981 1982 Rehabilitate Deteriorated Homes 21100 4,'300 6.,200 7,900 8,700 Assist Lower- Income Households 8,650 9,900 91900 9,900 91900 Basic Housing Production 240,000 240,000 240,000 240,000 240,000 I �'fL� COiUT�s ►vu�x. rt' r �trvch fv, l 9 -7 9 Qog repot 7b CL-II/ Csukv-,o-( re -- �p,�;6�(`t� —t ',��_ �t��' ^' °"�i"w`S SGU'd�.�1,` ✓,�'�'ttfi1.P/navt',t� t� HC D Equ^c"t-- did" - , - HCD flip qodatl Z44,0 464Ltv�-- do) 11lz�13�I Y"juJLtVL y f ti+�v ,