HomeMy WebLinkAboutPC2023-017 - RECOMMENDING CITY COUNCIL ADOPTION OF A CODE AMENDMENT TO SECTION 20.48.220 (TIME SHARE FACILITIES) AND SECTION 20.70.020 (DEFINITIONS OF SPECIALIZED TERMS AND PHRASES) OF THE NEWPORT BEACH MUNICIPAL CODE RELATED TO TIME SHARES (PA2022-0202)RESOLUTION NO. PC2023-017 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY
OF NEWPORT BEACH, CALIFORNIA RECOMMENDING CITY COUNCIL ADOPTION OF A CODE AMENDMENT TO SECTION 20.48.220 (TIME SHARE FACILITIES) AND SECTION 20.70.020 (DEFINITIONS OF SPECIALIZED TERMS AND PHRASES) OF THE NEWPORT BEACH MUNICIPAL CODE RELATED TO TIME
SHARES (PA2022-0202)
THE PLANNING COMMISSION OF THE CITY OF NEWPORT BEACH HEREBY FINDS AS FOLLOWS:
SECTION 1. STATEMENT OF FACTS. 1. Article XI Section 7 of the California Constitution authorizes cities to make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws.
2. California Government Code Section 65850 et seq. authorizes a city to adopt ordinances that regulate land uses as a valid use of its police powers. 3. Section 200 of the City of Newport Beach (“City”) Charter vests the City Council with the
authority to make and enforce all laws, rules, and regulations with respect to municipal
affairs subject only to the restrictions and limitations contained in the Charter and the State Constitution, and the power to exercise, or act pursuant to any and all rights, powers and privileges, or procedures granted or prescribed by any law of the State of California.
4. In 1982, the City Council adopted Ordinance No. 82-14 prohibiting the development of time share projects within Newport Beach in order to protect against unique problems associated with transient occupancy.
5. In 1996, the City Council adopted Ordinance 96-7 which provided a narrow exception to
allow time share projects in commercial districts subject to a conditional use permit but continuing to prohibit time shares of residential property. 6. Over the past three years, Newport Beach and cities that serve as tourist
destinations, have experienced a wave of purchases of single-unit residences,
which are then re-sold into fractional shares. For example, over the past 15 months, the number of fractional-owned residences has nearly tripled with at least 12 fractionally owned homes in Newport Beach.
7. Under this new model, the residence is owned in up to 1/8 shares with stays ranging
from two to fourteen nights in duration resulting in frequent turnover of the properties’ occupants and its commercial management.
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8. Fractionally owned homes create impacts on the City’s housing supply and character of residential neighborhoods.
9. With respect to the housing supply, Governor Gavin Newsom declared a housing crisis in the State of California and called for the development of 3.5 million new homes to be built by 2025, to meet the population’s housing needs. As a result, the State of California has adopted a number of housing bills such as Senate Bill Nos.
8, 9, 10, 35 and 330, and an aggressive Regional Housing Needs Assessment
(“RHNA”) for the 6th Cycle Housing Element covering the 2021-2029 (“6th Cycle Housing Element”). 10. The City’s RHNA for the 6th Cycle Housing Element is 4,845 new housing units,
which units are intended to meet the housing needs of existing and future residents
within the jurisdictional boundaries of Newport Beach. 11. According to the 6th Cycle Housing Element, whereas the median home price in the State of California was $579,770 as of 2020, the median home value of single-unit
homes and condominiums in Newport Beach was $2,407,454. The fractional
ownership of single-unit residences as a second home further exacerbates the housing supply in Newport Beach to meet housing demand. 12. With respect to the impacts on the character of residential neighborhoods, the City
is a popular tourist destination known for its beaches and temperate weather. In
accordance with Ewing v. Carmel-by-the-Sea, (1991) 234 Cal. App. 3d 1579, which upheld the City of Carmel-by-the-Sea’s right to impose zoning restrictions on short-term rentals, the Newport Beach City Council adopted Ordinance No. 92-13 on May 11, 1992, establishing regulations for the operation of short-term lodging units in order to mitigate
the impact of this use on the residents of the City.
13. On May 11, 2004, the City Council adopted Ordinance No. 2004-6 prohibiting the issuance of new short-term lodging permits after June 1, 2004, to any dwelling unit on a parcel zoned as a single-unit residence or designated for single-family residential use
as part of a Planned Community Development Plan, Specific Area Plan or Planned
Residential District. 14. In 2020 and 2021, the City Council adopted Ordinance Nos. 2020-15, 2020-26, and 2021-28, amending the City’s short-term lodging regulations based upon evidence and
documentation attesting to the need to further regulate and control short-term lodging
units in residential zones to ensure that, among other things, short-term lodging units are regulated in a way to maintain harmony with surrounding uses. 15. Due to the proliferation of short-term rentals and their impact on neighborhoods and
long-term housing, Ordinance No. 2021-28 placed a cap of 1,550 on the number of
short-term lodging permits allowed in the City.
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16. Fractional homeownership properties operate much like short-term lodgings in that they limit occupancy by owners of a fractional interest in a property to less than 30
consecutive days.
17. On November 16, 2021, the City Council conducted a study session to address concerns raised by the public regarding impacts of fractional homeownership.
18. On September 13, 2022, the City Council conducted a second study session to discuss
the fractional ownership uses within the City. Written and oral testimony provided included a report on how other jurisdictions were addressing fractional ownership uses. Fifteen of the 22 jurisdictions surveys classified fractional ownership uses as a time share. Additional public testimony included concerns about increases in traffic, noise,
and trash, as well as fractional ownership uses having an adverse impact on the
character of the existing residential neighborhoods. 19. On September 27, 2022, the City Council adopted Resolution 2022-61, initiating a Code Amendment to Title 20 (Planning and Zoning) and a Local Coastal Program Amendment
to Title 21 (Local Coastal Program Implementation Plan) of the Newport Beach
Municipal Code (NBMC). The City Council directed staff to work with the Planning Commission to develop regulations that would regulate fractional ownership uses in the best manner that would protect the character of residential neighborhoods.
20. On October 6, 2022, the Planning Commission conducted a study session to discuss
fractional ownership uses and accept public testimony. At the conclusion of study session, the Planning Commission expressed the desire to form an Ad-Hoc Committee to work closely with staff to formulate appropriate regulations.
21. On October 20, 2022, the Planning Commission formally formed an Ad-Hoc Committee
to evaluate potential amendments to Title 20 and Title 21 related to fractional ownership uses within the City. The Ad-Hoc Committee met a total of seven times, during which the Committee discussed potential regulatory schemes with staff from Community Development Department and City Attorney’s Office. During these meetings, the Ad-
Hoc Committee also met with representatives from one firm that facilitates fractional
ownership uses (Pacaso, Inc.) and several concerned citizens to ensure the Committee members had a full understanding of the issue. 22. On February 24, 2023, the Ad-Hoc Committee presented their findings to the full
Planning Commission. After accepting public testimony and discussing the matter at
length, the Planning Commission approved forwarding two recommendations to the City Council. The preferred recommendation was to broaden the definition of time shares to include fractional ownership uses. As an alternative recommendation, the Planning Commission stated the City Council could consider creating a separate regulatory
scheme to allow fractional ownership uses in all zones, except the Single-Unit
Residential (R-1) Zoning Districts. 23. On March 14, 2023, the City Council discussed the Planning Commission’s recommendations. After accepting further public testimony on fractional ownership uses
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within the City and discussing the issue, the City Council directed staff to move forward with the Planning Commission’s preferred option of broadening the definition of
timeshare.
24. A public hearing was held on April 20, 2023, in the Council Chambers located at 100 Civic Center Drive, Newport Beach, California. A notice of time, place and purpose of the public hearing was given in accordance with the California Government Code Section 54950
et seq. (“Ralph M. Brown Act”) and Chapter 20.62 (Public Hearings) of the NBMC.
Evidence, both written and oral, was presented to, and considered by, the Planning Commission at this public hearing. 25. The City desires to update Section 20.48.220 (Time Share Facilities) and related
definitions set forth in Section 20.70.020 of the NBMC.
SECTION 2. CALIFORNIA ENVIRONMENTAL QUALITY ACT DETERMINATION. 1. The Zoning Code Amendment (PA2022-0202) is exempt from environmental review under
the California Environmental Quality Act (“CEQA”) pursuant to Section 15060(c)(2) of the
CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, which states that a project is not further review under CEQA if “[t]he activity will not result in a direct or reasonably foreseeable indirect physical change in the environment.” Fractional ownership uses are not listed as a permitted use or defined under the Zoning Code. This is
amendment would clarify that fractional ownership uses are classified as time shares, which
are currently regulated by the NBMC. This amendment does not alter the manner in which time shares are regulated and therefore would not result in a physical change in the environment.
SECTION 3. FINDINGS.
1. The Code Amendment (PA2022-0202) is consistent with the City’s General Plan. It would serve to implement the following goals and policies of the General Plan:
Land Use Element Policy LU 2.6, which states, “Visitor Serving Uses Provide uses that serve
visitors to Newport Beach’s ocean, harbor, open spaces, and other recreational assets, while integrating them to protect neighborhoods and residents.” The proposed amendment would continue to allow time share uses, which is a visitor serving use in some commercial zones, while clarifying that fractional ownership uses are not permitted in residential zones areas.
This would prevent additional commercialization of the residential neighborhoods and protect
them from impacts created by increased traffic and noise. Land Use Element Goal LU 4, which states, “Management of growth and change to protect and enhance the livability of neighborhoods and achieve distinct and economically vital
business and employment districts, which are correlated with supporting infrastructure and
public services and sustain Newport Beach’s natural setting.” Classifying fractional ownership uses as time shares continues to allow the business within certain commercial zones. This clarification would also help preserve the long-term housing stock by eliminating the conversion of existing and new housing developments into time share uses, and further
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ensure that the commercial businesses would not encroach into residential areas and impact the livability of said neighborhoods.
Housing Element Goal #4, which states, “Housing opportunities for as many renter- and owner-occupied households as possible in response to the market demand and RHNA obligations for housing in the City.” Conversion of residential dwelling units into time shares removes the dwelling units from the market, thus making them no longer available for
occupancy of full-time residences. The proposed amendment would serve to prevent single-
unit residences from being taken off the market, thus protecting these housing opportunities for renters and owner-occupied households alike. Housing Element Goal #5, which states, “Preservation of the City’s housing stock for extremely
low-, very low-, low-, and moderate-income households.” Removing market-rate dwelling units
from the City’s housing stock impacts the affordability of housing across all income levels. As fewer dwelling units become available for rent or sale, the price increases. These price increases reduce the opportunities to provide affordable housing to extremely low-, very low-, low-, and moderate-income households. The proposed amendment would prevent conversion
of single-unit residences into a visitor serving accommodation, thus preserving the number of
units in the City’s housing stock, which would help minimize increases to housing costs. 2. A Local Coastal Program Amendment is also underway to ensure the regulations within the Coastal Zone are consistent with this amendment.
3. The recitals provided in this resolution are true and correct and are incorporated into the operative part of this resolution. SECTION 4. DECISION.
NOW, THEREFORE, BE IT RESOLVED: 1. The Planning Commission of the City of Newport Beach hereby finds Zoning Code Amendment (PA2022-0202) is exempt from environmental review under the California
Environmental Quality Act (“CEQA”) pursuant to Section 15060(c)(2) of the CEQA
Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, which states that a project is not further review under CEQA if “[t]he activity will not result in a direct or reasonably foreseeable indirect physical change in the environment”. Fractional ownership uses are not listed as a permitted use or defined under the Zoning Code. This is amendment
would clarify that fractional ownership uses are classified as time shares, which are
currently regulated by the NBMC. This amendment does not alter the manner in which time shares are regulated and therefore would not result in a physical change in the environment. 2. The Planning Commission hereby recommends to the City Council review the Code
Amendment (PA2022-0202) as set forth in Exhibit “A,” which is attached hereto and
incorporated herein by reference.
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PASSED, APPROVED, AND ADOPTED THIS 20TH DAY OF APRIL 2023.
AYES: Barto, Harris, Klaustermeier, Langford, Lowrey, and Rosene NOES: None
ABSTAIN: None
ABSENT: Ellmore
BY:___________________________ Mark Rosene, Vice Chair
BY:____________________________
Sarah Klaustermeier, Secretary
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EXHIBIT “A”
ZONING CODE AMENDMENT NO. PA2022-0202 Section 1: Section 20.48.220 of the Newport Beach Municipal Code is amended in its
entirety to read as follows:
SECTION 20.48.220 TIME SHARE USE
This section provides regulations for time share uses.
A. Development Standards.
1. Property Development Standards. A time share use shall comply with the standards
for the zoning district in which it is located.
2. Conversion of Existing Dwelling Units Prohibited. The conversion of existing
residential dwelling units into a time share use shall be prohibited.
3. Minimum Number of Units. Each time share property shall have a minimum of one
hundred (100) time share units. Time share properties consisting of less than one
hundred (100) units, but developed or converted in conjunction with a resort hotel
complex of three hundred (300) or more units, shall be considered to be in compliance with this requirement.
B. Required Amenities. Time share uses shall be developed with substantial recreational
amenities (e.g., golf courses, tennis courts, swimming pools, etc.).
C. Permit and Review Requirements.
1. Plan Submittals. In addition to the application requirements in Section 20.52.020
(Conditional Use Permits and Minor Use Permits), an application for a time share use shall include the following documents:
a. A sales plan shall address the times, areas and methods that will be used to
sell the time share property. Factors to be defined in the plan shall include the
location, length, and marketing methods that will be used, distinguishing on-site and off-site marketing and signage; and an estimate of the potential numbers of individuals and automobiles expected during various stages of the sales effort. The
plan also shall describe measures that will be implemented to reduce traffic during
peak hours.
b. An operating plan shall address the terms of the time share plan, the types of private unit and common amenities, and the general financing, maintenance, and management arrangements of the resort that benefit the unit owners.
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c. A management plan shall describe the methods employed by the applicant to guarantee the future adequacy, stability, and continuity of a satisfactory level of
management and maintenance of a time share property .
d. A contingency plan shall address the actions to be taken by the applicant if the
time share project is an economic failure or fails to sell fifty (50) percent of the time
share intervals within two years of receiving a permit to occupy the first unit.
2. Development Agreement. The City and the time share use operator shall enter into a
development agreement in compliance with Chapter 15.45 (Development Agreements).
3. Modification or Waiver. The review authority may modify or waive any of the
standards contained in this section if strict compliance with the standards is determined to be unnecessary to achieve the purpose and intent of this section.
Section 2: The definition of “Accommodation” is added to Section 20.70.020 of the Newport
Beach Municipal Code to read as follows:
“Accommodation” means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other or structure constructed for residential use and occupancy,
including, but not limited to, a single-unit dwelling, two-unit dwelling, multi-unit dwelling.
Section 3: The definition of “Time Share Facility (Land Use)” within Section 20.70.020 of
the Newport Beach Municipal Code is amended to read as follows:
Time Share (Land Use). See “Visitor accommodations.”
Section 4: The definition of “Visitor Serving Accommodations (Land Use)” within Section
20.70.020 of the Newport Beach Municipal Code is amended to read as follows:
Visitor Accommodations (Land Use)
1. “Bed and breakfast inn” means a dwelling unit that offers guest rooms or suites for a fee
for less than thirty (30) days, with incidental eating and drinking service provided from a
single kitchen for guests only.
2. “Hotel” means an establishment that provides guest rooms or suites for a fee to transient
guests for sleeping purposes. Access to units is primarily from interior lobbies, courts, or
halls. Related accessory uses may include conference and meeting rooms, restaurants,
bars, and recreational facilities. Guest rooms may or may not contain kitchen facilities for
food preparation (i.e., refrigerators, sinks, stoves, and ovens). Hotels with kitchen facilities are commonly known as extended stay hotels. A hotel operates subject to taxation under
Revenue and Taxation Code Section 7280.
3. “Motel” means an establishment that provides guest rooms for a fee to transient guests
for sleeping purposes. Guest rooms do not contain kitchen facilities. A motel is
distinguished from a hotel primarily by direct independent access to, and adjoining parking
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for, each guest room. A motel operates subject to taxation under Revenue and Taxation Code Section 7280.
4. “Recreational vehicle (RV) park” means a lot upon which two or more recreational vehicle
sites are located, established, or maintained for occupancy for a rental fee by recreational
vehicles of the general public as temporary living quarters for recreation or vacation
purposes.
5. “Short-term lodging” means a dwelling unit that is rented or leased as a single
housekeeping unit (see “Single housekeeping unit”) for a period of less than thirty (30)
days, subject to the requirements of Chapter 5.95 (Short Term Lodging Permits) and any
additional standards required by the City Manager.
6. “Single room occupancy, residential hotels (SRO)” means buildings with six or more guest rooms without kitchen facilities in individual rooms, or kitchen facilities for the
exclusive use of guests, and which are also the primary residences of the hotel guests.
7. “Time share instrument” means one or more documents, by whatever name
denominated, creating a time share plan or governing the operation of a time share plan, and includes the declaration dedicating accommodations to the time share plan.
8. “Time share interval” means the period or periods of time when the purchaser in a time
share plan is afforded the opportunity to use the accommodations of a time share plan.
9. “Time share plan” means any arrangement, plan, scheme, or similar device, whether by
membership agreement, bylaws, shareholder agreement, partnership agreement, sale,
lease, deed, license, right to use agreement, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property, or any
portion thereof, whether through the granting of ownership rights, possessory rights or
otherwise, for a period of time less than a full year during any given year, on a recurring
basis for more than one year, but not necessarily for consecutive years. A time share plan shall be deemed to exist whenever such recurring rights of exclusive use to the real property, or portion thereof, are created, regardless of whether such exclusive rights of use
are a result of a grant of ownership rights, possessory rights, membership rights, rights
pursuant to contract, or ownership of a fractional interest or share in the real property, or
portion thereof, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to
the time share plan.
10. “Time share property” means one or more accommodations subject to the same time
share instrument, together with any other property or rights to property appurtenant to those
accommodations.
11. “Time share unit” means the time share property or portion of a time share property in which a time share interval exists and that is designated for separate use.
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12. “Time share use” means the use of one or more accommodations or any part thereof, as a time share property.
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