HomeMy WebLinkAboutPC2023-018 - RECOMMENDING CITY COUNCIL AUTHORIZE SUBMITTAL OF A LOCAL COASTAL PLAN AMENDMENT TO THE CALIFORNIA COASTAL COMMISSION REQUESTING TO AMEND SECTION 21.48.025 (TIME SHARE FACILITIES) AND SECTION 21.70.020 (DEFINITIONS OF SPECIALIZED TERMS AND PHRESOLUTION NO. PC2023-018 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY
OF NEWPORT BEACH, CALIFORNIA RECOMMENDING CITY COUNCIL AUTHORIZE SUBMITTAL OF A LOCAL COASTAL PLAN AMENDMENT TO THE CALIFORNIA COASTAL COMMISSION REQUESTING TO AMEND SECTION 21.48.025 (TIME SHARE FACILITIES) AND SECTION 21.70.020
(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. Section 30500 of the California Public Resources Code requires each county and city to prepare a Local Coastal Program (“LCP”) for that portion of the coastal zone within its jurisdiction.
18. In 2005, the City adopted the City of Newport Beach Local Coastal Program Coastal Land Use Plan as amended from time to time. 19. The California Coastal Commission effectively certified the City’s Local Coastal Program
Implementation Plan on January 13, 2017, and the City added Title 21 (Local Coastal
Program Implementation Plan) (“Title 21”) to the City of Newport Beach Municipal Code (“NBMC”) whereby the City assumed coastal development permit-issuing authority on January 30, 2017.
20. On November 16, 2021, the City Council conducted a study session to discuss fractional
ownership uses within dwelling units. 21. 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.
22. 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 of the 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.
23. 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
and work closely with staff to formulate appropriate regulations.
24. 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.
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25. 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. 26. On March 14, 2023, the City Council discussed the Planning Commission’s recommendations. After accepting further public testimony on fractional ownership uses
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 to capture. 27. Pursuant to Section 13515 (Public Participation and Agency Coordination Procedures)
of the California Code of Regulations Title 14, Division 5.5, Chapter 8, Subchapter 2, Article
5 (Public Participation) (“Section 13515”), drafts of LCP Amendment (PA2022-0202) were made available and a Notice of Availability was distributed at least six weeks prior to the anticipated final action date.
28. 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 21.62 (Public Hearings) of the NBMC. Evidence, both written and oral, was presented to, and considered by, the Planning
Commission at this public hearing.
29. The City desires to update Section 21.48.025 (Time Share Facilities) and related definitions set forth in Section 21.70.020 of the NBMC. This code amendment does not impact the City’s ability to support coastal access in that 4,086 hotel/motel rooms hotels
and motels, 1,550 short-term lodging units, and approximately 471 campground and RV
sites are available to provide coastal access to the public. SECTION 2. CALIFORNIA ENVIRONMENTAL QUALITY ACT DETERMINATION.
1. The LCP 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 Municipal 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.
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SECTION 3. FINDINGS.
1. The LCP 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 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. The proposed Title 21 amendment serves to implement Coastal Land Use Plan (CLUP)
Table 2.1.1-1 (Land Use Plan Categories) of the LCP, which establishes the type, density,
and intensity of land uses within the coastal zone, including residential land use categories that are intended for residential dwellings. The amendment clarifies that fractional ownership uses are considered time shares, a type of visitor-serving commercial use that is prohibited in residential neighborhoods in order to maintain the residential character of
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communities. The proposed amendment would continue to allow time shares in other areas where visitor serving uses are currently permitted. This includes the CM, CV, MU-H, and
MU-W Coastal Land Use Designations, which are identified in CLUP Table 2.1.1-1 to
provide visitor serving uses. 3. While CLUP Policy 2.3.3-6 authorizes the short-term rental of dwelling units as a means of providing lower-cost overnight visitor accommodations, the maximum number of short-term
rentals are capped at a maximum of 1,550 permits to prevent adverse impacts to residential
areas and preserve housing stock within the coastal zone. Unlike short term rentals, fractional ownership of coastal properties is a high-cost option to visit the coast on a limited basis, but have similar negative impacts to housing supply and neighborhood disturbances that short term rentals create. Therefore, it is appropriate to prohibit this type of visitor-
serving commercial use in residential neighborhoods. Furthermore, this amendment will not
impact the City’s ability to support the wide variety of visitor accommodations that are currently provided, including 4,086 hotel/motel rooms hotels and motels, a cap of 1,550 short term lodging units, and approximately 471 campground and RV sites.
4. The LCP Amendment (PA2022-0202) shall not become effective until approval by the
California Coastal Commission and adoption, including any modifications suggested by the California Coastal Commission, by resolution and/or ordinance of the City Council of the City of Newport Beach.
5. The LCP, including the LCP Amendment (PA2022-0202), will be carried out fully in
conformity with the California Coastal Act.
6. 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 Local Costal Program 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 the City Council authorize staff to submit
the Local Coastal Program Amendment (PA2022-0202), as set forth in Exhibit “A,” which is
attached hereto and incorporated herein by reference, to the California Coastal Commission.
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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: None
BY:___________________________ Mark Rosene, Vice Chair
BY:____________________________
Sarah Klaustermeier, Secretary
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EXHIBIT “A”
LOCAL COSTAL PLAN AMENDMENT NO. PA2022-0202 Section 1: Section 21.48.025(A) of the Newport Beach Municipal Code is amended to read
as follows:
A. Applicability. The provisions of this section shall apply to applications involving the
development or creation of new visitor accommodations or the expansion, reduction,
redevelopment, demolition, conversion, closure, or cessation of existing visitor accommodations. Converting an accommodation that was not used as a visitor
accommodation into one that is used as a visitor accommodation, shall constitute the
development or creation of a new visitor accommodation.
Section 2: Section 21.48.025(C)(5) of the Newport Beach Municipal Code is amended to
read as follows:
5. Mitigation. If the review authority determines that the development will impact existing
lower cost visitor-serving accommodations, or provide only high or moderate cost visitor
accommodations or limited use overnight visitor accommodations such as time share uses
and condominium-hotels, then mitigation commensurate with the impact shall be provided by
one of more of the following:
a. Replacement of low cost rooms lost shall be provided at a one-to-one ratio either on
site or a suitable off-site location within the City;
b. Payment of an in-lieu fee commensurate with the impact shall be required;
c. Programmatic components that provide low cost overnight accommodations; or
d. Other form of mitigation addressing cost of stay.
The review authority may authorize deviations from development standards that provide
economic incentives to the development to maintain affordability.
Section 3: Section 21.48.025(E) of the Newport Beach Municipal Code is amended to read
as follows:
E. Conversion of Existing Dwelling Units Prohibited. The conversion of existing residential dwelling units into a time share use shall be prohibited.
Section 4: Section 21.48.025(F) of the Newport Beach Municipal Code is added to read as
follows:
F. Tsunami Information and Evacuation Plans. Visitor-serving accommodations in areas identified as susceptible to tsunami inundation shall be required to provide guests with information on tsunami information and evacuation plans.
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Section 5: The definition of “Accommodation” is added to Section 21.70.020 of the Newport Beach Municipal Code is 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 6: The definition of “Limited use overnight visitor accommodations (LUOVA)” within Section 21.70.020 of the Newport Beach Municipal Code is amended to read as follows:
Limited use overnight visitor accommodations (LUOVA). See “Time share use.”
Section 7: The definition of “LUOVA” within Section 21.70.020 of the Newport Beach
Municipal Code is deleted.
Section 8: The definition of “Time Share Facility (Land Use)” within Section 21.70.020 of the Newport Beach Municipal Code is amended to read as follows:
Time Share (Land Use). See “Visitor accommodations.”
Section 9: The definition of “Visitor Accommodations (Land Use)” within Section 21.70.020 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. “Campground” means a lot upon which one or more sites are located, established, or maintained for rent as an overnight tenting or camping area for recreation or vacation purposes.
3. “Hostel” means establishments offering supervised overnight sleeping accommodations,
primarily for travelers who use nonmotorized transportation or commercial or public
transportation. Such sleeping accommodations are designed, intended to be used and are used, rented or hired out as temporary or overnight accommodations for guests in which daily services of linen change, towel change, soap change and general cleanup are
provided by the management. If kitchen or eating facilities are provided, they are
communal in nature.
4. “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.
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5. “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
for, each guest room. A motel operates subject to taxation under Revenue and Taxation
Code Section 7280.
6. “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.
7. “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.
8. “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.
9. “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.
10. “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.
11. “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.
12. “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.
13.“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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14.“Time share use” means the use of one or more accommodations or any part thereof, as a time share property.
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