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HomeMy WebLinkAbout19 - Airport Area Rezoning Study���WPORr CITY OF NEWPORT BEACH p B PLANNING/BUILDING DEPARTMENT v = 330o NEWPORT BOULEVARD c9� P NEWPORT REACH, CA 92658 (714) 644-32oo; FAX (714) 644-3250 Hearing Date: Agenda Item No.: Staff Person: REPORT TO THE MAYOR AND CITY COUNCIL SUBJECT: Airport Area Rezoning Study June 24, 1996 19 John Douglas (714) 644-3230 CITY COUNCILM1O EWPORT BEACH IM " 4 APPROVED SUMMARY: Report from the Airport Area Rezoning Subcommittee of the Economic Development Committee regarding land use trends and policy options for increasing land values and City revenues in the area adjacent to John Wayne Airport. SUGGESTED ACTION: If desired, direct staff to: 1. Continue working with stakeholders in the study area to form a Property/Business Owner Task Force; and 2. Prepare a work program, budget and proposed financing mechanism for the preparation of a specific area plan for the study area. BACKGROUND This study was initiated by the Economic Development Committee as a result of recent land use trends in the portion of the city bounded by Campus Drive, Birch Street, MacArthur Boulevard and Bristol Street North. Of particular concern has been the development of airport -serving uses such as car rental service facilities that cause impacts on Newport Beach while generating very little revenue for the city. The purposes of the study were: 1) To evaluate land use patterns and revenues generated by the study area compared to other areas in the vicinity to determine whether there is a significant difference; and 2) If revenues from the study area are significantly lower than adjacent areas, to recommend policy options that would help to increase property values and city revenues. The attached report was prepared by the Airport Area Rezoning Study Subcommittee of the Economic Development Committee and has been reviewed and approved by the full EDC for Airport Area Rezoning Study June 24, 1996 Page 1 s consideration by the City Council. The principal author of the report was Planning Commissioner Ed Selich. It should be noted that the report contains preliminary findings which r should be verified by more detailed research prior to adoption of any final action plan. The report has also been presented to study area landowners at two public meetings and was generally well-received by the group. The major concern expressed by the owners was in regard to a declaration contained in their purchase agreements known as Special Land Use Restrictions ("SLURs"). When the current owners purchased their properties from The Irvine Company the contracts typically contained SLURs preventing the owners from attempting to change the use of the property (such as through amendments to the General Plan or zoning) without the consent of the seller. The current owners were concerned that their participation in discussions or a planning study relating to possible land use changes could be construed as a violation of these SLURs. In order to resolve this issue the City Manager contacted senior staff of The Irvine Company to request clarification of the intent of the SLURs. The attached letter from Richard Sim, Executive Vice President states that The Irvine Company will not consider discussions between the property owners and the City concerning proposed changes to zoning or land use regulations to be a violation of the SLUR declarations. A copy of this letter has been transmitted to the landowners for their information. SUMMARY OF FINDINGS The principal findings of the study are summarized below. Please refer to the attachment for the full text of the report. Characteristics of the Study Area: The study area has been subdivided into parcels that are predominantly 29,000 square feet in size with direct access from the adjacent arterials. This pattern is very different from other nearby areas that were developed under a planned community concept with significantly larger parcel sizes and shared access. Compared to these planned community developments, the study area appears to be under-utilized and developed with lesser quality uses. Preliminary analysis revealed that tax revenue generated from the study area is approximately one-half that of the adjacent comparison area on a per -acre basis. Potential Methods for Improviny, the Area: The report recommends that the most practical method of facilitating the upgrading of the area is through creation of a specific area plan, which is similar to a planned community but with multiple ownerships. A specific area plan would contain policies, programs and regulations tailored to the special conditions and needs of the area, and could include the following components to encourage the area's revitalization: 1. Identification of the most beneficial uses that should be encouraged Airport Area Rezoning Study June 24, 1996 Page 2 2. Incentives for lot consolidation and redevelopment with desired uses 3. Evaluation of City planning standards and requirements to ensure that they are appropriate in relation to other similar properties in the general area 4. An evaluation of the effect of SLURS on development potential and strategies for minimizing any disincentives they may present to the revitalization of the area The first steps in preparing a specific area plan are the formation of a property and business owner task force to ensure that such an effort has the support of the affected parties, and to develop a work program and financing plan for the study. Preparation of a specific area plan would require a major financial commitment that should be shared by the City and the private parties that would benefit by increased property values. RECOMMENDATIONS If desired: direct staff to: 1. Continue working with stakeholders in the study area to form a Property/Business Owner Task Force; and 2. Prepare a work program, budget and proposed financing mechanism for the preparation of a specific area plan for the study area. Respectfully submitted, PLANNING DEPARTMENT By: Joq H. Do u'las, AICP cipal Pr'er Attarhmantc Airport Area Rezoning Study Report Letter to Kevin Murphy from Richard Sim, Executive Vice President, The Irvine Company F:\...\A I RPORT\C C\S R 1. DOC Airport Area Rezoning Study June 24, 1996 Page 3 JUhi-12—' 00 WED 10:27 1 TEL HO: 13134 POI ftiohard G. Sim gxOWNS Viol President Group Pittf►den<. invetatment Propertws June 12, `1996 Mr. Kevin J. Murphy City Manager City of NaWport Bsoch 3300 Newport Souleverd Newport 5080h, CA 92659.1768 Post -It'" brand fax transmittal memo 7871 1 a of n.e« ► 2. Ca non. e 4 — .30 1. n 9_X _0 Re: Birch Tract Declarations of Special Land Use Restrictions Dear Kevin: I have r@celved your letter of May 29, 19% concerning the City's interest in investigating whether the 'Birch Tracy' (the area in the City bounded by Campus, Bristol, Birch and MacArthur) should be Included in a special planning area through the Economic Development appears be one Committee (of the many Your letter also enclosed a page from Declarations of Special Land Use Restrictions (the ,,Declarations') which The Irvine Company recorded in the Birch Tract concurrently and eotothet the sale Of these parcels to the ground leasehold Your letter notes the apparent concern of many of the owners of these parcels that even discussing a change In the lig, or U515 rehe might beheight, FAR, parking requirements, etc.) with TheY construed as a violation of the Declarations.he Declaratlonsevvhich proh bi s the stems from the wording in Section 2.01(b) of the for any purpose other than the `attempt' to use or develop the properties purposes expressly allowed by the Declarations. In order to alleviate these concerns, this d'ecuasicoMrm that The Irvine ions between the affected Company does not, and will not, Iva representatives, property owners, the City and the EDC, and their respect concerning proposed changes to the existing zoning of these inances or eclaratlons. other We land use regulations in the City, as a violation $50 Newport Cerner Of". P.O. Box 6370. N"OOn Beach, Caiilorrde 92656-e370 (714) 720'2222 4 JUN -12-'00 WED 10:27 IP TEL N0: #134 P02 Mr. Kevin J. Murphy June 12, IM Pago Two would be concomed, however, if the affected property owners wore to take .92n--ol:21e Stm to implement a change in the zoning ordinance effecting their properties, such as filing an application to change the zoning ordinance with the City. These kinds of step$, taken without The Irvine Company's approval as provided in the Declarations, would, in our view, constitute a violation. As always, we look forward common goal of a vibrant lexwith basthe e n the,C where possible, to achieve our Newport Beach, Please d0 not hesitate as stated contact me thisf you letter. Thank youave any questions about the Company's posits Yery truly your:, AIRPORT AREA REZONING STUDY PREPARED BY THE AIRPORT AREA REZONING SUBCOMMITTEE OF THE ECONOMIC DEVELOPMENT COMMITTEE OF THE CITY OF NEWPORT BEACH MAY 15. 1996 COMMITTEE PARTICIPANTS COUNCILMEMBER NORMA GLOVER TOM REDWITZ HARRY WOLOSON JOHN DOUGLAS GLEN EVERROAD EDWARD SELICH Airport Area Rezoning Study May 15, 1996 I. Introduction A. Purpose of Study - This study was initiated by the Economic Development Committee in response to recent establishment of uses adjacent to the John Wayne Airport which appeared to be support uses to the airport and may generate very little in the way of revenue compared to other areas in the vicinity. In addition, the goal of the committee was to look at ways to maximize the economic return to the city of this strategically located area. The study was to survey the area and determine how the area compared to other areas in revenues generation and if it fell short to recommend ways to improve the situation. The study was to focus on Economic Development issues only. The results of the study are intended to be forwarded to the City Council. It is anticipated that if the City Council accepts the recommendations of this report it would be forwarded to the Planning Commission for its recommendation. B. Committee Participants - A subcommittee of the EDC consisting of Norma Glover, Tom Redwitz, Harry Woloson and Edward Selich with the assistance of John Douglas from the Planning Department and Glen Everroad of the City Finance Department participated in the preparation of this report. C. Description of Study Area - The Study area is bound by Campus Drive on the North, Birch Street on the South, MacArthur Blvd. on the East and Bristol Street on the West. It is 52 acres in Size. Figure 1 shows the study area as well as the comparison area referred to later on in this report. Airport Area Rezoning Study Page 2 II. Characteristics of Study Area A. Subdivision Patterns - Figure 1 shows the land subdivision pattern of the study area. The study area is one of the first modern industrial subdivisions in the city. It was developed in the late 1960's for sale to small industrial users who wished to be near the then growing airport. The lot sizes are predominantly 29,000 sq. ft. Access comes directly off the adjoining streets with very little shared access or multiple lot development. If the area were to be subdivided today the land values and its proximity to the airport and freeways would dictate a totally different and contemporary subdivision pattern of the planned developments in adjacent areas. B. Property Physical Conditions - The study area is characterized mainly by structures of a late 1960's and early 70's vintage. They are mostly one story multi tenant structures with roll -up door access in the rear and small offices or storefronts in the front. Some exception exist on a few larger or consolidated parcels and a few newer structures. Although well maintained by generally accepted industrial standards, compared to adjacent areas it appears to be under utilized and of lesser quality. The area grew during the first phase of commercial growth of the area and has generally not been redeveloped to keep pace with surrounding modernization. C. Land Use and Zoning - The area has been zoned M1 -A for many years. This zone is intended for light industrial use. Although office uses are permitted it is intended primarily for light manufacturing and service uses. Since most of the structures had been converted or always used for office uses the city rezoned it to APF in 1995. In contrast the adjacent areas are zoned for Planned Community Development with PC land use Airport Area Rezoning Study Page 3 Floor Area Ratio Comparison Figure 1 regulations. Figure 2 shows the existing land use pattern of the study area. Most of the land is used for general office use with medical office, general industrial, auto related, commercial and vacant land comprising the remainder of the study area. The multi tenant structures have attracted a variety of small users that wanted to be near the airport but did not fit within the PC zoning of the adjacent areas. As shown on figure 1, on an overall parcel basis (including vacant parcels) the overall average floor area ratio of the study area is 0.42 compared to 0.48 for the comparison area. A base floor area ratio of 0.5 is permitted under current zoning. D. Revenue Generated to City - In order to analyze the revenue generating level of the study area a comparison area was used to determine how the study area compared to adjacent areas of a more contemporary land use and development pattern. The area chosen is bounded by MacArthur Blvd. on the East, Birch Street on the North, Bristol Street on the West and Jamboree Rd on the South. 1. Study Area Revenues - Based on analysis by the city Revenue Department the following is a summary of the revenues generated by the study area: Airport Area Rezoning Study Page 4 \'C EXISTING LAND USE Figure 2 Comparison of Revenues Generated to the City Study Area Comparison Area Total Per ac Total Per ac Acreage: 52.53 NA 136.94 NA Building Sq. Ft: 965,936 Number of Employees: 1610 Number of Revenue Entities: 822 Number of Tax Parcels: 60 Annual Property Tax Revenue: $112,732 Annual Property Tax Revenue/Parcel: $1,879 Total Annual Tax Revenue: $476,769 Total Annual Revenue per Building Sq. Ft: $0.49 Total Annual Revenue per Entity: $604 Total Annual Revenue per Tax Parcel: $8,274 Total Annual Revenue per Acre: $9076 Potential Annual Revenue Increase from Study Area* NA 2,877,542 NA 31 5257 38 15.8 1676 12.2 NA 62 NA $2168 $433,031 $3160 NA $6,984 NA $9076 $2,474,553 $18,070 NA $0.86 NA NA $1,476 NA NA $39,112 NA NA $18,070 NA $472,455 * If the revenue per acre from the study area were increased to the level of the comparison area 3. Comparison of the Two Areas - The data shows that the Comparison Area generates on a per acre basis double the revenue to the city. City studies show that the two areas cost the city the same to provide services on a per acre basis. Thus the city is receiving 50% of the revenue potential of this area if it were to be developed as a contemporary planned development. It is interesting to note that although the Comparison Area is only 2.6 times larger than the Study area it produces 5.7 times the Airport Area Rezoning Study Page 5 revenue from approximately the same number of parcels. On an acreage basis it is 2 times as much and on a building sq. footage basis it is also 2 times as much. This indicates that the greater land use efficiency of the planned developments generates greater revenues on a comparable basis and attracts the more desirable uses. It should be noted here that the comparison area contains an auto dealership and hotel which generate significant revenues above the average for other uses in both areas. This may be skewing the revenue generated in the comparison area on the high side. However, with redevelopment, one or two parcels in the study area could attract uses which generate revenue as significant as these two uses in the comparison area. 4. Highest Revenue Generating Uses - Based on the Revenue Departments analysis the following are the Highest Revenue generating uses by Category: a. business to business product sales b. new automobile and auto related sales c. restaurants d. general retail sales e. hotel and motel E. Ownership Patterns - Figure 3 shows the major ownerships in the study area. Most of the subdivided lots are owned by single entities. Outside of the few contiguous multiple owners there is very little in the way of lot consolidation potential by way of market forces alone. Airport Area Rezoning Study Page 6 Major Ownership ® SAUNDERS •. JRSM CORP. Koll -KW •::�� �•� DK BERT ASSOC. LAWRENZ GP ' •iiii■ :! PERLMULTER BORNSTEIN ►tlt►� DC WEST HERTZ lama UNIVERSITY INDUSTRIAL CTR. iixx:• L iiiii�:•� � \ �• \• Ty�'gN ::.��.•, •• ••••...•.•■•■• 0 WAY l • • • • �•� �•�� t a i� s � NJ 3/X, X 4 Ltt ��V L` �r G m� 0` Figure 3 �4 III. Potential Methods for Improving the Area A. Specific Area Plan - The most practical method to provide for a redevelopment of the area is through a Specific Area Plan. This is the city's equivalent to developer sponsored Planned Community. Due to the multiple ownership of the property the city would have to take the lead in developing such a plan for the area. The plan would contain a contemporary set of land use regulations that would provide for the most desirable uses and incentives for lot consolidation and conversion to higher revenue generating uses. 1. Land Uses most Beneficial to City - From the list of uses in section D-4 above the following general land uses should be encouraged and provided the highest incentives in the Specific Plan: a. business to business product sales. b. new automobile and auto related sales c. restaurants d. general retail sales e. hotel and motel These land uses were selected for their revenue generating potential to the city. As the purpose of this study is to enhance the city's fiscal status those uses with the highest revenue generating potential should be given the highest priority in receiving incentives, unless overriding circumstances are present. 2. Incentives for Lot Consolidation - In order to achieve some of the benefits of the planned development approach to land utilization it is necessary to provide for the consolidation of the greatest number of lots possible in the study area. Since the Airport Area Rezoning Study Page 7 `Is market forces alone are unlikely to be sufficient to accomplish this it is necessary to provide incentives through the Specific Plan for lot consolidation. These incentives are primarily economic. The following have been identified as being the most appropriate for this area. a. Increased Floor Area Ratios - Since the city's ability to provide incentives is primarily through zoning, allowing an increase in floor area ratios as lots are consolidated is the primary tool available to achieve this goal. The concept would be to allow higher floor area ratios as lots are consolidated. The more lots one entity consolidates the higher the allowable floor area ratio is. The difficulty here is balancing the impacts of higher floor area ratios (e.g., traffic) against how much of an increase is necessary to achieve the lot consolidation goals. b. Modification of Level of Service Threshold - One obstacle to achieving higher FAR's is that the current level of service for intersections restricts how much additional floor area can be developed. It would be counterproductive to have incentives for higher FAR's and then require that massive intersection improvements be done. They would most likely negate each other. The cities of Costa Mesa and Irvine have a level of service requirement that is lower than Newport Beach's. This allows them to attract development at higher FAR's. The traffic they generate flows onto the Newport Beach circulation system and impacts the city without any benefit. Modifying the city's level of service to that of these cities would level the playing field and place Newport Beach on an equal basis. Taking this approach would require some coordination with these cities and the county to ensure that Newport Beach maintains conformance with regional transportation policies and eligibility for transportation funds. Airport Area Rezoning Study Page 8 c. Waiver or deferment of Public Improvement Requirements - Another area to be considered in the Specific Plan is the waiver or deferment of some of the public improvement requirements. Again, the concept would be that the more lots that are consolidated the greater the waiver of public improvement requirements. The desired result is that the consolidation would lead to greater revenue to the city which could be used to complete the improvements. A fiscal impact study would be necessary to show that the revenue could be captured to pay for the waived or deferred improvements and still leave a long term positive revenue impact to the city. Examples of improvements that could be waived or deferred are: 1. Street widening 2. Intersection improvements 3. Water and sewer improvements 4. Off-site mitigation measures d. Fee Reductions - The same concept could be applied to city fees charged to projects in the Specific Plan area. Some examples of fee reductions or waivers are: 1. Processing and plan check fees 2. Traffic impact fees 3. Water and sewer fees 4. Time limited tax reductions e. Priority Processing - Development projects meeting the criteria for incentives would receive priority processing through the city's development review and plan checking process. Airport Area Rezoning Study Page 9 \9 3. Planned Deficiencies - To accomplish 2b above it will be necessary to study the concept of planned deficiencies at key intersections in and adjacent to the study area. This would allow the level of service to rise from the current standard of "D" to "E" This would allow for significant additional square feet of floor area to be added to the potential for the study area. To do this has potential financial impacts on the city from County transportation improvement funds and will require coordination with the county and adjacent cities. Since the study area and adjacent areas are somewhat geographically isolated from the rest of the city and are homogeneously industrial/office/commercial land uses it is felt that the planned deficiency approach is appropriate for consideration. However it will be necessary to coordinate this action with a review of the General Plan Circulation Element and Traffic Phasing Ordinance. 4. Specific Land Use Restrictions (SLUR'S) - Most of the land in the study area is subject to Specific Land Use Restrictions which include the ability of the original land owner to be compensated by the current owner for any increase in intensity of use. The economic incentives envisioned by this study would have to be significant enough to cover these payments or there may be a lack of incentive on the part of the property/business owner to take advantage of the incentives. There may be an opportunity for the city to negotiate a single adjustment for the study area as part of the recommended Specific Plan. This may produce an additional incentive for the property owners to participate. B. Need for Specific Plan Area Task Force - The scope of this study was to identify the problem and potential solutions. The nature of the committee limited the depth that could be gone into. Much more work needs to be done to develop a Specific Airport Area Rezoning Study Page 10 Plan. In the past the city has developed Specific Plans through Task forces comprised of affected parties in the Plan Area and City staff. Such a Task force should be set up if the recommendations of this report are implemented. IV. Property/Business Owner Involvement A. Survey of Property/Business Owner Interest - One of the tasks that this committee wanted to do was a survey of property/business owner interest in improving the study area. Unfortunately the committee had neither the time or resources to do such a survey. It is felt by the committee that such a survey should be undertaken as a first step should the recommendations of this report be accepted. This is particularly important as the recommendations include having property/business owner financial participation in the specific plan. A lack of support may dictate that another approach be taken. B. Financing Specific Plan - Developing a Specific Plan will require a significant financial investment. The implementation of the program recommended in this report will result in significant benefits to the city, land owners and businesses. Thus it is recommended that a shared financing program be considered. 1. Assessment of Property/Business Owner - Since the property/business owners will economically benefit from the Specific Plan it is proposed that they financially participate in the development of the Specific Plan. This could be done on some type of assessment basis involving both property owners and business owners on some formula that reflects the benefits that they potentially will realize. It should be noted that there may be a lack of incentive to support this by propertylbusiness owners if they don't plan to take advantage of the incentives. Airport Area Rezoning Study Page I 1 2. City Participation - Since the city will benefit from greater revenue the city should financially participate via some formula that reflects the benefit potential that the city will gain from this plan. 3. Redevelopment - Use of a Community Redevelopment Agency as permitted by California State law may be warranted in achieving some of the goals of this study. There may be financing mechanisms available to achieve some of the results that the recommended incentives are intended to accomplish. Also, a Community Redevelopment Agency would have the power of eminent domain to assist in the consolidation of land if it is necessary or deemed in the public interest. It should be noted here that in order to qualify as a Redevelopment Area the study area would have to qualify as a blighted area. Unsuitable land subdivision patterns and economic conditions have been successfully documented as meeting the condition of blight in other redevelopment areas. It is recommended that a Community Redevelopment Agency approach be considered as part of a Specific Plan for this area and evaluated as to its desirability or necessity in achieving the objectives of this study. 4. Development Agreements - If such a Specific Plan is pursued it is likely that Development Agreements could be used to establish specific benefits and obligations for the property owners and the city. Airport Area Rezoning Study Page 12 V. Conclusions and Recommendations A. Conclusions 1. The Study Area is not producing revenue to city commensurate with similar adjacent areas. support uses. 2. The Study Area has the potential to generate greater revenue. 3. The Study Area is in danger of attracting non revenue generating airport 4. Property development quality is not equal to similar adjacent areas. 5. Land subdivision patterns and diverse lot ownership is hindrance to higher utilization of the land. 6. City is at a disadvantage with adjacent cities in that the City's Intersection Level of Service standards are higher. 7. There is little potential for lot consolidation by market forces alone in the study area. B. Recommendations 1. Develop Specific Area Plan Airport Area Rezoning Study Page 13 a. Form Property/Business Owner Task force. b. Consider Financing the Plan through City and Property/Business Owner participation. 2. Specific Area Plan should provide incentives for uses that provide greatest revenues to city. 3. Specific Area Plan should provide incentives for lot consolidation. 4. Incentives to be considered should include: a. Increased floor area b. Reduction in intersection level of service standards c. Reduction in public improvement requirements d. Reduction in fees e. Priority processing 5. Study planned deficiencies of intersections to accommodate revitalization of the study area. Airport Area Rezoning Study Page 14 6. Request that the City initiate discussions regarding Specific Land Use Restrictions (SLURS) with The Irvine Company to: 1) Allow landowners to participate in a Specific Area Plan study to explore land use alternatives; and 2) Investigate the potential for renegotiating SLURS on an area -wide basis. F:\...\AIRPORT\REPORT I .DOC Airport Area Rezoning Study Page 15 a3