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HomeMy WebLinkAbout04 - Adoption of City Council Policy K-4 and Initiation of Amendments Related to Increasing Housing OpportunitiesQ �EwPpRT CITY OF O � z NEWPORT BEACH <,FORN'P City Council Staff Report March 9, 2021 Agenda Item No. 4 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Seimone Jurjis, Community Development Director - 949-644-3232, sjurjis@newportbeachca.gov PREPARED BY: Jaime Murillo, AICP, Principal Planner jmurillo@newportbeachca.gov PHONE: 949-644-3209 TITLE: Resolution Nos. 2021-18 and 2021-19: Adoption of City Council Policy K-4 (Reducing the Barriers to the Creation of Housing) and Initiation of Amendments Related to Increasing Housing Opportunities (PA2021-019) ABSTRACT: For the City Council's consideration is adoption of a new Council Policy K-4 (Reducing the Barriers to the Creation of Housing) and an initiation of amendments to the General Plan, Coastal Land Use Plan of the Local Coastal Program, and Newport Beach Municipal Code (NBMC) Title 20 (Planning and Zoning) and Title 21 (Local Coastal Program Implementation Plan), as necessary, to consider new and flexible land use and zoning amendments related to increasing housing opportunities. RECOMMENDATION: a) Determine this action is exempt from environmental review under the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2), 15060(c)(3), and 15262 of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly; b) Adopt Resolution No. 2020-18, A Resolution of the City Council of the City of Newport Beach, California, Adopting Council Policy K-4 (Reducing Barriers to the Creation of Housing) (PA2021-019); and c) Adopt Resolution No. 2020-19, A Resolution of the City Council of the City of Newport Beach, California, Initiating Amendments to the City of Newport Beach General Plan, Coastal Land Use Plans, and Titles 20 (Planning and Zoning) and 21 (Local Coastal Program Implementation Plan) of the City of Newport Beach Municipal Code Related to Increasing Housing Opportunities (PA2021-019). 4-1 Resolution Nos. 2021-18 and 2021-19: Adoption of City Council Policy K-4 (Reducing the Barriers to the Creation of Housing) and Initiation of Amendments Related to Increasing Housing Opportunities (PA2021-019) March 9, 2021 Page 2 FUNDING REQUIREMENTS: There is no fiscal impact related to the initiation of these amendments. DISCUSSION: On October 15, 2019, the California Department of Housing and Community Development (HCD) issued a Regional Housing Needs Assessment (RHNA) for the Southern California Association of Governments (SCAG) region of 1,341,827 units that each jurisdiction within the region must plan for in the 2021-2029 Planning Permit (Sixth Cycle). As required under State of California (State) law, SCAG developed a RHNA Allocation Methodology to reallocate the regional determination to each of the 197 jurisdictions in the region, including Newport Beach. The City of Newport Beach (City) worked diligently for many months in partnership with other member jurisdictions and stakeholders throughout the RHNA Allocation Methodology development process to provide comments and recommendations to achieve a RHNA allocation that is fair, equitable and in consideration of the unique circumstances and local planning factors inherent in our community. Despite this process and a City -initiated RHNA appeal, the final adopted RHNA methodology resulted in an allocation of 4,845 units for the City. At the February 9, 2021, City Council Study Session related to the Housing Element Update, the City Council provided staff direction to develop a new Council policy related to housing production, including: Accessory Dwelling Unit (ADU) production, review of existing mixed-use zoning districts, and potentially allowing residential development in conjunction with existing hotel development (Attachment C- Minutes). Council Policv K-4 (Reducina the Barriers to the Creation of Housin The draft Council Policy serves as a statement of the City's commitment to addressing the State housing crisis by developing a compliant Housing Element and continuing to support the production of housing for all income limits. In response to the City's unprecedented RHNA Allocation, the policy recognizes that the City may need to consider new and flexible land use and zoning designations and strategies in order to accommodate this ambitious housing mandate, while protecting the character of the community and maintaining a quality of life that makes Newport Beach a special place to live, work and visit. The policy focuses on the three distinct housing -related efforts recommended by the City Council: • Production of ADUs — Sets forth policies to further encourage and incentivize the development of ADUs beyond the minimum State law requirements as an important strategy to accommodate future growth in combination with other strategies to meet the RHNA Allocation. 4-2 Resolution Nos. 2021-18 and 2021-19: Adoption of City Council Policy K-4 (Reducing the Barriers to the Creation of Housing) and Initiation of Amendments Related to Increasing Housing Opportunities (PA2021-019) March 9, 2021 Page 3 • Planning Commission Review and Recommendations for Mixed -Use Designations - Despite the new mixed-use housing opportunities that were created in the 2006 Comprehensive General Plan Update, most of these sites remain underutilized with a single, non-residential use, such as retail or office. It is evident the City's existing development standards related to mixed-use development may create constraints to the redevelopment of these properties. Therefore, the policy directs staff and the Planning Commission to review annually the established mixed-use zones in the City and recommend code changes or policy ideas to the City Council that reduce regulatory barriers and incentivize mixed-use residential development. • Mixed -Use Resort Opportunities — Mixed-use resorts provide an opportunity to revitalize older resort hotels by incorporating accessory residential units. The policy affirms the City Council's direction to interpret ambiguities in code provisions to allow for limited residential units as an accessory use to the principal use of a hotel, and to pursue any needed amendments to accommodate such uses. Initiation of Amendments Related to Increasina Housina Opportunities The purpose of initiating the code amendments is to implement the City Council Policy K- 4 (Reducing the Barriers to the Creation of Housing) and propose amendments to provide additional housing opportunities. The future code amendments will consider new and/or flexible land use and zoning amendments related to increasing housing opportunities, expanding mixed-use housing opportunities, and expanding the use of transfer of development rights. The resolution recognizes that given the need for housing, City policies, rules, and regulations, to the greatest extent possible, should be interpreted to provide additional housing opportunities to accommodate the City's RHNA allocation. Any amendments pursued would consider the need to comply with the City's Charter Section 423. ENVIRONMENTAL REVIEW: The adoption of these resolutions are exempt from environmental review under the California Environmental Quality Act ("CEQA"), pursuant to Section 15262, 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, because they involve feasibility or planning studies for possible future actions which the agency, board, or commission has not approved or adopted, and because have no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). 4-3 Resolution Nos. 2021-18 and 2021-19: Adoption of City Council Policy K-4 (Reducing the Barriers to the Creation of Housing) and Initiation of Amendments Related to Increasing Housing Opportunities (PA2021-019) March 9, 2021 Page 4 ATTACHMENTS: Attachment A — Resolution No. 2021-18 (Council Policy K-4) Attachment B — Resolution No. 2021-19 (Initiation of Amendments) Attachment C — February 9, 2021, City Council Minutes Attachment A Draft Resolution (Council Policy K-4 4-5 RESOLUTION NO. 2021-18 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, ADOPTING COUNCIL POLICY K-4 (REDUCING THE BARRIERS TO THE CREATION OF HOUSING) (PA2021-019) WHEREAS, the City of Newport Beach ("City") is governed, in part, by its Charter, Municipal Code, and adopted City Council Policies; WHEREAS, at the February 9, 2021, City Council Study Session related to the Housing Element Update, the City Council provided staff direction to develop a new City Council policy and amend the City's land use and zoning codes related to housing opportunities; and WHEREAS, the City Council of the City of Newport Beach desires to adopt Council Policy K-4, Reducing the Barriers to the Creation of Housing, attached hereto as Exhibit "A" and incorporated herein by reference. NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1: The City Council hereby adopts City Council Policy K-4, Reducing the Barriers to the Creation of Housing, attached hereto as Exhibit "A" and incorporated herein by reference. Section 2: The recitals provided in this resolution are true and correct and are incorporated into the operative part of this resolution. Section 3: If any section, subsection, sentence, clause or phrase of this resolution is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this resolution. The City Council hereby declares that it would have passed this resolution, and each section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid or unconstitutional. Resolution No. 2021 - Page 2 of 2 Section 4: The City Council finds the adoption of this resolution is not subject to the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. The proposed action is also exempt pursuant to CEQA Guidelines Section 15061(b)(3), the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. The Council Policy is a statement and does not itself authorize development that would directly result in physical change to the environment. Section 5: Except as expressly modified in this resolution, all other City Council Policies, sections, subsections, terms, clauses and phrases set forth in the Council Policy Manual shall remain unchanged and shall be in full force and effect. Section 6: This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting the resolution. ADOPTED this 9th day of March, 2021. Brad Avery Mayor ATTEST: Leilani I. Brown City Clerk APPROVED AS TO FORM: CITY ATT-QRNEY'S OFFICE 'AaronI rn City A ey Attachment: Exhibit A- Council Policy K-4 (Reducing the Barriers to the Creation of Housing) 4-7 Reducing the Barriers to the Creation of Housing Background LIMA! The State of California has declared that the lack of housing is a critical problem that threatens the economic, environmental, and social quality of life in California. The consequences of the housing crisis include the lack of housing to support employment growth, imbalance in jobs and housing, reduced mobility, urban sprawl, excessive commutes, and air quality deterioration. While the causes of this crisis are multiple and complex, the State attributes the underlying cause to insufficient housing supply. On October 15, 2019, the California Department of Housing and Community Development (HCD) issued a Regional Housing Needs Assessment (RHNA) for the Southern California Association of Governments (SCAG) region of 1,341,827 units that each jurisdiction within the region must plan for in the 2021-2029 Planning Permit (Sixth Cycle). As required under State law, SCAG developed a RHNA Allocation Methodology to reallocate the regional determination to each of the 197 jurisdictions in the region, including Newport Beach. The City of Newport Beach worked diligently for many months in partnership with other member jurisdictions and stakeholders throughout the RHNA Allocation Methodology development process to provide comments and recommendations to achieve a RHNA allocation that is fair, equitable and in consideration of the unique circumstances and local planning factors inherent in our community. Despite this process and a City -initiated RHNA appeal, the final adopted RHNA methodology resulted in an allocation of 4,845 units for the City. The City has successfully obtained and maintained HCD certification of its Housing Element for both the Fourth Cycle (2008-2014) Planning Period with a RHNA Allocation of 1,769 units and the Fifth Cycle (2014-2021) Planning Period with a RHNA Allocation of 5 units. Despite a low Fifth Cycle RHNA Allocation, the City maintained its commitment to housing programs intended to reduce the barriers to the development of affordable housing, including preserving the Residential Overlay within the Newport Place Planned Community. During the first six years of the Fifth Cycle Planning Period, the City has permitted over 1,768 new units, including 95 lower income units. In addition, the City has approved entitlements for housing development projects totaling another 662 multi -unit residential units in the Airport Area, including 13 very low- and 78 low-income units. The Newport Airport Village Planned Community was also adopted creating the opportunity for another 444 residential units that would include a minimum affordable housing component consisting of at least 5 percent very low-income units or 10 percent low income units. Lastly, the City has committed approximately $2 million to fund the ,; acquisition and rehabilitation of the Cove permanent supportive housing project a 12 -unit apartment complex for homeless veterans and low-income seniors that opened in 2018. Despite an immensely difficult -to -attain Sixth Cycle RHNA Allocation, the City remains committed to addressing the housing crisis by developing a timely and compliant Housing Element and continuing to support the production of housing for all income levels. Policy Recognizing that the City has several major constraints on existing lands that severely limit or totally restrict the City's ability to accommodate growth to the extent identified in the Sixth Cycle RHNA Allocation, it shall be the policy of the City Council to consider new and flexible land use and zoning regulations and strategies in order to reasonably and practically accommodate this ambitious State housing mandate while protecting the character and maintaining a quality of life that makes Newport Beach a special place to live, work, and visit. The City Council therefore directs City staff and the Newport Beach Planning Commission to develop, modify as necessary, and aggressively implement strategies and action plans that are designed to accelerate housing production consistent with this policy as described in the following sections: Production of Accessory Dwelling Units The Legislature approved, and the Governor signed SB 13 (Chapter 653, Statutes of 2019), AB 68 (Chapter 655, Statutes of 2019), and AB 881 (Chapter 659, Statutes of 2019) into law that, among other things, amended Government Code sections 65852.2 and 65852.22 to further impose new limits on the City's ability to regulate ADUs and Junior Accessory Dwelling Units (JADUs). The Legislature's intent was to reduce regulatory barriers and costs, streamline the approval process, and expand the potential capacity for ADUs. Although the City has revised its ADU regulations to comply with the minimum requirements of State law, further encouraging the development ADUs is an important strategy to accommodate future growth in combination with other strategies to meet the RHNA Allocation. HCD allows ADUs to meet a portion of the City's RHNA based on trends in past production and more aggressive production estimates based on the adoption of production programs. Encouraging ADUs allows for the dispersing of density throughout the City and avoids the need for excessive rezoning and high infrastructure costs associated with new high-density developments. Because ADUs tend to be relatively small with modest amenities, they provide more affordable housing options for select groups, such as students, seniors, caretakers, and people with disabilities. Therefore, to further encourage and incentivize the development of ADUs, the City should pursue the following: 6 • 1. Interpret ambiguities in code provisions regulating ADUs in a manner that accommodates and maximizes production. 2. Direct staff and the Planning Commission to review and recommend code changes that reduce regulatory barriers, streamline the approval process, and expand potential capacity of ADUs beyond minimum State law requirements. 3. Publicize incentives for construction of ADUs with a systematic approach utilizing all forms of media and outreach. 4. Prepare and maintain a user-friendly website committed to information related to codes, processes, and incentives pertaining to the development of ADUs and JADUs in the City. 5. Develop and administer a program that includes waiving all permit and City fees for property owners of unpermitted units when they agree to bring units into compliance with current building and fire codes to ensure the safety of occupants and structures. 6. Develop permit -ready standard plans to permit new ADU construction to minimize design costs, expedite permit processing, and provide development certainty for property owners. Planninq Commission Review and Recommendations for Mixed -Use Designations As part of the 2006 Comprehensive General Plan Update and 2010 Zoning Code Update, new mixed-use housing opportunity zones were created throughout the City as a strategy to enhance and revitalize underperforming and underutilized properties. These areas included the Airport Area, Dover/Westcliff, Newport Center, Mariners Mile, and portions of the Balboa Peninsula. The Airport Area and Newport Center have proven the most successful with several approved and constructed mixed-use developments, such as Uptown Newport and Villas Fashion Island. The Balboa Peninsula has had some limited success while Dover/Westcliff and Mariners' Mile have not proven successful to -date. Despite the housing opportunity that has been created on several properties in these areas, a majority of these sites remain underutilized with a single, non-residential use, such as retail or office. It is evident the City's existing development standards (e.g., setbacks, height, density, parking, dedications, etc.) related to mixed-use development may create constraints to the redevelopment of these properties. Therefore, to ensure that mixed-use opportunities envisioned by the 2006 General Plan redevelop to their full potential, the City should pursue the following: 1. Direct staff and the Planning Commission to review annually the established mixed-use zones in the City and recommend code changes or policy ideas to the City Council that reduce regulatory barriers and incentivize mixed-use residential development. 4-10 Mixed -Use Resort Opportunities Mixed-use resorts are an established trend in the hospitality industry that incorporate hotel -branded residential units as an accessory use located within a resort hotel complex where residents enjoy access to the full range of services, facilities, and amenities provided by the hotel operator or brand. The residential use cannot exist without the hotel's services, facilities, and amenities. The hotel industry has been one of the hardest hit industries due to the COVID-19 pandemic and a full recovery of the industry is not anticipated for many years. Mixed-use resorts provide an opportunity to revitalize older or underperforming hotels and maintain their competitive standing by creating multiple revenue streams. Economies of scale created by shared facilities, amenities, and services add additional benefit to mixed-use resort developments. This cross pollination of business benefits both the hotel and the resident. It may also increase occupancy rates at the resort by creating increased synergy between uses and social gathering opportunities, boosting transient occupancy taxes while providing in -fill housing opportunities to partially assist the City in meeting its RHNA obligation in highly desirable and built -out areas. Incorporating residences also helps to off -set cyclical variations in hotel occupancy rates that can, for instance, result in seasonal decreases in revenue for the hotel's food and beverage offerings. Therefore, to further encourage and incentivize the development of mixed-use hotels, the City should pursue the following: 1. Issue interpretations that interpret ambiguities in General Plan, Zoning Code, and/or Local Coastal Plan Program provisions to allow hotels and motels, located outside of the Coastal Commission Appeal Areas, to convert up to thirty percent (30%) of their permitted hotel and motel rooms into residential units on a one-for- one basis. Such interpretation would allow for residential units to be deemed an accessory use to the principal use of a hotel and find that such residential uses are consistent with the hotel's and motel's underlying General Plan, Zoning Code, and Local Coastal Plan Program land use and zoning designations. 2. The residential units may be allowed in repurposed hotel and motel rooms and/or in new residential structures, subject to the City's project approval process (e.g., Site Development Review) and including, as appropriate, review under the California Environmental Quality Act. 3. Consider establishing parking programs (e.g., shared parking) and/or reduced residential parking requirements that mitigate the need for any additional parking due to the conversion to residential use. 4. Consider fiscal impact analysis to disclose and mitigate any reduction in transient occupancy tax due to the conversion. 4-11 5. Consider increasing the flexibility in use of transfer of development rights to allow for transfer of unbuilt residential units to hotel sites. 6. Require property owners converting permitted hotel and motel rooms into residential units to mitigate impacts as a result of the conversion including, but not limited to, creating affordable housing units either in the project itself or through a contribution of in -lieu fees. 4-12 Attachment B Draft Resolution (Initiation of Amendments) 4-13 RESOLUTION NO. 2021-19 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, INITIATING AMENDMENTS TO THE CITY OF NEWPORT BEACH GENERAL PLAN, COASTAL LAND USE PLAN, AND TITLES 20 (PLANNING AND ZONING) AND 21 (LOCAL COASTAL PROGRAM IMPLEMENTATION PLAN) OF THE CITY OF NEWPORT BEACH MUNICIPAL CODE RELATED TO INCREASING HOUSING OPPORTUNITIES (PA2021- 019) WHEREAS, City Council Policy K-1 (General Plan and Local Coastal Program) requires amendments to the City of Newport Beach ("City") certified Local Coastal Program ("LCP"), codified in Title 21 (Local Coastal Program Implementation Plan) of the Newport Beach Municipal Code ("NBMC") to be initiated by the City Council; WHEREAS, Section 20.66.020 (Initiation of Amendment) of the NBMC provides that the City Council may initiate an amendment to Title 20 (Planning and Zoning) with or without a recommendation from the Planning Commission; WHEREAS, in response to the City's Draft Regional Housing Needs Assessment ("RHNA") allocation of 4,845 residential units for the 2021-2029 Sixth Cycle Housing Element, the Housing Element Update Advisory Committee is considering new and flexible land use categories and zoning designations to accommodate the City's RHNA allocation; WHEREAS, at the February 9, 2021, City Council Study Session related to the Housing Element Update, the City Council provided staff direction to develop a new City Council policy and amend the City's land use and zoning codes related to housing opportunities; WHEREAS, given the need for housing, City policies, rules and regulations, to the greatest extent possible, should be interpreted to provide additional housing opportunities to accommodate the City's RHNA allocation; WHEREAS, mixed-use resorts are a developing trend in the hospitality industry that incorporate residential units within a hotel complex or as a mixed-use development; WHEREAS, adding residential units or the conversion to residential units does not change the character of the hotel and adds value, allowing them to maintain their competitive standing in an industry hard hit by the COVID-19 pandemic; 4-14 Resolution No. 2021 - Page 2 of 3 WHEREAS, adding residential units or the conversion to residential units may increase occupancy, affordability, transient occupancy taxes, or property taxes while providing housing opportunities to assist the City in meeting its RHNA allocation; WHEREAS, expanding the transfer of development rights encourages the development of housing by transferring allowable density from underutilized or infeasible sites to properties that have a greater potential to accommodate housing development, and WHEREAS, to increase housing opportunities, interpretations of, and amendments to the General Plan, Coastal Land Use Plan, Title 20 (Planning and Zoning) of the NBMC and Title 21 (Local Coastal Program Implementation Plan) of the NBMC are required. NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1: The City Council hereby initiates amendments to the General Plan, Coastal Land Use Plan of the Local Coastal Program, Title 20 (Planning and Zoning) of the NBMC, and Title 21 (Local Coastal Program Implementation Plan) of the NBMC to consider new and/or flexible land use and zoning amendments related to increasing housing opportunities, expanding mixed-use housing opportunities, and expanding the use of transfer of development rights. Section 2: The recitals provided in this resolution are true and correct and are incorporated into the operative part of this resolution. Section 3: If any section, subsection, sentence, clause, or phrase of this resolution is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this resolution. The City Council hereby declares that it would have passed this resolution, and each section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid or unconstitutional. Section 4: The City Council finds the adoption of this resolution is exempt from environmental review under the California Environmental Quality Act ("CEQA") pursuant to Section 15262 of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, because it involves feasibility or planning studies for possible future actions, which the agency, board, or commission has not approved or adopted. 4-15 Resolution No. 2021 - Page 3 of 3 Section 5: This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting the resolution. ADOPTED this 9th day of March, 2021. Brad Avery Mayor ATTEST: Leilani I. Brown City Clerk APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE Aaron . arp City orney 4-16 Attachment C February 9, 2021 City Council Minutes 4-17 CITY OF NEWPORT BEACH City Council Minutes Study Session and Regular Meeting February 9, 2021 ROLL CALL - 4:00 p.m. Present: Mayor Brad Avery. Mayor Pro Tem Kevin Muldoon. Council Member Noah Blom, Council Member Jov Brenner, Council Member Diane Dixon. Council Member Duffy Duffield. Council Member Will O'Neill II. CURRENT BUSINESS SSI. Clarification of Items on the Consent Calendar — None SS2. Orange County Human Relations Annual Report James McQueen and Minzah Malik. Orange County Human Relations Board Members. announced the creation of Orange County Together. requested support from Newport Beach and all cities in Orange County. shared data of activities in 2020. and thanked the City for its membership. SS3. Current Status of the Housing Element Update Process Community Development Director Jurjis and Deputy Community Development Director Campbell utilized a presentation to provide updates regarding the Regional Housing Needs Assessment (RHNA) allocation, the Housing Element Update Advisory Committee (HEUAC, and potential sites. In response to Council Member O'Neill's questions. Community Development Director Jurjis advised that staff is breaking down Banning Ranch for an affordability component and has discussed the property with the California Department of Housing and Communitv Development (HCD), but has not received a response. Further. staff has also spoken with the California Coastal Commission Executive Director. reported that the HELTAC is focusing on individual properties because not all properties are primed for redevelopment. and the City must provide substantial evidence that a parcel of land will turn into housing within the nest eight years, but details of substantial evidence are not clear at this time. Deputy Community Development Director Campbell added that the return rate for documentation from property owners is low. Council Member Dixon noted that Governor Newsom's proposed budget contains a line item for a new entity. the Housing Accountability Board, that will work with cities, local agencies. and counties: and attend council and planning commission meetings to see if there is true determination to turn existing uses to housing. Community Development Director Jurjis indicated the Housing Accountability Board has been discussed as a unit to help cities. but it is definitely an enforcement unit. Council Member O*Neill indicated that eventually the City needs to submit to HCD specific parcel numbers, the number of housing units the property will convert to, and the number of units in each tier of affordability. He thanked HEUAC members and reiterated the challenge of finding the exact properties. In response to Mayor Avery's questions. Deputy Community Development Director Campbell clarified that staff has reached out to property owners citywide, noted that size is a factor in designating a property as not feasible for redevelopment. stated that an owner's willingness to change land uses in the next eight years is helpful in providing evidence. and added that staff is working on possible housing yields and will share them with the HEL AC nest week. Volume 64 - Page 630 4-18 City of Newport Beach Study Session and Regular Meeting February 9, 2021 Community Development Director Jurjis continued the presentation with information about the West Newport Mesa Light Industrial Area. Airport Area Offices, and Newport Center. Council Member O'Neill reported that, last year, he sent a letter to the Irvine Company asking them to weigh in and, based on his phone call with them, he believed they will not play a major role in this process for substantial evidence purposes. Community Development Director Jurjis continued his presentation with exploring all options, including the 65 dB CNEL area. Council Member O'Neill added that, at the last HELIAC meeting, Brett Feuerstein discussed a potential housing development that would satisfy affordable housing in that area, the proposal has broad appeal, and if the project moves forward, any housing would be new so the occupants would understand what they were getting. In response to Council Member Blom's questions, Deputy Community Development Director Campbell indicated there is housing in the area, such as Santa Ana Heights, Mesa Drive, and south of the golf course, stated that the opportunities for housing are limited, and added that a General Plan Amendment is needed to build housing on the golf course, but today's consideration is whether to include it for consideration, the right density and affordability. Community Development Director Jurjis continued the presentation to discuss land uses, RHNA mandates, and Accessory Dwelling Units (ADU). In response to Council Member Dixon's questions, Community Development Director Jurjis stated that ADUs may be built by right, production is about 21 units/year, and added that staff is working with HCD on standard plans for ADUs. Council Member Brenner noted the sales efforts of ADU builders and suggested the City might see some ramifications from that. Community Development Director Jurjis advised that staff will submit a draft to HCD for their input, and by October, the Housing Element will be more set in stone. In response to Mayor Avery's questions, Community Development Director Jurjis related that the cost to construct an ADU is about $300-$350/square foot, and the property owner will have to run a pro forma to determine their return. He confirmed that Junior ADUs (JADUs) need to follow code requirements and stated that, if the ADU is located in a home and the home does not meet code, it will have to be retrofitted to meet the current code, which can be costly. Council Member Blom calculated a 25 -year return on a $450,000 investment. Mayor Avery questioned whether renting part of a property would impact the homeowners' tax break on selling the property. Community Development Director Jurjis concluded the presentation by discussing fee impacts, public benefit fees, development impact fees, the Housing Element schedule, additional engagement opportunities, newporttogether.com, and next steps. Council Member O'Neill stated that RHNA is complicated, expressed concern that the City will not reach compliance by the end of this process, not due to a lack of effort but as a product of calculations, indicated that CalMatters published an inaccurate article about Newport Beach, then the Orange County Register used the data to rank cities, believed there seems to be a perception that Newport Beach is adverse to affordable housing, but that is not historically true and not true going forward, noted that the City has to find 4,800 units at very specific levels of affordability, encouraged everyone to read the affordable housing subcommittee discussion, stated that affordability levels are a County determination, and believed that, in order to incentivize affordable housing in Newport Beach, there are two approaches: direct subsidy and density bonuses. Volume 64 - Page 631 4-19 City of Newport Beach Study Session and Regular Meeting February 9, 2021 Deputy Community Development Director Campbell indicated the City's RHNA is roughly 25% very -low-income, 25% low-income, and 25% moderate -income units. Council Member O'Neill related that the City cannot reach 1,200 very -low-income units using density bonuses, tax incentives are limited and competitive, development agreement monies will probably be used for affordable housing subsidies rather than capital projects, he does not envision residents being excited about high density, he agrees with Community Development Director Jurjis about doing things now because it continues to show good -faith efforts, he agrees with doing a General Plan Amendment and a Council Policy, staff interpretations will be helpful as Council works through General Plan Amendments, Council needs to look at an overlay in the coastal zone and the Airport area, mixed-use in areas like light industrial and the 65 dB CNEL area, and hotel/motel residential conversions with constraints, there could be a Council Policy and General Plan Amendment for hotels/motels to convert 25% of rooms, a Council Policy could incentivize ADU production, Council should be aggressive in the ultimate number of ADUs, in a General Plan Amendment and Council Policy, Council should have a preference for a diversity of economic uses for office buildings, parking structures, and commercial buildings, the Planning Commission could review annually or biennially areas of mixed-use that have only single uses with a preference for encouraging residential in a mixed-use environment, a Council Policy for the short term and a General Plan Amendment for the long term shows progress and will achieve more housing units, when the Housing Element and Land Use Element come back, the conversation will be much harder, and right now, Council should get to the easier portions and move forward. Council Member Blom noted there are a number of empty office spaces in Newport Center, stated that business and citizen interests align when Council makes something better, and better does not always mean bigger and more robust. He stated that the City is blessed with people who want to rebuild from within, believed the Irvine Company not wanting to work with the City is a disservice. recovery is probably not coming to Newport Center, and indicated that the process needs to move forward quicker. Council Member Dixon supported accelerating changes to the General Plan and Council Policy to provide a framework. In response to her question, Community Development Director Jurjis explained that the General Plan, Housing Element, and Land Use Element are tied together, and suggested that Council do the easy portions now without triggering the Greenlight provision, such as conversion of hotel units and mixed-use in light industrial areas. Council Member Dixon believed the industrial area of West Newport and Newport Center are right for mixed-use, residential, commercial, and possibly a new village and wondered whether Council can accelerate that discussion, the City needs as many ADUs as possible and could incentivize property owners to construct ADUs, proposed legislation restricts parking requirements, and expressed concern about the City's financial health and maintenance of the City in the future because of changes to development impact fees. Council Member Brenner referred to the irony of needing the Irvine Company's help now and the need to mend fences, and hoped the Irvine Company can see how they and the City can help each other. In response to her question, Community Development Director Jurjis advised that a General Plan Amendment is worth having a conversation with the Irvine Company. Council Member Brenner suggested having a study session specifically about affordable housing and a conversation with the Newport -Mesa Unified School District about their property above Banning Ranch. She encouraged forming a program where staff assists property owners with determining if they can construct an ADU and a citizen -driven program to brainstorm a specific area plan for West Newport. Council Member O'Neill clarified that the Irvine Company has not refused to be involved in the process, but they prefer not to be involved right now, and that his comments about low -hanging fruit apply to all property owners and suggested using a dual track of General Plan Amendments and Council Policies. Volume 64 - Page 632 4-20 City of Newport Beach Study Session and Regular Meeting February 9, 2021 Council Member Blom concurred with moving forward with some ideas that do not need to go to the Coastal Commission, if possible, and hoped to mend fences with those who want to invest in the City. Mayor Avery concurred with proceeding quickly, stated that the City needs to create housing and receive the community's buy -in, indicated that the City needs well-built projects and oversight in order to create communities that reflect Newport Beach, added that the important thing is to keep the integrity of current neighborhoods and villages, and believed ADUs will impact parking. Council Member Dixon indicated the Irvine Company's vision created the City that residents enjoy today and it would be a big miss not to have their input, encouraged staff to start conversations with them, and noted that legislation has changed planning laws and taken away local control in the last two years. Jim Mosher criticized the City's online efforts for public engagement, expressed confusion as to what will be delivered on October 15, discussed staffs interpretation of changing just the Housing Element without triggering Greenlight, but pointed out that converting hotel rooms to housing will trigger Greenlight, and noted that staff has not discussed penalties if the City over promises how much development will occur. Nancy Scarbrough believed that what the State is asking for is unreasonable, the RHNA numbers are available in the Kimley-Horn report distributed to the HEUAC in December and provided the numbers, using ADUs for a large portion of the RHNA numbers can give the City time to work out the percentages of ADUs versus high-density development versus reallocation, the City needs a bigger plan to look at this, estimating a higher number of ADUs and monitoring them will give the City time to plan for high-density housing, the percentages of 5% low-income to 95% above -moderate or moderate income are not attainable, and the fact that West Newport is the only industrial area needs to be considered when discussing converting it to housing and commercial. David Tanner believed it is okay for the City not to be in compliance with HCD requirements because the City will not be alone, the State having an enforcement person is inevitable, stated he wanted to hear more about the general welfare of residents and how changes will improve quality of life, suggested that Council look at proactive measures to protect quality of life, related that the talk about circumventing Greenlight is disheartening, talk about piecemealing the General Plan is unbelievable, and urged Council to reconsider the proposed course of action and to look to the people of Newport Beach first. Council Member O'Neill related that no one said anything about circumventing Greenlight, a General Plan Amendment is not piecemealing, Council is talking about low -hanging fruit, there will be many opportunities for public comment and discussion on this, there is a lot of work being done here, and some of the dual -tracking is more appropriate for General Plan Updates and some for a Council Policy. He proposed staff return with a Council Policy regarding 1) a preference for ADU production, direction to staff to interpret codes consistent with that preference, and direction to staff and the Planning Commission to bring further policy for code changes to be consistent with that as HCD provides further guidance; 2) a direction to the Planning Commission to review annually mixed-use zones for properties that have single, nonresidential uses and to provide policy ideas that incentivize residential in mixed-use areas; and 3) a preference for interpretation of codes that allow 1:1 hotel/motel conversion but no more than 30% of the actual hotel/motel and that such interpretation carry with it some type of development agreement, in -lieu fee, or both. The City Council unanimously concurred to bring this policy back at a future meeting. Volume 64 - Page 633 4-21