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HomeMy WebLinkAbout6.0_Interpreting Accessory Residential as an Allowed Use within Resort Hotels_PA2021-096 CITY OF NEWPORT BEACH PLANNING COMMISSION STAFF REPORT May 6, 2021 Agenda Item No. 6 SUBJECT: Interpreting Accessory Residential as an Allowed Use within Resort Hotels (PA2021-096)  Director’s Determination No. DD2021-01 SITE LOCATION: Various Resort Hotel Properties APPLICANT: City of Newport Beach PLANNER: Jaime Murillo, Principal Planner 949-644-3209 jmurillo@newportbeachca.gov PROJECT SUMMARY The Community Development Director has issued a determination that residential uses are allowable as an accessory use to resort hotels under certain parameters. This determination is consistent with City Council Policy K-4 (Reducing the Barriers to the Creation of Housing). RECOMMENDATION Receive and file Director’s Determination No. DD2021-01 (Attachment No. PC 1). BACKGROUND Council Policy K-4 (Reducing the Barriers to the Creation of Housing) At the March 9, 2021 City Council meeting, the City Council adopted Resolution No. 2021-18 (Attachment No. PC 2) adding City Council Policy K-4 (Reducing the Barriers to the Creation of Housing). Council Policy K-4 recognizes 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 6th Cycle Regional Housing Needs Allocation (“RHNA”). As a result, new and flexible land use and zoning regulations and strategies should be developed 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. Council Policy K-4 directs City staff to develop, modify as necessary, and aggressively implement various strategies and action plans that are designed to accelerate housing production consistent with the policy, including encouraging and incentivizing the development of mixed-use hotels. Mixed-use hotels are an established trend in the hospitality industry that incorporate hotel-branded residential units as an accessory use 11 INTENTIONALLY BLANK PAGE22 Interpreting Accessory Residential as an Allowed Use within Resort Hotels (PA2021-096) Planning Commission, May 6, 2021 Page 2 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. These hotel-residential uses cannot exist without the hotel’s services, facilities, and amenities. Council Policy K-4’s goals include interpreting ambiguities in 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 Newport Beach Municipal Code (“NBMC”) to allow hotels and motels, located outside of the Coastal Commission Appeal Jurisdiction, to convert up to thirty percent (30%) of their approved hotel rooms into residential units on a one-for-one basis. Such an 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 underlying General Plan, Coastal Land Use Plan and municipal code land use and zoning designations. DISCUSSION Need for Interpretation Title 20 (Planning and Zoning) and Title 21 (Local Coastal Program Implementation Plan) of the Newport Beach Municipal Code (“NBMC”) define “hotel” as 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 rooms and meeting rooms, restaurants, bars, and recreational facilities. Guest rooms may or may not contain kitchen facilities for food preparation. Hotels with kitchen facilities are commonly known as extended stay hotels. A hotel operates subject to taxation under California Revenue and Taxation Code Section 7280. Neither Title 20 (Planning and Zoning) nor Title 21 (Local Coastal Program Implementation Plan) list residential uses as part of the definition of “hotel”. Both Title 20 and Title 21 definitions of “hotel” are out of date and do not reflect current industry practice. Specifically, the definition of “hotel” has not been updated to designate residential uses as an accessory use, which has become common practice for destination resort hotels (mixed-use hotels). While the definition of a hotel does not prohibit residential uses a Director’s Determination is necessary to fill the gap between contemporary practice and the exact wording of Titles 20 and Title 21. Authority for Interpretation Sections 20.12.020 and 21.12.020 (Rules of Interpretation) of the NBMC authorize the Community Development Director to interpret the meaning of provisions of the Zoning Code and Local Coastal Program Implementation Plan. The attached Director’s Determination is intended to implement City Council direction provided in Council Policy K-4 and includes facts in supporting of required findings under NBMC Sections 20.12.020.E and 21.12.020.E. 33 Interpreting Accessory Residential as an Allowed Use within Resort Hotels (PA2021-096) Planning Commission, May 6, 2021 Page 3 Summary of Determination Residential uses would be permitted as an accessory use to hotels subject to the following: • Applicable only to resort hotels, a self-contained destination that provides for all travel accommodation needs in one location, including but not limited to restaurants, bars, shopping, and recreational facilities. • Must be located outside the appeal area identified in California Public Resources Code Section 30603(a) as generally depicted on the Post-LCP Certification Permit and Appeal Jurisdiction Map. • Approved hotel rooms may be converted to residential units but only on a one-for-one basis. • The residential use shall at all times be accessory to the hotel use, and the residential units shall comprise no more than 30 percent of the approved hotel rooms. • The residential units may be located within a repurposed hotel or in a new residential structure. • A property owner that desires to have an accessory residential use at their hotel shall process a conditional use permit and coastal development permit (if applicable). In reviewing said permits, the review authority shall ensure adequate parking is provided to accommodate the residential units through surplus parking, shared parking, or the adoption of a parking management plan. • Potential impacts to public access, affordable housing, and the loss of transient occupancy tax must be mitigated by entering into a Development Agreement with the City or by some other means deemed appropriate. Applicability There are currently twenty-two (22) hotels in the City, of which ten (10) hotels qualify as a resort hotel (see Attachment A of Director’s Determination). Of the ten (10) resort hotels in the City, one (1) hotel is located in the coastal zone, but completely outside the Coastal Commission Appeal Jurisdiction area, and three (3) hotels are located outside the coastal zone. Therefore, this interpretation would apply to the following four resort hotel properties in the City: 44 Interpreting Accessory Residential as an Allowed Use within Resort Hotels (PA2021-096) Planning Commission, May 6, 2021 Page 4 Table 1. Applicable Resort Hotel Properties in the City Map ID Hotel Name Location General Plan Local Coastal Program Zoning 1 Renaissance Newport Beach 4500 MacArthur Blvd. Mixed-Use Horizontal (MU-H2) N/A- Outside Coastal Zone Koll Center Planned Community (PC15) 2 Fashion Island Hotel 690 Newport Center Dr. MU-H3 N/A- Outside Coastal Zone North Newport Center Planned Community (PC56) 3 Hyatt Regency John Wayne Airport 4545 MacArthur Blvd. MU-H2 N/A- Outside Coastal Zone Newport Place Planned Community (PC11) 4 Newport Beach Marriot 900 Newport Center Dr. Visitor Serving Commercial (CV) Commercial Visitor-Serving (CV-B) / Visitor Serving Commercial (CV) Commercial Visitor-Serving (CV) Appeals or Call for Review Pursuant to NBMC Sections 20.64.030 and 21.64.030, within 14 days following the date of the Director’s Determination, any interested party may file an appeal to the Planning Commission. Alternatively, any member of the Planning Commission may call this item for review and bring the determination in front of the entire Commission for review at a future meeting. The Commission may choose to repeal or modify the determination at that time. The appeal or call for review deadline is Friday, May 14, 2021. Environmental Review This determination is not a project subject to the California Environmental Quality Act in accordance with Section 21065 of the California Public Resources Code (“CEQA”) and Sections 15060 (c)(2), 15060 (c)(3), and 15378 of the California Code of Regulations Title 14, Division 6, Chapter 3 (“CEQA Guidelines”). 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. While this determination would result in an interpretation that allows residential uses as an accessory use to resort hotels, it does not authorize new development that would directly result in physical change to the environment. 55 Interpreting Accessory Residential as an Allowed Use within Resort Hotels (PA2021-096) Planning Commission, May 6, 2021 Page 5 Public Notice The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the Planning Commission considers the item). Prepared by: Submitted by: ATTACHMENTS PC 1 Director’s Determination No. DD2021-01 PC 2 Council Policy K-4 66 Attachment No. PC 1 Director’s Determination No. DD2021-01 7 INTENTIONALLY BLANK PAGE88 Community Development Department CITY OF NEWPORT BEACH COMMUNITY DEVELOPMENT DEPARTMENT 100 Civic Center Drive Newport Beach, California 92660 949 644-3200 newportbeachca.gov/communitydevelopment Director’s Determination To: Planning Division, Community Development Department From: Seimone Jurjis, Community Development Director Date: April 30, 2021 Re: Director’s Determination No. DD2021-001 Interpreting Accessory Residential as an Allowed Use within Resort Hotels (PA2021-096) Title 20 (Planning and Zoning) and Title 21 (Local Coastal Program Implementation Plan) of the Newport Beach Municipal Code (“NBMC”) define “hotel” as 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 rooms and meeting rooms, restaurants, bars, and recreational facilities. Guest rooms may or may not contain kitchen facilities for food preparation. Hotels with kitchen facilities are commonly known as extended stay hotels. A hotel operates subject to taxation under California Revenue and Taxation Code Section 7280. Neither Title 20 (Planning and Zoning) nor Title 21 (Local Coastal Program Implementation Plan) list residential uses as part of the definition of “hotel”. Both Title 20 and Title 21 definitions of “hotel” are out of date and do not reflect current industry practice. Specifically, the definition of “hotel” has not been updated to designate residential uses as an accessory use, which has become common practice for destination resort hotels (mixed-use hotels). While the definition of a hotel does not prohibit residential uses, a Director’s Determination is necessary to fill the gap between contemporary practice and the exact wording of Title 20 and Title 21. Sections 20.12.020 and 21.12.020 (Rules of Interpretation) of the NBMC authorize the Community Development Director to interpret the meaning of provisions of the Zoning Code and Local Coastal Program Implementation Plan. Background Council Policy K-4 (Reducing the Barriers to the Creation of Housing) At the March 9, 2021 City Council meeting, the City Council adopted Resolution No. 2021-18 adding City Council Policy K-4 (Reducing the Barriers to the Creation of Housing). Council Policy K-4 recognizes that the City has several major constraints on existing lands that severely limit or totally restrict the City’s ability to 9 INTENTIONALLY BLANK PAGE1010 Interpreting Accessory Residential as an Allowed Use within Resort Hotels (PA2021-096) Director’s Determination, April 30, 2021 Page 2 accommodate growth to the extent identified in the Sixth Cycle Regional Housing Needs Allocation (“RHNA”). As a result, new and flexible land use and zoning regulations and strategies should be developed 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. Council Policy K-4 directs City staff to develop, modify as necessary, and aggressively implement various strategies and action plans that are designed to accelerate housing production consistent with the policy, including encouraging and incentivizing the development of mixed-use hotels. Council Policy K-4’s goals include interpreting ambiguities in 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 Newport Beach Municipal Code (“NBMC”) to allow hotels, located outside of the Coastal Commission Appeal Jurisdiction, to convert up to thirty percent (30%) of their approved hotel rooms into residential units on a one-for-one basis. Such an 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 underlying General Plan, Coastal Land Use Plan and municipal code land use and zoning designations. Applicable Resort Hotels Mixed-use hotels 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. These hotel- residential uses cannot exist without the hotel’s services, facilities, and amenities. There are currently twenty-two (22) hotels in the City, of which ten (10) hotels qualify as a resort hotel, a self-contained destination that provides for all travel accommodation needs in one location, including but not limited to restaurants, bars, shopping, and recreational facilities (Attachment A). Of the ten (10) resort hotels in the City, one (1) hotel is located in the coastal zone, but completely outside the Coastal Commission Appeal Jurisdiction area, and three (3) hotels are located outside the coastal zone. Table 1. Applicable Resort Hotel Properties in the City Map ID Hotel Name Location General Plan Local Coastal Program Zoning 1 Renaissance Newport Beach 4500 MacArthur Blvd. Mixed-Use Horizontal (MU-H2) N/A- Outside Coastal Zone Koll Center Planned Community (PC15) 2 Fashion Island Hotel 690 Newport Center Dr. MU-H3 N/A- Outside Coastal Zone North Newport Center Planned Community (PC56) 3 Hyatt Regency John Wayne Airport 4545 MacArthur Blvd. MU-H2 N/A- Outside Coastal Zone Newport Place Planned Community (PC11) 4 Newport Beach Marriot 900 Newport Center Dr. Visitor Serving Commercial (CV) Commercial Visitor-Serving (CV-B) / Visitor Serving Commercial (CV) Commercial Visitor-Serving (CV) 11 Interpreting Accessory Residential as an Allowed Use within Resort Hotels (PA2021-096) Director’s Determination, April 30, 2021 Page 3 Planning and Zoning (Title 20) Interpretation Pursuant to Section 20.12.020E (Rules of Interpretation – Unlisted Uses of Land) of the NBMC, the Director may determine that a proposed land use that is not listed in Part 2 of this title (Zoning Districts, Allowable Land Uses, and Zoning District Standards) may be allowed if the following findings can be made: Finding: A. The characteristics of, and activities associated with, the proposed use are equivalent to those of one or more of the uses listed in the zoning district as allowable, and will not involve a greater level of activity, population density, intensity, traffic generation, parking, dust, odor, noise, or similar impacts than the uses listed in the zoning district; Facts in Support of finding: 1. The allowance of residential accessory units within a hotel will be regulated to ensure the underlying characteristics and activities remain equivalent to the listed hotel use within the applicable CV (Commercial Visitor-Serving) Coastal Zoning District or PC (Planned Community) Zoning District. 2. Approved hotel rooms will be allowed to convert to residential uses on a one-for-one basis to ensure the accessory residential use does not involve a greater level of activity, population density, traffic generation, parking, dust, odor, noise, or similar impacts than the other uses listed within the applicable CV (Commercial Visitor-Serving) Coastal Zoning District or PC (Planned Community) Zoning District. 3. The conversion of hotel rooms to residential uses will be limited to no more than 30 percent of the total number of approved hotel rooms. This restriction will further ensure that residential uses remain an accessory use to the hotel and do not change the primary use of the property from hotel to residential. 4. The traffic generation associated with a residential use is comparable to the traffic generation for a resort hotel use. According to the Institute of Transportation Engineers Trip Generation Manual (10th Edition), a Multi- Family Housing Mid-Rise (3-10 levels) development (ITE Code 221) would generate 0.36 and 0.44 average AM and PM weekday peak hour trips per dwelling unit. A Resort Hotel (ITE Code 330) would generate 0.32 and 0.41 average AM and PM weekday peak hour trips per room. The published ITE trip rates are generally for stand-alone development (e.g. stand-alone hotel or multi-family housing buildings); however, the reality is accessory residential dwelling units would likely have lower rates due to the additional on-site amenities provided. Therefore, following conversion of a hotel room to a residential unit, the anticipated traffic generation will be similar or lower. 12 Interpreting Accessory Residential as an Allowed Use within Resort Hotels (PA2021-096) Director’s Determination, April 30, 2021 Page 4 5. Pursuant to Council Policy K-3 and in compliance with Senate Bill 743, the conversion of a resort hotel room to a residential unit is considered to be less than significant impact on transportation/traffic and no further vehicle miles traveled (VMT) analysis is required since all trips associated with such conversion have already been accounted for as approved hotel rooms. As a result, conversions are expected to fall below the adopted land use screening threshold of 300 or less daily trips. For ITE Code 330, there is no listed daily trip rate; however, the City Traffic Phasing Ordinance states that if there is not an applicable rate, the City Traffic Engineer may, in the exercise of his/her professional judgement, authorize the use of trip generation rates in San Diego Association of Government’s (SANDAG) Traffic Generators or on the basis of actual site counts. The SANDAG daily trip rate for Resort Hotel is eight daily trips per room. The SANDAG daily trip rate for Multi-Family Condominium is also eight daily trips per unit. Therefore, the conversion of a resort hotel room to a residential unit would result in same or lower daily trips, and below the screening threshold of 300 daily trips requiring VMT analysis. 6. Based on the similar vehicular trips associated with accessory residential uses, levels of odor, dust, noise, or similar impacts at a hotel property with accessory residential uses is expected to be similar or less. 7. Mixed-use hotels are a form of accommodation that affords buyers with access to the full range of services, facilities, and amenities provided by the hotel. 8. The definition of hotel allows related accessory uses such as conference rooms and meeting rooms, restaurants, bars, and recreational facilities that can generate additional parking demand substantially higher than residential parking rates. The conversion of hotel rooms to residential units would constitute an amendment to the conditional use permit. In reviewing such amendments, approval of the conditional use permit would require ensuring adequate parking is provided to accommodate the residential units through surplus parking, shared parking, or the adoption of a parking management plan. Finding: B. The proposed use will meet the purpose/intent of the zoning district that is applied to the location of the use; Facts in Support of finding: 1. The CV (Commercial Visitor-Serving) Coastal Zoning District is intended to provide for areas appropriate for accommodations, goods, and services intended to primarily serve visitors to the City. Hotels are allowed in the CV (Commercial Visitor-Serving) Coastal Zoning District subject to obtaining a 13 Interpreting Accessory Residential as an Allowed Use within Resort Hotels (PA2021-096) Director’s Determination, April 30, 2021 Page 5 conditional use permit pursuant to Section 20.20.020 of the NBMC. A hotel with an accessory residential use that is limited to no more than 30 percent of the approved hotel rooms will primarily serve visitors to the City. 2. The resort hotels located within PC11, PC15, and PC56 are located within the MU-H (Mixed-Use Horizontal) land use category of the General Plan. The MU-H designations are intended to provide for the development of areas for a horizontally distributed mix of uses, which may include general or neighborhood commercial, commercial offices, multi-family residential, visitor-serving and marine-related uses, and/or buildings that vertically integrate residential with commercial uses. The hotel-branded units are consistent with the MU-H designations as residential units are clearly allowed, and a hotel with an accessory residential use that is limited to no more than 30 percent of the approved hotel rooms will primarily serve visitors to the City. 3. Mixed-use hotels are common practice within the hotel industry and provide visitor serving amenities and services consistent with the CV (Commercial Visitor-Serving) Coastal Zoning District and PC (Planned Community) Zoning District. 4. Fact in Support of Finding A.7 is hereby incorporated. Finding: C. The proposed use will be consistent with the goals, objectives, and policies of the General Plan, or any applicable specific plan; Facts in Support of finding: 1. The CV (Commercial Visitor-Serving) Coastal Zoning District General Plan land use designation is intended to provide for areas appropriate for accommodations, goods, and services intended to serve primary visitors to the City. By limiting residential uses to an accessory use at a hotel property, the primary purpose of the hotel meets the goals, objectives and policies of the General Plan, or any applicable specific plan. 2. The MU-H (Mixed-Use Horizontal) designations are intended to provide for the development of areas for a horizontally distributed mix of uses, which may include general or neighborhood commercial, commercial offices, multi-family residential, visitor-serving and marine-related uses, and/or buildings that vertically integrate residential with commercial uses. Mixed- use hotels are consistent with the MU-H designations as residential units are clearly allowed, and a hotel with an accessory residential use that is limited to no more than 30 percent of the approved hotel rooms will primarily serve visitors to the City. 14 Interpreting Accessory Residential as an Allowed Use within Resort Hotels (PA2021-096) Director’s Determination, April 30, 2021 Page 6 3. The trend in the hotel industry is to locate limited residential uses at a hotel property to create resort amenities that can be shared by residents, visitors, and tourists alike. 4. This interpretation implements Land Use Element Policy LU 2.3 (Range of Residential Choices) by providing new opportunities for the development of residential units in response to community and regional needs for housing. 5. This interpretation implements Land Use Element Policy LU 3.2 (Growth and Change) which encourages enhancement of existing neighborhoods, districts, and corridors, allowing for re-use and infill with uses that are complementary in type, form, scale, and character. Changes in use and/or density/intensity should only be considered in those areas that are economically underperforming, are necessary to accommodate the City’s share of regional population growth, improve the relationship and reduce commuting distance between home and jobs, or enhance the values that distinguish Newport Beach as a special place to live for its residents. The hotel industry has been one of the hardest hit industries due to the COVID-19 pandemic and for some hotels, a full recovery of the industry is not anticipated for many years. Mixed-use hotels provide an opportunity to revitalize older and/or underperforming hotels to maintain their competitive standing by creating multiple revenue streams that can support improvements to the property enhancing the visitor experience. Economies of scale created by shared facilities, amenities, and services add additional benefit to mixed-use hotel 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. Finding: D. The proposed use is not listed as allowable in another zoning district; Fact in Support of finding: 1. Hotels with an accessory residential use are not listed as allowable in another zoning district, Stand-alone residential uses, which are allowable in another zoning district, would not be permitted under this interpretation. Finding: E. The proposed use is not a prohibited or illegal use. 15 Interpreting Accessory Residential as an Allowed Use within Resort Hotels (PA2021-096) Director’s Determination, April 30, 2021 Page 7 Fact in Support of finding: 1. Hotels with an accessory residential use are neither a prohibited or an illegal use. Local Coastal Program Implementation Plan (Title 21) Interpretation Pursuant to NBMC Section 21.12.020(E) (Rules of Interpretation – Unlisted Uses of Land) of the NBMC, the Director may determine that a proposed land use that is not listed in Part 2 of this title (Coastal Zoning Districts, Allowable Land Uses, and Coastal Zoning District Standards) may be allowed if the following findings can be made: Finding: F. The characteristics of, and activities associated with, the proposed use are equivalent to those of one or more of the uses listed in the coastal zoning district as allowable, and will not involve a greater level of activity, population density, intensity, traffic generation, parking, dust, odor, noise, or similar impacts than the uses listed in the coastal zoning district; Facts in Support of finding: 1. The allowance of residential accessory units within a hotel will be regulated to ensure the underlying characteristics and activities remain equivalent to the listed hotel use within the applicable CV (Commercial Visitor-Serving) Coastal Zoning District. 2. Approved hotel rooms will be allowed to convert to residential uses on a one-for-one basis to ensure the accessory residential use does not involve a greater level of activity, population density, traffic generation, parking, dust, odor, noise, or similar impacts than the other uses listed within the applicable CV (Commercial Visitor-Serving) Coastal Zoning District. 3. The conversion of hotel room to residential units would constitute a major change in hotel operations requiring a coastal development permit. The coastal development permit review will require adequate parking be provided to accommodate the residential units through surplus parking, shared parking, or the adoption of a parking management plan, and to ensure the protection of lower-coast visitor accommodations. 4. Facts in Support of Finding A.3 through A.8 are hereby incorporated by reference. 16 Interpreting Accessory Residential as an Allowed Use within Resort Hotels (PA2021-096) Director’s Determination, April 30, 2021 Page 8 Finding: G. The proposed use will meet the purpose/intent of the coastal zoning district that is applied to the location of the use; Facts in Support of finding: 1. The CV (Commercial Visitor-Serving) Zoning District is intended to provide for areas appropriate for accommodations, goods, and services intended to primarily serve visitors to the City. A hotel with an accessory residential use that is limited to no more than 30 percent of the approved hotel rooms will primarily serve visitors to the City. 2. Mixed-use hotels are common practice within the hotel industry and provide visitor serving amenities and services consistent with the CV (Commercial Visitor-Serving) Coastal Zoning District. Finding: H. The proposed use will be consistent with the goals, objectives, and policies of the Coastal Land Use Plan; Facts in Support of finding: 1. The CV (Commercial Visitor-Serving) Coastal Zoning District Coastal Land Use Plan designation is intended to provide for areas appropriate for accommodations, goods, and services intended to serve primary visitors to the City. By limiting residential uses to an accessory use at a hotel property, the primary purpose of the hotel meets the goals, objectives and policies of the Coastal Land Use Plan that prioritize visitor-serving commercial recreational facilities designed to enhance public opportunities for coastal recreation over other uses. 2. The trend in the hotel industry is to locate limited residential uses at a hotel property to create resort amenities that can be shared by residents, visitors, and tourists alike. 3. This interpretation would restrict its applicability to hotel properties located outside of the appeal areas identified in the California Public Resources code Section 30603(a) as generally depicted on the Post-LCP Certification Permit and Appeal Jurisdiction Map. This applicability restriction ensures that coastal access and coastal dependent uses are not impacted. 4. Any development would be required to adhere to all LCP goals and policies including those related to public access and resource protection, and the protection of lower-cost visitor accommodations. 17 Interpreting Accessory Residential as an Allowed Use within Resort Hotels (PA2021-096) Director’s Determination, April 30, 2021 Page 9 Finding: I. The proposed use is not listed as allowable in another coastal zoning district; and Fact in Support of finding: 1. Hotels with an accessory residential use are not listed as allowable in another coastal zoning district. Separate or stand-alone residential uses operating as primary land uses, which are allowable in another coastal zoning district, would not be permitted under this interpretation. Finding: J. The proposed use is not a prohibited or illegal use. Fact in Support of finding: 1. Hotels with an accessory residential use are neither a prohibited or an illegal use. Directors Determination The Community Development Director of the City of Newport Beach hereby determines that residential uses are permitted as an accessory use to hotels subject to the following: a. This interpretation shall only apply to resort hotels, a self-contained destination that provides for all travel accommodation needs in one location, including but not limited to restaurants, bars, shopping, and recreational facilities. Residents shall enjoy access to the full range of services, facilities, and amenities provided by the hotel operator or brand. b. The hotel property relying upon this interpretation shall be located outside the appeal area identified in California Public Resources Code Section 30603(a) as generally depicted on the Post-LCP Certification Permit and Appeal Jurisdiction Map. c. Approved hotel rooms may be converted to residential units but only on a one-for-one basis. d. The residential use shall at all times be accessory to the hotel use, and the residential units shall comprise no more than 30 percent of the approved hotel rooms. e. The residential units may be located within a repurposed hotel or in a new residential structure. 18 Interpreting Accessory Residential as an Allowed Use within Resort Hotels (PA2021-096) Director’s Determination, April 30, 2021 Page 10 f. A property owner that desires to have an accessory residential use at their hotel shall process a conditional use permit and coastal development permit (if applicable). In reviewing said permits, the review authority shall ensure adequate parking is provided to accommodate the residential units through surplus parking, shared parking, or the adoption of a parking management plan. g. Potential impacts to public access, affordable housing, and the loss of transient occupancy tax must be mitigated by entering into a Development Agreement with the City or by some other means deemed appropriate. Please note that a call for review or appeal may be filed within 14 days following the date of this determination. Attachments: A – Hotel Map and List 19 INTENTIONALLY BLANK PAGE2020 ATTACHMENT A Hotel Map and List 21 INTENTIONALLY BLANK PAGE22 COAST HWY W NEWPORTCOASTDRNEWPORT BLVDJAMBOREERDBALBOABLVDE COAS T H W Y ESUPERIOR AVEFORDRD BALBOABLVDW MACARTHURBLVDBA L B O A B L V D NEWPORT BLVDBA L B O A B L V D NEWPORTBLVDU N IV E R SIT YDRJAMBOREE RDSANJOAQUINHILLS RD BISONAVE BALBOABLVDE BONITAC A N Y O N D REASTBLUFFDR!3 !2 !1 !4 !12!19 !15 !18 !6 !16 !21 !17 !20 !22 !7 !11 !5 !8 !14 !13 !9 !10 PA2021_096_Hotel_Exhibit_March_2021.mxd 0 6,9003,450 FeetI City of Newport BeachGIS DivisionApril 23, 2021 Qualifying Resort Hotels Determination No. DD2021-001 (PA2021-096) Legend LCP Appeal Area Coastal Zone Boundary City Boundary Eligible hotels; resort qualities and located outside Coastal Commission Appeal Area Non-eligible hotels; non-resort or located in Coastal Commission Appeal Area 23 INTENTIONALLY BLANK PAGE24 Tag Name of Establishment Address GP Zoning Coastal land Use and Zoning Appeal Area Resort Qualities Eligible for Interpretation Non-Appeal Area Resort Qualities 1 Renaissance Newport Beach 4500 MacArthur Blvd MU-H2 PC-15 (Office Site A) -- -- Yes Yes 2 Fashion Island Hotel 690 Newport Center Drive MU-H3 PC-56 -- -- Yes Yes 3 Hyatt Regency John Wayne Airport 4545 MacArthur Blvd MU-H2 PC11 (Hotel Site 1) -- -- Yes Yes 4 Newport Beach Marriot 900 Newport Center Dr CV CV CV-B/CV No Yes Yes 5 Lido House 3300 Newport Boulevard CV-LV CV-LV CV-LV Bisected Yes No 6 Newport Dunes 1131 Back Bay Drive PR PC48 PR/PC48 Yes No No 7 Balboa Bay Resort 1221 West Coast Highway CV PC45 (Resort) CV-B/PC45 Yes Yes No 8 Newport Beach Marriot Bayview 500 Bayview Circle CV PC32 CV-A/PC-32 Bisected Yes No 9 The Resort at Pelican Hill 22701 Pelican Hill Rd CV PC52 (PA13C- Tourist Commercial) PC52 Bisected Yes No 10 Hyatt Regency Newport Beach 1107 Jamboree Rd CV CV CV-B/CV Bisected Yes No 11 Balboa Inn 105 Main St. CV CV CV-B/CV Yes Yes No 12 Bay Shores Peninsula Hotel 1800 West Balboa Blvd. CV CV CV-A/CV Yes No No 13 Little Inn By The Bay 2627 Newport Blvd. CV CV CV-A/CV Bisected No No 14 Newport Channel Inn 6100 West Coast Highway CV CV CV-A/CV No No No 15 Hotel Solarena 6208 West Coast Highway CV CV CV-A/CV No No No 16 Holiday Inn Express 2300 West Coast Highway CV CV CV-A/CV Bisected. No No 17 Pine Knot 6302 West Coast Highway CV CV CV-A/CV No No No 18 Marriot’s Newport Coast Villas 23000 Newport Coast Dr CV PC52 (PA13C- Tourist Commercial) PC52 Bisected No No 19 Doryman’s Inn 2102 West Ocean Front CV CV CV-B/CV Yes No No 20 Crystal Cove Beach Cottages 35 Crystal Cove OS PC52 (PA17) PC52 (PA17) Yes No No 21 Extended Stay America OC John Wayne Airport 4881 Birch Street CG PC15 (Retail and Service Site 1) __ __ No No 22 The Newport Beach Hotel A Four Sisters Inn 2306 W Oceanfront CV CV CV-B/CV Yes No No 25 INTENTIONALLY BLANK PAGE26 Attachment No. PC 2 Council Policy K-4 27 INTENTIONALLY BLANK PAGE2828 K-4 Reducing the Barriers to the Creation of Housing Background 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 2929 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: 3030 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. Planning 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. 3131 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. 3232 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. Adopted K-4 – 03-09-2021 3333 May 6, 2021, Planning Commission Item 6 Comments These comments on a Newport Beach Planning Commission agenda item are submitted by: Jim Mosher ( jimmosher@yahoo.com ), 2210 Private Road, Newport Beach 92660 (949-548-6229). Item No. 6. DIRECTOR'S INTERPRETATION FOR ACCESSORY RESIDENTIAL USES ASSOCIATED WITH HOTELS (PA2021-096) The conversion of hotel unit allocations in Newport Beach’s General Plan into dwelling unit allocations has been a matter of controversy in the past, and is explicitly subject to Greenlight tracking under City Council Policy A-18. This purported “Directors Determination” is in effect a thinly disguised General Plan Amendment (that is, a substantial change to the land use allocations currently approved in the General Plan). It requires Greenlight tracking. And I believe the conclusion will be that it requires a Greenlight vote as it adds the possibility of more than 100 previously-unallocated dwelling units to two of the City’s statistical areas. The restriction of the determination to “resort hotels” outside the Coastal Commission’s appeal area is likewise a thinly disguised attempt to effectively amend the City’s Local Coastal Program without possibility of review. Were it subject to review, it seems uncertain, if not improbable, that the Coastal Commission would regard dwelling units as a proper substitute for visitor-serving hotel rooms. Planning Commission - May 6, 2021 Item No. 6a - Additional Materials Received Director's Interpretation For Accessory Residential Uses Associated With Hotels (PA2021-096)