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HomeMy WebLinkAbout2021-78 - Denying an Appeal and Upholding the Community Development Director’s Determination No. DD2021-001, and Associated Findings, that Accessory Residential is an Allowed Use within Resort Hotels (PA2021-096)RESOLUTION NO. 2021-78 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, DENYING AN APPEAL AND UPHOLDING THE COMMUNITY DEVELOPMENT DIRECTOR'S DETERMINATION NO. DD2021-001 AND ASSOCIATED FINDINGS THAT ACCESSORY RESIDENTIAL IS AN ALLOWED USE WITHIN RESORT HOTELS (PA2021-096) 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 Council policy and amend the City of Newport Beach's ("City") land use and zoning codes related to housing opportunities; WHEREAS, 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); WHEREAS, the City Council adoption of Council Policy K-4 was not challenged by the appellant or any other party, and the time for such a challenge has elapsed; WHEREAS, 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 Sixth Cycle Regional Housing Needs Allocation ("RHNA"); WHEREAS, as a result of these constraints, 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; WHEREAS, 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; Resolution No. 2021-78 Page 2 of 15 WHEREAS, the goals of Council Policy K-4 include interpreting ambiguities in the City's General Plan, Coastal Land Use Plan, Title 20 (Planning and Zoning) and Title 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 30 percent of their approved hotel rooms into residential units on a one- for-one basis; WHEREAS, 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 underlying General Plan, Coastal Land Use Plan and NBMC land use and zoning designations; WHEREAS, 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; WHEREAS, there are currently 22 hotels in the City, of which 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; WHEREAS, of the 10 resort hotels in the City, one hotel is located in the coastal zone, but completely outside the Coastal Commission Appeal Jurisdiction area, and three hotels are located outside the coastal zone, therefore, the following four hotels meet the criteria of a resort hotel located outside the Coastal Commission Appeal Jurisdiction: a. Renaissance Newport Beach located at 4500 MacArthur Boulevard ("Renaissance") is designated MU -H2 (Mixed -Use Horizontal) by the General Plan Land Use Element and is located within the Koll Center Planned Community (PC15) Zoning District. Hotels are an allowed use, subject to a conditional use permit. The Renaissance is not located within the coastal zone, b. Hyatt Regency John Wayne Airport located at 4545 MacArthur Boulevard ("Hyatt") is designated MU -H2 (Mixed -Use Horizontal) by the General Plan Land Use Element and is located within Hotel Site 1 of the Newport Place Planned Community (PC11) Zoning District. Hotels are an allowed use, subject to a conditional use permit. The Hyatt is not located within the coastal zone, Resolution No. 2021-78 Page 3 of 15 C. Fashion Island Hotel located at 690 Newport Center Drive ("Fashion Island Hotel") is designated MU -H3 (Mixed -Use Horizontal) by the General Plan Land Use Element and is located within Block 600 Subarea of the North Newport Center Planned Community (PC56) Zoning District. Hotels are an allowed use, subject to a conditional use permit. The Fashion Island Hotel is not located within the coastal zone, and d. Newport Beach Marriott located at 900 Newport Center ("Marriott") is designated CV (Visitor Serving Commercial) by the General Plan Land Use Element and is located within the Commercial Visitor -Serving Zoning District. Hotels are an allowed use, subject to a conditional use permit. The Marriott is located within the coastal zone. The Coastal Land Use Plan category is CV - B (Visitor Serving Commercial) and is located within the CV (Commercial Visitor -Serving) Coastal Zoning District. Hotels are allowed subject to a conditional use permit and coastal development permit; WHEREAS, the Director's Determination did not amend the General Plan, and instead relied upon the existing authority found in the General Plan, the Municipal Code, the LCP, Council Policy K-4, and NBMC Sections 20.10.030, 20.12.020, 21.10.030 and 21.12.020; WHEREAS, Title 20 (Planning and Zoning) of the NBMC ("Title 20" or "Zoning Code") is intended to carry out the policies of the City of Newport Beach General Plan; WHEREAS, Section 20.10.030 (Authority -Relationship to General Plan) of the NBMC, states that the Zoning Code is the primary tool used by the City to carry out the goals, objectives, and policies of the General Plan with the intent that all provisions of the Zoning Code be consistent with the General Plan and any development, land use, or subdivision approved in compliance with these regulations will also be consistent with the General Plan; WHEREAS, the PC11, PC15, and PC56 Planned Community Development Plans state that the requirements of the Zoning Code shall apply, unless otherwise stated; WHEREAS, Section 20.12.020 (Rules of Interpretation) of the NBMC authorizes the Community Development Director ("Director") to interpret the meaning of provisions of the Zoning Code; Resolution No. 2021-78 Page 4 of 15 WHEREAS, Title 21 (Local Coastal Program Implementation Plan) of the NBMC is intended to carry out the policies of the City of Newport Beach Coastal Land Use Plan and Coastal Act of 1976; WHEREAS, Section 21.10.030 (Authority—Relationship to Coastal Land Use Plan) of the NBMC states that the Local Coastal Program Implementation Plan is the primary tool used by the City to carry out the goals, objectives, and policies of the Coastal Land Use Plan with the intent that all provisions of the Local Coastal Program Implementation Plan be consistent with the Coastal Land Use Plan and any development, land use, or subdivision approved in compliance with these regulations will also be consistent with the Coastal Land Use Plan, and that if any proposed development is located between the first public road and the sea or shoreline of any body of water located within the coastal zone, any approved development must be in conformity with the public access and recreation policies of Chapter 3 of the Coastal Act; WHEREAS, Director's Determination No. DD2021-001 does not impact any properties located within the first public road and the sea or shoreline of any body of water; WHEREAS, Section 21.12.020 (Rules of Interpretation) of the NBMC authorizes the Community Development Director to interpret the meaning of provisions of the Implementation Plan; WHEREAS, both Title 20 (Planning and Zoning) and Title 21 (Local Coastal Program Implementation Plan) 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; WHEREAS, 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); Resolution No. 2021-78 Page 5 of 15 WHEREAS, 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; WHEREAS, on April 30, 2021, consistent with City Council's direction provided in Council Policy K-4, the Community Development Director issued Director's Determination No. DD2021-001 set forth in Exhibit 'A," which is attached hereto and incorporated herein by reference, interpreting accessory residential as an allowed use within resort hotels; WHEREAS, in issuing Director's Determination No. DD2021-001, the Community Development Director was acting in accordance with the direction given by the City Council in City Council Policy K-4, which policy is final and effective; WHEREAS, on appeal, the issue before the City Council is limited to whether the Director's Determination is consistent with City Council Policy K-4 because all questions raised in the appeal regarding the consistency with City Charter Section 423 and City Council Policy A-18 were fully and finally resolved by and through the adoption of City Council Policy K-4; WHEREAS, on May 14, 2021, Stop Polluting Our Newport ("SPON") filed an appeal of the Director's Determination No. DD2021-001 alleging that the determination improperly converts General Plan -approved hotel allocations into General Plan -approved dwelling unit allocations without Greenlight (Charter Section 423) tracking, in contravention of Council Policy A-18; WHEREAS, the appeal also states that the determination adds the potential for some 250 new dwelling units to the General Plan Statistical Area L1, which would require voter approval if processed as a General Plan Amendment; WHEREAS, the Planning Commission held a de novo public hearing on July 8, 2021, in the Council Chambers located at 100 Civic Center Drive, Newport Beach. A notice of time, place and purpose of the hearing was given in accordance with California Government Code Section 54950 et seq. ("Ralph M. Brown Act") and Chapters 20.62 and 21.62 (Public Hearings) of the NBMC. Evidence, both written and oral, was presented to, and considered by, the Planning Commission at this hearing; WHEREAS, at the conclusion of the public hearing, the Planning Commission unanimously adopted Resolution No. PC2021-016 (6 ayes and 1 abstention) denying the appeal and upholding the Director's Determination No. DD2021-001; Resolution No. 2021-78 Page 6 of 15 WHEREAS, on July 22, 2021, Stop Polluting Our Newport ("SPON") filed an appeal of the Planning Commission's decision to uphold Director's Determination No. DD2021-001 citing the reasons set forth in its May 14, 2021 appeal; and WHEREAS, the City Council held a de novo public hearing on August 24, 2021, in the Council Chambers located at 100 Civic Center Drive, Newport Beach. A notice of time, place and purpose of the hearing was given in accordance with the Ralph M. Brown Act and Chapters 20.62 and 21.62 (Public Hearings) of the NBMC. Evidence, both written and oral, was presented to, and considered by, the City Council at this hearing. NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1: The City Council has considered the reasons cited in the appeal and finds that Director's Determination No. DD2021-001 interpreting that residential uses are permitted as an accessory use to hotels is authorized pursuant to Director's authority granted in Sections 20.12.020 and 21.12.020 of the NBMC. The City Council finds that Director's Determination No. DD2021-001 is consistent with City Council Policy K-4. Although not necessary to deny the appeal, the City Council determines that the restrictions described in Section 2 below will further ensure that residential uses remain an accessory use to the hotel, do not increase the level of activity on a site, and do not change the primary use of the property from hotel to residential. Director's Determination No. DD2021-001 does not amend the General Plan, and instead relies on the existing authority found in the General Plan, NBMC, and LCP for the Community Development Director to determine an unlisted land use may be allowed. As such, an amendment to the General Plan and Local Coastal Plan to change the land use designations or increase the development limits is not required, and the determination does not violate City Charter Section 423 and/or City Council Policy A-18. Section 2: The City Council's denial of the appeal and upholding of the Director's Determination No. DD2021-001 interpreting that residential uses are permitted as an accessory use to hotels are subject to the following: 1. 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. Resolution No. 2021-78 Page 7 of 15 2. 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. 3. Approved hotel rooms may be converted to residential units but only on a one-for- one basis. 4. 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. 5. The residential units may be located within a repurposed hotel or in a new residential structure. 6. 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. 7. 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. Section 3: In accordance with Section 20.12.020(E) (Rules of Interpretation — Unlisted Uses of Land) of the NBMC, the Director, and the City Council on appeal, 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 based on the following findings and facts in support of findings as set forth below. 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; Resolution No. 2021-78 Page 8 of 15 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 similar or less than 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 (three [3] to ten [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 will 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. 5. Pursuant to Council Policy K-3 (Implementation Procedures for the California Environmental Quality Act) 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 Resolution No. 2021-78 Page 9 of 15 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 (8) daily trips per room. The SANDAG daily trip rate for Multi -Family Condominium is also eight (8) 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 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. Resolution No. 2021-78 Page 10 of 15 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 Findinq: 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. Resolution No. 2021-78 Page 11 of 15 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: Hotels with an accessory residential use are not listed as allowable in any other zoning district. Stand-alone residential uses, which are allowable in another zoning district, would not be permitted under this interpretation. Resolution No. 2021-78 Page 12 of 15 Finding: E. The proposed use is not a prohibited or illegal use. Fact in Support of Finding: Hotels with an accessory residential use are neither a prohibited or an illegal use. Section 4: In accordance with Section 21.12.020(E) (Rules of Interpretation — Unlisted Uses of Land) of the NBMC, the Director, and Planning Commission on appeal, 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 based on the following findings and facts in support of findings as set forth below: 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 rooms to residential units would require 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-cost visitor accommodations. Resolution No. 2021-78 Page 13 of 15 4. Facts in Support of Finding A.3 through A.8 are hereby incorporated by reference. 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. Findinq: H. The proposed use will be consistent with the goals, objectives, and policies of the Coastal Land Use Plan; Facts in Support of Findinq: 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. Resolution No. 2021-78 Page 14 of 15 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. The applicability of this restriction ensures that coastal access and the most sensitive 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. Finding: 1. The proposed use is not listed as allowable in another coastal zoning district; and Fact in Support of Finding: 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: Hotels with an accessory residential use are neither a prohibited or an illegal use. Section 5: The recitals provided in this resolution are true and correct and are incorporated into the operative part of this resolution. Section 6: 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. 2021-78 Page 15 of 15 Section 7: The City Council hereby finds this Director's Determination 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 Director's Determination is also exempt pursuant to CEQA Guidelines Section 15061(b)(3), the general rule common sense exemption that CEQA applies only when there is the potential for causing a significant effect on the environment. Specifically, the determination is for the purpose of interpreting the Zoning Code and Local Coastal Program Implementation Plan. This action will not change the existing land use designations, will not increase intensity of use, and will not authorize new development that would directly result in physical change to the environment. Section 8: 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 24th day of August 2021. ATTEST: W 1 M,m7myeffM r��►�� City Clerk APPROVED AS TO FORM: CITY TTORNEY'S OFFICE a rkn C. Harp City Attorney Brad ry mew Attachment(s) — Exhibit A - Director's Determination No. DD2021-001 SEW Ppb Old I CITY OF NEWPORT BEACH } y COMMUNITY DEVELOPMENT DEPARTMENT r) 100 Civic Center Drive U )t S Newport Beach, California 92660 Cq(/FORN\P 949 644-3200 newportbeachca.gov/communitydevelopment Dired&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 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 ort Hotel Prol iertles in the City Map Hotel Name Location General Plan Local Coastal Zoning ID Program 1 Renaissance 4500 MacArthur Blvd. Mixed -Use N/A- Outside Coastal Koll Center Planned Newport Beach Horizontal Zone Community (PC 15) MU -H2 2 Fashion Island 690 Newport Center Dr. MU -H3 N/A- Outside Coastal North Newport Hotel Zone Center Planned Community PC56 3 Hyatt Regency 4545 MacArthur Blvd. MU -H2 N/A- Outside Coastal Newport Place John Wayne Zone Planned Community Airport PC11 4 Newport Beach 900 Newport Center Dr. Visitor Serving Commercial Visitor- Commercial Visitor - Marriot Commercial Serving (CV -B) /Visitor Serving (CV) (CV) Serving Commercial CV 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 istrict, Facts in Support of finding: 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. 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. Findin : B. The proposed use will meet the purpose/intent of the zoning district that is applied to the location of the use,- Facts se, Facts in Support of finding: 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 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: 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. 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. Findinq: D. The proposed use is not listed as allowable in another zoning district; Fact in Support of finding: 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. 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: 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: 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. 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_ 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: 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. Interpreting Accessory Residential as an Allowed Use within Resort Hotels (PA2021-096) Director's Determination, April 30, 2021 Page 9 Finding: The proposed use is not listed as allowable in another coastal zoning district; and Fact in Support of finding 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: 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. Interpreting Accessory Residential as an Allowed Use within Resort Hotels (PA2021-096) Director's Determination, April 30, 2021 Page 10 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. J" . n�i Seimone Jurjis, P CB Community Deve pment Director Attachments: A — Hotel Map and List ATTACHMENT A Hotel Map and List a� ATIA Q = o 0 a, o m d Mm CL cr w z K} d j y y Z z z z z z z z z z z z z z z z Z z O N v N w w y 0 0 0 0 0 0 0 0 0 0 o O >> r>-> z>> r r > z z z z z z z z z z z No v ¢` w w w w ._- v w 0 w CL o h 0 0 N 0 a z m>> m''M m >y'mzzCo z'm } } c m N 14 M N c u a a a > u u u u u u u a $ A m�,ma� m maaaaa aN N mu m UO >u > u I > u U V U U a U a U Q m Fi. � •� .L v 3 f n v E v u E .. 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CITY OF NEWPORT BEACH I, Leilani I. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the whole number of members of the City Council is seven, the foregoing resolution, being Resolution No. 2021-78 was duly introduced before and adopted by the City Council of said City at a regular meeting of said Council held on the 24th day of August, 2021, and the same was so passed and adopted by the following vote, to wit: AYES: Mayor Brad Avery, Mayor Pro Tem Kevin Muldoon, Council Member Noah Blom, Council Member Joy Brenner, Council Member Diane Dixon, Council Member Duffy Duffield, Council Member Will O'Neill NAYS: None IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of said City this 251h day of August, 2021. * r 0 Leilani I. Brown City Clerk Newport Beach, California