HomeMy WebLinkAboutPA2021-019_20210309_City Council Staff ReportQ EwPpRT
CITY OF
O
z NEWPORT BEACH
FORN'P City Council Staff Report
March 9, 2021
Agenda Item No. 4
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Seimone Jurjis, Community Development Director - 949-644-3232,
sjurjis@newportbeachca.gov
PREPARED BY: Jaime Murillo, AICP, Principal Planner
jmurillo@newportbeachca.gov
PHONE: 949-644-3209
TITLE: Resolution Nos. 2021-18 and 2021-19: Adoption of City Council
Policy K-4 (Reducing the Barriers to the Creation of Housing) and
Initiation of Amendments Related to Increasing Housing
Opportunities (PA2021-019)
ABSTRACT:
For the City Council's consideration is adoption of a new Council Policy K-4 (Reducing
the Barriers to the Creation of Housing) and an initiation of amendments to the General
Plan, Coastal Land Use Plan of the Local Coastal Program, and Newport Beach Municipal
Code (NBMC) Title 20 (Planning and Zoning) and Title 21 (Local Coastal Program
Implementation Plan), as necessary, to consider new and flexible land use and zoning
amendments related to increasing housing opportunities.
RECOMMENDATION:
a) Determine this action is exempt from environmental review under the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2), 15060(c)(3), and
15262 of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6,
Chapter 3, because it has no potential for resulting in physical change to the
environment, directly or indirectly;
b) Adopt Resolution No. 2020-18, A Resolution of the City Council of the City of Newport
Beach, California, Adopting Council Policy K-4 (Reducing Barriers to the Creation of
Housing) (PA2021-019); and
c) Adopt Resolution No. 2020-19, A Resolution of the City Council of the City of Newport
Beach, California, Initiating Amendments to the City of Newport Beach General Plan,
Coastal Land Use Plans, and Titles 20 (Planning and Zoning) and 21 (Local Coastal
Program Implementation Plan) of the City of Newport Beach Municipal Code Related
to Increasing Housing Opportunities (PA2021-019).
4-1
Resolution Nos. 2021-18 and 2021-19: Adoption of City Council Policy K-4
Reducing the Barriers to the Creation of Housing) and Initiation of Amendments
Related to Increasing Housing Opportunities (PA2021-019)
March 9, 2021
Page 2
FUNDING REQUIREMENTS:
There is no fiscal impact related to the initiation of these amendments.
DISCUSSION:
On October 15, 2019, the California Department of Housing and Community
Development (HCD) issued a Regional Housing Needs Assessment (RHNA) for the
Southern California Association of Governments (SCAG) region of 1,341,827 units that
each jurisdiction within the region must plan for in the 2021-2029 Planning Permit (Sixth
Cycle). As required under State of California (State) law, SCAG developed a RHNA
Allocation Methodology to reallocate the regional determination to each of the 197
jurisdictions in the region, including Newport Beach.
The City of Newport Beach (City) worked diligently for many months in partnership with
other member jurisdictions and stakeholders throughout the RHNA Allocation
Methodology development process to provide comments and recommendations to
achieve a RHNA allocation that is fair, equitable and in consideration of the unique
circumstances and local planning factors inherent in our community. Despite this process
and a City -initiated RHNA appeal, the final adopted RHNA methodology resulted in an
allocation of 4,845 units for the City.
At the February 9, 2021, City Council Study Session related to the Housing Element
Update, the City Council provided staff direction to develop a new Council policy related
to housing production, including: Accessory Dwelling Unit (ADU) production, review of
existing mixed-use zoning districts, and potentially allowing residential development in
conjunction with existing hotel development (Attachment C- Minutes).
Council Policv K-4 (Reducina the Barriers to the Creation of Housin
The draft Council Policy serves as a statement of the City's commitment to addressing
the State housing crisis by developing a compliant Housing Element and continuing to
support the production of housing for all income limits. In response to the City's
unprecedented RHNA Allocation, the policy recognizes that the City may need to consider
new and flexible land use and zoning designations and strategies in order to
accommodate this ambitious housing mandate, while protecting the character of the
community and maintaining a quality of life that makes Newport Beach a special place to
live, work and visit.
The policy focuses on the three distinct housing -related efforts recommended by the City
Council:
Production of ADUs — Sets forth policies to further encourage and incentivize the
development of ADUs beyond the minimum State law requirements as an
important strategy to accommodate future growth in combination with other
strategies to meet the RHNA Allocation.
4-2
Resolution Nos. 2021-18 and 2021-19: Adoption of City Council Policy K-4
Reducing the Barriers to the Creation of Housing) and Initiation of Amendments
Related to Increasing Housing Opportunities (PA2021-019)
March 9, 2021
Page 3
Planning Commission Review and Recommendations for Mixed -Use Designations
Despite the new mixed-use housing opportunities that were created in the 2006
Comprehensive General Plan Update, most of these sites remain underutilized
with a single, non-residential use, such as retail or office. It is evident the City's
existing development standards related to mixed-use development may create
constraints to the redevelopment of these properties. Therefore, the policy directs
staff and the Planning Commission to review annually the established mixed-use
zones in the City and recommend code changes or policy ideas to the City Council
that reduce regulatory barriers and incentivize mixed-use residential development.
Mixed -Use Resort Opportunities — Mixed-use resorts provide an opportunity to
revitalize older resort hotels by incorporating accessory residential units. The
policy affirms the City Council's direction to interpret ambiguities in code provisions
to allow for limited residential units as an accessory use to the principal use of a
hotel, and to pursue any needed amendments to accommodate such uses.
Initiation of Amendments Related to Increasina Housina Opportunities
The purpose of initiating the code amendments is to implement the City Council Policy K-
4 (Reducing the Barriers to the Creation of Housing) and propose amendments to provide
additional housing opportunities.
The future code amendments will consider new and/or flexible land use and zoning
amendments related to increasing housing opportunities, expanding mixed-use housing
opportunities, and expanding the use of transfer of development rights.
The resolution recognizes that given the need for housing, City policies, rules, and
regulations, to the greatest extent possible, should be interpreted to provide additional
housing opportunities to accommodate the City's RHNA allocation.
Any amendments pursued would consider the need to comply with the City's Charter
Section 423.
ENVIRONMENTAL REVIEW:
The adoption of these resolutions are exempt from environmental review under the
California Environmental Quality Act ("CEQA"), pursuant to Section 15262, 15060(c)(2)
and 15060(c)(3) of the CEQA Guidelines, California Code of Regulations, Title 14,
Division 6, Chapter 3, because they involve feasibility or planning studies for possible
future actions which the agency, board, or commission has not approved or adopted, and
because have no potential for resulting in physical change to the environment, directly or
indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
4-3
Resolution Nos. 2021-18 and 2021-19: Adoption of City Council Policy K-4
Reducing the Barriers to the Creation of Housing) and Initiation of Amendments
Related to Increasing Housing Opportunities (PA2021-019)
March 9, 2021
Page 4
ATTACHMENTS:
Attachment A — Resolution No. 2021-18 (Council Policy K-4)
Attachment B — Resolution No. 2021-19 (Initiation of Amendments)
Attachment C — February 9, 2021, City Council Minutes
Attachment A
Draft Resolution
Council Policy K-4
4-5
RESOLUTION NO. 2021-18
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
NEWPORT BEACH, CALIFORNIA, ADOPTING COUNCIL
POLICY K-4 (REDUCING THE BARRIERS TO THE
CREATION OF HOUSING) (PA2021-019)
WHEREAS, the City of Newport Beach ("City") is governed, in part, by its Charter,
Municipal Code, and adopted City Council Policies;
WHEREAS, at the February 9, 2021, City Council Study Session related to the
Housing Element Update, the City Council provided staff direction to develop a new City
Council policy and amend the City's land use and zoning codes related to housing
opportunities; and
WHEREAS, the City Council of the City of Newport Beach desires to adopt
Council Policy K-4, Reducing the Barriers to the Creation of Housing, attached hereto
as Exhibit "A" and incorporated herein by reference.
NOW, THEREFORE, the City Council of the City of Newport Beach resolves as
follows:
Section 1: The City Council hereby adopts City Council Policy K-4, Reducing
the Barriers to the Creation of Housing, attached hereto as Exhibit "A" and incorporated
herein by reference.
Section 2: The recitals provided in this resolution are true and correct and are
incorporated into the operative part of this resolution.
Section 3: If any section, subsection, sentence, clause or phrase of this
resolution is, for any reason, held to be invalid or unconstitutional, such decision shall
not affect the validity or constitutionality of the remaining portions of this resolution. The
City Council hereby declares that it would have passed this resolution, and each
section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any
one or more sections, subsections, sentences, clauses or phrases be declared invalid
or unconstitutional.
Resolution No. 2021 -
Page 2 of 2
Section 4: The City Council finds the adoption of this resolution is not subject
to the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2)
the activity will not result in a direct or reasonably foreseeable indirect physical change
in the environment) and 15060(c)(3) (the activity is not a project as defined in Section
15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6,
Chapter 3, because it has no potential for resulting in physical change to the
environment, directly or indirectly. The proposed action is also exempt pursuant to
CEQA Guidelines Section 15061(b)(3), the general rule that CEQA applies only to
projects which have the potential for causing a significant effect on the environment.
The Council Policy is a statement and does not itself authorize development that would
directly result in physical change to the environment.
Section 5: Except as expressly modified in this resolution, all other City Council
Policies, sections, subsections, terms, clauses and phrases set forth in the Council
Policy Manual shall remain unchanged and shall be in full force and effect.
Section 6: This resolution shall take effect immediately upon its adoption by
the City Council, and the City Clerk shall certify the vote adopting the resolution.
ADOPTED this 9th day of March, 2021.
Brad Avery
Mayor
ATTEST:
Leilani I. Brown
City Clerk
APPROVED AS TO FORM:
CITY ATT-QRNEY'S OFFICE
AaronI
rnCityA ey
Attachment: Exhibit A- Council Policy K-4 (Reducing the Barriers to the Creation of
Housing)
4-7
Reducing the Barriers to the Creation of Housing
Background
LIMA!
The State of California has declared that the lack of housing is a critical problem that
threatens the economic, environmental, and social quality of life in California. The
consequences of the housing crisis include the lack of housing to support employment
growth, imbalance in jobs and housing, reduced mobility, urban sprawl, excessive
commutes, and air quality deterioration. While the causes of this crisis are multiple and
complex, the State attributes the underlying cause to insufficient housing supply.
On October 15, 2019, the California Department of Housing and Community
Development (HCD) issued a Regional Housing Needs Assessment (RHNA) for the
Southern California Association of Governments (SCAG) region of 1,341,827 units that
each jurisdiction within the region must plan for in the 2021-2029 Planning Permit (Sixth
Cycle). As required under State law, SCAG developed a RHNA Allocation Methodology
to reallocate the regional determination to each of the 197 jurisdictions in the region,
including Newport Beach.
The City of Newport Beach worked diligently for many months in partnership with other
member jurisdictions and stakeholders throughout the RHNA Allocation Methodology
development process to provide comments and recommendations to achieve a RHNA
allocation that is fair, equitable and in consideration of the unique circumstances and local
planning factors inherent in our community. Despite this process and a City -initiated
RHNA appeal, the final adopted RHNA methodology resulted in an allocation of 4,845
units for the City.
The City has successfully obtained and maintained HCD certification of its Housing
Element for both the Fourth Cycle (2008-2014) Planning Period with a RHNA Allocation
of 1,769 units and the Fifth Cycle (2014-2021) Planning Period with a RHNA Allocation
of 5 units. Despite a low Fifth Cycle RHNA Allocation, the City maintained its commitment
to housing programs intended to reduce the barriers to the development of affordable
housing, including preserving the Residential Overlay within the Newport Place Planned
Community. During the first six years of the Fifth Cycle Planning Period, the City has
permitted over 1,768 new units, including 95 lower income units. In addition, the City has
approved entitlements for housing development projects totaling another 662 multi -unit
residential units in the Airport Area, including 13 very low- and 78 low-income units. The
Newport Airport Village Planned Community was also adopted creating the opportunity
for another 444 residential units that would include a minimum affordable housing
component consisting of at least 5 percent very low-income units or 10 percent low
income units. Lastly, the City has committed approximately $2 million to fund the
acquisition and rehabilitation of the Cove permanent supportive housing project a 12 -unit
apartment complex for homeless veterans and low-income seniors that opened in 2018.
Despite an immensely difficult -to -attain Sixth Cycle RHNA Allocation, the City remains
committed to addressing the housing crisis by developing a timely and compliant Housing
Element and continuing to support the production of housing for all income levels.
Policy
Recognizing that the City has several major constraints on existing lands that severely
limit or totally restrict the City's ability to accommodate growth to the extent identified in
the Sixth Cycle RHNA Allocation, it shall be the policy of the City Council to consider new
and flexible land use and zoning regulations and strategies in order to reasonably and
practically accommodate this ambitious State housing mandate while protecting the
character and maintaining a quality of life that makes Newport Beach a special place to
live, work, and visit.
The City Council therefore directs City staff and the Newport Beach Planning Commission
to develop, modify as necessary, and aggressively implement strategies and action plans
that are designed to accelerate housing production consistent with this policy as
described in the following sections:
Production of Accessory Dwelling Units
The Legislature approved, and the Governor signed SB 13 (Chapter 653, Statutes of
2019), AB 68 (Chapter 655, Statutes of 2019), and AB 881 (Chapter 659, Statutes of
2019) into law that, among other things, amended Government Code sections 65852.2
and 65852.22 to further impose new limits on the City's ability to regulate ADUs and Junior
Accessory Dwelling Units (JADUs). The Legislature's intent was to reduce regulatory
barriers and costs, streamline the approval process, and expand the potential capacity
for ADUs.
Although the City has revised its ADU regulations to comply with the minimum
requirements of State law, further encouraging the development ADUs is an important
strategy to accommodate future growth in combination with other strategies to meet the
RHNA Allocation. HCD allows ADUs to meet a portion of the City's RHNA based on trends
in past production and more aggressive production estimates based on the adoption of
production programs. Encouraging ADUs allows for the dispersing of density throughout
the City and avoids the need for excessive rezoning and high infrastructure costs
associated with new high-density developments. Because ADUs tend to be relatively
small with modest amenities, they provide more affordable housing options for select
groups, such as students, seniors, caretakers, and people with disabilities.
Therefore, to further encourage and incentivize the development of ADUs, the City should
pursue the following:
6 •
1. Interpret ambiguities in code provisions regulating ADUs in a manner that
accommodates and maximizes production.
2. Direct staff and the Planning Commission to review and recommend code changes
that reduce regulatory barriers, streamline the approval process, and expand
potential capacity of ADUs beyond minimum State law requirements.
3. Publicize incentives for construction of ADUs with a systematic approach utilizing
all forms of media and outreach.
4. Prepare and maintain a user-friendly website committed to information related to
codes, processes, and incentives pertaining to the development of ADUs and
JADUs in the City.
5. Develop and administer a program that includes waiving all permit and City fees
for property owners of unpermitted units when they agree to bring units into
compliance with current building and fire codes to ensure the safety of occupants
and structures.
6. Develop permit -ready standard plans to permit new ADU construction to minimize
design costs, expedite permit processing, and provide development certainty for
property owners.
Planninq Commission Review and Recommendations for Mixed -Use Designations
As part of the 2006 Comprehensive General Plan Update and 2010 Zoning Code Update,
new mixed-use housing opportunity zones were created throughout the City as a strategy
to enhance and revitalize underperforming and underutilized properties. These areas
included the Airport Area, Dover/Westcliff, Newport Center, Mariners Mile, and portions
of the Balboa Peninsula. The Airport Area and Newport Center have proven the most
successful with several approved and constructed mixed-use developments, such as
Uptown Newport and Villas Fashion Island. The Balboa Peninsula has had some limited
success while Dover/Westcliff and Mariners' Mile have not proven successful to -date.
Despite the housing opportunity that has been created on several properties in these
areas, a majority of these sites remain underutilized with a single, non-residential use,
such as retail or office. It is evident the City's existing development standards (e.g.,
setbacks, height, density, parking, dedications, etc.) related to mixed-use development
may create constraints to the redevelopment of these properties. Therefore, to ensure
that mixed-use opportunities envisioned by the 2006 General Plan redevelop to their full
potential, the City should pursue the following:
1. Direct staff and the Planning Commission to review annually the established
mixed-use zones in the City and recommend code changes or policy ideas to the
City Council that reduce regulatory barriers and incentivize mixed-use residential
development.
4-10
Mixed -Use Resort Opportunities
Mixed-use resorts are an established trend in the hospitality industry that incorporate
hotel -branded residential units as an accessory use located within a resort hotel complex
where residents enjoy access to the full range of services, facilities, and amenities
provided by the hotel operator or brand. The residential use cannot exist without the
hotel's services, facilities, and amenities.
The hotel industry has been one of the hardest hit industries due to the COVID-19
pandemic and a full recovery of the industry is not anticipated for many years. Mixed-use
resorts provide an opportunity to revitalize older or underperforming hotels and maintain
their competitive standing by creating multiple revenue streams.
Economies of scale created by shared facilities, amenities, and services add additional
benefit to mixed-use resort developments. This cross pollination of business benefits both
the hotel and the resident. It may also increase occupancy rates at the resort by creating
increased synergy between uses and social gathering opportunities, boosting transient
occupancy taxes while providing in -fill housing opportunities to partially assist the City in
meeting its RHNA obligation in highly desirable and built -out areas. Incorporating
residences also helps to off -set cyclical variations in hotel occupancy rates that can, for
instance, result in seasonal decreases in revenue for the hotel's food and beverage
offerings.
Therefore, to further encourage and incentivize the development of mixed-use hotels, the
City should pursue the following:
1. Issue interpretations that interpret ambiguities in General Plan, Zoning Code,
and/or Local Coastal Plan Program provisions to allow hotels and motels, located
outside of the Coastal Commission Appeal Areas, to convert up to thirty percent
30%) of their permitted hotel and motel rooms into residential units on a one-for-
one basis. Such interpretation would allow for residential units to be deemed an
accessory use to the principal use of a hotel and find that such residential uses are
consistent with the hotel's and motel's underlying General Plan, Zoning Code, and
Local Coastal Plan Program land use and zoning designations.
2. The residential units may be allowed in repurposed hotel and motel rooms and/or
in new residential structures, subject to the City's project approval process (e.g.,
Site Development Review) and including, as appropriate, review under the
California Environmental Quality Act.
3. Consider establishing parking programs (e.g., shared parking) and/or reduced
residential parking requirements that mitigate the need for any additional parking
due to the conversion to residential use.
4. Consider fiscal impact analysis to disclose and mitigate any reduction in transient
occupancy tax due to the conversion.
4-11
5. Consider increasing the flexibility in use of transfer of development rights to allow
for transfer of unbuilt residential units to hotel sites.
6. Require property owners converting permitted hotel and motel rooms into
residential units to mitigate impacts as a result of the conversion including, but not
limited to, creating affordable housing units either in the project itself or through a
contribution of in -lieu fees.
4-12
Attachment B
Draft Resolution
Initiation of
Amendments)
4-13
RESOLUTION NO. 2021-19
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
NEWPORT BEACH, CALIFORNIA, INITIATING
AMENDMENTS TO THE CITY OF NEWPORT BEACH
GENERAL PLAN, COASTAL LAND USE PLAN, AND
TITLES 20 (PLANNING AND ZONING) AND 21 (LOCAL
COASTAL PROGRAM IMPLEMENTATION PLAN) OF THE
CITY OF NEWPORT BEACH MUNICIPAL CODE RELATED
TO INCREASING HOUSING OPPORTUNITIES (PA2021-
019)
WHEREAS, City Council Policy K-1 (General Plan and Local Coastal Program)
requires amendments to the City of Newport Beach ("City") certified Local Coastal
Program ("LCP"), codified in Title 21 (Local Coastal Program Implementation Plan) of
the Newport Beach Municipal Code ("NBMC") to be initiated by the City Council;
WHEREAS, Section 20.66.020 (Initiation of Amendment) of the NBMC provides
that the City Council may initiate an amendment to Title 20 (Planning and Zoning) with
or without a recommendation from the Planning Commission;
WHEREAS, in response to the City's Draft Regional Housing Needs Assessment
RHNA") allocation of 4,845 residential units for the 2021-2029 Sixth Cycle Housing
Element, the Housing Element Update Advisory Committee is considering new and
flexible land use categories and zoning designations to accommodate the City's RHNA
allocation;
WHEREAS, at the February 9, 2021, City Council Study Session related to the
Housing Element Update, the City Council provided staff direction to develop a new City
Council policy and amend the City's land use and zoning codes related to housing
opportunities;
WHEREAS, given the need for housing, City policies, rules and regulations, to the
greatest extent possible, should be interpreted to provide additional housing opportunities
to accommodate the City's RHNA allocation;
WHEREAS, mixed-use resorts are a developing trend in the hospitality industry
that incorporate residential units within a hotel complex or as a mixed-use development;
WHEREAS, adding residential units or the conversion to residential units does
not change the character of the hotel and adds value, allowing them to maintain their
competitive standing in an industry hard hit by the COVID-19 pandemic;
4-14
Resolution No. 2021 -
Page 2 of 3
WHEREAS, adding residential units or the conversion to residential units may
increase occupancy, affordability, transient occupancy taxes, or property taxes while
providing housing opportunities to assist the City in meeting its RHNA allocation;
WHEREAS, expanding the transfer of development rights encourages the
development of housing by transferring allowable density from underutilized or infeasible
sites to properties that have a greater potential to accommodate housing development,
and
WHEREAS, to increase housing opportunities, interpretations of, and
amendments to the General Plan, Coastal Land Use Plan, Title 20 (Planning and
Zoning) of the NBMC and Title 21 (Local Coastal Program Implementation Plan) of the
NBMC are required.
NOW, THEREFORE, the City Council of the City of Newport Beach resolves as
follows:
Section 1: The City Council hereby initiates amendments to the General Plan,
Coastal Land Use Plan of the Local Coastal Program, Title 20 (Planning and Zoning)
of the NBMC, and Title 21 (Local Coastal Program Implementation Plan) of the NBMC
to consider new and/or flexible land use and zoning amendments related to increasing
housing opportunities, expanding mixed-use housing opportunities, and expanding the
use of transfer of development rights.
Section 2: The recitals provided in this resolution are true and correct and are
incorporated into the operative part of this resolution.
Section 3: If any section, subsection, sentence, clause, or phrase of this
resolution is, for any reason, held to be invalid or unconstitutional, such decision shall
not affect the validity or constitutionality of the remaining portions of this resolution. The
City Council hereby declares that it would have passed this resolution, and each
section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any
one or more sections, subsections, sentences, clauses or phrases be declared invalid
or unconstitutional.
Section 4: The City Council finds the adoption of this resolution is exempt
from environmental review under the California Environmental Quality Act ("CEQA")
pursuant to Section 15262 of the CEQA Guidelines, California Code of Regulations,
Title 14, Division 6, Chapter 3, because it involves feasibility or planning studies for
possible future actions, which the agency, board, or commission has not approved or
adopted.
4-15
Resolution No. 2021 -
Page 3 of 3
Section 5: This resolution shall take effect immediately upon its adoption by
the City Council, and the City Clerk shall certify the vote adopting the resolution.
ADOPTED this 9th day of March, 2021.
Brad Avery
Mayor
ATTEST:
Leilani I. Brown
City Clerk
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Aaron . arp
City orney
4-16
Attachment C
February 9, 2021
City Council Minutes
4-17
CITY OF NEWPORT BEACH
City Council Minutes
Study Session and Regular Meeting
February 9, 2021
ROLL CALL - 4:00 p.m.
Present: Mayor Brad Avery. Mayor Pro Tem Kevin Muldoon. Council Member Noah Blom, Council
Member Jov Brenner, Council Member Diane Dixon. Council Member Duffy Duffield.
Council Member Will O'Neill
II. CURRENT BUSINESS
SSI. Clarification of Items on the Consent Calendar — None
SS2. Orange County Human Relations Annual Report
James McQueen and Minzah Malik. Orange County Human Relations Board Members.
announced the creation of Orange County Together. requested support from Newport Beach and
all cities in Orange County. shared data of activities in 2020. and thanked the City for its
membership.
SS3. Current Status of the Housing Element Update Process
Community Development Director Jurjis and Deputy Community Development Director
Campbell utilized a presentation to provide updates regarding the Regional Housing Needs
Assessment (RHNA) allocation, the Housing Element Update Advisory Committee (HEUAC,
and potential sites.
In response to Council Member O'Neill's questions. Community Development Director Jurjis
advised that staff is breaking down Banning Ranch for an affordability component and has
discussed the property with the California Department of Housing and Communitv
Development (HCD), but has not received a response. Further. staff has also spoken with the
California Coastal Commission Executive Director. reported that the HELTAC is focusing on
individual properties because not all properties are primed for redevelopment. and the City must
provide substantial evidence that a parcel of land will turn into housing within the nest eight
years, but details of substantial evidence are not clear at this time. Deputy Community
Development Director Campbell added that the return rate for documentation from property
owners is low.
Council Member Dixon noted that Governor Newsom's proposed budget contains a line item for
a new entity. the Housing Accountability Board, that will work with cities, local agencies. and
counties: and attend council and planning commission meetings to see if there is true
determination to turn existing uses to housing. Community Development Director Jurjis
indicated the Housing Accountability Board has been discussed as a unit to help cities. but it is
definitely an enforcement unit.
Council Member O*Neill indicated that eventually the City needs to submit to HCD specific
parcel numbers, the number of housing units the property will convert to, and the number of
units in each tier of affordability. He thanked HEUAC members and reiterated the challenge of
finding the exact properties.
In response to Mayor Avery's questions. Deputy Community Development Director Campbell
clarified that staff has reached out to property owners citywide, noted that size is a factor in
designating a property as not feasible for redevelopment. stated that an owner's willingness to
change land uses in the next eight years is helpful in providing evidence. and added that staff
is working on possible housing yields and will share them with the HEL AC nest week.
Volume 64 - Page 630 4-18
City of Newport Beach
Study Session and Regular Meeting
February 9, 2021
Community Development Director Jurjis continued the presentation with information about the
West Newport Mesa Light Industrial Area. Airport Area Offices, and Newport Center.
Council Member O'Neill reported that, last year, he sent a letter to the Irvine Company asking
them to weigh in and, based on his phone call with them, he believed they will not play a major
role in this process for substantial evidence purposes.
Community Development Director Jurjis continued his presentation with exploring all options,
including the 65 dB CNEL area. Council Member O'Neill added that, at the last HELIAC
meeting, Brett Feuerstein discussed a potential housing development that would satisfy
affordable housing in that area, the proposal has broad appeal, and if the project moves forward,
any housing would be new so the occupants would understand what they were getting.
In response to Council Member Blom's questions, Deputy Community Development Director
Campbell indicated there is housing in the area, such as Santa Ana Heights, Mesa Drive, and
south of the golf course, stated that the opportunities for housing are limited, and added that a
General Plan Amendment is needed to build housing on the golf course, but today's
consideration is whether to include it for consideration, the right density and affordability.
Community Development Director Jurjis continued the presentation to discuss land uses,
RHNA mandates, and Accessory Dwelling Units (ADU).
In response to Council Member Dixon's questions, Community Development Director Jurjis
stated that ADUs may be built by right, production is about 21 units/year, and added that staff
is working with HCD on standard plans for ADUs.
Council Member Brenner noted the sales efforts of ADU builders and suggested the City might
see some ramifications from that. Community Development Director Jurjis advised that staff
will submit a draft to HCD for their input, and by October, the Housing Element will be more
set in stone.
In response to Mayor Avery's questions, Community Development Director Jurjis related that
the cost to construct an ADU is about $300-$350/square foot, and the property owner will have
to run a pro forma to determine their return. He confirmed that Junior ADUs (JADUs) need to
follow code requirements and stated that, if the ADU is located in a home and the home does
not meet code, it will have to be retrofitted to meet the current code, which can be costly.
Council Member Blom calculated a 25 -year return on a $450,000 investment.
Mayor Avery questioned whether renting part of a property would impact the homeowners' tax
break on selling the property.
Community Development Director Jurjis concluded the presentation by discussing fee impacts,
public benefit fees, development impact fees, the Housing Element schedule, additional
engagement opportunities, newporttogether.com, and next steps.
Council Member O'Neill stated that RHNA is complicated, expressed concern that the City will
not reach compliance by the end of this process, not due to a lack of effort but as a product of
calculations, indicated that CalMatters published an inaccurate article about Newport Beach,
then the Orange County Register used the data to rank cities, believed there seems to be a
perception that Newport Beach is adverse to affordable housing, but that is not historically true
and not true going forward, noted that the City has to find 4,800 units at very specific levels of
affordability, encouraged everyone to read the affordable housing subcommittee discussion,
stated that affordability levels are a County determination, and believed that, in order to
incentivize affordable housing in Newport Beach, there are two approaches: direct subsidy and
density bonuses.
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City of Newport Beach
Study Session and Regular Meeting
February 9, 2021
Deputy Community Development Director Campbell indicated the City's RHNA is roughly 25%
very -low-income, 25% low-income, and 25% moderate -income units. Council Member O'Neill
related that the City cannot reach 1,200 very -low-income units using density bonuses, tax
incentives are limited and competitive, development agreement monies will probably be used
for affordable housing subsidies rather than capital projects, he does not envision residents
being excited about high density, he agrees with Community Development Director Jurjis about
doing things now because it continues to show good -faith efforts, he agrees with doing a General
Plan Amendment and a Council Policy, staff interpretations will be helpful as Council works
through General Plan Amendments, Council needs to look at an overlay in the coastal zone and
the Airport area, mixed-use in areas like light industrial and the 65 dB CNEL area, and
hotel/motel residential conversions with constraints, there could be a Council Policy and General
Plan Amendment for hotels/motels to convert 25% of rooms, a Council Policy could incentivize
ADU production, Council should be aggressive in the ultimate number of ADUs, in a General
Plan Amendment and Council Policy, Council should have a preference for a diversity of
economic uses for office buildings, parking structures, and commercial buildings, the Planning
Commission could review annually or biennially areas of mixed-use that have only single uses
with a preference for encouraging residential in a mixed-use environment, a Council Policy for
the short term and a General Plan Amendment for the long term shows progress and will
achieve more housing units, when the Housing Element and Land Use Element come back, the
conversation will be much harder, and right now, Council should get to the easier portions and
move forward.
Council Member Blom noted there are a number of empty office spaces in Newport Center,
stated that business and citizen interests align when Council makes something better, and
better does not always mean bigger and more robust. He stated that the City is blessed with
people who want to rebuild from within, believed the Irvine Company not wanting to work with
the City is a disservice. recovery is probably not coming to Newport Center, and indicated that
the process needs to move forward quicker.
Council Member Dixon supported accelerating changes to the General Plan and Council Policy
to provide a framework. In response to her question, Community Development Director Jurjis
explained that the General Plan, Housing Element, and Land Use Element are tied together,
and suggested that Council do the easy portions now without triggering the Greenlight
provision, such as conversion of hotel units and mixed-use in light industrial areas. Council
Member Dixon believed the industrial area of West Newport and Newport Center are right for
mixed-use, residential, commercial, and possibly a new village and wondered whether Council
can accelerate that discussion, the City needs as many ADUs as possible and could incentivize
property owners to construct ADUs, proposed legislation restricts parking requirements, and
expressed concern about the City's financial health and maintenance of the City in the future
because of changes to development impact fees.
Council Member Brenner referred to the irony of needing the Irvine Company's help now and
the need to mend fences, and hoped the Irvine Company can see how they and the City can help
each other. In response to her question, Community Development Director Jurjis advised that
a General Plan Amendment is worth having a conversation with the Irvine Company. Council
Member Brenner suggested having a study session specifically about affordable housing and a
conversation with the Newport -Mesa Unified School District about their property above
Banning Ranch. She encouraged forming a program where staff assists property owners with
determining if they can construct an ADU and a citizen -driven program to brainstorm a specific
area plan for West Newport.
Council Member O'Neill clarified that the Irvine Company has not refused to be involved in the
process, but they prefer not to be involved right now, and that his comments about low -hanging
fruit apply to all property owners and suggested using a dual track of General Plan Amendments
and Council Policies.
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City of Newport Beach
Study Session and Regular Meeting
February 9, 2021
Council Member Blom concurred with moving forward with some ideas that do not need to go to
the Coastal Commission, if possible, and hoped to mend fences with those who want to invest in
the City.
Mayor Avery concurred with proceeding quickly, stated that the City needs to create housing
and receive the community's buy -in, indicated that the City needs well-built projects and
oversight in order to create communities that reflect Newport Beach, added that the important
thing is to keep the integrity of current neighborhoods and villages, and believed ADUs will
impact parking.
Council Member Dixon indicated the Irvine Company's vision created the City that residents
enjoy today and it would be a big miss not to have their input, encouraged staff to start
conversations with them, and noted that legislation has changed planning laws and taken away
local control in the last two years.
Jim Mosher criticized the City's online efforts for public engagement, expressed confusion as to
what will be delivered on October 15, discussed staffs interpretation of changing just the
Housing Element without triggering Greenlight, but pointed out that converting hotel rooms to
housing will trigger Greenlight, and noted that staff has not discussed penalties if the City over
promises how much development will occur.
Nancy Scarbrough believed that what the State is asking for is unreasonable, the RHNA
numbers are available in the Kimley-Horn report distributed to the HEUAC in December and
provided the numbers, using ADUs for a large portion of the RHNA numbers can give the City
time to work out the percentages of ADUs versus high-density development versus reallocation,
the City needs a bigger plan to look at this, estimating a higher number ofADUs and monitoring
them will give the City time to plan for high-density housing, the percentages of 5% low-income
to 95% above -moderate or moderate income are not attainable, and the fact that West Newport
is the only industrial area needs to be considered when discussing converting it to housing and
commercial.
David Tanner believed it is okay for the City not to be in compliance with HCD requirements
because the City will not be alone, the State having an enforcement person is inevitable, stated
he wanted to hear more about the general welfare of residents and how changes will improve
quality of life, suggested that Council look at proactive measures to protect quality oflife, related
that the talk about circumventing Greenlight is disheartening, talk about piecemealing the
General Plan is unbelievable, and urged Council to reconsider the proposed course of action and
to look to the people of Newport Beach first.
Council Member O'Neill related that no one said anything about circumventing Greenlight, a
General Plan Amendment is not piecemealing, Council is talking about low -hanging fruit, there
will be many opportunities for public comment and discussion on this, there is a lot of work
being done here, and some of the dual -tracking is more appropriate for General Plan Updates
and some for a Council Policy. He proposed staff return with a Council Policy regarding 1) a
preference for ADU production, direction to staff to interpret codes consistent with that
preference, and direction to staff and the Planning Commission to bring further policy for code
changes to be consistent with that as HCD provides further guidance; 2) a direction to the
Planning Commission to review annually mixed-use zones for properties that have single,
nonresidential uses and to provide policy ideas that incentivize residential in mixed-use areas;
and 3) a preference for interpretation of codes that allow 1:1 hotel/motel conversion but no more
than 30% of the actual hotel/motel and that such interpretation carry with it some type of
development agreement, in -lieu fee, or both.
The City Council unanimously concurred to bring this policy back at a future meeting.
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