HomeMy WebLinkAbout09/27/2022 - Special MeetingCITY OF NEWPORT BEACH
City Council Meeting Minutes
Special Meeting
September 27, 2022
I. CALL THE MEETING TO ORDER
H. ROLL CALL — 4:02 p.m.
Present: Mayor Kevin Muldoon, Mayor Pro Tem Noah Blom, Council Member Brad Avery, Council
Member Joy Brenner, Council Member Diane Dixon, Council Member Duffy Duffield, Council
Member Will O'Neill
III. CURRENT BUSINESS
1. Resolution No. 2022-61: Initiation of Zoning Code and Local Coastal Program
Amendments Related to Fractional Homeownership (PA2022-0202) [100-2022]
Community Development Director Jurjis reviewed the previous direction provided to staff by
Council to initiate a Newport Beach Municipal Code (NBMC) change and moratorium, and
requested further direction from Council.
Council Member O'Neill supported moving forward with a code change initiation and the Planning
Commission preparing the first draft. Mayor Muldoon concurred.
Council Member Dixon suggested that Council give direction to the Planning Commission and
recommended providing direction and a framework for staff.
Council Member Brenner agreed that more direction is needed for the Planning Commission, noted
the original municipal code excluded timeshares and fractional ownerships, and suggested the
moratorium begin immediately and sunset when an ordinance is in place.
Council Member O'Neill thought the last study session provided a general framework, referenced
the approach and litigation in St. Helena, and suggested the Planning Commission use it as a
starting point.
Mayor Muldoon concurred that Council had given direction previously and the parameters of the
St. Helena lawsuit makes the most sense to use.
Council Member Dixon agreed but added that there are other factors to consider. She announced
that she met with a Pacaso representative and discussed options, noted this is a new industry with
few case studies, and stated it requires a more substantive study.
Council Member Avery agreed with Council Member O'Neill, suggested moving deliberately,
identifying options, and picking a solution that works for the City.
Mayor Muldoon thought that a majority exists to regulate fractional ownerships in residential areas
of the City.
Gabe Dima-Smith, Pacaso Public Affairs Manager, appreciated the thoughtful approach by Council,
stated that Pacaso is not a timeshare business model, co -ownership is common and has been present
for decades, no regulatory framework exists, and expressed interest in meeting with staff to reach a
mutually agreeable policy.
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Gary Cruz shared his wife's five points that addressed timeshare characteristics, suggested creating
a moratorium, and expressed concern for banning fractional ownerships in only R-1 zones since
Newport Island is zoned R-2.
Nancy Scarbrough suggested forming an ad hoc committee to help the Planning Commission work
through the extensive study conducted by staff, agreed with adopting a moratorium and taking a
slower approach, and indicated that there are currently five fractional ownership listings.
Jim Shaheen shared his background and the benefits of co -ownership.
Jim Mosher discussed Ordinance No. 82-14, which addresses timeshares, read the definition from
the NBMC, and questioned enforcement.
City Attorney Harp indicated that the purchase of a residential property by an LLC does not
constitute a timeshare under the current provisions of the NBMC.
Meagan Licata, Pacaso employee, on behalf of the Stein family, read their letter of support and
highlighted their co -ownership experience.
Denys Oberman thanked Council for bringing the item forward, agreed with City Attorney Harp,
supported enacting a moratorium, expressed the opinion that fractional ownership intensifies a
neighborhood, noted challenges with setbacks and consequences of establishing co -ownership
properties, discussed fractional ownership and timeshare history, and indicated a need to manage
the concentration.
Mike O'Neill stated that the wrong definition of timeshare is being used and discussed the
differences between fractional ownership and timeshare transactions, the ability to buy up to half
the property for a 180-day use, Pacaso having an interest in property management without a
financial interest in the property, and questioned the parameters of a moratorium.
Carmen Rawson expressed the opinion that the Pacaso business model is a timeshare, defined two
types of timeshares, reviewed the guidelines for co-owner stays, questioned why timesharing is
allowed in residential areas, reviewed the limits and regulations, and indicated the short-term
lodging ordinance does not apply to fractional ownership properties because the owners are not
paying rent or Transient Occupancy Tax (TOT).
Chrissy Bruchey, Pacaso employee, read a letter from Steve Hayes and his family that supports the
Pacaso model.
Cathy Brown noted that she lives in a residential neighborhood behind a Pacaso property and asked
Council to address owners who stay for short amount of time, and cleaners, friends and family who
come and go.
Samantha Walsh, Pacaso employee, read a letter from property owner Anthony Kumar who shared
his experience as a fractional owner.
Roberta Smith provided a complaint regarding the Plaza del Sur property.
Timothy Ellis, Pacaso Home Estate Manager, read a statement from property owner Sam Papoyan
and provided his own background and best practices.
Steve Rosansky, President and CEO of Newport Beach Chamber of Commerce, noted different
viewpoints on the subject, encouraged Council to be deliberative and engage with Pacaso, and asked
that if the Council adopts a moratorium that it be for a short duration.
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An unidentified speaker noted the City's responsibility to support its investors and longtime
residents, discussed diminution of property value, and a comparison to how Costa Mesa was able to
establish care facility development limits when it was thought too not be possible. Furthermore, he
suggested consulting with attorneys who have handled similar cases with success on an appeal, and
questioned if the NBMC is sufficient.
Purvi Doshi, Pacaso employee, read a statement on behalf of owner Cathy Coste.
Dave Archie, neighbor to a Pacaso property, encouraged an accelerated solution, noted three -to -
seven -day guest rotations over the last year, discussed their behavior, and offered to share
additional experiences.
Charles Klobe noted the number of sold shares in Newport Beach and urged Council to conduct a
study and do what is best for the residents of the City.
Max Johnson stated his opposition to fractional home ownership.
Michael Jacobs discussed the Plaza del Sur property, supported a moratorium to conduct a study,
and opposed businesses in residential areas.
Mayor Muldoon noted that sold shares are grandfathered in, supported regulations in R-1 and R-2
zones, looked forward to what is brought back to Council, expressed support for Council Member
O'Neill's analysis, expressed concern regarding enacting a moratorium, and supported the
emergency passage of regulation of R-1 and R-2 zones.
Motion by Mayor Muldoon, seconded by Council Member O'Neill, to a) determine this action
exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15262
(Feasibility and Planning Studies) of the CEQA Guidelines, California Code of Regulations,
Title 14, Chapter 3; and b) adopt Resolution No. 2022-61, AResolution of the City Council of the City
of Newport Beach, California, Initiating Amendments to Title 20 (Planning and Zoning) and Title
21 (Local Coastal Program Implementation Plan) of the City of Newport Beach Municipal Code
Related to Fractional Homeownership (PA2022-0202).
In response to Council Member Dixon's question, Council Member O'Neill clarified that the request
includes moving quickly, using existing models and language from St. Helena to encompass what
the City wants, and the Planning Commission has enough information to craft the language to be
sent back to Council. Council Member Dixon sought expediency, and in response to her question,
Community Development Director Jurjis indicated that staff will have a study session with the
Planning Commission to discuss the current NBMC, break down the St. Helena code, ask for
feedback from the Planning Commission, draft NBMC amendments, and return to Council with a
written document by the first part of the new year. Council Member Dixon clarified that the City
Council will give the Planning Commission the parameters and framework within the context of the
St. Helena ordinance, agreed to be supportive, and asked if support exists among her colleagues to
have a 60 or 90-day moratorium to give the Planning Commission time to do the work or impose
immediate code changes to control the density.
Mayor Muldoon expressed concern for litigation if the City makes any missteps, suggested a special
meeting of the Planning Commission to address it sooner, and noted a drastic move will weaken the
City's position.
In response to Council Member Brenner's question, Mayor Muldoon clarified his suggestion to move
through more quickly instead of enacting a moratorium. Council Member Brenner noted that she
would support passing this to the Planning Commission with a moratorium in place.
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Council Member O'Neill stated the importance of reviewing Government Code Section 65858, which
is the standard for a moratorium, and indicated it does not apply to this situation,
the City's hands are tied by State law.
At the request of Council Member Brenner, Council Member O'Neill read Government Code Section
65858.
In response to Council Member Dixon's question, City Attorney Harp clarified that all moratoriums
and urgency ordinances have the same basic standard and require an immediate threat to the public
health, safety, and welfare. He also clarified that any non -urgency ordinance takes effect 30 days
after the second reading. Community Development Director Jurjis indicated that a draft ordinance
could return to Council by the first or second Council meeting in November and would take effect
30 days after the second meeting.
In response to Council Member Avery's question regarding the City of Beverly Hill's moratorium,
City Attorney Harp noted that Beverly Hills enacted a moratorium two years ago, they were the
only city in the State to do so, and they were not challenged.
In response to Council Member Brenner's question, Community Development Director Jurjis
relayed that the Planning Commission could hold special meetings but staff will not return to
Council until November at the earliest.
Council Member Dixon questioned why the City cannot enact a moratorium, to which Mayor
Muldoon stated that due process must be followed. Council Member Dixon concluded that Council
agrees about expediting the process, following the due process rules, and moving forward in a
manner that is supported by neighbors and respects property rights.
Motion by Council Member Brenner to establish a moratorium and go forward with the rest of
staffs recommendation.
Council Member O'Neill questioned the findings included in Council Member Brenner's motion and
City Attorney Harp stated that the City cannot establish a moratorium at this meeting but could
direct staff to come back with a proposed moratorium.
Alternate motion by Council Member Brenner, seconded by Council Member Dixon, to
a) determine this action exempt from the California Environmental Quality Act (CEQA) pursuant
to Section 15262 (Feasibility and Planning Studies) of the CEQA Guidelines, California Code of
Regulations, Title 14, Chapter 3; b) adopt Resolution No. 2022-61, A Resolution of the City Council
of the City of Newport Beach, California, Initiating Amendments to Title 20 (Planning and Zoning)
and Title 21 (Local Coastal Program Implementation Plan) of the City of Newport Beach Municipal
Code Related to Fractional Homeownership (PA2022-0202); and c) direct staff to bring back a
moratorium discussion at the next City Council meeting.
In response to Council Member Dixon's question, Community Development Director Jurjis
confirmed that Beverly Hills is the only City to enact a moratorium and City Attorney Harp noted
that any findings for a moratorium in Newport beach would need to be based upon facts specific to
Newport Beach.
Council Member O'Neill expressed the opinion that staffs time is better spent on the code initiation
instead of trying to identify findings on a moratorium, and opposed the motion in an effort to be sure
the City is moving forward speedily.
In response to Council Member Dixon's inquiry, City Attorney Harp stated that he has not consulted
with an outside attorney regarding enacting a moratorium and agreed with Council Member Dixon
that this may be a prudent course of action if direction is given to go forward with the moratorium.
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City Council Meeting
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Council Member Brenner questioned whether lack of staff time is a problem. Mayor Muldoon
indicated the City Attorney's Office's time is separate from Community Development at this time,
but City Attorney Harp noted that his office works closely with the Community Development
Department in regards to these matters.
With Council Members Brenner and Dixon voting yes, the alternate motion failed 2-5.
The original motion carried unanimously 7-0.
IV. ADJOURNMENT - 5:37 p.m.
The special meeting agenda was posted on the City's website and on the City Hall electronic
bulletin board located in the entrance of the City Council Chambers at 100 Civic Center
Drive on September 22, 2022, at 4:00 p.m.
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Leilani I. Brown
City Clerk
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