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HomeMy WebLinkAbout2.0_Additional Materials Presented at Meeting_Staff_PA2022-0202Code Update Related to Fractional Homeownership Planning Commission Study Session October 6, 2022 Seimone Jurjis, CDD Director Jaime Murillo, AICP, Principal Planner Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Discussion Outline •What is Fractional Homeownership •Pros and Cons •Current Regulations •City Council Background and Direction •Research Findings •Options and Direction Community Development Department 2 Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Community Development Department 3 What is Fractional Homeownership? Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Fractional Ownership of Personal Property: What is it? Community Development Department 4 Not a new idea Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Fractional Ownership of Real Estate •Partial ownership of property: •Common with commercial properties •Emerging with single-family residential •Vacation property (2nd or 3rd homes) •Fractions offered for sale online Community Development Department 5 Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Companies Selling Fractional Ownership Community Development Department 6 Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) How it Works •Property is purchased under a Limited Liability Corporation (LLC) •Shares of the property are sold: •1/8 ownership or greater •Operating Agreement is used to manage the property Community Development Department 7 Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Operations •Co-owners agree on usage (days, week) •1/8 share = 45 days (not consecutive) •typically less than 30 consecutive day stays •managed through calender •Owners pay share of property costs: •maintenance, management, HOA, cleaning, tax, utilities, insurance, and reserve funds costs •Short-term lodging or renting is not allowed •Co-owners can sell their interest Community Development Department 8 Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Community Development Department 9 Pros and Cons Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) •Function like short term rentals –non-resident vacation behaviors •Commercialization of neighborhoods •Impacts housing affordability –increased vacation homes and reduced housing stock Complaints/Concerns Community Development Department 10 Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) •Less vacancies of second home •Better property maintenance •Increased spending in community •Alleviate pressure of median-priced homes Claimed Benefits Community Development Department 11 Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Community Development Department 12 How Does City Regulate? Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) City Regulation Community Development Department •City can regulate Land Use but not Ownership •City regulates what is adopted in the Newport Beach Municipal Code •56% of single-family properties in City are owned under an LLC or Trust 13 Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Municipal Code Review Community Development Department •Single-Family Dwelling Use –House Owned by LLC Allowed – Can’t Regulate Based on Ownership •Short Term Lodging Allowed by Permit, Except in R-1 •Fractional Ownership doesn’t fit definition •Rented or leased for a period of less than 30 days (these are owned) •Time Share Project–Prohibited, except in commercial and mixed-use zones •Fractional Ownership doesn’t meet definition 14 Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) “Time Share” Defined Community Development Department 15 NBMC §21.70.020 Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) “Development” Defined Community Development Department 16 •Ownership, including multiple owners is not development Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Municipal Code’s Time Share Requirements Community Development Department 17 •Commercial visitor accommodations are not residential uses •Visitor accommodations •Conversion of dwellings prohibited •Minimum 100 timeshares or less with 300-unit resort hotel complex •Substantial amenities required •(e.g. golf courses, tennis courts, swimming pools, etc.) •Sales, operating, management, and contingency plans required •Use Permit and Development Agreement Required Adapted from NBMC §20.48.220 Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Community Development Department 18 City Council Background and Direction Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) City Council Background •November 16, 2021, Study Session •4 known homes •Directed staff to study what other cities are doing and report back •September 13, 2022-City Council Study Session •Sagecrest Planning+Environmental Report •11 known homes •Directed staff to return with proposed action items 19Community Development Department Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) City Council Direction •September 27, 2022 –Council Meeting •Initiated Zoning Code and Local Coastal Program Amendment •Did not pursue moratorium •Directed staff to work expeditiously with Planning Commission 20Community Development Department Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Community Development Department 21 Research Findings Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Report Findings •13 Cities -Consider Fractional Ownership a form of timeshare •Carlsbad, Carmel by the Sea, Hermosa Beach, Monterey, Village of North Haven, Pacific Grove, Palm Desert, Palm Springs, Park City, South Lake Tahoe, Sonoma, St. Helena, Truckee •7 Cities -Do not regulate •Encinitas, Vail, Fort Lauderdale, Indian Wells, Santa Barbara, Santa Cruz, Napa •4 Cities -Revised definition of timeshare •Palm Desert, Truckee, St. Helena, Sonoma 22Community Development Department 22 Cities Surveyed Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Report Findings •4 Cities –Issued Cease and Desist Letters •Carmel by the Sea, Monterey County, Palm Springs, South Lake Tahoe •3 Cities –Working on code update to timeshare •Hermosa Beach, Pacific Grove, Park City •1 City -Current moratorium to study •Beverley Hills (expiring July 2023) •1 City -Active litigation •St. Helena 23Community Development Department Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) 12 Known Properties in City 24Community Development Department Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Short Term Lodging in City 25Community Development Department Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Case Studies - St. Helena, CA •Classifies fractional housing as timeshare •Updated code •Broaden timeshare definition •Right of occupancy < Full year •Limits timeshares to commercial zones •Bolsters enforcement authority •Modeled after short-term rental ordinance 26Community Development Department Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Case Studies - St. Helena, CA •Current litigation -Ownership group and Pacaso filed suit against City •Plaintiff’s Claim •City ordinance invalid (pending) •Enforcement violates plaintiff’s due process –14th Amendment (pending) •City is selectively and discriminatorily enforcing regulations (pending) •Enforcement exceeds City’s authority (pending) •City interfering with economic advantage (dismissed) 27Community Development Department Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Case Studies –Palm Springs, CA •Classified as timeshare •Permitted in zones which permit hotels •Require approval of a CUP •Cease-and-Desist Order •Proceeding with code enforcement actions on existing unpermitted units 28Community Development Department Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Case Studies- Park City, UT •Updating code to allow and regulate •Tentative City Council hearing –October 6, 2022 •Creating new definition -Single-Family Dwelling Fractional Ownership/Use •Property owned by LC, LLC, or corporation •Owner occupancy right < 30 days at a time •Unrelated co-owners •Advanced reservations via electronic systems •Management subscription fee 29Community Development Department Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Case Studies- Park City, UT 30Community Development Department Case Studies – Park City, UT Locations Allowed •Commercial Zoning Districts •Residential Development - Medium Density •Same zones where Timeshares and Private Residential Clubs allowed Prohibited Locations •Historic, Single-Family, and Estate Zoning Districts Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Case Studies- Park City, UT •Require approval of a CUP •Require management plan •Responsible party –return call within 20 minutes and within one hour drive of property •Snow removal for access and parking •Maintain property •Noise and occupancy control •Prohibit nightly rentals, on-street parking, commercial activities, and signs •Business license 31Community Development Department Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) Community Development Department 32 Options and Direction Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) 1) Definitions –Option A •Amend Timeshare Project Definition •Eliminate “development” criteria (St. Helena) •Clarify fractional use includes plan facilitated, offered, or organized by a third-party manager (Hermosa Beach) •Exclude arrangements whereby multiple property parties join in directly purchasing full ownership of a unit and thereafter agree upon arrangements for its use (Palm Desert) •Considered an accommodation and would effectively prohibit in residential zones 33Community Development Department Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) 1) Definitions –Option B •Create Fractional Ownership Land Use •Create a new and separate fractional ownership use definition •Owner occupancy right < 30 days at a time •Establish specific regulations/standards •Considered a form of residential use and allow in all zones that allow residential uses 34Community Development Department Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) 2) Review Process Options a)Use Permit (Public Hearing) •Conditional Use Permit (CUP):Planning Commission •Minor Use Permit (MUP): Zoning Administrator OR b)Zoning Clearance (No Hearing) •Planning staff reviews and issues approval letter 35Community Development Department Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) 3) Parking Requirements •Parking shall conform with current standards (size and number) •Parking shall be free of obstructions and available for use 36Community Development Department 4) Noise Restrictions •Prohibition of amplified sound outside or audible at PL from 10 pm to 10 am •Compliance with City noise ordinance Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) 5) Separation Standards •R-1 Zones: 500 feet separation between other fractionals (areas where STL prohibited) •Other Residential Zones –No separation 37Community Development Department 6) Trash Management •Property manager responsible for ensuring containers put out/in on appropriate days Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) 7) Management Plan •Require submission of operating agreement/management plan to City •Contact person to address issues 38Community Development Department 8) Prohibit Subletting •Prohibit subletting of unit for rentals, including short-term lodging Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) 9) Good Neighbor Policy •Owner responsibilities and acknowledgment of potential enforcement/fines •Contact person •Parking rules •Street sweeping •Trash collection •City noise restrictions 39Community Development Department Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) 10) Owner Acknowledgments •Sign acknowledgement by each owner submitted to the City •Understanding of parking rules, street sweeping schedule, trash collection, and noise restrictions •Understanding of Good Neighbor Policy •Prohibition against subletting •Enforcement and fines 40Community Development Department Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) 11) Grandfathering Provisions •Difficult to retroactively regulate existing uses or those in process •Allow to remain as legal nonconforming uses 41Community Development Department Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202) 42 Questions and Discussion Seimone Jurjis, CDD Director sjurjis@newportbeachca.gov Jaime Murillo, AICP, Principal Planner jmurillo@newportbeachca.gov Planning Commission Study Session October 6, 2022 Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)