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HomeMy WebLinkAbout12 - Code Update Recommendations Related to Fractional Homeownership (PA2022-0202) - Correspondence from PacasoReceived After Agenda Printed March 14, 2023 Agenda Item No. 12 From: Purvi Doshi <pdoshi@pacaso.com> Sent: March 13, 2023 9:48 AM To: Jurjis, Seimone <sjurjis@newportbeachca.gov> Cc: Patrick Strader <PS@starpointeventures.com> Subject: Staff Report- fractional ownership [EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the sender and know the content is safe. Hi Seimone, Looking through the staff report, I disagree with the assertion that the Planning Commission came out with a preferred recommendation to treat fractional ownership as a timeshare. The minutes from the meeting also do not support this. Chair Ellmore clarifies at the end of the meeting that staff provide a review of the timeshare definition and whether broadening it could include fractional ownership. Please let me know what you think and whether an amendment can be made either in the report or verbally at tomorrow's meeting. Appreciate your time. Purvi Purvi Doshi Public Affairs, West Coast 949-466-3511 Received After Agenda Printed March 14, 2023 Agenda Item No. 12 From: Purvi Doshi <pdoshi@pacaso.com> Sent: March 13, 2023 12:45 PM To: Dept - City Council <CityCouncil@newportbeachca.gov> Subject: Pacaso Letter to Newport Beach City Council - Fractional Ownership [EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the sender and know the content is safe. Dear Honorable Mayor and City Councilmembers, Please see attached letter from Pacaso regarding Item 12 on tomorrow's City Council agenda. Kind regards, Purvi Purvi Doshi Public Affairs, West Coast 949-466-3511 Paca S O March 13, 2023 DELIVERED VIA EMAIL: citycouncil(&newportbeachca.gov Mayor Noah B16m & Honorable City Council Members City of Newport Beach 100 Civic Center Drive Newport Beach, California 92660 RE: Professionally Managed Residential Co -Ownership in Newport Beach Dear Mayor Blom & Honorable City Council Members: We appreciate this opportunity to update you and the community on the significant and extensive efforts that we have made since the City Council's September 2022 meeting to protect property rights. However, before we get into this update, we'd like to take a moment to address a comment that was raised at the February 23' Planning Commission meeting regarding the possible treatment of co -ownership as a "time share." Co -owned homes are not "time shares," rather co -owned homes are residential real estate, owned and enjoyed by the individual owner -occupiers, who have complete control of their home. Co -owned home ownership is an important property right of the owner. If a co -owned home is considered a "time share" under the existing, or an amended, Municipal Code, then every co -owned home in the City of Newport Beach ("City") is a "time share." This fact should not be considered lightly, based upon the property record data that we have reviewed, almost 31 % of the homes (5,951 individual homes) in the City are owned by a limited liability company ("LLC") or a trust, which enable and facilitate multiple owner arrangements. These home owners would likely be very surprised and dismayed to learn that the City is discussing the possibility of labeling their home ownership as a "time share," and thus depriving them of their property rights. We do not believe it is the intention or the desire of the City Council to treat 31% of the City's homes as "time shares," and we respectfully suggest that this Planning Commission comment be dismissed without further discussion. Turning our focus to the latest updates since the September 2022 City Council meeting, at this meeting we heard both from the City Council and members of the public that there was a concern regarding potential secondary impacts associated with professionally managed residential co -ownership in the City. We made a commitment at this meeting to work with the 1 City to study and develop rules and accepted practices to address any potential secondary impacts that may be associated with professionally managed residential co -ownership in the City. As City staff will attest, we participated in numerous meetings with the Planning Commission's subcommittee that was tasked with studying this topic. We also attended and actively participated in meetings of the entire Planning Commission on this topic. This participation culminated in our drafting of a comprehensive ordinance designed to address any potential secondary impacts that may be associated with a co -owned residence that is professionally managed by a third party. We shared this draft ordinance with City staff and the Planning Commission, and we now enclose this draft ordinance with this letter for your review. Among other regulations, this draft ordinance proposed a cap on the number of co -owned homes that could be located within the City's R-1 Residential Zone. We understand that more dialogue may be needed before a final cap number is agreed upon, and we welcome those discussions and any other comments that the City may have regarding our draft ordinance. As we said at the last City Council meeting, and as we reiterate here today, we are committed to working in good faith with the City to draft reasonable regulations to ensure there are no negative secondary impacts associated with professionally managed co -owned homes. The City has a long and storied history of being a vacation destination and a large percentage of the homes owned in the City are owned by an LLC, trust, or other form of ownership that involves multiple owners. We look forward to continuing our good working relationship with you and City staff to create thoughtful rules and policies that enhance the community and protect property rights, while being respectful of the City's past, present and future as a second home destination. Sincerely, Purvi Doshi Senior Manager, Public Affairs Enclosure. cc: Grace Leung, City Manager (gleung(a newportbeachca.gov) Aaron C. Harp, City Attorney (aharn�c&newportbeachca.gov) Leilani I. Brown, City Clerk (lbrownnnewportbeachca.gov) Seimone Jurjis, Community Development Director (siurjis&newportbeachca.gov) K Q:7_1a&CZIQ1►/_1►[a]� Chapter 5.98 CO -OWNERSHIP PROPERTY MANAGEMENT 5.98.005 Purpose and Findings. The City Council of the City of Newport Beach finds and declares as follows: A. The City has a long and storied history of being a vacation destination welcoming families and visitors from all over the world to second homes within our shared community. B. Unlike short term lodging units that are primarily used during the summer months when parking and other demands for City services are at their highest, second homes are utilized by their owners throughout the year. C. An increasing trend in second home ownership in the City and other communities throughout the nation is co -ownership whereby a number of persons jointly contribute towards the purchase and shared use of a second home. D. A portion of these co -owned homes are managed by third -party management companies. E. The restrictions of this chapter are necessary to ensure the growth of co -ownership homes that are managed by a third -party management company is done in an orderly fashion that does not negatively impact the surrounding community. 5.98.010 Definitions. For the purpose of this chapter, the following definitions shall apply: A. "Authorized Guests" shall mean any guests of an owner of a Co -owned Housing Unit who have not provided compensation to an owner for dwelling, lodging, and sleeping purposes and are present in the Co -owned Housing unit while the owner is on -site and in the home. B. "City" shall mean the City of Newport Beach. C. "Community Development Department" or "Department" shall mean the Community Development Department of the City. D. "Community Development Director" or "Director" shall mean the Community Development Director of the City or his or her designee. E. "Co -owned Housing Unit" shall mean a residential dwelling unit, managed by a Co -owned Property Manager, and utilized for occupancy for dwelling, lodging, or sleeping purposes by up to eight (8) Owners or eight (8) members of a Limited Liability Company, that owns the residential dwelling unit, along with authorized guests. The term "Co -owned Housing Unit" is not a time-share project, as defined in this Code, and usage of a Co -owned Housing Unit is not a time-share use. F. "Co -owned Housing Unit Permit" shall mean a permit granted by the City to a Co -owned Property Manager for each Co -owned Housing Unit under management. G. "Co -owned Property Manager" shall mean a person or Limited Liability Company that manages a Co -owned Housing Unit, on behalf of the Owners of the Co -Owned Housing Unit. H. "Co -owned Property Management Permit" shall mean the annual permit issued by the City allowing a Co -owned Property Manager to manage a Co -owned Housing Unit(s). I. "Good Neighbor Policy" shall mean a written policy that governs the operation of a Co -owned Housing Unit and summarizes general rules of conduct, occupancy limits, consideration, and respect for neighbors and the community, including without limitation provisions of this Chapter applicable to the Owner and guests. J. "Limited Liability Company" shall mean a limited liability company or other form of business entity, including, but not limited to, all domestic and foreign corporations, associations, syndicates, joint stock corporations, partnerships of every kind, clubs, business or common law trusts, or societies. K. "Local Contact Person" shall mean an individual(s) who is available twenty-four (24) hours per day, seven (7) days per week for the purpose of responding within twenty-four (24) hours to complaints regarding the condition, operation, or conduct of occupants of the Co -owned Housing Unit, or any agent of an owner authorized by the owner to take remedial action and who responds to any violation of this Code. L. "Owner" shall mean the person(s) that hold legal and/or equitable title to the Co -owned Housing Unit. M. "R-1 Zoning District" shall have the same meaning provided in Section 20.18.010(B) and Section 21.18.010(B), or any successor sections. 5.98.015 Co -owned Property Management Permit Required. A. A Co -owned Property Manager shall not manage a Co -owned Housing Unit 2 without obtaining a Co -owned Property Management Permit from the City. B. A Co -owned Property Manager shall obtain a permit by submitting an application to the Community Development Director, in a form provided by the Department, signed by the applicant. An application for a new permit, renewal permit, the reinstatement of a permit or the transfer of a permit shall contain the following information: 1. The name, address, and telephone number of the applicant; 2. The name, address, and telephone number of the Local Contact for the Co -owned Property Manager; 3. A current list of every property that the applicant manages in the City; 4. Evidence of a valid business license issued by the City for the separate business of operating Co -owned Housing Units or submission of evidence or information indicating that the Owner is exempt or otherwise not covered by Chapter 5.04 for such activity. 5. A copy of the Good Neighbor Policy that governs each Co -owned Housing Unit. C. The Co -owned Property Management Permit shall be renewed annually pursuant to procedures provided by the Community Development Department. D. An application for the renewal of a Co -owned Property Management Permit shall be filed within thirty (30) calendar days of the Co -owned Property Management Permit expiration, or the Co -owned Property Management Permit shall be deemed abandoned. E. An application for the reinstatement of a Co -owned Property Management Permit closed by the Director pursuant to Section 5.98.070 shall be filed within thirty (30) calendar days of the date the permit was closed by the Director, or the Co -owned Property Management Permit shall be deemed abandoned. F. An application for the reinstatement of a previously suspended Co -owned Property Management Permit shall be filed within thirty (30) calendar days of the end of the suspension period, or the Co -owned Property Management Permit shall be deemed abandoned. G. If any application is deemed incomplete, which shall be determined in the sole discretion of the Director, the application shall be completed within thirty (30) calendar days of the service of notice that the application is incomplete, which shall be served in accordance with Section 1.08.080, or the application and any associated permit shall be 3 rd I,-GOO..o0157TXi1 H. If good causes exist, as determined in the sole discretion of the Director, the Director may extend the deadlines set forth in this section. 5.98.020 Co -owned Housing Unit Permit Required. A. A Co -owned Property Manager shall obtain a permit for each Co -owned Housing Unit in the City prior to the unit's use as a Co -owned Housing Unit. B. A Co -owned Property Manager shall obtain a permit by submitting an application to the Community Development Director, in a form provided by the Department, signed by the applicant. An application for a new permit, renewal permit, the reinstatement of a permit or the transfer of a permit shall contain the following information: 1. The address of the Co -owned Housing Unit; 2. The name, address, and telephone number of the applicant; 3. The name, address, and telephone number of the local contact for the Co -owned Housing Unit; 4. A copy of the Good Neighbor Policy that governs the operation of the Co -owned Housing Unit; 5. If applicable, evidence that a Co -owned Housing Unit would not violate the permissible use for housing within a Homeowners Association in accordance with the Homeowners Association's Declaration of Covenants, Conditions, and Restrictions. C. The Co -owned Housing Unit Permit shall be renewed annually pursuant to procedures provided by the Community Development Department. D. An application for the renewal of a Co -owned Housing Unit Permit shall be filed within thirty (30) calendar days of the Co -owned Housing Unit Permit's expiration, or the Co -owned Housing Unit Permit shall be deemed abandoned. E. An application for the reinstatement of a Co -owned Housing Unit Permit closed by the Director pursuant to Section 5.98.070 shall be filed within thirty (30) calendar days of the date the permit was closed by the Director, or the Co -owned Housing Unit Permit shall be deemed abandoned. N F. An application for the reinstatement of a previously suspended Co -owned Housing Unit Permit shall be filed within thirty (30) calendar days of the end of the suspension period, or the Co -owned Housing Unit Permit shall be deemed abandoned. G. If any application is deemed incomplete, which shall be determined in the sole discretion of the Director, the application shall be completed within thirty (30) calendar days of the service of notice that the application is incomplete, which shall be served in accordance with Section 1.08.080, or the application and any associated permit shall be deemed abandoned. H. If good causes exist, as determined in the sole discretion of the Director, the Director may extend the deadlines set forth in this section. I. For purposes of calculating the maximum number of permits under Subsection 5.98.035(A), a Co -owned Housing Unit Permit shall be deemed valid until the applicable permit has been deemed abandoned. 5.98.025 Denial of Permit. If Co -owned Housing Unit Permits are available for issuance, no timely application filed by a Co -owned Property Manager for an annual permit, renewal of a permit, reinstatement of a permit or transfer of a permit for a unit eligible to be used as a Co -owned Housing Unit, as provided for in this Chapter and this Code, shall be denied unless: the Co -owned Property Manager does not have a current valid business license; or the Co -owned Housing Unit Permit for the same unit and issued to the same Co -owned Property Manager has been suspended. 5.98.030 Filing Fee. An application for a new annual permit, the renewal of an existing permit, the reinstatement of a permit, or the transfer of a permit shall be accompanied by a fee established by resolution of the City Council; provided, however, the fee shall be no greater than necessary to defer the cost incurred by the City in administering the provisions of this chapter. 5.98.035 Maximum Number of Co -owned Housing Unit Permits in the R-1 Zoning District. A. The maximum number of Co -owned Housing Unit Permits in the R-1 Zoning District shall be limited to five hundred (500) permits at any time. For purposes of calculating the maximum number of permits available, a permit shall be deemed valid and unavailable until it is abandoned in accordance with Sections 5.98.020(D) through (G). B. An Co -owned Property Manager who has a Co -owned Housing Unit Permit, or a 5 Co -owned Property Manager seeking to reinstate a Co -owned Housing Unit Permit that has not been abandoned in accordance with Sections 5.98.020(D) through (G), shall have priority to renew or reinstate the permit over anyone on the waiting list, as described in subsection (D) of this section. C. A Co -owned Property Manager seeking to transfer a valid Co -Owned Housing Unit Permit under Section 5.98.040 shall have priority to transfer the permit over anyone on the waiting list, as described in subsection (D) of this section. D. If the City has issued the maximum number of Co -owned Housing Unit Permits available in the R-1 Zoning District, the City shall maintain a waiting list. An application for placement on the waiting list shall be submitted to the Director, on a form approved by the Director, and shall be accompanied by a fee established by resolution of the City Council. In the event a Co -owned Housing Unit Permit becomes available, the Director shall notify the person or persons next in order on the waiting list. The notice shall specify that applications will be accepted for ten (10) calendar days after the date of the notice, and that failure to apply within the ten (10) calendar -day period shall result in removal of the person or persons receiving notice from the waiting list. Notice shall be deemed given when deposited in the United States mail, with the first-class postage prepaid, and addressed as specified by the person or persons on the waiting list. The City shall not be liable for a failure to notify any person or persons on the waiting list since placement on the list does not create any property right in any person or persons on the list nor any contractual obligation on the part of the City. 5.98.040 Transfer of Permit. A Co -owned Housing Unit Permits permit that is valid, and has not been abandoned in accordance with Sections 5.98.020(D) through (G), may be transferred by the Co -owned Property Manager to another Co -owned Property Manager that is permitted under this chapter. 5.98.045 Conditions for Co -owned Housing Unit Permits. A. All Co -owned Housing Unit Permits issued pursuant to this chapter are subject to the following standard conditions: 1. The Co -owned Property Manager shall prohibit the Owner(s) from renting the Co -owned Housing Unit to a transient user for short term lodging. 2. The Co -owned Property Manager shall ensure that the Owner(s) limits the overnight occupancy of the Co -owned Housing Unit to the maximum permitted by the building code and fire code. 3. The Co -owned Property Manager shall use best efforts to ensure that the occupants and/or guests of the Co -owned Housing Unit do not create unreasonable noise or disturbances, engage in disorderly conduct, or violate 2 provisions of this Code or any state or federal law pertaining to noise, disorderly conduct, the consumption of alcohol, or the use of illegal drugs. 4. The Co -owned Property Manager shall, upon notification that any Owner and/or guest of a Co -owned Housing Unit has created unreasonable noise or disturbances, engaged in disorderly conduct or committed violations of this Code or any state or federal law pertaining to noise, disorderly conduct, the consumption of alcohol or the use of illegal drugs, promptly use best efforts to prevent a recurrence of such conduct by any Owner or guest. 5. The Co -owned Property Manager shall provide the Owner(s) with a copy of the Good Neighbor Policy. 6. With respect to any Co -owned Housing Unit that is located in any safety enhancement zone, the Co -owned Property Manager shall take immediate action during the period that the safety enhancement zone is in effect to prevent any Owner or guest from engaging in disorderly conduct or committing violations of this Code or state or federal law pertaining to noise, disorderly conduct, the consumption of alcohol or the use of illegal drugs. 7. The Co -owned Property Manager shall provide the City with the name and twenty-four (24) hour phone number of a Local Contact Person(s) (who resides within twenty-five (25) miles of the property) who shall respond to any call related to the Co -owned Housing Unit within thirty (30) minutes, and ensure compliance with this chapter in a timely manner. The Co -owned Property Manager must provide a new Local Contact Person and his or her phone number within five (5) business days, if there is a change in the Local Contact Person(s). 8. The Co -owned Property Manager shall ensure that all available parking spaces on site, which may include garage, carport, and driveway spaces as well as tandem parking, are available for the Owner and/or guest of the Co -owned Housing Unit. The Co -owned Property Manager shall disclose the number of parking spaces available on site and shall inform the Owner and/or guest that street parking may not be available. 9. The Co -owned Property Manager shall maintain a valid Co -owned Housing Unit Permit for each Co -owned Housing Unit under management. 10. The Co -owned Property Manager shall include the City issued Co -owned Housing Unit Permit number on all advertisements for the sale of the Co -owned Housing Unit. 11. The Co -owned Property Manager shall ensure that a permitted Co -owned Housing Units is only used for residential purposes and not used for nonresidential uses, including, but not limited to, large commercial or non-commercial gatherings, commercial filming and/or nonowner wedding N receptions. 12. The Co -owned Property Manager shall ensure that no amplified sound or reproduced sound is used outside or audible from the property line between the hours of 10:00 p.m. and 10:00 a.m. 13. The Co -owned Property Manager shall provide the City with a copy of the Good Neighbor Policy, within seven (7) calendar days after the City serves the Co -owned Property Manager with a notice of request for the Good Neighbor Policy in accordance with Section 1.08.080. 14. The Co -owned Property Manager shall require every Owner and/or guest to comply with all State and local laws that regulate parking while staying at or visiting the Co -owned Housing Unit; 15. The Co -owned Property Manager shall ensure that any Owner and/or guest complies with all State and local laws that regulate parking while the Owner and/or guest is staying at or visiting the Co -Owned Housing Unit. B. The Director shall have the authority to impose additional conditions on any permit in the event of any violation of the conditions to the permit or the provisions of this chapter subject to compliance with the procedures specified in Section 5.98.060. 5.98.050 Violations of Permit Conditions. A. In addition to other provisions of this Code, it shall be unlawful for any Owner or guest of Co -owned Housing Unit to: 1. Exceed the overnight occupancy limit designated for the Co -owned Housing Unit. 2. Use street parking prior to utilizing all available on -site parking space(s) for the Co -owned Housing Unit. 3. Place trash for collection in violation of this Code's rules and regulations concerning: a. The timing, storage or placement of trash containers; or b. Recycling requirements. 4. Amplify or reproduce sound between the hours of 10:00 p.m. and 10:00 a.m.: L-1J a. Outside of the Co -owned Housing Unit; or b. That is audible from the property line for the Co -owned Housing Unit. 5. Use the Co -owned Housing Unit for any nonresidential purpose, including, but not limited to, large commercial or noncommercial gatherings, commercial filming and/or non -owner wedding receptions. 6. Rent a Co -owned Housing Unit to any person for a short term. 7. Allow guests to use a Co -owned Housing Unit when the Owner(s) is not present. 5.98.055 Violations, Penalties, and Enforcement. A. It shall be unlawful for any person to violate any provisions or to fail to comply with any of the requirements of this chapter. B. In addition to, or separate from, the foregoing criminal penalties, any person violating any of the provisions or failing to comply with any of the requirements of this chapter is subject to the issuance of an administrative citation pursuant to the provisions of Section 1.04.010(E) and Chapter 1.05. 5.98.060 Suspensions. In addition to any fine or penalty that may be imposed pursuant to any provision of this Code including, but not limited to, Section 5.98.055, a Co -owned Housing Unit Permit may be suspended as provided in this section. A. Suspension of Co -owned Property Manager Permit. 1. Except as otherwise provided in this subsection, if any person violates any Co -owned Housing Unit Permit condition four (4) or more times in any six (6) month period or any other provision of this Code, state law or federal law, four (4) or more times in any six (6) month period, and the violation relates in any way to the Co -owned Housing Unit Permit, the Co -owned Property Manager Permit for the unit may be suspended for a period of up to six (6) months in accordance with subsection (B) of this section. 2. If a Co -owned Housing Unit that is subject to a Co -owned Housing Unit Permit has been the location of four (4) or more loud or unruly gatherings, as defined in Chapter 10.66, within any twelve (12) month period, the Co -owned Property Manager Permit may be suspended for a period of up to six (6) 9 months. A loud or unruly gathering that occurred prior to the passage of fourteen (14) calendar days from the mailing of notice to the Co -owned Property Manager in compliance with Section 10.66.030(D) shall not be included within the calculation of the four (4) or more loud or unruly gatherings required to suspend a Co -owned Property Manager Permit. B. Co -owned Property Manager Permits shall be suspended only in the manner provided in this section. 1. The Director shall investigate whenever he or she has reason to believe that a Co -owned Property Manager has submitted an application that contains false information or committed a violation of a permit condition, this Code, state or federal law related to a Co -owned Housing Unit. Such investigation may include, but is not limited to, on -site property inspections. Should the investigation reveal substantial evidence to support a finding that warrants a suspension of the Co -owned Property Manager Permit, the Director shall issue written notice of intention to suspend the Co -owned Property Manager Permit. The written notice shall be served on the Co -owned Property Manager in accordance with Section 1.08.080, and shall specify the facts which, in the opinion of the Director constitute substantial evidence to establish grounds for imposition of the suspension, and specify the proposed time the Co -owned Property Manager Permit shall be suspended within thirty (30) calendar days from the date the notice is given, unless the Co -owned Property Manager files with the Director, before the suspension becomes effective, a request for hearing before a hearing officer, who shall be retained by the City, and pays the fee for the hearing established by resolution of the City Council. 2. If the Co -owned Property Manager requests a hearing and pays the hearing fee, established by resolution of the City Council, within the time specified in subsection (B)(1) of this section, the Director shall serve written notice on the Co -owned Property Manager, pursuant to Section 1.08.080, setting forth the date, time and place for the hearing. The hearing shall be scheduled not less than fifteen (15) calendar days, nor more than sixty (60) calendar days, from the date on which notice of the hearing is served by the Director. The hearing shall be conducted according to the rules normally applicable to administrative hearings. At the hearing, the hearing officer will preside over the hearing, take evidence and then submit proposed findings and recommendations to the City Manager. The City Manager may suspend the Co -owned Property Manager Permit only upon a finding that a violation has been proven by a preponderance of the evidence, and that the suspension is consistent with the provisions of this section. The City Manager shall render a decision within thirty (30) calendar days of the hearing and the decision shall be final. 10 C. If a Co -owned Property Manager Permit is suspended, it shall be the Co -owned Property Manager's responsibility to transfer management of the Co -owned Housing Unit(s) to another Co -owned Property Manager that is permitted under this chapter. D. After any suspension, the Co -owned Property Manager may reapply for reinstatement of the Co -owned Property Manager Permit which shall be processed in accordance with this chapter, provided the owner has paid the City all amounts owed the City in accordance with this chapter. 5.98.065 Permits and Fees Not Exclusive. Permits and fees required by this chapter shall be in addition to any license, permit or fee required under any other chapter of this Code. The issuance of any permit pursuant to this chapter shall not relieve the Co -owned Property Manager of the obligation to comply with all other provisions of this Code. 5.98.070 Permit Closure. Any Co -owned Property Manager that has ceased operating a Co -owned Housing Unit shall inform the Director in writing of the date of the last management day, and having done such, the Co -owned Property Manager Permit for that Co -owned Housing Unit shall be closed as to the specific Co -owned Property Manager. 11