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HomeMy WebLinkAbout12 - Code Amendments Related to Time Shares (PA2022-0202)Q SEW Pp�T CITY OF z NEWPORT BEACH c�<,FORN'P City Council Staff Report May 9, 2023 Agenda Item No. 12 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, Principal Planner, jmurillo@newportbeachca.gov PHONE: 949-644-3209 TITLE: Ordinance Nos. 2023-4 and 2023-5: Code Amendments Related to Time Shares (PA2022-0202) FA 739_7±Tip19 For the City Council's consideration is an amendment to Title 20 (Planning and Zoning) and Title 21 (Local Coastal Program Implementation Plan) of the Newport Beach Municipal Code (NBMC) modifying the definition of time share to clearly include fractional ownership units. As a time share use, fractional homeownership would be prohibited in all residential zoning districts and only allowed in certain commercial and mixed -use zoning districts subject to existing time share regulations. RECOMMENDATIONS: a) Conduct a public hearing; b) Find proposed amendments to Titles 20 and 21 of the NBMC are not subject to the California Environmental Quality Act (CEQA) pursuant to Section 15060(c)(2) and 15061(b)(3) of the CEQA Guidelines, because it would not result in a direct or reasonably foreseeable indirect physical change in the environment and is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Additionally, the proposed amendments to Titles 20 and 21 of the NBMC are categorically exempt pursuant to Section 15308 because the ordinances involve regulatory actions to assure protection of the environment; c) Waive full reading, direct the City Clerk to read by title only, introduce Ordinance No. 2023-4, An Ordinance of the City Council of the City of Newport Beach, California, Approving an Amendment to Title 20 (Planning and Zoning) of the Newport Beach Municipal Code Related to Time Shares (PA2022-0202), and pass to second reading on May 23, 2023; and d) Waive full reading, direct the City Clerk to read by title only, introduce Ordinance No. 2023-5, An Ordinance of the City Council of the City of Newport Beach, California, Approving and Authorizing Submittal of a Local Coastal Program Amendment to the California Coastal Commission Amending Title 21 (Local Coastal Program Implementation Plan) of the Newport Beach Municipal Code Related to Time Shares (PA2022-0202) and pass to second reading on May 23, 2023. 12-1 Ordinance Nos. 2023-4 and 2023-5: Code Amendments Related to Time Shares May 9, 2023 Page 2 BACKGROUND: Fractional homeownership is when multiple owners (usually 4-8) equally share property ownership through a formal agreement, often managed by a private company or are self -organized. Each owner's time at the property depends on their share, such as 45 days for a 1/8 share, typically spent in one- or two -week increments. Owners pay for their share of the home, as well as maintenance, management fees, home owner association fees, cleaning costs, utilities, taxes, insurance, and a reserve fund for long-term repairs. Staff is aware of a total of 12 fractional ownership homes in the city (Attachment C). Previous Study Sessions As a result of community concerns received regarding the commercialization of residential neighborhoods that fractional ownership uses create, including increases in traffic, parking, noise and trash, the Planning Commission and City Council have held multiple study sessions to discuss the best approach to address potential impacts. A summary of the actions conducted to date is as follows: • On November 16, 2021, the City Council conducted a study session to discuss the emerging trend of fractional ownership use of dwelling units. After accepting public testimony on the issue, the Council directed staff to monitor the use and investigate how other jurisdictions were dealing with the establishment of fractional ownership uses. • Staff retained the services of Sagecrest Planning + Environmental (Sagecrest) to research the benefits and impacts of fractional ownership uses operating within the city and to determine how other jurisdictions were handling the use. The study, which surveyed 22 jurisdictions, found that a majority of the jurisdictions classified fractional ownership uses as a time share and/or adopted a moratorium to study the matter further. Due to bulk, the report and appendices are available online at www.newportbeachca.gov/fractionalownership. • On September 13, 2022, the City Council conducted a second study session to discuss fractional ownership use. After accepting public testimony on the issue, the Council directed staff to return with an initiation of a code amendment to revise the NBMC to regulate the use. • On September 27, 2022, the City Council adopted Resolution 2022-61, initiating amendments to Title 20 and Title 21 of the NBMC and directed staff to work with the Planning Commission to develop regulations that would regulate fractional ownership uses in the best manner that would protect the character of residential neighborhoods. • On October 6, 2022, the Planning Commission conducted a study session to discuss fractional ownership uses and accept public testimony. At the conclusion of study session, the Planning Commission expressed the desire to form an ad hoc committee and work closely with staff to formulate appropriate regulations. 12-2 Ordinance Nos. 2023-4 and 2023-5: Code Amendments Related to Time Shares May 9, 2023 Page 3 • On October 20, 2022, the Planning Commission formed an ad hoc committee consisting of Commissioners Lee Lowery, Mark Rosene and former Commissioner Erik Weigand. Over the four -month period, the ad hoc committee met seven times to discuss potential options. The ad hoc committee consulted with Community Development staff, the City Attorney's Office, representatives from Pacaso, and a group of concerned citizens. • On February 23, 2023, the ad hoc committee presented its findings to the Planning Commission. The Planning Commission approved forwarding two recommendations to the City Council: 1) the preferred recommendation to broaden the definition of time shares to include fractional ownership uses thereby prohibiting them in residential zoning districts, and 2) the alternative recommendation to create a separate regulatory scheme to allow fractional ownership uses in all zones, except the Single -Unit Residential (R-1) Zoning Districts. • On March 14, 2023, the City Council discussed the Planning Commission's recommendations. The City Council directed staff to move forward with a code amendment and Local Coastal Program (LCP) amendment to implement the Planning Commission's preferred option of broadening the definition of time share to include fractional ownership uses, effectively prohibiting them in residential zoning. Meeting minutes from the aforementioned meetings have been compiled and included as Attachment D. Planning Commission Recommendation On April 20, 2023, the Planning Commission held a public hearing to discuss draft Zoning Code and LCP amendments. Seven people spoke (six in favor and one against). The Planning Commission recommended approving the amendments and suggested two additional changes for the City Council's consideration: 1) prohibit advertising time shares for sale, and 2) clarify time share definitions to exclude shared vacation homes by family or friends so that it is clear what is not intended. Planning Commission resolutions and draft meeting minutes are in Attachments D, E and F. Proposed Amendments The proposed amendments to Title 20 and Title 21 of the NBMC would modify time share related definitions (i.e., time share accommodation, time share project, time share estate, time share instrument, time share interval, time share plan, time share property, time share unit, and time share use) to clearly include fractional ownership arrangements. Specifically, the definition of time share plan would be added to mean "any arrangement, plan, scheme, or similar device" that limits the owner to the right for "exclusive use of real property, or any portion thereof" for "less than a full year during any given year, on a recurring basis for more than one year." This means the use of any real property in which an owner has exclusive use of said property for less than the full year would be classified as a time share. 12-3 Ordinance Nos. 2023-4 and 2023-5: Code Amendments Related to Time Shares May 9, 2023 Page 4 While the proposed amendments include minor clean-up revisions to the existing time share regulations for consistency with the modified definitions, no significant changes to the manner in which time shares are approved or development standards are proposed. Time shares uses would continue to be prohibited in all residential zoning districts and permitted in certain commercial and mixed -use zoning districts, specifically, the OA, OM, CG, CV, MU-V, MU-MM, MU-CV/15th St, MU-W1, MU-W2 zones, subject to the following: • Approval of a Conditional Use Permit; • The minimum number of units is 100 units, unless the time share is part of a resort hotel complex that has 300 or more units; • A development agreement is required; and • Approval of a sales plan, operating plan, management plan, and contingency plan is required. In response to the Planning Commission's recommendation regarding advertising and enforcement, Section 20.48.220 was modified to make clear that unless a time share use is authorized in the specific commercial and mixed -use zoning districts discussed above, a number of activities related to time share uses are prohibited. These activities include the advertisement of a time share use and management of a time share use. Any violation of these requirements is subject to the penalties set forth in Chapters 1.04 and 1.05 of the NBMC. However, a time share use legally established prior to the effective date of the ordinance would remain legal nonconforming. The proposed code changes are attached to this report in redlined format (Attachment E). Staff Recommendations Regarding Exception to Definition With respect to an exception to the definition of time share plan, Staff is recommending that the definition remain as proposed because the definition treats everyone equally and avoids creating a loophole that could be used to avoid regulation. Specifically, the definition of time share plan set forth in the proposed ordinances requires several conditions be met to trigger regulation and does not inadvertently capture non -time share uses such as the purchase of an entire property between family and friends and/or the bequeathing of a property by a family member. These conditions include: (i) the use of an accommodation; (ii) pursuant to a plan; (iii) whereby a purchaser, in exchange for consideration; and (iv) receives the right to exclusively use the accommodation for less than one year during a given year, on a recurring basis for more than one year. This definition tracks the definition set forth in the Vacation Ownership and Time Share Act of 2004 (set forth in the California Business and Professions Code established by the State Legislature) of what constitutes a time share plan, and the use of this definition ensures that this use is properly regulated. 12-4 Ordinance Nos. 2023-4 and 2023-5: Code Amendments Related to Time Shares May 9, 2023 Page 5 Local Coastal Program Consistency The proposed Title 21 amendment serves to implement Coastal Land Use Plan (CLUP) Table 2.1.1-1 (Land Use Plan Categories) of the LCP, which establishes the type, density and intensity of land uses within the coastal zone, including residential land use categories that are intended for residential dwellings. The amendment clarifies that time share use of residential property is prohibited in order to maintain the residential character of communities. The proposed amendment would continue to allow time shares in other areas where visitor -serving uses are currently permitted. This includes the CM, CV, MU-H, and MU-W Coastal Land Use Designations, which are identified in CLUP Table 2.1.1-1 to provide visitor -serving uses. While CLUP Policy 2.3.3-6 authorizes the short-term rental of dwelling units as a means of providing lower -cost overnight visitor accommodations, the maximum number of short-term rentals is capped at a maximum of 1,550 permits to prevent adverse impacts to residential areas and preserve housing stock within the coastal zone. Given the cost associated with this time share use, this use does not provide low-cost visitor accommodations, but it does have similar negative impacts to housing supply and neighborhood disturbances as short-term rentals. Therefore, it is appropriate to prohibit this type of visitor -serving commercial use in residential neighborhoods. Furthermore, this amendment will not impact the City of Newport Beach's (City's) ability to support the wide variety of visitor accommodations that are currently provided, including 4,086 hotel/motel rooms, a cap of 1,550 short term lodging units, and approximately 471 campground and RV sites. Local Coastal Plan Amendment Process Any amendment to the LCP, including Title 21, must be reviewed and approved by the City Council, with a recommendation from the Planning Commission, prior to submitting the amendment request to the California Coastal Commission (Coastal Commission). The Coastal Commission is the final decision -making authority on amendments to the certified LCP; however, the City retains the ability to reject an LCP amendment in its entirety if the Coastal Commission includes suggested modifications. To expediate the review and approval of the LCP Amendment, staff is recommending adopting the LCP Amendment as an ordinance and submitting the adopted ordinance to the Coastal Commission. If the Coastal Commission approves the LCP Amendment as submitted, the ordinance would immediately go into effect without the need to return for further City Council approval. Should the Coastal Commission make any suggested modifications, staff will then return to the City Council to accept any suggested modifications and adopt a new ordinance incorporating the modifications. FISCAL IMPACT: There is no fiscal impact related to this item. 12-5 Ordinance Nos. 2023-4 and 2023-5: Code Amendments Related to Time Shares May 9, 2023 Page 6 ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act (CEQA) pursuant to Section 15060(c)(2) and 15061(b)(3) of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, because the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment and is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. This code amendment would clarify that fractional ownership uses are classified as time shares, which are currently regulated by the NBMC. This amendment does not alter the manner in which time shares are regulated and therefore would not result in a physical change in the environment. Additionally, the proposed amendments to Titles 20 and 21 of the NBMC are categorically exempt pursuant to Section 15308 because the ordinances involve regulatory actions to assure protection of the environment. NOTICING: Pursuant to Section 13515 of the California Code of Regulations, a review draft of the LCP Amendment was made available, and a Notice of Availability was distributed on June 24, 2022, to all persons and agencies on the Notice of Availability mailing list. In addition, notice of this amendment was published in the Daily Pilot as an eighth -page advertisement, consistent with the provisions of the Municipal Code and State law. The item also appeared on the agenda for this meeting, which was posted at City Hall and on the City website. ATTACHMENTS: Attachment A — Ordinance No. 2023-4: Adopting Title 20 Code Amendment Attachment B — Ordinance No. 2023-5: Adopting Title 21 LCP Amendment and Authorizing Submittal to the California Coastal Commission Attachment C — Fractional Ownership Map Attachment D — Compiled Meeting Minutes Attachment E — Planning Commission Resolution No. PC2023-018 Attachment F — Planning Commission Resolution No. PC2023-019 Attachment G — Planning Commission Draft Minute Excerpts, Dated April 20, 2023 Attachment H — Proposed Code Text Changes (Redlined) 12-6 Attachment A Ordinance No. 2023-4: Adopting Code Amendment 12-7 ORDINANCE NO. 2023- 4 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, APPROVING AN AMENDMENT TO TITLE 20 (PLANNING AND ZONING) OF THE NEWPORT BEACH MUNICIPAL CODE RELATED TO TIME SHARES (PA2022-0202) WHEREAS, Article XI Section 7 of the California Constitution authorizes cities to make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws; WHEREAS, California Government Code Section 65850 et seq. authorizes a city to adopt ordinances that regulate land uses as a valid exercise of its police powers; 3 WHEREAS, Section 200 of the City of Newport Beach ("City") Charter vests the City Council with the authority to make and enforce all laws, rules, and regulations with respect to municipal affairs subject only to the restrictions and limitations contained in the Charter and the State Constitution, and the power to exercise, or act pursuant to any and all rights, powers and privileges, or.procedures granted or prescribed by any law of the State of California; WHEREAS, in 1982, the City Council adopted Ordinance No. 82-14, which is attached hereto as Exhibit "A," and incorporated herein by reference prohibiting the development of time share projects within Newport Beach to protect against unique problems associated with transient occupancy; WHEREAS, in 1996, the City Council adopted Ordinance 96-7 which is attached hereto as Exhibit "B," and incorporated herein by reference providing a narrow exception to allow time share projects in commercial districts subject to a conditional use permit but continuing to prohibit the use of residential property for time shares; WHEREAS, the City is a popular tourist destination known for its beaches and temperate weather; WHEREAS, over the past three years, Newport Beach and cities that serve as tourist destinations, have experienced a wave of purchases of single -unit residences, which are then re -sold to persons purchasing fractional shares; WHEREAS, for example, over the past 15 months, the number of fractional - owned residences has nearly tripled with at least 12 fractionally owned homes in Newport Beach, 12-8 Ordinance No. 2023- Page 2 of 9 WHEREAS, under this model, the ownership of the residence is usually divided into eight shares and sold to different persons with stays ranging from two to fourteen nights in duration, with back-to-back stays prohibited, resulting in frequent turnover of the properties' occupants and its commercial management, WHEREAS, a representative of a commercial management company who manages this type of use, Pacaso, Inc. ("Pacaso"), has stated in correspondence to the California Department of Real Estate, which is attached hereto as Exhibit "C," and incorporated herein by reference, that Pacaso homes are sold as time share interests as defined in Business and Professions Code Section 11212(z) ; WHEREAS, fractionally owned homes create impacts on the City's housing supply and character of residential neighborhoods by converting dwelling units from a full-time owner -occupied residence to a frequent rotation of vacation stays of less than a month; WHEREAS, public has testified that this change in the use of dwelling units results in an increase in traffic and noise in residential neighborhoods, as well a change to the fabric of the community due to the short-term nature of the stays, WHEREAS, with respect to the housing supply, Governor Gavin Newsom declared a housing crisis in the State of California and called for the development of 3.5 million new homes to be built by 2025, to meet the population's housing needs; WHEREAS, as a result, the State of California has adopted a number of housing bills such as Senate Bill Nos. 8, 9, 10, 35 and 330, and an aggressive Regional Housing Needs Assessment ("RHNA") for the 6th Cycle Housing Element covering the period 2021-2029 ("6t" Cycle Housing Element"); WHEREAS, the City's RHNA for the 6th Cycle Housing Element is 4,845 new housing units, which units are intended to meet the housing needs of existing and future residents within the jurisdictional boundaries of Newport Beach, WHEREAS, according to the 6t" Cycle Housing Element, which is attached hereto as Exhibit "D," and incorporated herein by reference, the median home price in the State of California was $579,770 as of 2020, the median home value of single - unit homes and condominiums in Newport Beach was $2,407,454; 12-9 Ordinance No. 2023- Page 3 of 9 WHEREAS, the fractional ownership of single -unit residences as a second home further exacerbates the housing supply in Newport Beach making it harder to meet housing demand, - WHEREAS, in accordance with Ewing v. Carmel-bV-the-Sea, (1991) 234 Cal. App. 3d 1579, which upheld the City of Carmel-by-the-Sea's right to impose zoning restrictions on short-term rentals, the Newport Beach City Council adopted Ordinance No. 92-13 which is attached hereto as Exhibit T," and incorporated herein by reference on May 11, 1992, establishing regulations for the operation of short-term lodging units to mitigate the impact of this use on the residents of the City; WHEREAS, on May 11, 2004, the City Council adopted Ordinance No. 2004-6, which is attached hereto as Exhibit T," and incorporated herein by reference, prohibiting the issuance of new short-term lodging permits after June 1, 2004, to any dwelling unit on a parcel zoned as a single -unit residence or designated for single-family residential use as part of a Planned Community Development Plan, Specific Area Plan or Planned Residential District; WHEREAS, in 2020 and 2021, the City Council adopted Ordinance Nos. 2020- 15, 2020-26, and 2021-28, which are attached hereto as Exhibits "G" — "I," and incorporated herein by reference amending the City's short-term lodging regulations based upon evidence and documentation attesting to the need to further regulate and control short-term lodging units in residential zones to ensure that, among other things, short-term lodging units are regulated in a way to maintain harmony with surrounding uses, WHEREAS, due to the proliferation of short-term rentals and their impact on neighborhoods and long-term housing, Ordinance No. 2021-28 placed a cap of 1,550 on the number of short-term lodging permits allowed in the City; WHEREAS, fractionally owned homes are a time share and operate much like short-term lodgings in that they limit occupancy by owners of a fractional interest in a property to less than 30 consecutive days; WHEREAS, on November 16, 2021, the City Council conducted a study session to address concerns raised by the public regarding impacts of fractional homeownership; 12-10 Ordinance No. 2023- Page 4 of 9 WHEREAS, during this study session public testimony was given that these homes operate as short-term lodging with residents expressing displeasure with the impacts that these homes were causing including an increase in the noise and traffic in the residential neighborhood; WHEREAS, on September 13, 2022, the City Council conducted a second study session, to discuss the fractional ownership uses and was presented with a report, which is attached hereto as Exhibit "J," and incorporated herein by reference that 15 of the 22 jurisdictions surveyed classify fractional ownership uses as a time share; WHEREAS, additional public testimony included concerns about increases in traffic, noise, and trash, as well as fractional ownership uses having an adverse impact on the character of the existing residential neighborhoods consistent with the impacts identified by the cities of Carmel -by -the Sea, Hermosa Beach, Palm Desert, Sonoma and St. Helena whose ordinances regulating and evidence in support of such ordinances are attached hereto and incorporated herein by reference as Exhibits "K" - "O"; WHEREAS, on September 27, 2022, the City Council adopted Resolution 2022- 61, initiating code amendments to Title 20 (Planning and Zoning) ("Zoning Code Amendment No. PA2022-0202") and Title 21 (Local Coastal Program Implementation Plan) ("Local Coastal Program Amendment No. 2020-0202") of the NBMC and directed staff to work with the Planning Commission to develop regulations related to fractional ownership uses in the best manner that would protect the character of residential neighborhoods; WHEREAS, on October 6, 2022, the Planning Commission conducted a study session to discuss fractional ownership uses and receive public testimony; WHEREAS, public testimony included fractional owners who were in favor of allowing the use and neighbors who expressed frustration with the increased impacts caused by the operation of fractional ownership homes; WHEREAS, at the conclusion of study session, the Planning Commission expressed the desire to form an ad -hoc committee to work closely with staff to formulate appropriate regulations to ensure that they were able to thoroughly investigate the appropriate approach to fractional ownership uses; 12-11 Ordinance No. 2023- Page 5 of 9 WHEREAS, on October 20, 2022, the Planning Commission formed an Ad -Hoc Committee to evaluate potential amendments to Title 20 and Title 21 of the NBMC related to fractional ownership uses within the City; WHEREAS, the Ad -Hoc Committee met a total of seven times, during which the Committee discussed potential regulatory schemes with the Community Development Department, City Attorney's Office, representatives from Pacaso and several concerned citizens to ensure the Committee members had a full understanding of the issue; WHEREAS, during this process, Pacaso proposed an ordinance, which is attached hereto as Exhibit "P," and incorporated herein by reference, regulating, Pacaso- managed homes by way of a regulatory permit with a cap of 500 on the number of regulatory permits the City would be required to issue to such fractionally owned homes; WHEREAS, on February 3, 2023, the Ad -Hoc Committee presented their findings to the Planning Commission making two recommendations to the City Council including the preferred recommendation which was to broaden the definition of time shares to include fractional ownership uses, and an alternative recommendation of creating a separate regulatory scheme to allow fractional ownership uses in all zones, except the Single -Unit Residential (R-1) Zoning Districts; WHEREAS, on March 14, 2023, the City Council considered the Planning Commission's recommendations and, after receiving further public testimony, the City Council directed staff to move forward with the Planning Commission's preferred option of broadening the definition of time share; WHEREAS, the Planning Commission held a public hearing on April 20, 2023, in the City Council Chambers, located at 100 Civic Center Drive, Newport Beach, California. A notice of time, place and purpose of the hearing was given in accordance with California Government Code Section 54950 et seq. ("Ralph M. Brown Act") and Chapter 20.62 (Public Hearings) of the NBMC. Evidence, both written and oral, was presented to, and considered by, the Planning Commission at this hearing; WHEREAS, at the conclusion of the hearing, the Planning Commission adopted Resolution No. PC2023-017 by a unanimous vote (6 ayes — 0 nays) recommending approval of the amendment to Title 20 of the NBMC to the City Council; 12-12 Ordinance No. 2023- Page 6 of 9 WHEREAS, the City Council held a public hearing on May 9, 2023, in the City Council Chambers located at 100 Civic Center Drive, Newport Beach, California. A notice of time, place and purpose of the public hearing was given in accordance with the Ralph M. Brown Act, and Chapter 20.62 (Public Hearings) of the NBMC. Evidence, both written and oral, was presented to, and considered by, the City Council at this public hearing; and WHEREAS, the City Council and Planning Commission agenda item and supporting evidence, are attached hereto as Exhibits "Q" — "V" and incorporated herein by reference. NOW, THEREFORE, the Newport Beach City Council does hereby ordain as follows: Section 1: The City Council of the City of Newport Beach does hereby approve the Zoning Code Amendment No. PA2022-0202 to amend Title 20 (Planning and Zoning) of the Newport Beach Municipal Code related to time shares as set forth in Exhibit "W," which is attached hereto and incorporated herein by reference. This decision is made based upon the evidence in the record and is consistent with the General Plan Land Use Policies set forth in Exhibit "X," which is attached hereto and incorporated herein by reference. Section 2: The recitals provided in this ordinance are true and correct and are incorporated into the substantive part of this ordinance. Section 3: If any section, subsection, sentence, clause or phrase of this ordinance 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 ordinance. The City Council hereby declares that it would have passed this ordinance, and each section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases may be declared invalid or unconstitutional. 12-13 Ordinance No. 2023- Page 7 of 9 Section 4: The City Council of the City of Newport Beach finds Zoning Code Amendment No. PA2022-0202 is not subject to environmental review under the California Environmental Quality Act ("CEQA") pursuant to Section 15060(c)(2) and 15061(b)(3) of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, which states that an activity is not subject to CEQA if the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment or will not have the potential for causing a significant effect on the environment. Time share uses are not permitted in residential zones, however, the City has seen a trend in the fractional use of residences wherein the property is usually divided into eight shares and sold to different persons with stays ranging from two to fourteen nights in duration with back- to-back stays prohibited resulting in frequent turnover of the properties' occupants and its commercial management. This Zoning Code Amendment would not result in a direct or indirect physical change to the environment nor does it have the potential for causing a significant effect on the environment since it would simply clarify that fractional ownership uses are classified as time shares, which are currently regulated by the NBMC. This Zoning Code Amendment does not alter the manner in which time shares are regulated and therefore would not result in a physical change in the environment. Additionally, the Zoning Code Amendment is categorically exempt pursuant to Section 15308 because the ordinance involves regulatory actions to assure protection of the environment. Section 5: Except as expressly modified in this ordinance, all other sections, subsections, terms, clauses and phrases set forth in the Newport Beach Municipal Code shall remain unchanged and shall be in full force and effect. 12-14 Ordinance No. 2023- Page 8 of 9 Section 6: The Mayor shall sign, and the City Clerk shall attest to the passage of this ordinance. The City Clerk shall cause the ordinance, or a summary thereof, to be published pursuant to City Charter Section 414. This ordinance shall be effective thirty calendar days after its adoption. This code amendment will not take effect in the coastal zone until Local Coastal Program Amendment No. PA2022-0202 is approved by the California Coastal Commission and adoption, including any modifications suggested by the California Coastal Commission. This ordinance was introduced at a regular meeting of the City Council of the City of Newport Beach held on the 9tn day of May, 2023, and adopted on the 23rd day of May, 2023, by the following vote, to wit- AYES - NAYS: ABSENT: ATTEST: LEILANI I. BROWN, CITY CLERK APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE AARON�q,'. HARP, PITY ATTORNEY Attachrpfint(s): NOAH BLOM, MAYOR Exhibit A - July 26, 1982, City Council Meeting Minutes and Ordinance No. 82-14 Exhibit B - March 11, 1996, City Council Meeting Minutes and Ordinance No. 96-7 12-15 Ordinance No. 2023- Page 9 of 9 Exhibit C - Correspondence from Pacaso to the California Department of Real Estate Exhibit D - 6th Cycle Housing Element Exhibit E - April 27, 1992, City Council Meeting Minutes and Ordinance No. 92-13 Exhibit F - April 27, 2004, City Council Agenda Item No. 3 Adopting Ordinance No. 2004-6 and Supporting Material Exhibit G - June 23, 2020, City Council Agenda Item No. 19 Adopting Ordinance No. 2020-15 and Supporting Material Exhibit H - October 13, 2020, City Council Agenda Item No. 18 Adopting Ordinance No. 2020-26 and Supporting Material Exhibit I - November 30, 2021, City Council Agenda Item No. 26 Adopting Ordinance No. 2021-28 and Supporting Material Exhibit J - Sage Crest Planning + Environmental Report Exhibit K - City of Carmel -by -the Sea Time Share Ordinance and Supporting Evidence Exhibit L - City of Hermosa Beach Time Share Ordinance and Supporting Evidence Exhibit M - City of Palm Desert Time Share Ordinance and Supporting Evidence Exhibit N - City of Sonoma Time Share Ordinance and Supporting Evidence Exhibit O - City of St. Helena Time Share Ordinance and Supporting Evidence Exhibit P - Ordinance Proposed by Pacaso Adding Chapter 5.98 Exhibit Q - September 13, 2022, City Council Agenda Item No. SS2 Exhibit R - September 27, 2022, City Council Agenda Item No. 1 Exhibit S - October 6, 2022, Planning Commission Agenda Item No. SS.2 Exhibit T - October 20, 2022, Planning Commission Agenda Item No. 6 Exhibit U - February 23, 2023, Planning Commission Agenda Item No. 6 Exhibit V - March 14, 2023, City Council Agenda Item No.12 Exhibit W - Zoning Code Amendment PA2022-0202 Exhibit X - General Plan Consistency Finding in Support of Zoning Code Amendment PA2022-0202 12-16 Exhibit A July 26, 1982, City Council Meeting Minutes and Ordinance No. 82-14 https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=21155&dbid=0&repo=CNB https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=35606&dbid=0&repo=CNB 12-17 Exhibit B March 11, 1996, City Council Meeting Minutes and Ordinance No. 96-7 https://ecros.newportbeachca.qov/WEB/DocView.aspx?id=22280&dbid=0&repo=CNB https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=36439&dbid=0&repo=CNB 12-18 Exhibit C Correspondence from Pacaso to the California Department of Real Estate 12-19 Exhibit C From: Andy Sirkin <dasirkin@gmail.com> Sent: Saturday, July 24, 2021 10:19 AM To: Aiu, Joseph@DRE <Joseph.Aiu@dre.ca.gov> Cc: Bruce, David@DRE <David.Bruce@dre.ca.gov>; Neri, Chris@DRE <Chris.Neri(c@dre.ca.gov>; Patrick Abell <patrick@pacaso.com>; David J. Willbrand <david@pacaso.com> Subject: Re: Pacaso (DRE No. 121-0701-006) CAUTION: THIS EMAIL ORIGINATED OUTSIDE THE DEPARTMENT OF REAL ESTATE! DO NOT: click links or open attachments unless you know the content is safe. NEVER: provide credentials on websites via a clicked link in an Email. )ear Mr. Aiu, Yes, I confirm that Pacaso Homes are within that exemption. We sincerely appreciate your prompt response and attention. All the best, Andy Sirkin SirkinLaw APC +1-415-462-5925 (US) On Jul 24, 2021, at 5:37 PM, Aiu, Joseph@DRE <Joseph.Aiu ,dre.ca.gov> wrote: Dear Mr. Sirkin, Thank you for your email response and explanation dated 7/21/21. Based on your response and explanation, we understand that your clients, Pacaso Inc. and Pacaso Homes, are selling time-share interests as defined in B&P Code section 11212(z), but are exempt from needing to file for a time-share public report since they fall below the reporting threshold of 11 or more units. Please confirm. Thank you. Sincerely, Joseph Aiu Investigations & Compliance From: Andy Sirkin <dasirkin@gmail.com> Sent: Wednesday, July 21, 2021 2:28 AM To: Aiu, Joseph@DRE <Joseph.Aiu@dre.ca.gov> Cc: Bruce, David@DRE <David.Bruce@dre. ca.gov>; Neri, Chris@DRE 12-20 <Chris.Neri@dre.ca.gov>; Patrick Abell <patrick@pacaso.com>; David J. Willbrand <david@pacaso.com> Subject: Re: Pacaso (DRE No. 121-0701-006) CAUTION: THIS EMAIL ORIGINATED OUTSIDE THE DEPARTMENT OF REAL ESTATEI DO NOT: click links or open attach ments.unless you know the content is safe. NEVER: provide credentials on websites via a clicked link in.an Email. Vear Mr. Am, I received an email late yesterday from David Bruce saying that, since an investigation has been initiated by the Department, all correspondence should be routed to you. He also mentioned that I was welcome to "cc" him on that correspondence, so I will continue to do SO. Although you may already have a basic understanding of Pacaso's business, I will begin with a brief explanation of the key elements. Pacaso only organizes group purchases of single- family residences. Each owner gets a 1/8th share along with the right to use the home for 1/8th of each year indefinitely. During each owner's usage period, that owner has exclusive use of the entire house. All rentals are prohibited; only owners and their guests are permitted to use the house. Each owner pays regular assessments to fund the operating costs of the home and maintenance reserves. Once all eight ownership slots are filled, the eight owners own and control the house; Pacaso retains no ownership interest. B&P Code Section I I212(z) defines "Time -Share Plan" as any "arrangement ... whereby a purchaser, in exchange for consideration, receives ownership rights in or the right to use accommodations for a period of time less than a full year during any given year, on a recurring basis for more than one year." This description matches exactly the arrangement among owners of a Pacaso home. Specifically, each purchaser gets the right to use the home for 1/8th of each year on a recurring basis every year for as long as he/she is an owner. However, since each Pacaso offering involves only eight interests, each home is below the threshold for needing a Time -Share public report under Section 11211.5(b)(1). B&P Code Section 11004.5(g) provides that "time-share plans ... are not "subdivisions" or "subdivided lands" subject to this chapter." Based on this language, I had always assumed that Time -Share offerings, regardless of size, did not require a subdivision public report under B&P Code Section 11000 et seq.; rather, large Time -Share offerings (more than 10 interests) require a Time -Share public report, and small Time -Share offerings (10 or fewer interests) require no public report. Your communications suggest that Time -Share offerings too small to require a Time -Share public report instead need a subdivision public report. I am having difficulty understanding the logic of this position. As you may know, prior to 2004, California law required a Time - Share public report only for projects involving more than 12 interests. When the legislature enacted the Vacation Ownership and Time -Share Act Of 2004, it reduced the threshold from 12 to 10. This change shows that the legislature specifically considered the appropriate threshold for when a Time -Share offering needs a public report. The legislature did not choose nine, or eight, or six for the threshold; it specifically chose 10. The idea that Time -Share offerings too small to require a Time -Share public report instead need a subdivision public report seems contrary to this legislative intent. What meaning could the 10-share threshold in Section 11211.5(b)(1) have if an offering below the threshold still had to obtain a subdivision public report? Moreover, when the legislature enacted the Vacation Ownership and Time -Share Act Of 2004, the legislature could have said that Time -Share offerings require a subdivision public report under B&P Code Section 11000 et seq., and that the application for a Time -Share public report should be the same as the application for a subdivision public report. Instead, the legislature carefully specified the types of information it deemed appropriate for DRE to obtain and consider when "vetting" a proposed Time -Share offering. The application submittal for a Time -Share public report makes sense in the context of what a Time -Share offering is and what the purchasers buy. 12-21 If, as you suggest, Time -Share offerings too small to require a Time -Share public report instead need a subdivision public report, it would mean that the public report application for a small Time -Share offering would ignore the carefully -crafted specifics of the Time -Share law (which make perfect sense in the context of a Time -Share offering), and instead comply with the public report application requirements for a subdivision (which make no sense in the context of a Time -Share offering). To illustrate this point with just one of many examples, consider B&P Code Section 11234(c), under which a Time -Share public report requires "a description of the type of interest and usage rights the purchaser will receive" and "a representation about the percentage of useable time authorized for sale, and if that percentage is 100 percent, then a statement describing how adequate periods of time for maintenance and repair will be provided." This requirement is perfectly logical for a Time -Share public report, since the fairness and adequacy of the usage assignment structure is absolutely critical from a consumer protection standpoint. So, why would the subdivision public report you suggest is needed for a small Time -Share offering not require this critical information? Is this information suddenly less important if the offering involves 10 or fewer Time -Share interests? For all of these reasons, I respectfully suggest that Pacaso offerings do not require a Public Report. My assertion is based specifically on B&P Code Sections 11211.5(b)(1) and 11004.5(g), and on the legislative history and context of the Vacation Ownership and Time - Share Act Of 2004. To simplify your job when responding, you can ignore the other arguments made in my client's letter of July 9. Cordially, Andy Sirkin SirkinLaw APC +1-415-462-5925 (US) On Jul 17, 2021, at 1:28 AM, Aiu, Joseph@DRE <Joseph.Aiu ,dre.ca.gov> wrote: Dear Mr. Sirkin, Your request for an extension to the deadline imposed in my "Notice to show cause was taken under consideration and you are granted an extension until July 23, 2021. Please note the following. The Department of Real Estate (DRE), investigates violations of the Real Estate Law (Licensees), the Subdivided Lands Act (Subdividers), the Vacation Ownership and Time Share Act (Developers), and endeavors to safeguard the public interests in real estate matters. In your initial response, your letter alluded to 11001.[a](b)(2), 11004.5(g), 11212.5(b)(1), and Pacaso Homes purchases are resales. Please be aware that your marketing concept is also under consideration. Sincerely, Joseph Aiu Investigations and Compliance From: Andy Sirkin <dasirkin@gmail.com> Sent: Friday, July 16, 2021 3:04 PM To: Aiu, Joseph@DRE <Joseph.Aiu@dre.ca.gov> Cc: Bruce, David@DRE <David.Bruce@dre. ca.gov>; Neri, Chris@DRE <Chris.Neri@dre.ca.gov>; Patrick Abell <Patrick@pacaso.com>; David J. Willbrand <david@pacaso.com> Subject: Pacaso (DRE No. 121-0701-006) 12-22 CAUTION: THIS EMAIL ORIGINATED OUTSIDE THE DEPARTMENT OF REAL.ESTATEI DO NOT: click Links or open attachments unless you know the content is safe. - NEVER: provide, credentials on websites viaa clicked link.in an Email: Ll_ n.,, Our office has been engaged by Pacaso in connection with your inquiry. Over the past four days, I have been corresponding with David Bruce about my analysis of the situation and potential options to move forward in a manner that would be satisfactory to DRE. I had hoped to provide a formal response to your email by this afternoon in accordance with your deadline. However, I have not yet received Davids's response to my most recent email (sent late yesterday), and I would very much like to get that before responding to you. Might I ask your indulgence in getting a short extension so that I might complete my interchange with David? I will commit to keeping you advised on the progress of that exchange. Please be assured that resolving this matter to the satisfaction of DRE is Pacaso's highest priority. We are in no way interested in delaying a resolution; however, we want to make sure to proceed in the manner most likely to lead to a mutually acceptable outcome. Thank you in advance for your consideration. All the best, Andy Sirkin SirkinLaw APC +1-415-462-5925 (o) +1-415-350-6296 (m) ---------- Forwarded message --------- From: Aiu, Joseph@DRE <Joseph.AiuQdre.ca.gov> Date: Fri, Jul 9, 2021 at 11:42 AM Subject: RE: Pacaso response to DRE notice letter (DRE No. 121- 0701-006) To: Patrick Abell <patrick(a�pacaso.com> Cc: David Willbrand <david(a�pacaso.com>, Charlie Tanner <charlie ,brokerzoo.com>, Aiu, Joseph@DRE <Ioseph.Aiugdre. ca. gov> Dear Mr. Abell, Thank you for your letter explaining the position of Paseo Homes as to its sales of "1/8th undivided interests in a residential homes." The key phrase in our letter is the sale of undivided interest. Please refer to Section 11000.1 of the Code. Further, your letter appear to allude to the "Exemption" pursuant to Subsection 11000.1(b)(2), which requires satisfactory evidence presented to DRE —this has not been done. Hence, Section 11010 is applicable. Please respond by July 16, 2021 as to whether Pacaso Homes and its affiliates will comply with applying for a Public Report, since advertising the sales must have a Preliminary Public Report. Sincerely, Joseph Aiu Statewide Subdivisions Investigations & Compliance 12-23 (213) 576-6927 Direct (213) 576-6942 Fax Department of Real Estate 320 W. 4th Street, Suite 350 Los Angeles, CA 90013 joseph.aiugdre.ca. ov <image001.png> 12-24 Exhibit D 6t" Cycle Housing Element https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=2833796&dbid=0&repo=CN B 12-25 Exhibit E April 27, 1992, City Council Meeting Minutes and Ordinance No. 92-13 https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=21921 &dbid=0&repo=CNB https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=36004&dbid=0&repo=CNB 12-26 Exhibit F April 27, 2004, City Council Agenda Item No. 3 Adopting Ordinance No. 2004-6 and Supporting Material https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=68969&dbid=0&repo=CNB https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=36708&dbid=0&repo=CNB 12-27 Exhibit G June 23, 2020, City Council Agenda Item No. 19 Adopting Ordinance No. 2020-15 and Supporting Material https://ecros. newportbeachca.gov/WEB/DocView. aspx?id=2538440&dbid=0&repo=CN B Correspondence https://ecros. newportbeachca.gov/WEB/DocView.aspx?id=2538635&dbid=0&repo=CN B Ad Hoc Committee Recommendations PowerPoint https://ecros. newportbeachca.gov/WEB/DocView.aspx?id=2538700&dbid=0&repo=CNB Corona del Mar Residents Association Short -Term Lodging Survey PowerPoint https://ecros. newportbeachca.gov/WEB/DocView. aspx?id=2538702&dbid=0&repo=CN B Newport Island Community Association Survey Highlights PowerPoint https://ecros. newportbeachca.aov/WEB/DocView.aspx?id=2538703&dbid =0&repo=CNB Ordinance No. 2020-15 https:Hecros. newportbeachca.govMEB/DocView. aspx?id=2544635&d bid=0&repo=CN B 12-28 Exhibit H October 13, 2020, City Council Agenda Item No. 18 Adopting Ordinance No. 2020-26 and Supporting Material https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=2605151 &dbid=0&repo=CNB Correspondence https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=2605188&dbid=0&repo=CNB Notice of Public Hearing https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=2605206&dbid=0&repo=CNB Ordinance No. 2020-26 https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=2609797&dbid=0&repo=CNB 12-29 Exhibit I November 30, 2021, City Council Agenda Item No. 26 Adopting Ordinance No. 2021-28 and Supporting Material https://ecros. newportbeachca.gov/WEB/DocView.aspx?id=2797314&dbid=0&repo=CN B Correspondence https://ecros. newportbeachca.gov/WEB/DocView.aspx?id=2797686&d bid=0&repo=CNB Short Term Lodging LCP Amendments PowerPoint https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=2797391 &dbid=0&repo=CNB Notice of Public Hearing https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=2797689&dbid=0&repo=CNB Ordinance No. 2021-28 https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=2800356&dbid=0&repo=CNB 12-30 Exhibit J Sage Crest Planning + Environmental Report 12-31 t >K N � r a. a 7... t t f i {_-W. 1 IP HUts�$OW N iEa P t t 4 f �oa.WPO�, Prepared far, - pity AfIV��u�por� Beach 1 h •!!�� evelop ent [fie artment � p t y �ljr s, �,t4 g v..r r 4.' �7 r'7' v':at t ax ,i♦ �- - e!h° y'' sE= s `' y i � , !• { 5r - �x s a„ a X r 1� t`$s .�4,V p ak..p t a � �{a�vy,✓,r�Fi ��}�s7,'{'�� 4. �L�'"�y3�y..{r�4#���r�, � s .t ! 4� r �+s� t ; �{Fn �$ i 1h"'l.i�i��i �rZsa`4F Table of Contents EXECUTIVESUMMARY..................................................................................................................................1 BACKGROUND...............................................................................................................................................1 Known/Suspected Properties in Newport Beach.....................................................................................1 BENEFITS AND IMPACTS OF FRACTIONAL HOUSING....................................................................I............... 2 FractionalHousing Benefits...................................................................................................................... 2 FractionalHousing Impacts....................................................................................................................... 3 COMMUNITYSURVEY .............. .. .......................................... ....................................................4 Cityof Beverly Hills, CA............................................................................................................................. 5 Cityof Carlsbad, CA.........................................................................................:.........................................5 Cityof Carmel by the Sea, CA.........................................................,.......................................... Cityof Encinitas, CA..................................................................................................................................5 Cityof Fort Lauderdale, FL........................................................................................................................ 6 Cityof Hermosa Beach, CA....................................................................................................................... 6 Cityof Indian Wells, CA............................................................................................................................. 6 Countyof Monterey, CA........................................................................................................................... 6 Cityof Napa, CA........................................................................................... ...... 6 Villageof North Haven, NY....................................................................................................................... 7 Cityof Oceanside, CA................................................................................................................................7 Cityof Pacific Grove, CA............................................................................................................................ 7 Cityof Palm Desert, CA............................................................................................................................. 7 Cityof Palm Springs, CA............................................................................................................................ 7 Cityof Park City, UT.................................................................................................................................. 8 Cityof Santa Barbara, CA.......................................................................................................................... 8 Cityof Santa Cruz, CA................................................................................................................................8 Cityof South Lake Tahoe, CA.................................................................................................................... 8 Cityof Sonoma, CA....................................................................................................................................9 Cityof St. Helena, CA..............................................................................................................I.................9 Townof Truckee, CA................................................................................................................................. 9 Cityof Vail, CO........................................................................................................................................10 FRACTIONAL HOUSING �ly uo� acm, c, n, ` C� � on SS2-5 12-33 APPENDICES......................................................................................................................... ..................10 Appendix A — Pacaso Economic Impact Analysis, prepared by EBP........................................................A1 Appendix B — City of Beverly Hills Urgency Ordinance........................................................................... 131 Appendix C— City of Carlsbad Timeshare ordinance............................................................... ........... C1 Appendix D — City of Carmel by the Sea Cease and Desist Order...........................................................D1 Appendix E — City of Hermosa Beach Planning Commission Resolution ................................................ E1 Appendix F — County of Monterey Cease and Desist Order................................................................... F1 Appendix G — Village of North Haven Code Amendment...................................................................... G1 Appendix H — City of Palm Desert Ordinance........................................................................................ H1 Appendix I - City of Palm Springs Cease and Desist Order......................................................................11 Appendix J — Park City Notice of Amendment .... .............................................................................J1 Appendix K — City of Santa Cruz Ballot Initiative..................................................................................... K1 Appendix L — City of South Lake Tahoe Cease and Desist Order............................................................ L1 Appendix M — City of Sonoma Ordinance..............................................................................................M1 Appendix N — City of St. Helena Ordinance........................................................................................... N1 Appendix O — Pacaso Inc. v. City of St. Helena....................................................................................... 01 Appendix P —Town of Truckee Ordinance.............................................................................................. P1 Cover Photo by Dex Ezekiel on Unsplash k FRACTIONAL HOUSING It adn oc T N SS2-6 12-34 EXECUTIVE SUMMARY The City of Newport Beach (City) is beginning to see the rise of fractional homeownership of single-family houses. Fractional homeownership is when multiple owners purchase a property and split the allowed time at the property through a formal arrangement, as compared to multiple owners who occupy the residence full-time or have no formal arrangement for occupancy. In the fractional model, the allotted time for each owner is based on their percentage of ownership. In reviewing available data on fractional homeownership, there appears to be at least ten such properties within the City but there could be more. The City is receiving complaints from residents that these properties function similarly to short-term rental vacation homes and result in significant noise, traffic, and other impacts to residential neighborhoods. As a result of these concerns, the City asked Sagecrest Planning+Environmental (Sagecrest) to investigate how other jurisdictions are dealing with fractional housing and the companies that promote them. Based on this investigation, it appears that other communities are adopting moratoriums and pursuing operators of fractional housing companies through code enforcement actions. BACKGROUND Fractional homeownership (sometimes called co -ownership) is an emerging trend in real estate where ownership of properties is equally shared among multiple owners (typically between four and 12 owners). The amount of time the owner may spend at the property correlates to the fraction of ownership (e.g., a 1/s share owner would be allotted 45 days per year). This time allotment is not typically used consecutively, but rather one or two weeks at a time. In addition to the cost to purchase their share of the home, the owners are responsible for their share of the maintenance, property management fees, HOA fees, cleaning costs, utilities, taxes, insurance, and payment into a reserve fund to cover long-term repairs, such as replacement of the roof. Fractional owners maintain an ownership interest, benefit from a change in property value due to appreciation and have the potential to generate income through short- term rentals, although the City would maintain authority on short-term rentals. It should also be noted that some fractional homeownership companies prohibit short-term rentals in their management agreement. Companies such as Pacaso, Sharetini, Ember, Equity Estates, and others facilitate the purchase of properties and provide the necessary maintenance, furnishments, property management, and cleaning services in exchange for a monthly fee. Many of these companies utilize ownership models that purchase and hold the properties under entities, such as limited liability companies, to avoid the need for a real estate transaction each time an owner sells their share. Alternatively, an ownership group could forego using a management company and self -govern the access to fractional housing. Known/Suspected Properties in Newport Beach Sagecrest reviewed the listings on various sites to identify properties in Newport Beach. Additionally, Sagecrest reviewed the City's database to find properties with mailing addresses that match the fractional home ownership companies. The following table lists the properties that are either known or suspected to be fractional ownership properties. FRACTIONAL HOUSING Ilk VK B R�3 _. SS2-7 12-35 117 25`' Street Listed on Pacaso 121 Emerald Avenue Listed on Pacaso 305 Grand Canal Listed on Pacaso 315 East Bay Avenue -- , -- .. ._ ... _. 506 West Oceanfront Listed on Ember Listed on Pacaso 1703 Plaza del Sur --_--- . ____ . _ _.-.-__ ._. _ _ .2137 Miramar Drive Listed on www.compass.com _-___._-- ___ _._..__ _.__--- ..... Listed on Ember 2628 Ocean Boulevard _r .--__. _ . _._ 3803 Marcus Avenue City database mailing address match to Pacaso _. _ ._ ..-.. _ __ .. _.._ , .. _ _. City database mailing address match to Pacaso _ 4106 River Avenue 7 Listed on Pacaso BENEFITS AND IMPACTS OF FRACTIONAL HOUSING Fractional Housing Benefits The primary benefit of fractional homeownership is to own a second home at a more affordable price. According to county records, the home at 506 W Oceanfront sold on March 14, 2022, for $6,800,000. A 1/8 share of this house is currently being offered on Pacaso for $1,098,000. According to Equity Estates, a vacation home investment firm, the benefits of fractional housing are:' • it's more affordable - Perhaps a $4M home is out of reach, but $1M is right in your wheelhouse. Fractional ownership lets you get the home you want in the most desirable location at the price you can afford. This goes for home upkeep and maintenance, too. By sharing the costs of upkeep, fractional ownership makes long-term ownership a much more realistic possibility. • The home will get some love - No home should sit vacant 48 weeks out of the year. By sharing the ownership, the home will be opened up at regular intervals. Opening and closing windows and doors, running the water, turning on the AC and heater, and using amenities like the hot tub and pool —all of these are essential to maintaining the home. It provides an opportunity to identify issues early on and preserve the home's long-term value. • Peace of Mind - Fractional ownership also means sharing the burden of homeownership. Rather than a single point of failure (i.e., you), you essentially have a group that shares accountability, schedules maintenance, checks on the home, and divides the work and chores that would otherwise be left to a single owner. Another fractional housing company, Pacaso, claims that its model reduces demand in the housing market. Specifically, they state, "This demand on top of short supply has driven up home prices to unprecedented levels. instead of eight second home buyers buying eight separate median -priced homes, which drives up prices even further, Pacaso consolidates those eight buyers into just one luxury home, which alleviates pressure at the median -priced tier."' To address concerns that they do not provide a benefit, Pacaso commissioned an economic impact analysis (Appendix A), which found that the average fractional ownership house generates an average of $48,390 in annual spending compared with the i https://eguityestatesfund.com/the-pros-and-cons-of-fractional-ownership, retrieved August 16, 2022 z https://www.pacaso.com/bloc/economic-impact-study, retrieved August 16, 2022 FRACTIONAL HOUSING 2- JL F BC__) rl ti SS2-8 12-36 average second home. The study further found that fractional housing generates an average of $3,780 additional revenue in local and state tax dollars over the average second home. Fractional Housing Impacts Notwithstanding the aforementioned benefits, many communities have received complaints from their residents that fractional housing creates adverse impacts on the neighborhoods in which they are located and the City as a whole. Jurisdictions that have taken a proactive approach to preventing fractional housing in their communities all have expressed concerns about the following: • Fractional housing adversely impacts the affordability of full-time homes in the community. As more homes are taken out of the primary housing market and converted to vacation homes, the available housing stock is reduced. Even though the fractional housing companies focus on the high -end market, any loss in available housing supply results in increase costs across the entire market. Due to the high turn -over of occupants, fractional housing could adversely impact long-term residents in the surrounding neighborhood. Given that vacations typically last for short periods of time, these properties would have similar impacts as short-term rentals, such as noise, loss of privacy, loss of community buy -in, and decline in property values. • The operation of the fractional homeownership companies within residential areas would result in the commercialization of residential neighborhoods. Several communities that Sagecrest spoke with noted that the operations of these companies would require a business license as they are establishing a commercial use. Sagecrest discussed concerns with fractional housing with a major opponent to fractional housing, Stop Pacaso Now3. This organization consists of volunteers who provide resources to residents to oppose fractional housing from being established in their community. This includes providing sample yard signs, sample letters, and volunteer coordination guidance. In discussing the effectiveness of their outreach, Stop Pacaso Now stated that they have had great success in communities in which residents have organized. Stop Pacaso Now has sponsored four petitions on change.org (Sonoma 4, Dry Creek Valleys, St. Helena', and a nationwide petition') against fractional housing with a total of 7,411 signatures. The Mitchell Hamline Law Journal of Public Policy and Practice published a journal article' that found that "The increasing commodification of single-family homes has had cascading effects on housing and on communities in general." Fractional housing is shared among various owners, as a result, an increase in 3 https://stoppacasonow.com/ 4 https://www.change.org/p/sonoma-county-planning-commission-pacaso-time-shares-don-t-belong-in-sonoma- neighborhoods, retrieved August 16, 2022 5 https://www.change.org/p/pacaso-time-shares-don-t-belong-in-dry-creek-valley-s-agricultural-zoning-and- farmlands, retrieved August 16, 2022 6 https://www.change.org/p/mderosa-cityofsthelena-org-gellsworth-cityofsthelena-org-stop-pacaso-from- commercializing-our-residential-neighborhoods, retrieved August 16, 2022 ' https://www.change.org/p/pacaso-stop-pacaso-s-takeover-of-housing, retrieved August 16, 2022 8 Markuson, Christopher (2022) "A Timeshare By Any Other Name: Fractional Homeownership and the Challenges and Effects of Commodified Single -Family Homes," Mitchell Hamline Law Journal of Public Policy and Practice: Vol. 43: Iss. 2, Article 1. Available at: https://open.mitchelIhamIine.edu/policypractice/voI43/iss2/1 FRACTIONAL HOUSING ca Ic "I N�vl: EPA RY B SS2-9 12-37 the number of units could decrease the demand for hotel rooms. This would likely result in a reduction in the amount of transient occupancy tax accrued by the City. COMMUNITY SURVEY Sagecrest researched other communities that have fractional ownership properties to determine if there is a concern with these properties and how the community is addressing these concerns. A summary of the actions is contained in the table below, followed by a description of each community. Notes (a) Code Amendment in Process (b) City Council is split on whether or not fractional housing is a timeshare FRACTIONAL HOUSING City of N0e--�.nV,-fij(D.,i0ft, BU",,--3-'-1ch SS2-10 12-38 City of Beverly Hills, CA On July 15, 2021, the City of Beverly Hills adopted an urgency ordinance establishing a 45-day moratorium on fractional ownerships of residential and commercial properties. In the staff report, the City expressed concerns that the properties would impact the residents in the surrounding neighborhood since they would operate as vacation rental homes. The City noted these properties would likely "experience high turnover rates of occupants, and result in impacts related to their operation such as noise, loss of privacy, loss of community buy -in, and decline in property values." In addition to these impacts, the City expressed concerns that converting homes to fractional housing would remove permanent housing from the housing market.. Notwithstanding this prohibition, the moratorium does allow the City Council to approve a fractional ownership dwelling if they adopt a finding that "the fractional ownership of a property will not disturb the stability of a residential neighborhood or residential building and will not adversely impact future development, redevelopment, safety, and proper maintenance of the property" during a duly noticed public hearing. The moratorium was extended for ten months and 15 days on August 17, 2021 and extended again for a second year on June 14, 2022. The moratorium is now set to expire on July 14, 2023. The moratorium intends to allow the City staff time to study the issue and any potential impacts fractional housing may have on the health, safety, and welfare of those who live in surrounding homes and on the City as a whole. A copy of the urgency ordinance and staff report is included in Appendix B. City of Carlsbad, CA The City of Carlsbad noted that the use of fractional properties constitutes a timeshare. They have an existing timeshare ordinance (Appendix C), which they would enforce if they received a complaint. The City has not had an issue with operation of the fractional homes. City of Carmel by the Sea, CA The City is aware of fractional ownership companies and their assertation that they sell and manage properties, not timeshares. The City disagrees with this position and is of the opinion that any fractional housing has the same impacts on surrounding residential areas as short-term vacation rentals. Not only is it unlawful for any fractional ownership company to commence or carry on any kind of business in the City without first procuring a business license and pay the applicable business license tax, but any such business would be in violation of the City's prohibition of timeshares. The City noted that their regulations on transient commercial use of residential property have been previously adjudicated.' Carmel by the Sea has issued a cease -and -desist order (Appendix D), ordering Pacaso to stop all advertising and sale of fractional ownership of residential properties within the City and will proceed through its code enforcement authority to obtain compliance. City of Encinitas, CA The City is aware of the fractional ownership model and that other communities are working on regulations. Since Encinitas has not had any issues with fractional homeownership, they are not working on any code updates or taking enforcement actions. 9 Ewing v. City of Carmel -by -the -Sea (1991) 234 Cal,App.3d 1579 FRACTIONAL HOUSING Oty f N 01 ��t �1 � fj _h SS2-11 12-39 City of Fort Lauderdale; FL The City of Fort Lauderdale does not regulate fractional housing since they are considered transient lodging. Within the State of Florida, transient lodging is regulated by the State. Provided the fractional housing is within any zone which permits transient lodging, it would be allowed. City of Hermosa Beach, CA The City of Hermosa Beach classifies fractional housing as a timeshare. They are concerned that the operation of the fractional housing and timeshares could change the character of residential neighborhoods as the guest of the units may naturally stay out later, entertain more, and gather in larger numbers while on vacation. Currently, the Hermosa Beach Municipal Code does not regulate timeshares, but the City is processing a code amendment to prohibit.timeshares in residential zones. If approved, the code amendment would allow timeshares in commercial zones with approval of a Conditional Use Permit. The Planning Commission conducted a public hearing on the code amendment on April 19, 2022, at which the Commission adopted a resolution (Appendix E) to recommend the City Council approve the code amendment. This amendment is currently scheduled for a public hearing before the Council on September 27, 2022. City of Indian Wells, CA The City of Indian wells does not currently regulate fractional housing but has received complaints from residents regarding impacts being created. The City Council discussed the matter on May 19, 2022, at which time the City Council was split if fractional housing constituents a timeshare or not. They expressed concerns about taking legal action on the fractional ownership companies due to the ongoing litigation in other jurisdictions. The City Council directed the City Attorney to return with options for them to consider on how to proceed. At this time, it is not known when this discussion will be taken back to the City Council. County of Monterey, CA Within areas of Monterey County that fall under the County's zoning jurisdiction, fractional ownerships are classified as timeshares. Pursuant to the Monterey County Municipal Code, timeshare projects are only allowed in zones where a hotel, motel, or similar visitor accommodation use would be permitted, and in such cases a Use Permit or a Coastal Development Permit would be required. Monterey County is aware of certain homes advertised as fractional housing that are located in the Carmel Highlands and the Del Monte Forest. Both areas are within the County's zoning jurisdiction and are within residential zones. Monterey County has issued a cease -and -desist order (Appendix F), ordering Pacaso to stop all advertising and sale of fractional ownership of residential properties within these areas and will proceed through its code enforcement authority to obtain compliance. City of Napa, CA The City of Napa does not have an ordinance regulating fractional ownership citywide but does have a Master Development Plan (MDP) for the Stanly Ranch area. This MDP requires fractional ownership properties to pay a transient oriented tax for stays more than 14 days, but research indicates that no fractional ownership property has paid the TOT. In 2021, the City Council conducted a hearing to discuss the matter, during which residents complained of not wanting their neighborhoods to turn into a business venture for the wealthy. There has been no further discussion regarding fractional ownership. FRACTIONAL HOUSING C-fty of New-'Poft Beach . SS2-12 12-40 Village of North Haven, NY The Board of Trustees of the Village of North Haven enacted a prohibition on fractional ownership, timesharing, and interval uses in single-family homes in January 2022 (Appendix G). The Board found that the needs of transients are adverse to the interest that protect and preserve single-family homes. Furthermore, the prohibition was deemed necessary to prevent the unwarranted commercialization of residential areas. In a discussion with the Town staff, the ordinance would be enforced through code enforcement if they receive a complaint, but they were unable to confirm if action had been taken on any existing units. City of Oceanside, CA The City of Oceanside is not aware of any specific issues surrounding single-family homes used as fractional ownerships. The City does allow fractional ownership in their Downtown District as it pertains to traditional timeshare listings, provided a Conditional Use Permit is approved for the use. Given that most of these fractional ownership listings resemble short-term rental models, staff would consider fractional housing has short-term rentals in single-family homes, which would require the issuance of a short-term rental permit. City of Pacific Grove, CA Currently the City of Pacific Grove prohibits timeshares throughout the City. The City Council accepted public comment on fractional housing and timeshares on May 18, 2022, at the conclusion of which the Council directed staff to review the City's current timeshare ordinance and recommend changes to better effectuate the City's prohibition of timeshare projects, including fractional housing. The City anticipates having the draft ordinance to their Planning Commission in October 2022 and to the City Council by the end of year. City of Palm Desert, CA In November 2021, the City Council discussed the emergence of fractional ownership businesses within the City. In the Staff Report, the City Attorney opined that the fractional homeownership "model fits within that definition of "time-share plan" as co -owners receive ownership rights to use a property for less than a year on a recurring basis" (Appendix H). The City only allows timeshares in the Planned Residential, General Commercial, and Planned Commercial Resort zones. On May 12, 2022, the City Council adopted an ordinance updating the timeshare provisions of the Palm Desert Municipal Code. The updates include expanding the definition of timeshare that includes the shared use of any property, where the owners have the right of occupancy for less than full year during any given year. The ordinance also established enforcement procedures for violations of the timeshare ordinance. City of Palm Springs, CA The City of Palm Springs regulates where timeshares can be located within the City and taxes occupancy of timeshares. Timeshares are only permitted in zoning districts where hotel uses are permitted and with approval of a Conditional Use Permit. Notably, timeshares are not permitted in single-family zones. Furthermore, the City's business license ordinance requires any party that is transacting any business within the City to first procure a business license and pay the applicable business license tax. Although the fractional ownership companies claim that they only purchase and sell luxury homes, and therefore they do not impact the availability of affordable housing. However, the City believes the basic laws of supply and demand dictate that every home that is made unavailable to a full-time resident, FRACTIONAL HOUSING C b, jjjo y of New-'p-ort Be r SS2-13 12-41 whether "luxury" or not, necessarily reduces the supply of homes, and therefore reduces the affordability of housing in the City. In addition to the loss of housing, fractional ownership companies who involve multiple investors will result in their guests rotating the occupancy of the dwelling throughout the year. Although the fractional owners are not technically renters, the City believes the neighbors can expect the property to have many of the same secondary impacts that are caused by vacation rentals. The City of Palm Springs has issued a cease -and -desist order (Appendix 1), ordering Pacaso to stop all advertising and sale of fractional ownership of residential properties within the City and will proceed through its code enforcement authority to obtain compliance. City of Park City, UT Park City, Utah allows fractional ownership in single-family homes provided the ownership obtains approval of a Conditional Use Permit. The areas in which the City allows fractional ownership are identified in the City's General Plan and consists of areas that support the resort economy. These are the same areas that allow timeshares and private residential clubs. The fractional ownership properties must comply with specific prohibitions such as on -street parking, nightly rentals, the outdoor display of goods and merchandise, and signage. Additionally, the fractional housing must obtain approval of a management plan that outlines a satisfactory level of management and maintenance of the fractional housing. The City is currently preparing a code amendment which would prohibit fractional ownership in most single-family zones. The amendments would allow fractional housing in zones where timeshares and private residential clubs are currently permitted. The amendment would also require a business license for fractional ownerships, submittal of a management plan, and prohibition of nightly rentals, on -street parking, outdoor display of goods, signs, and commercial uses (Appendix J). On August 30, 2022, the Planning Commission and City Council are scheduled to conduct a joint work session on the proposed amendments. City of Santa Barbara, CA The City of Santa Barbara does not have any regulation for fractional ownership. The City has received complaints regarding fractional housing in single-family residential area. The Planning Commission and City Council have conducted hearings on the matter but have not given staff direction for future research to regulate these ownerships. City of Santa Cruz, CA Even with fractional homes being offered within city limits, City staff was not aware of this type of ownership model. The City does not currently regulate fractional ownership or timeshares. Notwithstanding this, the City Council has placed a ballot initiative on the November election to establish a tax on residential properties that are occupied less than 120-days a year (Appendix K). City of South Lake Tahoe, CA The City stated that a property sale or deed that results ownership rights in or the right to use accommodations for a period of time less than full year during any given year is considered timeshare. Even though timeshares ten or fewer units are not subject to the Vacation Ownership and Timeshare Act of 200410, they are still subject to local authority. In fact, Section 11280(b) of the Business and Professions io California Business and Professions Code §§1121-11288 FRACTIONAL HOUSING C-Ifty of NeWportr SS2-14 12-42 Code expressly preserves the authority of local jurisdictions to regulate timeshares through "zoning, subdivision, or building code or other real estate use law, ordinance, or regulation." South lake Tahoe has issued a cease -and -desist order (Appendix L), ordering Pacaso to stop all advertising and sale of fractional ownership of residential properties within the City until such time they comply with the City's timeshare ordinance. City of Sonoma, CA On January 19th, 2022, the Sonoma City Council voted unanimously to adopt an urgency ordinance to prohibit timeshares and fractional housing. The Council adopted the urgency ordinance due to concerns that these uses threaten to reduce the housing supply in the City by turning long-term housing in the City into vacation rentals and reducing the affordable housing stock in the City. Furthermore, there are concerns that timeshare and fractional housing interest uses increase traffic and noise impacts as they have the same character as commercial hotels, motels, and other transient occupancy uses making them inappropriate for residential zones. On June 15, 2022, the Sonoma City Council adopted an ordinance (Appendix M) to amend the code to prohibit all timeshares and fractional housing in the City. City of St. Helena, CA Within St. Helena, timeshares are only permitted in Service Commercial District and Central Business District. The City Council recently updated the timeshare ordinance to specifically prohibit co -ownership of residential properties (Appendix N). The ordinance updated the definition of a timeshare to broaden its applicability to incorporate fractional housing and limits timeshares uses to their Service Commercial and Central Business District zone. The ordinance also bolsters the City's enforcement authority by including a specific prohibition on timeshare uses in most zones, but also outlines the enforcement process and mechanisms. The enforcement provision was modeled after the City's short-term rental ordinance to which they note has been very effective. It is important to note that Pacaso filed a lawsuit against the City in federal court" (Appendix 0). Pacaso seeks to stop the City from enforcing their timeshare ordinance against Pacaso and other fractional ownership properties because they feel the timeshare ordinance is invalid and enforcement of said ordinance violates the fractional homeowners and Pacaso's due process protection afforded by the 141" amendment to the U.S. Constitution. Pacaso had also claimed that the City's enforcement actions constituted an intentional interference with prospective economic advantage; however, the Court rejected this portion of the claim. The lawsuit remains pending. Town of Truckee, CA In May 2022 the Town of Truckee adopted a general zoning code cleanup ordinance (Appendix P). Among the various amendments included in the ordinance, the Town Council approved changes to the Town's timeshare uses. This includes outlining the application process, development standards and enforcement and violation protocols for time-share uses; as well as clarifying that timeshare properties are only allowed within existing legal nonconforming single-family residences in the CG (General Commercial) and CN (Neighborhood Commercial) zones. 11 Pacaso Inc. v. City of St. Helena, 21-cv-02493-WHO (N.D. Cal. Jul. 15, 2021) FRACTIONAL HOUSING -9- City0c-".4 SS2-15 12-43 City of Vail, CO The City does not have regulations regarding fractional ownership. Explaining the concerns of the business model, the City Attorney would agree it resembles a timeshare model but does not see how any City ordinance would be able to regulate it since it is the ownership of a property rather than a use in a portion of a building. APPENDICES FRACTIONAL HOUSING SS2-16 12-44 Appendix A— Pacaso Economic Impact Analysis, prepared by EBP FRACTIONAL HOUSING o Y 01 ad B, 12-45 Exhibit K City of Carmel -by -the Sea Time Share Ordinance and Supporting Evidence 12-46 4/27/23, 9:01 AM Coversheet CITY OF CARMEL-BY-THE-SEA CITY COUNCIL Staff Report February 7, 2023 PUBLIC HEARINGS TO: Honorable Mayor and City Council Members SUBMITTED BY: Brandon Swanson, Community Planning & Building Director APPROVED BY. Chip Rerig, City Administrator Consider Ordinance No. 2022-007 (first reading) amending Carmel Municipal Code (CMC) Sections SUBJECT: 17.14.040, 17.28.010, and 17.70.020, to prohibit timeshare and fractional interest uses, as well as advertising and sale thereof, in a manner fully in conformity with the California Coastal Act (CA Section 30510) - Continued from December 6, 2022, and January 10, 2023 REC'OMMENDATiOPI: 1. Request the City Attorney to read the title of Ordinance 2022-007. 2. Waive further reading and introduce draft ordinance 2022-007 amending Carmel municipal code (CMC) sections 17.14.040, 17.28.010, and 17.70.020, to prohibit timeshare and fractional interest uses, as well as advertising and sale thereof, in a manner fully in conformity with the California Coastal Act (CA section 30510). SACKGROUNDISUMOVARY: EXECUTIVE SUMMARY The Carmel -by -the -Sea Municipal Code prohibits timeshares. The proposed ordinance confirms the existing prohibition of time shares, and adds new prohibitions with respect to advertisement and sale of timeshares and fractional interest ownerships. The City's Planning Commission has recommended adoption of these amendments, with an additional recommendation for Council to have a policy level discussion in the future about whether or not timeshares should continue to be prohibited in the Village. BACKGROUND Existing provisions of the Carmel -by -the -Sea Municipal Code prohibit timeshare uses. Specifically, timeshares are prohibited in all zoning districts of the City, and are defined in Section 17.28.010 to include any land use that is a "timeshare project", "time share program," or "time share occupancy." These are defined in Section 17.70.020 as follows: Time -Share Occupancy. An occupancy related to the situation wherein a purchaser receives the right or entitlement in perpetuity, for life, or for a term of years or other extended term, to the recurrent, exclusive use or occupancy of a lot, parcel, unit, room(s), hotel or portion thereof, or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy periods into which the time-share project which is involved has been divided. The right or entitlement to occupancy may attach in advance to a specific lot, parcel, unit, room(s) or portion of a hotel, or segment of real property, or may involve designation or selection of the same at a future time or times. Time -Share Program. Any arrangement for a project whereby the use, occupancy, or possession of real property has been made subject to a time-share estate, use, or occupancy, whereby such use, occupancy, or possession circulates among purchasers of the time-share intervals according to a fixed or floating time schedule on a periodic basis for a specific period of time during any given year, but not necessarily for consecutive years. Time -Share Project. A project in which a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel, unit, or segment of real property, annually or on some other periodic basis, for a period of time that has been or will be allotted for the use or occupancy periods into which the project has been divided. As a result of recent enforcement efforts related to timeshares, City staff have reviewed the existing city code provisions and recommend that they be revised to confirm the existing prohibition, and additionally, that new prohibitions be added with respect to advertisement and sale of timeshares and fractional interest ownerships, which are treated identically under the existing City code. On October 12th, 2022, the Planning Commission was presented these draft amendments, and received testimony from the public. Following discussion, the Commission approved a resolution recommending that the City Council adopt the ordinance as drafted by staff. The Commission also crafted an additional recital recommending that Council have a policy discussion in the near future to explore whether or not timeshares should still be prohibited in the City of Carmel -by -the -Sea. This additional recommendation arose from deliberations during the hearing, in which the Commissioners discussed the number of vacant homes in the Village and whether https://carmel.novusagenda.com/agendapublic/CoverSheet.aspx?ItemI D=4958&Meeting ID=1340 1 /2 12-4 7 4/27/23, 9:01 AM Coversheet a form of timeshare use could present a solution to filling them. The Commission's additional recommendation is for Council to hold a separate hearing in the near future to have a policy level discussion and decide whether or not to refer an item back to the Planning Commission to remove or modify the prohibition on timeshares in Carmel -by -the -Sea. STAFF ANALYSIS The changes proposed by the ordinance include: Section 17.70.020 is modified to simplify the City's existing definitions with respect to timeshares. The City's existing definitions include definitions of time-share estate, time-share use, time-share occupancy, and time-share property, which are based on similar definitions in state law (the Vacation Ownership and Time -Share Act of 2004, as set forth in Business and Professions Code section 11210 et seq.). However, the existing definitions with respect to timeshares in 17.70.020 are multiple and reference each other, and introduce unnecessary complexity into the City's zoning regulations. While not a substantive change in the scope of the City's regulations, the proposed ordinance would simplify definitions to prohibit the use of real property under a "time-share plan." The definition of "time-share plan" would mean "any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right to use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years." The code would specify that a time share plan exists "whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are a result of a grant of ownership rights, possessory rights, membership rights, rights pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time-share plan." The code would be revised to make clear that a prohibited timeshare is created whenever any right is established for exclusive use of the property that is periodic on a recurring basis, regardless of the form. The definition of "timeshare plan" would now specifically mention that fractional ownership is one way a timeshare can be created, which is also not a substantive change. "Time-share use" and "fractional interest use" are defined to mean exactly same thing, so that it is clear to all potential violators that there is no difference between a fractional interest use and a timeshare use. • 17.14.040, prohibiting timeshares in commercial zones, is modified to use the updated definitions. • 17.28.010.A, prohibiting timeshares in all city zoning districts, is updated to use the updated definitions. Additional subsections are added to this section to make advertisement of timeshares subject to criminal penalties as well as the City's administrative civil penalty process. The code also specifies that each day a violation occurs is a separate offense, for purposes of deterring violations by increasing the visibility of potential consequences. While the existing municipal code prohibits fractionalized interest ownership, as a timeshare is created based on the allocation of exclusive rights of use to real property, the proposed code amendments would clarify the prohibition and strengthen enforcement efforts. Additionally, the proposed ordinance would expressly prohibit the advertisement and sale of timeshares and fractional interest uses this would allow for proactive enforcement by the City against those involved in the creation, advertisement, and sale of such prohibited land uses, rather than just the purchaser or owner of a timeshare or fractional interest use. FISCAL IMPACT: The staff time associated with processing this ordinance amendment is captured in the FY2022/2023 Community Planning and Building Budget PRIOR CITY COUNCIL ACTIO9I: None. ATTACHMENTS: Attachment 1) PC Resolution 2022-036-PC RecommendingApproval Attachment 2) Draft Ord. 2022-007 REDLINE Attachment 3) Draft Ord. 2022.007 CLEAN https:llcarmel.novusagenda.com/agendapublielCoverSheet.aspx?ltemlD=4958&MeetingID=1340 2/2 12-48 CITY OF CARMEL-BY-THE-SEA PLANNING COMMISSION RESOLUTION NO.2022-036-PC A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA RECOMMENDING CITY COUNCIL ADOPT ORDINANCE AMENDING MUNICIPAL CODE SECTIONS 17.14.040, 17.28.010, AND 17.70.020, TO PROHIBIT TIMESHARE AND FRACTIONAL INTEREST USES, AS WELL AS ADVERTISING AND SALE THEREOF WHEREAS, existing provisions of the Carmel -by -the -Sea Municipal Code prohibit timeshare uses. Specifically, timeshares are prohibited in all zoning districts of the City, and regulated by Sections 17.28.010, 17.70.020 and 17.14.040; and WHEREAS, as a result of enforcement efforts, City staff have reviewed the existing city code provisions and recommend that they be revised to confirm the existing prohibition, and additionally, that new prohibitions be added with respect to advertisement and sale of timeshares and fractional interest ownerships, which are treated identically under the existing City code; and WHEREAS, notice of a public hearing of the Planning Commission was published on September 30th, 2022 in compliance with State law (California Government Code 65091); and WHEREAS, on October 12, 2022, the Planning Commission held a public hearing to consider draft Ordinance 2022-007 amending regulations pertaining to timeshares and receive public testimony, including without limitation, information provided to the Planning Commission by City staff and through public testimony; and WHEREAS, the Planning Commission found that the draft Ordinance 2022-007 was consistent with the City's General Plan, Local Coastal Plan, and all other relevant City and State codes and regulations. WHEREAS, the California Environmental Quality Act (California Public Resources Code §§ 21000, et seq., "CEQA"), together with State Guidelines (14 California Code Regulations §§ 15000, et seq., the "CEQA Guidelines") and City Environmental Regulations (CMC 17.60) require the review of certain projects for environmental impacts and preparation of environmental documents; and WHEREAS, the Planning Commission finds that pursuant to CEQA regulations, the project will have no impact on the environment and is not considered a project requiring compliance with the California Environmental Quality Act (Section 21065 of the California Public Resources Code); and WHEREAS, the facts set forth in the recitals are true and correct and are incorporated herein by reference. 12-49 NOW, THEREFORE, BE IT RESOLVED, THAT THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA DOES HEREBY recommend the City Council amend municipal code sections 17.14.040, 17.28.010, and 17.70.020, to prohibit timeshare and fractional interest uses, as well as advertising and sale thereof and adopt the Update in a manner fully in conformity with the Coastal Act (CA Section 30510). BE IT FURTHER RESOLVED, THAT THE PLANNING COMMISSION OF THE CITY OF CARMEL- BY-THE-SEA DOES ALSO recommend the City Council hold a separate hearing in the near future to have a policy level discussion and decide whether or not to refer an item back to the Planning Commission to remove or modify the prohibition on timeshares in Carmel -by -the -Sea. PASSED, APPROVED, AND ADOPTED BY THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA this 12th day of October, 2022, by the following vote: AYES: Delves, Allen, Bolton, LePage, Locke NOES: ABSENT: ABSTAIN: APPROVED: ATTEST: Michael LePage, Chair Leah Young, Planning Commission Secretary 12-50 CITY OF CARMEL-BY-THE-SEA CITY COUNCIL ORDINANCE NO. 2022-007 AN ORDINANCE AMENDING THE CARMEL-BY-THE-SEA MUNICIPAL CODE TO PROHIBIT TIMESHARE AND FRACTIONAL INTEREST USES, AS WELL AS ADVERTISING AND SALE THEREOF IN A MANNER FULLY IN CONFORMITY WITH THE COASTAL ACT (CA PUBLIC RESOURCES CODE SECTION 30510 ET SEQ.) WHEREAS, timeshares involve the division of the exclusive rights to use, possess, and occupy any real property between multiple persons, pursuant to a fixed or floating time schedule; and WHEREAS, since at least 1988, the City of Carmel -by -the -Sea has prohibited the establishment of timeshares within the City; and WHEREAS, the Housing Element of the City's General Plan specifically recognizes that the City seeks to protect the stability of residential neighborhoods by promoting year-round occupancy, and to avoid depletion of residents and associated impacts on the community, City services, Goal G3-4 of the City's Housing Element specifically requires the enforcement of the prohibitions on short-term, transient rentals and timeshares in residential dwellings; and n of the Citv of Carm ordinance. and on Octo and reviewed the Planni consistent with WHEREAS, recent increases in the development and sale of fractional interest ownerships have made it appropriate for the City to revisit its municipal code to clarify that fractional interest ownerships are prohibited timeshares and to also expressly prohibit the advertising and sale of prohibited timeshares and fractional interest uses. WHEREAS, notice of the public hearing was published on November 25, 2022 in compliance with State law (California Government Code 65091), indicating the date and time of the public hearing; and WHEREAS, on December 6, 2022, the City Council opened the a public hearing to receive public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony, and continued the hearing to a date certain of January 10, 2023; and _WHEREAS, on January 10, 2023, the City Council re -convened the public hearing to receive further public testimony regarding the draft ordinance, including without limitation information provided by City staff and public testimony and OAK #4875-3304-4012 Q 12-51 WHEREAS, this decision is made based upon evidence presented to the City Council at its December 6, 2022 and January 10, 2023 hearings including, without limitation, the staff report submitted by the Community Planning and Building Department and public testimony; and WHEREAS, the City Council did hear and consider all said reports, recommendations, attachments and testimony herein above set forth and used their independent judgement to evaluate the ordinance; and WHEREAS, the proposed amendments are in full conformity with the City's Local Coastal Plan and the California Coastal Act (GA Public Resources Code Section 30510 et seq. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DOES ORDAIN AS FOLLOWS: SECTION 1. CEQA Review. The City Council exercises its independent judgment and finds that this ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to the State CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, Sections. 15060(c)(2), because the proposed ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment; 15061(b)(3) because the proposed ordinance is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment; and 15308 because the proposed ordinance involves regulatory actions to assure protection of the environment. Therefore, the adoption of this ordinance is exempt from CEQA and no further environmental review is necessary. SECTION 2. Amendment to the CIVIC. 1. Subsection A of Section 17.14.040 is amended and restated as follows: 17.14.040 Additional Use Regulations. A. All Uses. 1. No new structure or modification to an existing structure shall be permitted nor shall any business license be issued that would allow the creation of publicly accessible retail space occupying fewer than 200 square feet or more than 5,000 square feet unless approved through a use permit and pursuant to the adoption of findings per CIVIC 17.64.200, Retail Space of Less Than 200 Square Feet or Greater Than 5,000 Square Feet. 2. No timeshare uses or fractional interest uses shall be established or permitted in any zone. 3. Except in restaurants, not more than five persons in any one individually licensed business shall be engaged in the production, repair or manufacturing of goods. 4. No use shall be permitted and no process, equipment, or materials shall be employed which is found by the Planning Director or by the Planning Commission to be OAK #4875-3304-4012 v2 12-52 objectionable to persons residing or working in the vicinity by reason of odor, fumes, noise, vibration, illumination, glare, unsightliness, dust, cinders, dirt, refuse, water - carried wastes or heavy truck traffic, or involve any hazard of fire or explosion. 2. Section 17.28.010 is amended and restated as follows: 17.28.010 Timeshare and Fractional Interest Uses. A. Timeshare uses and fractional interest uses are prohibited uses within all of the zoning districts within the City. B. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.16 (General Penalty). C. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is subject to administrative fines and/or penalties as set forth in Chapter 18.04 (Municipal Code and Ordinance Enforcement). D. Each day a violation of this section occurs shall constitute a separate offense, and the remedies under this section are cumulative and in addition to any and all other remedies available at law and equity. 3. "Time -Share Definitions" of Section 17.70.020 is amended to repeal the definitions of "Time -Share Estate," "Time -Share Occupancy," "Time -Share Program," "Time -Share Project," and "Vacation -Time Sharing Project," and restated to enact the definitions of "Time -Share Plan," "Time -Share Use" and "Fractional Interest Use" to read as follows: 17.70.020 Definitions. The words, terms, and phrases defined in this chapter shall, for all purposes connected with this title, be construed as having the meanings respectively set forth in this chapter. Time -Share Definitions. "Time -Share Plan" means any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right -to -use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A timeshare plan shall be deemed to exist whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are OAK #4875-3304-4012 v2 12-53 a result of a grant of ownership rights, possessory rights, membership rights, rights pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time-share plan. "Time -Share Use" and "Fractional Interest Use" means the use of real property or any part thereof, pursuant to a timeshare plan. SECTION 3. Severability. If any section, subsection, phrase, or clause of this ordinance is for any reason held to be unconstitutional, such a decision shall not affect the validity of the remaining portions of this ordinance. The City Council hereby declares that it would have passed this Ordinance and each section, subsection, phrase, or clause thereof irrespective of the fact that any one or more sections, subsections, phrases, or clauses be declared unconstitutional. SECTION 4. Publication. The City Clerk shall publish or post this ordinance in the manner required by law. SECTION 5. Effective Date. This ordinance shall be effective 30 days after its adoption and after approval by the California Coastal Commission. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE- SEA this XX day of XX 2022, by the following vote: AYES: NOES: ABSENT: ABSTAIN: APPROVE: ATTEST: Dave Potter, Mayor Nova Romero, MMC, City Clerk OAK #4875-3304-4012 Q 12-54 CITY OF CARMEL-BY-THE-SEA CITY COUNCIL ORDINANCE NO. 2022-007 AN ORDINANCE AMENDING THE CARMEL-BY-THE-SEA MUNICIPAL CODE TO PROHIBIT TIMESHARE AND FRACTIONAL INTEREST USES, AS WELL AS ADVERTISING AND SALE THEREOF IN A MANNER FULLY IN CONFORMITY WITH THE COASTAL ACT (PUBLIC RESOURCES CODE SECTION 30510 ET SEQ.) WHEREAS, timeshares involve the division of the exclusive rights to use, possess, and occupy any real property between multiple persons, pursuant to a fixed or floating time schedule; and WHEREAS, since at least 1988, the City of Carmel -by -the -Sea has prohibited the establishment of timeshares within the City; and WHEREAS, the Housing Element of the City's General Plan specifically recognizes that the City seeks to protect the stability of residential neighborhoods by promoting year-round occupancy, and to avoid depletion of residents and associated impacts on the community, City services, Goal G3-4 of the City's Housing Element specifically requires the enforcement of the prohibitions on short-term, transient rentals and timeshares in residential dwellings; and WHEREAS, the Planning Commission of the City of Carmel -by -the -Sea reviewed the ordinance, and on October 12, 2022, determined the ordinance was consistent with the City's General Plan, Local Coastal Plan, and all other relevant City and State codes and regulations, and having reviewed the Planning Commission's recommendations and the relevant provisions of the General Plan, the City Council finds that the ordinance is consistent with the City's General Plan; and WHEREAS, recent increases in the development and sale of fractional interest ownerships have made it appropriate for the City to revisit its municipal code to clarify that fractional interest ownerships are prohibited timeshares and to also expressly prohibit the advertising and sale of prohibited timeshares and fractional interest uses. WHEREAS, notice of the public hearing was published on November 25, 2022 in compliance with State law (California Government Code 65091), indicating the date and time of the public hearing; and WHEREAS, on December 6, 2022, the City Council opened the public hearing to receive public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony, and continued the hearing to a date certain of January 10, 2023; and WHEREAS, on January 10, 2023, the City Council re -convened the public hearing to receive further public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony; and OAK #4875-3304-4012 v2 12-55 WHEREAS, this decision is made based upon evidence presented to the City Council at its December 6, 2022 and January 10, 2023 hearings including, without limitation, the staff report submitted by the Community Planning and Building Department and public testimony; and WHEREAS, the City Council did hear and consider all said reports, recommendations, attachments and testimony herein above set forth and used their independent judgement to evaluate the ordinance; and WHEREAS, the proposed amendments are in full conformity with the City's Local Coastal Plan and the California Coastal Act (Public Resources Code Section 30510 et seq.) NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DOES ORDAIN AS FOLLOWS: SECTION 1. CEQA Review. The City Council exercises its independent judgment and finds that this ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to the State CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, Sections. 15060(c)(2), because the proposed ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment; 15061(b)(3) because the proposed ordinance is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment; and 15308 because the proposed ordinance involves regulatory actions to assure protection of the environment. Therefore, the adoption of this ordinance is exempt from CEQA and no further environmental review is necessary. SECTION 2. Amendment to the CIVIC. 1. Subsection A of Section 17.14.040 is amended and restated as follows: 17.14.040 Additional Use Regulations. A. All Uses. 1. No new structure or modification to an existing structure shall be permitted nor shall any business license be issued that would allow the creation of publicly accessible retail space occupying fewer than 200 square feet or more than 5,000 square feet unless approved through a use permit and pursuant to the adoption of findings per CIVIC 17.64.200, Retail Space of Less Than 200 Square Feet or Greater Than 5,000 Square Feet. 2. No timeshare uses or fractional interest uses shall be established or permitted in any zone. 3. Except in restaurants, not more than five persons in any one individually licensed business shall be engaged in the production, repair or manufacturing of goods. 4. No use shall be permitted and no process, equipment, or materials shall be employed which is found by the Planning Director or by the Planning Commission to be objectionable to persons residing or working in the vicinity by reason of odor, fumes, OAK 44875-3304-4012 v2 12-56 noise, vibration, illumination, glare, unsightliness, dust, cinders, dirt, refuse, water - carried wastes or heavy truck traffic, or involve any hazard of fire or explosion. 2. Section 17.28.010 is amended and restated as follows: 17.28.010 Timeshare and Fractional Interest Uses. A. Timeshare uses and fractional interest uses are prohibited uses within all of the zoning districts within the City. B. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.16 (General Penalty). C. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is subject to administrative fines and/or penalties as set forth in Chapter 18.04 (Municipal Code and Ordinance Enforcement). D. Each day a violation of this section occurs shall constitute a separate offense, and the remedies under this section are cumulative and in addition to any and all other remedies available at law and equity. 3. "Time -Share Definitions" of Section 17.70.020 is amended to repeal the definitions of "Time -Share Estate," "Time -Share Occupancy," "Time -Share Program," "Time -Share Project," and "Vacation -Time Sharing Project," and restated to enact the definitions of "Time -Share Plan," "Time -Share Use" and "Fractional Interest Use" to read as follows: 17.70.020 Definitions. The words, terms, and phrases defined in this chapter shall, for all purposes connected with this title, be construed as having the meanings respectively set forth in this chapter. Time -Share Definitions. "Time -Share Plan" means any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right -to -use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A timeshare plan shall be deemed to exist whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are a result of a grant of ownership rights, possessory rights, membership rights, rights OAK #4875-3304-4012 v2 12-57 pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time-share plan. "Time -Share Use" and "Fractional Interest Use" means the use of real property or any part thereof, pursuant to a timeshare plan. SECTION 3. Severability. If any section, subsection, phrase, or clause of this ordinance is for any reason held to be unconstitutional, such a decision shall not affect the validity of the remaining portions of this ordinance. The City Council hereby declares that it would have passed this Ordinance and each section, subsection, phrase, or clause thereof irrespective of the fact that any one or more sections, subsections, phrases, or clauses be declared unconstitutional. SECTION 4. Publication. The City Clerk shall publish or post this ordinance in the manner required by law. SECTION 5. Effective Date. This ordinance shall be effective 30 days after its adoption and after approval by the California Coastal Commission. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE- SEA this XX day of XX 2022, by the following vote: AYES: NOES: ABSENT: ABSTAIN: APPROVE: Dave Potter, Mayor Nova Romero, MMC, City Clerk OAK 44875-3304-4012 v2 12-58 4/27/23, 9:03 AM Coversheet CITY OF CARMEL-BY-THE-SEA CITY COUNCIL Staff Report March 7, 2023 ORDERS OF BUSINESS TO: Honorable Mayor and City Council Members SUBMITTED BY: Brandon Swanson, Community Planning & Building Director APPROVED BY: Chip Rerig, City Administrator Second Reading and Adoption of Ordinance No. 2022-007 -Amending Carmel Municipal Code (CMC) SUBJECT: Sections 17.14.040, 17.28.010, and 17.70.020, to prohibit timeshare and fractional interest uses, as well as advertising and sale thereof, in a manner fully in conformity with the California Coastal Act (CA Section 30510) RECOMMENDATION: 1. Request the City Attorney to read the title of Ordinance 2022-007. 2. Waive further reading and ADOPT ordinance 2022-007 amending Carmel municipal code (CMC) sections 17.14.040, 17.28.010, and 17.70.020, to prohibit timeshare and fractional interest uses, as well as advertising and sale thereof, in a manner fully in conformity with the California Coastal Act (CA section 30510). SAC KGROtiNDISUiyPdARY: EXECUTIVE SUMMARY The Carmel -by -the -Sea Municipal Code prohibits timeshares. The proposed ordinance confirms the existing prohibition of time shares, and adds new prohibitions with respect to advertisement and sale of timeshares and fractional interest ownerships. The City's Planning Commission has recommended adoption of these amendments, with an additional recommendation for Council to have a policy level discussion in the future about whether or not timeshares should continue to be prohibited in the Village. BACKGROUND Existing provisions of the Carmel -by -the -Sea Municipal Code prohibit timeshare uses. Specifically, timeshares are prohibited in all zoning districts of the City, and are defined in Section 17.28.010 to include any land use that is a "timeshare project", "time share program," or "time share occupancy." These are defined in Section 17.70.020 as follows: Time -Share Occupancy. An occupancy related to the situation wherein a purchaser receives the right or entitlement in perpetuity, for life, or for a term of years or other extended term, to the recurrent, exclusive use or occupancy of a lot, parcel, unit, room(s), hotel or portion thereof, or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy periods into which the time-share project which is involved has been divided. The right or entitlement to occupancy may attach in advance to a specific lot, parcel, unit, room(s) or portion of a hotel, or segment of real property, or may involve designation or selection of the same at a future time or times. Time -Share Program. Any arrangement for a project whereby the use, occupancy, or possession of real property has been made subject to a time-share estate, use, or occupancy, whereby such use, occupancy, or possession circulates among purchasers of the time-share intervals according to a fixed or floating time schedule on a periodic basis for a specific period of time during any given year, but not necessarily for consecutive years. Time -Share Project. A project in which a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel, unit, or segment of real property, annually or on some other periodic basis, for a period of time that has been or will be allotted for the use or occupancy periods into which the project has been divided. As a result of recent enforcement efforts related to timeshares, City staff have reviewed the existing city code provisions and recommend that they be revised to confirm the existing prohibition, and additionally, that new prohibitions be added with respect to advertisement and sale of timeshares and fractional interest ownerships, which are treated identically under the existing City code. On October 12th, 2022, the Planning Commission was presented these draft amendments, and received testimony from the public. Following discussion, the Commission approved a resolution recommending that the City Council adopt the ordinance as drafted by staff. The Commission also crafted an additional recital recommending that Council have a policy discussion in the near future to explore whether or not timeshares should still be prohibited in the City of Carmel -by -the -Sea. This additional recommendation arose from deliberations during the hearing, in which the Commissioners discussed the number of vacant homes in the Village and whether https://carmel.novusagenda.com/agendapublic/CoverSheet.aspx?ltemlD=5020&MeetingID=1341 1/2 12-59 4/27123, 9:03 AM Coversheet a form of timeshare use could present a solution to filling them. The Commission's additional recommendation is for Council to hold a separate hearing in the near future to have a policy level discussion and decide whether or not to refer an item back to the Planning Commission to remove or modify the prohibition on timeshares in Carmel -by -the -Sea. STAFF ANALYSIS The changes proposed by the ordinance include: • Section 17.70.020 is modified to simplify the City's existing definitions with respect to timeshares. The City's existing definitions include definitions of time-share estate, time-share use, time-share occupancy, and time-share property, which are based on similar definitions in state law (the Vacation Ownership and Time -Share Act of 2004, as set forth in Business and Professions Code section 11210 et seq.). However, the existing definitions with respect to timeshares in 17.70.020 are multiple and reference each other, and introduce unnecessary complexity into the City's zoning regulations. While not a substantive change in the scope of the City's regulations, the proposed ordinance would simplify definitions to prohibit the use of real property under a "time-share plan." • The definition of "time-share plan" would mean "any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right to use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years." • The code would specify that a time share plan exists "whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are a result of a grant of ownership rights, possessory rights, membership rights, rights pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time-share plan." • The code would be revised to make clear that a prohibited timeshare is created whenever any right is established for exclusive use of the property that is periodic on a recurring basis, regardless of the form. The definition of "timeshare plan" would now specifically mention that fractional ownership is one way a timeshare can be created, which is also not a substantive change. "Time-share use" and "fractional interest use" are defined to mean exactly same thing, so that it is clear to all potential violators that there is no difference between a fractional interest use and a timeshare use. • 17.14.040, prohibiting timeshares in commercial zones, is modified to use the updated definitions. • 17.28.010.A, prohibiting timeshares in all city zoning districts, is updated to use the updated definitions. Additional subsections are added to this section to make advertisement of timeshares subject to criminal penalties as well as the City's administrative civil penalty process. The code also specifies that each day a violation occurs is a separate offense, for purposes of deterring violations by increasing the visibility of potential consequences. While the existing municipal code prohibits fractionalized interest ownership, as a timeshare is created based on the allocation of exclusive rights of use to real property, the proposed code amendments would clarify the prohibition and strengthen enforcement efforts. Additionally, the proposed ordinance would expressly prohibit the advertisement and sale of timeshares and fractional interest uses; this would allow for proactive enforcement by the City against those involved in the creation, advertisement, and sale of such prohibited land uses, rather than just the purchaser or owner of a timeshare or fractional interest use. During the February 7, 2023 discussion on this item, the City Council directed staff to inquire with appropriate Monterey County offices about the tax implications of a Limited Liability Corporation (LLC) owning and disposing of fractional ownership interests. Monterey County Counsel advised that reassessment of fractional ownership real property interests in an LLC does not occur until transfer of 50 percent or more of said interests occurs. Reporting of such is incumbent on the LLC filing appropriate documentation with the Internal Revenue Service which, in turn, relays such information to a state's real property taxing authority (a County in the case of the State of California). FISCAL IMPACT: The staff time associated with processing this ordinance amendment is captured in the FY202212023 Community Planning and Building Budget. PRIOR CITY Cs"uW,l0 A.C'TIOK Ordinance 2022-007 was introduced (first reading) on February 7, 2023 at a Regular City Council Meeting ATTACHMENTS: Attachment 1) PC Resolution 2022-036-PC Recommending Approval Attachment 2) Draft Ord. 2022-007 REDLINE Attachment 3) Draft Ord. 2022.007 CLEAN https://carmel.novusagenda.com/agendapubiic/CoverSheet.aspx?ItemID=5020&MeetingID=1341 2/2 12-60 CITY OF CARMEL-BY-THE-SEA PLANNING COMMISSION RESOLUTION NO.2022-036-PC A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA RECOMMENDING CITY COUNCIL ADOPT ORDINANCE AMENDING MUNICIPAL CODE SECTIONS 17.14.040, 17.28.010, AND 17.70.020, TO PROHIBIT TIMESHARE AND FRACTIONAL INTEREST USES, AS WELL AS ADVERTISING AND SALE THEREOF WHEREAS, existing provisions of the Carmel -by -the -Sea Municipal Code prohibit timeshare uses. Specifically, timeshares are prohibited in all zoning districts of the City, and regulated by Sections 17.28.010, 17.70.020 and 17.14.040; and WHEREAS, as a result of enforcement efforts, City staff have reviewed the existing city code provisions and recommend that they be revised to confirm the existing prohibition, and additionally, that new prohibitions be added with respect to advertisement and sale of timeshares and fractional interest ownerships, which are treated identically under the existing City code; and WHEREAS, notice of a public hearing of the Planning Commission was published on September 301h, 2022 in compliance with State law (California Government Code 65091); and WHEREAS, on October 12, 2022, the Planning Commission held a public hearing to consider draft Ordinance 2022-007 amending regulations pertaining to timeshares and receive public testimony, including without limitation, information provided to the Planning Commission by City staff and through public testimony; and WHEREAS, the Planning Commission found that the draft Ordinance 2022-007 was consistent with the City's General Plan, Local Coastal Plan, and all other relevant City and State codes and regulations. WHEREAS, the California Environmental Quality Act (California Public Resources Code §§ 21000, et seq., "CEQA"), together with State Guidelines (14 California Code Regulations §§ 15000, et seq., the "CEQA Guidelines") and City Environmental Regulations (CIVIC 17.60) require the review of certain projects for environmental impacts and preparation of environmental documents; and WHEREAS, the Planning Commission finds that pursuant to CEQA regulations, the project will have no impact on the environment and is not considered a project requiring compliance with the California Environmental Quality Act (Section 21065 of the California Public Resources Code); and WHEREAS, the facts set forth in the recitals are true and correct and are incorporated herein by reference. 12-61 NOW, THEREFORE, BE IT RESOLVED, THAT THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA DOES HEREBY recommend the City Council amend municipal code sections 17.14.040, 17.28.010, and 17.70.020, to prohibit timeshare and fractional interest uses, as well as advertising and sale thereof and adopt the Update in a manner fully in conformity with the Coastal Act (CA Section 30510). BE IT FURTHER RESOLVED, THAT THE PLANNING COMMISSION OF THE CITY OF CARMEL- BY-THE-SEA DOES ALSO recommend the City Council hold a separate hearing in the near future to have a policy level discussion and decide whether or not to refer an item back to the Planning Commission to remove or modify the prohibition on timeshares in Carmel -by -the -Sea. PASSED, APPROVED, AND ADOPTED BY THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA this 12th day of October, 2022, by the following vote: AYES: Delves, Allen, Bolton, LePage, Locke NOES: ABSENT: ABSTAIN: APPROVED: ATTEST: Michael LePage, Chair Leah Young, Planning Commission Secretary 12-62 CITY OF CARMEL-BY-THE-SEA CITY COUNCIL ORDINANCE NO. 2022-007 AN ORDINANCE AMENDING THE CARMEL-BY-THE-SEA MUNICIPAL CODE TO PROHIBIT TIMESHARE AND FRACTIONAL INTEREST USES, AS WELL AS ADVERTISING AND SALE THEREOF IN A MANNER FULLY IN CONFORMITY WITH THE COASTAL ACT (CA PUBLIC RESOURCES CODE SECTION 30510 ET SEQ.) WHEREAS, timeshares involve the division of the exclusive rights to use, possess, and occupy any real property between multiple persons, pursuant to a fixed or floating time schedule; and WHEREAS, since at least 1988, the City of Carmel -by -the -Sea has prohibited the establishment of timeshares within the City; and WHEREAS, the Housing Element of the City's General Plan specifically recognizes that the City seeks to protect the stability of residential neighborhoods by promoting year-round occupancy, and to avoid depletion of residents and associated impacts on the community, City services, Goal G3-4 of the City's Housing Element specifically requires the enforcement of the prohibitions on short-term, transient rentals and timeshares in residential dwellings; and on of the Citv of Carmel - and on October 12. 2 codes and and havina reviewed the Plannina Commission's recommendations and the relevant WHEREAS, recent increases in the development and sale of fractional interest ownerships have made it appropriate for the City to revisit its municipal code to clarify that fractional interest ownerships are prohibited timeshares and to also expressly prohibit the advertising and sale of prohibited timeshares and fractional interest uses. WHEREAS, notice of the public hearing was published on November 25, 2022 in compliance with State law (California Government Code 65091), indicating the date and time of the public hearing; and WHEREAS, on December 6, 2022, the City Council opened the a public hearing to receive public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony, and continued the hearing to a date certain of January 10, 2023; and WHEREAS, on January 10, 2023, the City Council re -convened the public hearing to receive further public testimony regarding the draft ordinance, including_ without limitation, information provided by City staff and public testimony; and OAK #4875-3304-4012 v2 12-63 WHEREAS, this decision is made based upon evidence presented to the City Council at its December 6, 2022 and January 10, 2023 hearings including, without limitation, the staff report submitted by the Community Planning and Building Department and public testimony; and WHEREAS, the City Council did hear and consider all said reports, recommendations, attachments and testimony herein above set forth and used their independent judgement to evaluate the ordinance; and WHEREAS, the proposed amendments are in full conformity with the City's Local Coastal Plan and the California Coastal Act (GA Public Resources Code Section 30510 et se .) NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DOES ORDAIN AS FOLLOWS: SECTION 1. CEQA Review. The City Council exercises its independent judgment and finds that this ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to the State CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, Sections. 15060(c)(2), because the proposed ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment; 15061(b)(3) because the proposed ordinance is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment; and 15308 because the proposed ordinance involves regulatory actions to assure protection of the environment. Therefore, the adoption of this ordinance is exempt from CEQA and no further environmental review is necessary. SECTION 2. Amendment to the CIVIC. 1. Subsection A of Section 17.14.040 is amended and restated as follows: 17.14.040 Additional Use Regulations. A. All Uses. - 1. No new structure or modification to an existing structure shall be permitted nor shall any business license be issued that would allow the creation of publicly accessible retail space occupying fewer than 200 square feet or more than 5,000 square feet unless approved through a use permit and pursuant to the adoption of findings per CIVIC 17.64.200, Retail Space of Less Than 200 Square Feet or Greater Than 5,000 Square Feet. 2. No timeshare uses or fractional interest uses shall be established or permitted in any zone. 3. Except in restaurants, not more than five persons in any one individually licensed business shall be engaged in the production, repair or manufacturing of goods. 4. No use shall be permitted and no process, equipment, or materials shall be employed which is found by the Planning Director or by the Planning Commission to be OAK #4875-3304-4012 v2 12-64 objectionable to persons residing or working in the vicinity by reason of odor, fumes, noise, vibration, illumination, glare, unsightliness, dust, cinders, dirt, refuse, water - carried wastes or heavy truck traffic, or involve any hazard of fire or explosion. 2. Section 17.28.010 is amended and restated as follows: 17.28.010 Timeshare and Fractional Interest Uses. A. Timeshare uses and fractional interest uses are prohibited uses within all of the zoning districts within the City. B. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.16 (General Penalty). C. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is subject to administrative fines and/or penalties as set forth in Chapter 18.04 (Municipal Code and Ordinance Enforcement). D. Each day a violation of this section occurs shall constitute a separate offense, and the remedies under this section are cumulative and in addition to any and all other remedies available at law and equity. 3. "Time -Share Definitions" of Section 17.70.020 is amended to repeal the definitions of "Time -Share Estate," "Time -Share Occupancy," "Time -Share Program," "Time -Share Project," and "Vacation -Time Sharing Project," and restated to enact the definitions of "Time -Share Plan," "Time -Share Use" and "Fractional Interest Use" to read as follows: 17.70.020 Definitions. The words, terms, and phrases defined in this chapter shall, for all purposes connected with this title, be construed as having the meanings respectively set forth in this chapter. Time -Share Definitions. "Time -Share Plan" means any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right -to -use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A timeshare plan shall be deemed to exist whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are OAK #4875-3304-4012 v2 12-65 a result of a grant of ownership rights, possessory rights, membership rights, rights pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time-share plan. "Time -Share Use" and "Fractional Interest Use" means the use of real property or any part thereof, pursuant to a timeshare plan. SECTION 3. Severability. If any section, subsection, phrase, or clause of this ordinance is for any reason held to be unconstitutional, such a decision shall not affect the validity of the remaining portions of this ordinance. The City Council hereby declares that it would have passed this Ordinance and each section, subsection, phrase, or clause thereof irrespective of the fact that any one or more sections, subsections, phrases, or clauses be declared unconstitutional. SECTION 4. Publication. The City Clerk shall publish or post this ordinance in the manner required by law. SECTION 5. Effective Date. This ordinance shall be effective 30 days after its adoption and after approval by the California Coastal Commission. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE- SEA this XX day of XX 2022, by the following vote: AYES: NOES: ABSENT: ABSTAIN: APPROVE: ATTEST: Dave Potter, Mayor Nova Romero, MMC, City Clerk OAK #4875-3304-4012 Q 12-66 CITY OF CARMEL-BY-THE-SEA CITY COUNCIL ORDINANCE NO. 2022-007 AN ORDINANCE AMENDING THE CARMEL-BY-THE-SEA MUNICIPAL CODE TO PROHIBIT TIMESHARE AND FRACTIONAL INTEREST USES, AS WELL AS ADVERTISING AND SALE THEREOF IN A MANNER FULLY IN CONFORMITY WITH THE COASTAL ACT (PUBLIC RESOURCES CODE SECTION 30510 ET SEQ.) WHEREAS, timeshares involve the division of the exclusive rights to use, possess, and occupy any real property between multiple persons, pursuant to a fixed or floating time schedule; and WHEREAS, since at least 1988, the City of Carmel -by -the -Sea has prohibited the establishment of timeshares within the City; and WHEREAS, the Housing Element of the City's General Plan specifically recognizes that the City seeks to protect the stability of residential neighborhoods by promoting year-round occupancy, and to avoid depletion of residents and associated impacts on the community, City services, Goal G3-4 of the City's Housing Element specifically requires the enforcement of the prohibitions on short-term, transient rentals and timeshares in residential dwellings; and WHEREAS, the Planning Commission of the City of Carmel -by -the -Sea reviewed the ordinance, and on October 12, 2022, determined the ordinance was consistent with the City's General Plan, Local Coastal Plan, and all other relevant City and State codes and regulations, and having reviewed the Planning Commission's recommendations and the relevant provisions of the General Plan, the City Council finds that the ordinance is consistent with the City's General Plan; and WHEREAS, recent increases in the development and sale of fractional interest ownerships have made it appropriate for the City to revisit its municipal code to clarify that fractional interest ownerships are prohibited timeshares and to also expressly prohibit the advertising and sale of prohibited timeshares and fractional interest uses. WHEREAS, notice of the public hearing was published on November 25, 2022 in compliance with State law (California Government Code 65091), indicating the date and time of the public hearing; and WHEREAS, on December 6, 2022, the City Council opened the public hearing to receive public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony, and continued the hearing to a date certain of January 10, 2023; and WHEREAS, on January 10, 2023, the City Council re -convened the public hearing to receive further public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony; and OAK #4875-3304-4012 Q 12-67 WHEREAS, this decision is made based upon evidence presented to the City Council at its December 6, 2022 and January 10, 2023 hearings including, without limitation, the staff report submitted by the Community Planning and Building Department and public testimony; and WHEREAS, the City Council did hear and consider all said reports, recommendations, attachments and testimony herein above set forth and used their independent judgement to evaluate the ordinance; and WHEREAS, the proposed amendments are in full conformity with the City's Local Coastal Plan and the California Coastal Act (Public Resources Code Section 30510 et seq.) NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DOES ORDAIN AS FOLLOWS: SECTION 1. CEQA Review. The City Council exercises its independent judgment and finds that this ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to the State CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, Sections. 15060(c)(2), because the proposed ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment; 15061(b)(3) because the proposed ordinance is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment; and 15308 because the proposed ordinance involves regulatory actions to assure protection of the environment. Therefore, the adoption of this ordinance is exempt from CEQA and no further environmental review is necessary. SECTION 2. Amendment to the CIVIC. 1. Subsection A of Section 17.14.040 is amended and restated as follows: 17.14.040 Additional Use Regulations. A. All Uses. 1. No new structure or modification to an existing structure shall be permitted nor shall any business license be issued that would allow the creation of publicly accessible retail space occupying fewer than 200 square feet or more than 5,000 square feet unless approved through a use permit and pursuant to the adoption of findings per CIVIC 17.64.200, Retail Space of Less Than 200 Square Feet or Greater Than 5,000 Square Feet. 2. No timeshare uses or fractional interest uses shall be established or permitted in any zone. 3. Except in restaurants, not more than five persons in any one individually licensed business shall be engaged in the production, repair or manufacturing of goods. 4. No use shall be permitted and no process, equipment, or materials shall be employed which is found by the Planning Director or by the Planning Commission to be objectionable to persons residing or working in the vicinity by reason of odor, fumes, OAK #4875-3304-4012 Q 12-68 noise, vibration, illumination, glare, unsightliness, dust, cinders, dirt, refuse, water - carried wastes or heavy truck traffic, or involve any hazard of fire or explosion. 2. Section 17.28.010 is amended and restated as follows: 17.28.010 Timeshare and Fractional Interest Uses. A. Timeshare uses and fractional interest uses are prohibited uses within all of the zoning districts within the City. B. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.16 (General Penalty). C. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is subject to administrative fines and/or penalties as set forth in Chapter 18.04 (Municipal Code and Ordinance Enforcement). D. Each day a violation of this section occurs shall constitute a separate offense, and the remedies under this section are cumulative and in addition to any and all other remedies available at law and equity. 3. "Time -Share Definitions" of Section 17.70.020 is amended to repeal the definitions of "Time -Share Estate," "Time -Share Occupancy," "Time -Share Program," "Time -Share Project," and "Vacation -Time Sharing Project," and restated to enact the definitions of "Time -Share Plan," "Time -Share Use" and "Fractional Interest Use" to read as follows: 17.70.020 Definitions. The words, terms, and phrases defined in this chapter shall, for all purposes connected with this title, be construed as having the meanings respectively set forth in this chapter. Time -Share Definitions. "Time -Share Plan" means any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right -to -use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A timeshare plan shall be deemed to exist whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are a result of a grant of ownership rights, possessory rights, membership rights, rights OAK 94875-3304-4012 v2 12-69 pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time-share plan. "Time -Share Use" and "Fractional Interest Use" means the use of real property or any part thereof, pursuant to a timeshare plan. SECTION 3. Severability. If any section, subsection, phrase, or clause of this ordinance is for any reason held to be unconstitutional, such a decision shall not affect the validity of the remaining portions of this ordinance. The City Council hereby declares that it would have passed this Ordinance and each section, subsection, phrase, or clause thereof irrespective of the fact that any one or more sections, subsections, phrases, or clauses be declared unconstitutional. SECTION 4. Publication. The City Clerk shall publish or post this ordinance in the manner required by law. SECTION 5. Effective Date. This ordinance shall be effective 30 days after its adoption and after approval by the California Coastal Commission. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE- SEA this XX day of XX 2022, by the following vote: AYES: NOES: ABSENT: ABSTAIN: APPROVE: ATTEST: Dave Potter, Mayor Nova Romero, MMC, City Clerk OAK #4875-3304-4012 Q 12-70 Exhibit L City of Hermosa Beach Time Share Ordinance and Supporting Evidence 12-71 4/27/23, 9:17 AM City of Hermosa Beach - File #: REPORT 22-0586 Sign In CITY OF :--ma=--ma HERMOSA BEACH Legislation Calendar City Council Departments People lug Cal ©Snare (®R55 (»Alerts] Details PDF Staff Report File #: REPORT 22-0586 Version: 1 Name: Type: Action Item Status: Public Hearing File created: 9/19/2022 In control: City Council On agenda: 9/28/2022 Final action: INTRODUCTION OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND Title: AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANTTO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (Community Development Director Jeannie Naughton) Attachments: 1. 1. SUPPLEMENTAL Draft Ordinance. 2. 2. Resolution P.C. 22-07. 3. 3. Link to April 19, 2022 Planning Commission Staff Rep—4. SUPPLEMENTAL Email from Scott Hayes Re Item 13. c.. 5. SUPPLEMENTAL eComments for Item 13, c Staff Report Text Honorable Mayor and Members of the Hermosa Beach City Council Regular Meeting of September 28, 2022 Title INTRODUCTION OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITYACT (Community Development Director Jeannie Naughton) Body Recommended Action: Recommendation Staff recommends City Council consider waiving full reading and introduce by title only an Ordinance of the City of Hermosa Beach, California, amending Chapter 17.40 (Conditional Use Permit and Other Permit Standards) to add Section 17.40.230 (Timeshare Uses) to Title 17 (Zoning) and amending Section 17.26.030 to permit timeshare uses in specified commercial zones pursuant to a Conditional Use Permit and determining that the project is exempt from the California Environmental Quality Act (Attachment 1). Body Executive Summary_ The City of Hermosa Beach Municipal Code (HBMC) does not currently include regulations governing the use of timeshares within the City, nor any regulations that would explicitly address these emerging businesses offering "fractional ownership" of a property in a way that operates like a timeshare. If left unregulated, these types of uses in the residential zones could limit the City's existing housing stock for use as long-term residency and impair the overall character of the City's residential areas. The proposed draft ordinance (Attachment 1) would permit timeshare uses in the C-1 and G 2 commercial zones within the City pursuant to a Conditional Use Permit (CUP), and prohibit the use in all other zones within the City. Background: The City of Hermosa Beach is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents, those who work in the City, and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance. The City has commercial zones, ineluding the G 1 and G 2 eemmeFeial zenes, that provide for uses that serve both visitors and the local community. These commercial uses include: restaurants; retail shops; and visitor -serving hotels and motels. The City also has residential zones, at varying densities, that provide a diversity of housing types for those who live in the community. The City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. At its April 18, 2022 meeting, the Planning Commission reviewed and recommended approval of the proposed ordinance to permit timeshare uses in specified commercial zones pursuant to a Conditional Use Permit by adopting Resolution P.C. 22-07 (Attachment 2). Past Planning Commission Actions https:Hhermosabeach.legistar.com/LegislationDetail.aspx?ID=5850234&GUID=EEC63C4B-88FE-48DO-8735-DD895DF161 B5 1/3 12-72 4/27/23, 9:17 AM City of Hermosa Beach - File #: REPORT 22-0586 Meeting Date Description April 18, 2022 Planning Commission reviewed the proposed ordinance and adopted Resolution P.C. 22-07 City Housing The most recent U.S. Census data lists the median value of owner -occupied homes in Hermosa Beach as $1,542,900 for the 2015-2019 period, while the Zillow Home Value Index estimates median home values in Hermosa Beach to be approximately $2,174,879 as of January 31, 2022. According to the Zillow Home Value Index, home values in the City have gone up 10.1 percent over the past year. In contrast, the median household income in Hermosa Beach from 2015-2019 was $136,702, and the median income for a four -person household in Los Angeles County for 2021 was approximately $80,000. The cost of homes currently in Hermosa Beach are in excess of what median income residents of Hermosa Beach can afford, and certainly over the median income residents of Los Angeles County generally. The conversion of homes in the City's residential neighborhoods to these timeshare -like uses would eliminate residential dwelling units that would otherwise be available for long-term residential use, thereby further exacerbating the lack of long-term available housing in the City. A home that is used for timeshare purposes would no longer be available for households to use as their long-term residence. Impacts to Character of the City's Residential Districts Timesharing projects have the same character as commercial hotels, motels, and other transient occupancy uses due to the multiple short- term occupancies by those participating in timesharing projects. For this reason, the activity is better suited in commercial or quasi - commercial zones. The use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods. The intensity of the activity is a significant reason why these uses can change the character of a residential neighborhood. Long-term residents, whether owners or renters, occasionally have guests and parties, but timeshare homes are used exclusively by people who are coming to the City on a short-term basis -most likely for vacation or leisure, increasing the likelihood of frequent gatherings and parties generating noise in excess of what the neighborhood normally generates. Timeshare owners and visitors will most likely stay out later, entertain more, and gather in larger numbers while on vacation. Timeshare uses can change the character of a residential neighborhood by having it serve not only as a residential area, but also a visitor lodging area and subjecting the neighborhood to the impacts that come with the more intense land use. Further, the nature of the timeshare use itself can impact the residential character of the City's residential zones because they ensure that the timeshare users can only use their property for a limited amount of time each year. Each co-owner is in the unit on a short-term basis, so they do not have the time to participate in activities or build the relationships that create the fabric of a community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents. Emerging Businesses Recently, certain businesses have emerged which purport to sell "co -ownership" shares in residential property. These businesses, as staff understands the business model, start by purchasing homes or entering contracts to purchase homes in tourist destinations in desirable locations like Hermosa Beach. These businesses then form a limited liability company ("LLC"), which owns title to the residential home. The "co -owners" each purchase a one -eighth share and are entitled to use the residential property for a certain number of days per year according to their share of ownership in the LLC. The one -eighth interest entitles the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special day" (Fourth of July, Thanksgiving, Christmas, etc.). The stays are reserved on an app, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, the business continues to manage the homes, including providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners of the LLC. The Ordinance The City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. The purpose of any ordinance should be to ensure that the City is able to maintain its existing and limited housing stock for use in long-term residency, and to maintain the character of its residential zones. Completely banning "fractional ownership," joint tenancies, or ownership by business entities such as LLC is not advisable. There are numerous properties in the City's residential zones currently owned by numerous owners or by LLCs. Thus, the ordinance is geared toward the specific impacts of the at -issue uses -timeshare -like uses organized and run by third parties for a fee. The proposed ordinance (Attachment 1) does not target or single out any business or ownership structure. The proposed ordinance allows for these types of timeshare uses in the City's C-1 e+Ad G-2 zones, subject to a Conditions Use Permit. Timeshare uses would be prohibited in all other zones. In order to avoid an over -inclusive ordinance that prohibits joint tenancies or other type of ownership structure that do not have the same deleterious impacts, the proposed ordinance focuses on the actual use of the property, as compared to the ownership structure, and in pertinent regulates this "timeshare use" subject to a "timeshare plan." Timeshare plan is defined as: https:Hhermosabeach.legistar.com/LegislationDetail.aspx?ID=5850234&GUID=EEC63C4B-88FE-48D0-8735-DD895DF161 B5 2/3 12-73 4/27/23, 9:17 AM City of Hermosa Beach - File #: REPORT 22-0586 "Any arrangement, plan, scheme, or similar device, facilitated, offered, or organized by a third -party non -purchaser, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby purchasers, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years." At its April 18, 2022 meeting, the Planning Commission reviewed and recommended approval of the proposed ordinance by adopting Resolution P.C. 22-07 (Attachment 2). Environmental Determination: The proposed ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in the C-1 and —C-,-2 commercial zones within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. General Plan Consistency_ The proposed text amendment has been evaluated for consistency with the City's General Plan. Relevant Policies are listed below: Land Use and Design Element Goal 1. Create a sustainable urban form and land use patterns that support a robust economy and high quality of life for residents. Policies: • 1.5 Balance resident and visitor needs. Ensure land uses and business provide for the needs of residents as well as visitors. • 1.7 Compatibility of uses. Ensure the placements of new uses does not create or exacerbate nuisances between different types of land uses. Goal 2. Neighborhoods provide for diverse needs of residents of all ages and abilities and are organized to support healthy and active lifestyles. Policies: • 2.4 Single density neighborhoods. Preserve and maintain the Hermosa Hills, Eastside, Valley, North End and Hermosa View neighborhoods as predominantly single-family residential neighborhoods • 2.5 Neighborhood preservation. Preserve and enhance the quality of residential neighborhoods by avoiding or abating the intrusion of disruptive, nonconforming buildings and uses. Fiscal Impact: There is no fiscal impact associated with the recommended action. Attachments: 1. Draft Ordinance 2. Resolution P.C. 22-07 3. Link to April 19, 2022 Planning Commission Staff Report Respectfully Submitted by: Patrick Donegan, Assistant City Attorney Concur: Jeannie Naughton, Community Development Director Noted for Fiscal Impact: Viki Copeland, Finance Director Legal Review: Patrick Donegan, Assistant City Attorney Approved: Suja Lowenthal, City Manager Staff ReporrtUt-dated on 9/27/2022 - See Track Changes https:Hhermosabeach.legistar.com/LegislationDetail.aspx?ID=5850234&GUID=EEC63C4B-88FE-48DO-8735-DD895DF161 B5 3/3 12-74 ORDINANCE NO. AN ORDINANCE OF THE CITY OF HERMOSA BEACH. AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT. The City of Council of the City of Hermosa Beach does hereby ordain as follows: Section 1. Findings. A. The City of Hermosa Beach ("City") is a scenic beachfront city, known for its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. B. Preserving the City's costal resource and the quality and character of the City has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's current General Plan. C. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. D. The City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses. E. The City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City. F. According to the U.S. Census Bureau, the current median household income in the City is $136,702, while the estimated value of owner -occupied housing units from 2015-2019 was approximately $1,542,900 with current real estate listings 12- 75 suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City. G. The conversion of existing residential units to uses other than long-term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community. H. The City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses. I. The high impact use associated with timeshares, combined with the frequent turnover and commercial management involved in timeshare properties is not consistent with the purpose and nature of residential districts in the City. Rather, they are commercial in nature, in that these timeshare uses are structured as a short-term, tourist oriented, visitor serving use of the subject properties. The use of properties as timeshares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City. J. The use of residential properties for timeshare uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for timeshare uses of residential properties. K. This encroachment of tourist oriented, visitor serving uses in residential neighborhoods is likely to compromise the character of residential areas within the City, and further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City. L. The City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad authority to regulate the development and use of real property within its jurisdiction to promote the public welfare. M. Pursuant to and in accordance with this authority, the City Council desires to prohibit timeshare uses in residential areas, and only allow them in the C-1 commercial zone within the City, pursuant to a conditional use permit. 12-76 N. The City's Planning Commission held a duly noticed public hearing on April 19, 2022, as required by law to consider all the information presented by staff, and public testimony presented in writing and at the meeting. O. On April 19, 2022, the City's Planning Commission recommended that the City Council adopt this Ordinance amending the City's Municipal Code as described herein. P. On September 28, 2022, the City Council held a duly noticed public hearing, accepting testimony from the public, and discussed the proposed amendments and staff's recommended approval of this Ordinance. Q. The proposed zoning amendments are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the character of the City; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply. Section 2. The above recitals are hereby incorporated as though set forth in this section. Section 3. Section 17.40.230 (Time Share Uses) is hereby added to Chapter 17.40 (Conditional Use Permit and Other Permit Standards) of Title 17 (Zoning) of the City of Hermosa Beach Municipal Code, to read as follows: Section 17.40.230 Timeshare Uses A. Purpose and Findings. There is a critical shortage of permanent, long-term housing in the City of Hermosa Beach ("City"). A limited supply of suitable vacant land, land values, and market demand for land for other uses, have limited the construction of additional housing in the City. The City is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. Timeshare uses are not an appropriate land use in the City's residential zones due to the multiple occupancy of timeshare properties, the short-term, tourist oriented use of such property and commercial management of timeshare facilities, all of which create increased traffic generation, excessive noise, disruption to residential communities through commercial -level maintenance of the timeshare facilities, and therefore are appropriately confined to commercial zones. 12-77 Conversion of permanent housing to timeshare facilities removes existing housing units from the City's existing stock and exacerbates an already severe housing shortage. It is therefore in the public interest to prohibit conversions of existing housing units into timeshare facilities, as to do so eliminates needed housing stock by diverting those units to a tourist -oriented, commercial use. B. Definitions. For purposes of this Section, the following words and phrases shall have the meaning respectively ascribed to them by this Section: "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.040. "Building" shall have the meaning ascribed to it by Section 17.04.040. "Dwelling unit" shall have the meaning ascribed to it by Section 17.04.040. "Managing entity" means the person who undertakes the duties, responsibilities and obligations of the management of a timeshare plan. "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. "Timeshare instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a timeshare plan and includes the declaration dedicating accommodations to the timeshare plan. "Timeshare interest" means the right to exclusively occupy a timeshare property for a period of time on a recurring basis pursuant to a timeshare plan, regardless of whether or not such right is coupled with a property interest in the timeshare property or a specified portion thereof. "Timeshare plan" means any arrangement, plan, scheme, or similar device, facilitated, offered, or organized by a third -party non -purchaser, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby purchasers, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. "Timeshare property" means one or more accommodations subject to the same timeshare instrument, together with any other property or rights to property appurtenant to those accommodations. 12-78 "Timeshare use" means the use of one or more accommodations or any part thereof, as a timeshare property pursuant to a timeshare plan. C. Timeshare Uses Restricted to C-1 Commercial Zone. Timeshare uses are conditional uses within the City's C-1 Commercial Zone, subject to approval of a conditional use permit applied for and approved in conformance with this Section. Timeshare uses are not permitted in any other Zones in the City. D. Application Process and Development Standards. A. Application Process. Approval of a conditional use permit for timeshare uses in the C-1 Commercial Zone within the City shall be required in accordance with the requirements of Chapter 17.40. In addition to the requirements contained in Chapter 17.40, an application for a timeshare use shall be accompanied by the following documents which shall be subject to the approval of the Community Development Director: 1. Management Plan. A management plan shall describe the methods employed by the applicant to guarantee the future adequacy, stability, and continuity of a satisfactory level of management and maintenance of the time share use. 2. Application Requirements. In addition to any application requirements established by this section and any other applicable requirements of this code, the following information shall be submitted as part of any application to develop or establish a timeshare use: a. Typical floor plans for each accommodation. b. The phasing of the construction of the accommodations on the timeshare property, if applicable. C. A description of any ancillary uses which are proposed in conjunction with the time share use. d. A description of the method of management of the time share use and indication of the management entity for the time-share property. e. Any restrictions on the use or occupancy of the accommodations. f. Any other information or documentation the applicant, City staff or commission deems reasonably necessary to the consideration of the timeshare use, including any required environmental documents. B. Development Standards and Operational Requirements. Notwithstanding any other provision of this Section, the following conditions must be met by any timeshare use in any conditionally permitted zone. Additional requirements may be attached to a 12-79 conditional use permit or development agreement if found to be necessary to assure that the timeshare use meets the intent of this Section: 1. Timeshare uses developed in the C-1 Commercial Zone within the City shall be limited to accommodations in upper floors in conjunction with a mixed -use project. 2. No existing residential use in the C-1 Commercial Zone within the City shall be converted to a timeshare use. 3. Development Standards. The timeshare use shall comply with all development standards for the zone in which it is located. 4. Parking. Parking shall be provided as follows: a. For accommodations of two or fewer bedrooms, one parking space shall be provided for each accommodation. b. For accommodations of three or more bedrooms, two parking spaces shall be provided for each accommodation. 5. Modification or Waiver of Standards. The Planning Commission may modify or waive one or more of the regulations contained in this Section if it determines that strict compliance is not necessary to achieve the purpose and intent of this Section. E. Violations, Enforcement and Civil Penalties. 1. Any responsible person, including but not limited to an owner of a timeshare interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this Section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this Section. Such violation shall be punishable pursuant to Section 1.04.020 of the City of Hermosa Beach Municipal Code. 2. Timeshare use, and/or advertisement for timeshare use, of an accommodation in violation of this Section is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance. Any such nuisance may be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 8.28 except that the civil penalty for a violation shall be one thousand dollars ($1,000.00). Each day the violation occurs shall constitute a separate offense 3. Any responsible person who violates this Section shall be liable and responsible for a civil penalty of one thousand dollars ($1,000.00) per violation per day such violation occurs. The City may recover such civil penalty by either civil action or administrative citation. Such penalty shall be in addition to all other costs incurred by the City, including without limitation the City's staff time, investigation expenses and attorney's fees. 12-80 a. Where the City proceeds by civil action, the court shall have discretion to reduce the civil penalty based upon evidence presented by the responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the court should consider the purpose of this Section to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the responsible person's enrichment or profit as a result of the violation of this Section. In any such civil action the City also may abate and/or enjoin any violation of this Section. b. Where the City proceeds by administrative citation, the City shall provide the responsible person notice of the right to request an administrative hearing to challenge the citation and penalty, and the time for requesting that hearing. The responsible person shall have the right to request the administrative hearing within forty-five (45) days of the issuance of the administrative citation and imposition of the civil penalty. To request such a hearing, the responsible person shall notify the City clerk in writing within forty-five (45) days of the issuance of the citation. The appeal notification shall include all specific facts, circumstances and arguments upon which the appeal is based. The City Manager is hereby authorized to designate a hearing officer to hear such appeal. The City hearing officer shall conduct a hearing on the appeal within ninety (90) days of the request for the hearing unless one of the parties requests a continuance forgood cause. The hearing officer shall only consider those facts, circumstances or arguments that the property owner or responsible person has presented in the appeal notification. iii. The hearing officer shall render a decision in writing within thirty (30) days of the conclusion of the hearing. The hearing officer shall have discretion to reduce the civil penalty based upon evidence presented by the property owner or responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the hearing officer should consider the purpose of this Section to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the property owner's or responsible person's enrichment or profit as a result of the violation of this Section. iv. Any aggrieved party to the hearing officer's decision on the administrative appeal may obtain review of the decision by filing a petition for writ of mandate with the Los Angeles County Superior 12-81 Court in accordance with the timelines and provisions set forth in Government Code Section 53069.4. v. If, following an administrative hearing, appeal, or other final determination, the owner of the property is determined to be the responsible person for the civil penalty imposed by this section, such penalty, if unpaid within forty-five (45) days of the notice of the final determination, shall become a lien to be recorded against the property on which the violation occurred pursuant to Chapter 8.28. Such costs shall be collected in the same manner as county taxes, and thereafter the property upon which they are a lien shall be sold in the same manner as property now is sold for delinquent taxes 4. Any violation of this Section may also be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 8.28 except that the civil penalty under Chapter 8.28 for a violation shall be one thousand dollars ($1,000.00). Each day the violation of this Section occurs shall constitute a separate offense. The remedies under this Section are cumulative and in addition to any and all other remedies available at law and equity. Section 3. Section 17.26.030 of Chapter 17.26 (C1, C2 and C3 Commercial Zones) of Title 17 (Zoning) is amended to add the following entry to the chart of land use regulations USES I C1 C2 C3 See Section Timeshares I U 17.40.230 Section 4. CEQA. This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in the C-1 commercial zone within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. Section 5. Effective Date. Pursuant to California Government Code section 36937, this Ordinance shall take effect thirty (30) days after its final passage. Section 6. Certification. The City Clerk is directed to certify the passage and adoption of this Ordinance; cause it to be entered into the City's book of original ordinances; make a note of the passage and adoption in the records of this meeting; and, 12-82 within fifteen (15) days after the passage and adoption of this Ordinance, cause it to be published or posted in accordance with California law. PASSED, APPROVED and ADOPTED this 28th day of September, 2022. VOTE: AYES: NOES: ABSTAIN: ABSENT: Michael Detoy, Mayor PRESIDENT of the City Council and MAYOR of the City of Hermosa Beach, CA ATTEST: Myra Maravilla City Clerk APPROVED AS TO FORM: Michael Jenkins City Attorney 12-83 RESOLUTION P.C. 22-07 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF HERMOSA BEACH RECOMMENDING CITY COUNCIL APPROVAL OF TEXT AMENDMENTS TO THE CITY OF HERMOSA BEACH MUNICIPAL CODE AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT. The Planning Commission of the City of Hermosa Beach does hereby resolve as follows: SECTION 1. Findings. A. The Planning Commission held a duly noticed public hearing on April 19, 2022 to consider a text amendments to the City of Hermosa Beach Municipal Code, Title 17 (Zoning), as described in the proposed ordinance attached as Exhibit A. B. The City of Hermosa Beach {"City') is a scenic beachfront city, known for its many diverse restaurants, local retailers and popular commercial areas like its downtown area and Pier Avenue. C. Preserving the City's costal resource and the quality and character of the City has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's current General Plan. D. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. E. The City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to, the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses. F. The City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City. 12-85 G. According to the U.S. Census Bureau, the current median household income in the City is $136,702, while the estimated value of owner -occupied housing units from 2015-2019 was approximately $1,542,900 with current real estate listings suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City. H. The conversion of existing residential units to uses other than long-term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community. I. The City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses. J. This high impact use associated with timeshares, combined with the frequent turnover and commercial management involved in timeshare properties is not consistent with the purpose and nature of residential districts in the City. Rather, they are commercial in nature, in that these timeshare uses are structured as a short- term, tourist oriented, visitor serving use of the subject properties. The use of properties as timeshares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City. K. The use of residential properties for timeshare uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for timeshare uses of residential properties. L. This encroachment of tourist oriented, visitor serving uses in residential neighborhoods is likely to compromise the character of residential areas within the City, and further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City. M. The City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad authority to regulate the development and use of real property within its jurisdiction to promote the public welfare. N. Pursuant to and in accordance with this authority, the Planning Commission desires to prohibit timeshare uses in residential areas, and certain commercial zones and to 12-86 update the language of the Zoning Code to provide consistency with the terminology used to define timeshare uses in State law. Further, the City desires to provide greater clarity as to the zones which timeshare uses are permitted as conditional uses, and the standards pursuant to which they will be reviewed in those zones. O. On April 19, 2022, the Planning Commission held a duly -noticed public hearing and considered the staff report, recommendations by staff, and public testimony concerning the proposed ordinance. SECTION 2. This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in specified zones within the City pursuant to a conditional use permit, and prohibits them in all other zones, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. SECTION 3. The Planning Commission finds that the proposed amendments to the Municipal Code to permit timeshares in specified zones within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the character of the City; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply. SECTION 4. Based on the entire record before the Planning Commission, and all written and oral evidence presented, the Planning Commission hereby finds that the proposed ordinance is consistent with the City's adopted General Plan and does not conflict with any of the General Plan's goals or policies. SECTION 5. The Planning Commission hereby recommends that the City Council adopt the attached proposed ordinance entitled, "AN ORDINANCE OF THE CITY OF HERMOSA BEACH. AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING 12-87 THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT. I HEREBY CERTIFY that the foregoing recommendation to the City Council was duly and regularly approved by the Planning Commission of the City of Hermosa Beach at a regular meeting of said Planning Commission held on April 19, 2022, by the following roll call vote: VOTE: AYES: 5 - Chair Pedersen, Vice Chair Izant, Commissioner Saemann, Commissioner Hoffman, and Commissioner Rice NOES: None ABSTAIN: None ABSENT: None CERTIFICATION I hereby certify that the foregoing Resolution P.C. 22-07 is a true and complete record of the action taken by the Planning Commission of the. City of Hermosa Beach, California, at its regular meeting of April 19, 2022. Dave Pedersen, Chairperson 1��.�/2� Date /-.4 1 Ang a Crespi, Secretary 12-88 4/27123, 9:22 AM City of Hermosa Beach - File #: REPORT 22-0249 Sign In CITY of Fb° HERMOSA Bch Legislation Calendar City Council Departments People �19i I®-.{©Share;(®Rss IS: Alerts :. Details � PDF Staff Report File #: REPORT 22-0249 Version: 1 Name: Type: Action Item Status: Passed File created: 4/14/2022 In control: Planning Commission On agenda: 4/19/2022 Final action: 4/19/2022 TA 22-01 ZONE TEXT AMENDMENT TO AMEND THE HERMOSA BEACH MUNICIPAL CODE CHAPTER 17.40 TO ADD SECTION 17.40.230 AND Title: AMEND SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES AND DETERMINE THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRINMENTAL QUALITY ACT (CEQA) Attachments: 1. 1. Draft Resolution 22-07 Timeshare Ordinance 2. 2. Hermosa Beach Draft Ordinance Staff Report Text Honorable Chairman and Members of the Hermosa Beach Planning Commission Regular Meeting of April 19, 2022 Title TA 22-01 ZONE TEXT AMENDMENT TO AMEND THE HERMOSA BEACH MUNICIPAL CODE CHAPTER 17.40 TO ADD SECTION 17.40.230 AND AMEND SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES AND DETERMINE THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRINMENTAL QUALITY ACT (CEQA) Recommendation Recommended Action: Staff recommends the Planning Commission adopt Resolution No. 22-07 (Attachment 1) recommending that the City Council approve Zone Text Amendment TA 22-01, thereby amending Chapter 17.40 to add section 17.40.230 and amend section 17.26.030 to permit timeshare uses in specified commercial zones and determine that the project is exempt from the California Environmental Quality Act (CEQA). Body Background: The City of Hermosa Beach ("City') does not currently have regulations in place governing the use of timeshares within the City, nor any regulations that would explicitly address these emerging businesses offering "fractional ownership" of a property in a way that operates like a timeshare. These types of uses in the City's residential zone could limit the City's existing housing stock for use as a long-term residency and impair the character of the City's residential zones. At its March 15, 2022 meeting, the Planning Commission directed staff to bring forward a zone text amendment addressing these types of uses. Analysis: The City is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers, and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents, those who work in the City, and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance. The City has commercial zones including the C-1 and C-2 commercial zones that provide for uses that serve both visitors and the local community such as: restaurants; retail shops; and visitor serving hotels. The City also has residential zones that provide housing for those who live in the community, at varying densities in order to provide a diversity of housing types. �01 y ousi g The most recent census data lists the median value of owner -occupied homes in Hermosa Beach as $1,542,900 for the period of 2015- 2019, while the Zillow Home Value Index estimates medial home values in Hermosa Beach to be approximately $2,174,879 as of January 31, 2022. According to the Zillow Home Value Index, homes values in the City have gone up 10.1 percent over the past year. In contrast, the median household income in Hermosa Beach from 2015-2019 was $136,702, and the median income for a four -person household in Los Angeles County for 2021 is approximately $80,000. The cost of homes currently in Hermosa Beach are more than what median income residents of Hermosa Beach can afford, and certainly over the median income residents of Los Angeles County generally. https://hermosabeach.legistar.com/LegislationDetaii.aspx?ID=5557241&GUID=80A64A8C-E51A-4C26-B2D2-3046537C93D5 1/3 12-89 4/27/23, 9:22 AM City of Hermosa Beach - File #: REPORT 22-0249 The conversion of homes in the City's residential neighborhoods to these timeshare -like uses would eliminate residential dwelling units that would otherwise be available for long-term residential use, thereby further exacerbating the lack of long-term available housing in the City. A home that is used for timeshare purposes would no longer be available for households to use as their long-term residence. Impacts to Character of the City's Residential Districts Timesharing projects have the same character as commercial hotels, motels, and other transient occupancy uses due to their transient nature and to the multiple short-term occupancies by those participating in timesharing projects. This use is better suited in commercial or quasi -commercial zones and is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods. The intensity of this use is a significant reason that these uses can change the character of a residential neighborhood. Long-term residents, whether owners or renters, occasionally have guests or parties, but these timeshare homes are used exclusively by people who are coming to the City on a short-term basis - most likely for vacation or leisure. As a result, those users may naturally stay out later, entertain more, and gather in larger numbers while on vacation. Timeshare uses can change the character of a residential neighborhood by having it serve not only as a residential area, but also a visitor lodging area, and subjecting it to the impacts that come with that more intense land use. Further, the nature of the timeshare use itself can impact the residential character of the City's residential zones because it would ensure that the time share users can only use their property for a limited amount of time each year. Each co-owner is in the unit on a short-term basis, and without the time to participate in the types of activities or build the relationships that create the fabric of a community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents. Emerging Businesses Recently, certain businesses have emerged which purport to sell "co -ownership" shares in residential property. These businesses, as staff understands the business model, start by purchasing homes or entering into contracts to purchase homes in tourist destinations in desirable locations like the City. These businesses then form a limited liability company ("LLC"), which owns title to the residential home. The "co - owners" each purchase a one -eighth share and are entitled to use the residential property for a certain number of days per year according to their share of ownership in the LLC. The one -eighth interest entitles the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special day" (Fourth of July, Thanksgiving, Christmas, etc.). The stays are reserved on a mobile application, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, the business continues to manage the homes, including providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners of the LLC. Time Share Ordinance As mentioned above, the City does not currently have regulations in place.governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. The purpose of any ordinance should be to ensure that it the City is able to maintain its existing and limited housing stock for use in long term residency and to maintain the character of its residential zones. Completely banning "fractional ownership," joint tenancies, or ownership by business entities such as LLC is not advisable. There are numerous properties in the City's residential zones currently owned by numerous owners or by LLCs. Thus, any ordinance should be geared toward the specific impacts of the at -issue uses - timeshare like uses organized and ran by third parties for a fee. The proposed ordinance (Attachment 2) does not target or single out any business or ownership structure. Environmental Determination: The proposed ordinance is not subject to CEQA because the adoptions of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in C-1 and C-2 commercial zones within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. General Plan Consistency_ The proposed text amendment has been evaluated for consistency with the City's General Plan and is consistent with the following Goals and Policies of Plan Hermosa: Land Use and Design Element Goal 1 Create a sustainable urban form and land use patterns that support a robust economy and high quality of life for residents. Policies: • 1.5 Balance resident and visitor needs. Ensure land uses and business provide for the needs of residents as well as visitors. • 1.7 Compatibility of uses. Ensure the placements of new uses does not create or exacerbate nuisances between different types of land uses. Goal 2 Neighborhoods provide for diverse needs of residents of all ages and abilities, and are organized to support healthy and active lifestyles. Policies: • 2.4 Single density neighborhoods. Preserve and maintain the Hermosa Hills, Eastside, Valley, North End and Hermosa View neighborhoods as predominantly single-family residential neighborhoods https:Hhermosabeach.legistar.com/LegislationDetail.aspx?ID=5557241&GUID=80A64A8C-E51A-4C26-B2D2-3046537C93D5 2/3 12-90 4/27/23, 9:22 AM City of Hermosa Beach - File #: REPORT 22-0249 • 2.5 Neighborhood preservation. Preserve and enhance the quality of residential neighborhoods by avoiding or abating the intrusion of disruptive, nonconforming buildings and uses. Attachments: 1. Draft Resolution 22-07 Timeshare Ordinance 2. Hermosa Beach Draft Ordinance Respectfully Submitted by: Carlos Luis, Senior Planner Legal Review: Patrick Donegan, Deputy City Attorney Approved: Angela Crespi, Interim Community Development Director https:Hhermosabeach.legistar. com/Leg islationDetail.aspx?I D=5557241 &GU I D=80A64A8C-E51 A-4C26-B2D2-3046537C93D5 3/3 12-91 From: Scott Hayes Sent: Tuesday, September 27, 2022 3:19 PM To: City Council <citycouncil@hermosabeach.gov>; Suja Lowenthal <suja@hermosabeach.gov>; Ann Yang <anny@hermosabeach.gov> Cc: Jeannie Naughton <jaughton@hermosabeach.gov>; DG_PlanningCommission <DG_PlanningCommission@hermosabeach.gov>; Patrick Donegan <Patrick.Donegan @bbklaw.com> <Patrick.Donegan@bbklaw.com>; rachelsaccount@hotmail.com Subject: Agenda Item XIII, c (Report 22-0586) - Timeshares Mayor, Mayor Pro Tem, and Councilmembers. am writing to express my strong opposition Council Agenda Item XIII, c (Report 22-0586). Inadequate Noticing First, I believe that the residents adjacent to C-1 Zones should have been directly noticed about this potential change to the zoning code. As stated in the staff report, timesharing projects have increased "likelihood of frequent gatherings and parties generating noise in excess of what the neighborhood normally generates." Since staff acknowledges that there will be neighborhood impacts as a result of the proposed timeshare projects, I feel that the City should have gone over and above the minimum legal public noticing requirements. I respectfully request that this item be continued until such time that the neighbors are properly noticed. If this item is not continued please consider the following argument against the proposed zoning changes. Section 17.40.230, A of the proposed ordinance states 'Timeshare uses are not an appropriate land use in the City's residential zones due to the multiple occupancy of timeshare properties, the short- term, tourist oriented use of such property and commercial management of timeshare facilities, all of which create increased traffic generation, excessive noise, disruption to residential communities." What the ordinance fails to recognize is that those exact same concerns also make timeshares unsuitable for the C-1 Neighborhood Commercial Zone. Timeshares are Hotels Timeshares are almost always vacation properties. As such, they are essentially hotels which is a disruptive use when adjacent to a residential neighborhood. Our municipal code does not allow hotels in the C-1 zone and timeshares should be excluded as well. Municipal Code Section 17.26.020, B, 1 specifically states that the purpose of the C-1 Neighborhood Commercial Zone is "to provide sites for a mix of small local businesses appropriate for, and serving the daily needs of 12-92 nearby residential neighborhoods; while establishing land use regulations that prevent significant adverse effects on abutting residential uses." I do not see how a timeshare serves the daily needs of nearby residential neighborhoods but I can easily see how these neighborhoods would suffer significant adverse effects from timeshares. Timeshares are STVRs People generally stay at timeshares for 1-2 weeks. As a result, they have nearly the same impact on neighborhoods as short term vacation rentals. Hermosa Beach only allows STVRs on commercially zoned parcels with non -conforming residential uses. Why are timeshares being treated any differently? Timeshares will have the same traffic and noise impacts as STVRs so they should be restricted to the same areas. Additionally, there is no language in the ordinance to prohibit utilizing the timeshare as a short term vacation rental. If timeshares are approved, it will only be a matter of time before we start seeing the timeshare units showing up on Airbnb and VRBO. Timeshares Take Potential Housing Stock The ordinance states that timeshares must be built above commercial space as part of a mixed use project. Why wouldn't we require that the upper floors of mixed use developments be residential space to help the City meet its housing goals? Allowing this space to be used as timeshare vacation homes makes no sense. I would much prefer to have new neighbors contributing to the community that having to deal with new transient residents every week or 2. Enforcement Challenges The City is currently unable to do anything about the quality of life issues brought about by the MANY illegal short term vacation rentals in Hermosa Beach. I am concerned that timeshares will just add to the number of quality of life issues that the City will not be able to enforce. I happen to live nearby some of these illegal STVRs and no matter how frequently I report them to the City, new renters keep showing up. A quick search of Airbnb shows that there are dozens of STVRs that are advertising for stays of less than 30 days. If the stay is increased to 30 days the number grows to over 100. The City is just not able to do anything to contain these issues and I am worried that the City will not be able to do anything about the potential problems with timeshares. Potential Solutions I believe that there are a few different ways that Council should deal with this issue: 1. Allow timeshares in locations where hotels are permitted. If timeshares are strictly considered a residential use this may not be possible until the zoning code is changed to allow residential in mixed use projects in C-2 and C-3. The Beach House is a form of timeshare but nobody minds it because it is in the C-2 zone. I think that it is worth waiting for the zoning code update to properly deal with the timeshare issue. 2. Define timeshares in the municipal code as hotels or motels. This would allow them in zones where hotel use is allowed. 3. Allow timeshares at commercially zoned parcels with non -conforming residential uses similar to legal STVRs. 4. Prohibit timeshares anywhere in Hermosa Beach. 12-93 Please do not allow timeshares to further degrade our neighborhoods the way that STVRs already have. Thank you for your consideration. Scott Hayes MEMN Hermosa Beach, CA 90254 12-94 City Council Adjourned Regular Hybrid Meeting (Closed Session - 5:00 PM Open Session - 6:00 PM 09-28-22 17:00 Agenda dame c) REPORT 22-0586 INTRODUCTION OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (Community Development Director Jeannie Naughton) Comments Support Oppose Neutral Sentiments for All Agenda Items The following graphs display sentiments for comments that have location data. Only locations of users who have commented will be shown. Overall Sentiment E Support(o%) apposo(t Do%) Neutral(D°o) No Responsa(D%) Agenda Item: eComments for c) REPORT 22-0586 INTRODUCTION OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (Community Development Director Jeannie Naughton) Overall Sentiment Support(D%) opposo(l o0%) Neutral(o%) No Responso(D%) Scott Hayes Location: Submitted At: 3:30pm 09-27-22 I am writing to express my strong opposition to Agenda Item XIII, c 12-95 First, I believe that the residents adjacent to C-1 Zones should have been directly noticed about this potential change to the zoning code. As stated in the staff report, timesharing projects have increased "likelihood of frequent gatherings and parties generating noise in excess of what the neighborhood normally generates." Since staff acknowledges that there will be neighborhood impacts as a result of the proposed timeshare projects, I feel that the City should have gone over and above the minimum legal public noticing requirements. I respectfully request that this item be continued until such time that the neighbors are properly noticed. If this item is not continued please consider the following argument against the proposed zoning changes Section 17.40.230, A of the proposed ordinance states "Timeshare uses are not an appropriate land use in the City's residential zones due to the multiple occupancy of timeshare properties, the short-term, tourist oriented use of such property and commercial management of timeshare facilities, all of which create increased traffic generation, excessive noise, disruption to residential communities" What the ordinance fails to recognize is that those exact same concerns also make timeshares unsuitable for the C-1 Neighborhood Commercial Zone. Timeshares are almost always vacation properties. As such, they are essentially hotels which is a disruptive use when adjacent to a residential neighborhood. Our municipal code does not allow hotels in the C-1 zone and timeshares should be excluded as well. Municipal Code Section 17.26.020, B, 1 specifically states that the purpose of the C-1 Neighborhood Commercial Zone is "to provide sites for a mix of small local businesses appropriate for, and serving the daily needs of nearby residential neighborhoods; while establishing land use regulations that prevent significant adverse effects on abutting residential uses." I do not see how a timeshare serves the daily needs of nearby residential neighborhoods but I can easily see how these neighborhoods would suffer significant adverse effects from timeshares. People generally stay at timeshares for 1-2 weeks. As a result, they have nearly the same impact on neighborhoods as short term vacation rentals. Hermosa Beach only allows STVRs on commercially zoned parcels with non -conforming residential uses. Why are timeshares being treated any differently? Timeshares will have the same traffic and noise impacts as STVRs so they should be restricted to the same areas. Additionally, there is no language in the ordinance to prohibit utilizing the timeshare as a short term vacation rental. If timeshares are approved, it will only be a matter of time before we start seeing the timeshare units showing up on Airbnb and VRBO. The ordinance states that timeshares must be built above commercial space as part of a mixed use project. Why wouldn't we require that the upper floors of mixed use developments be residential space to help the City meet its housing goals? Allowing this space to be used as timeshare vacation homes makes no sense. I would much prefer to have new neighbors contributing to the community that having to deal with new transient residents every week or 2. The City is currently unable to do anything about the quality of life issues brought about by the MANY illegal short term vacation rentals in Hermosa Beach. I am concerned that timeshares will just add to the number of quality of life issues that the City will not be able to enforce. I happen to live nearby some of these illegal STVRs and no matter how frequently I report them to the City, new renters keep showing up. A quick search of Airbnb shows that there are dozens of STVRs that are advertising for stays of less than 30 days. If the stay is increased to 30 days the number grows to over 100. The City is just not able to do anything to contain these issues and I am worried that the City will not be able to do anything about the potential problems with timeshares. I believe that there are a few different ways that Council should deal with this issue: 1. Allow timeshares in locations where hotels are permitted. If timeshares are strictly considered a residential use this may not be possible until the zoning code is changed to allow residential in mixed use projects in C-2 and C- 3. 1 think that it is worth waiting for the zoning code update to properly deal with the timeshare issue. 2. Define timeshares in the municipal code as hotels or motels. This would allow them in zones where hotel use is allowed. 3. Allow timeshares at commercially zoned parcels with non -conforming residential uses similar to legal STVRs. 4. Prohibit timeshares anywhere in Hermosa Beach. 12-96 Please do not allow timeshares to further degrade our neighborhoods the way that STVRs already have. Rachel Hayes Location: 90254-5103, Hermosa Beach Submitted At: 8:55am 09-27-22 While I am glad to see that the city is being proactive to prevent timeshare ownership of properties in the residential areas, I am not happy with the request to change the use of properties in zone C1 which is directly adjacent to residential properties. For the same reason that you don't want one in your neighborhood, we don't want one in our neighborhood. Please note that timeshares do not operate the way it was sold to the planning commission. Timeshare salesmen are very good sales people, and they have sold you a pack of lies. Think about what they are selling you. Eight families sharing one house. Eight families would get one week every other month. Who do you know who has six weeks of vacation time? And how many people want to use all six of those weeks to go to the same location? The eight families they are selling you on are "investors" in a property who will get their money back by renting the unit through the timeshare system. The way timeshares work is owners either buy a designated week at one resort/location or they buy points which they can use to book a week at any of the timeshare's properties (owned or negotiated). People who own the same week can trade that week into the timeshare pool of units for a week at any other of the timeshare's properties. The timeshare companies pool their resources with other timeshare companies in order to offer more flexibility, as it helps generate more sales. So, what you think will be the same eight families using the unit, will end up becoming a short term rental with new tenants every single week. I belong to a timeshare and they use AirBnB as a selling point — seems they are getting into the business of subleasing out AirBnB's to their owners for points. The sales people will actually say "You don't have to stay at one of our resorts, we have contracts with AirBnBs all over. You can use your points to book one of those properties". Avoidance of Taxes: Because allegedly only `time share owners' will be using the unit, there will be no short term tax paid to the city for this unit. Timeshare fees are called maintenance fees (not rent), so technically they would not be subject to the short term tax like hotels or even AirBnBs. Short Term Rentals kill neighborhoods. There is an illegal short term rental across the street from us. Every single new tenant drives the wrong way down the one-way alley. Every single one.... They don't care about our neighborhood. Sometimes they park a car in the alley blocking access to our garage. When I call the city, I am told the city will not tow. So the city is protecting the short term renters at the expense of the residents? If the city cannot help us now, imagine what it will be like when there are several places with new tenants every single week (unmanaged tenants). C1 zone: I live next to a bar. I have no problems with the bar. They have a CUP and they follow their CUP, so we have lived in harmony. The bar has a paid staff member on site to manage the property. This timeshare Oust another name for short term rental) will not have a staff member present to manage the property. I would rather have a pot dispensary next to me than another short term rental. At least the pot dispensary will have staff on site, and it will have specific hours of operation. And the City will have the ability to correct any unwanted behaviors with the pot dispensary operators. How can the city correct behavior of tenants who change over every single week. With a timeshare owned property, once you open pandora's box, you will not be able to fix it. Please say no to timeshare properties in our city. Please say no to timeshare properties in Zone C1 as it is too close to residential properties. For the same reason that you don't want one in your neighborhood, we don't want one in our neighborhood. Rachel Hayes, resident 122 1 st Street, Hermosa Beach, CA 12-97 4127123, 9:29 AM City of Hermosa Beach - File #: REPORT 22-0643 Sign In 4CITY OF HERMOSA BEACH Legislation Calendar City Council Departments People l� 1.®� O Share (® RSS j �S3 Alerts Details PDF Staff Report File #: REPORT 22-0643 Version: 1 Name: Type: Action Item Status: Consent Calendar File created: 10/4/2022 In control: City Council On agenda: 10/11/2022 Final action: ADOPTION OF AN ORDINANCE OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT Title: AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT (Community Development Director Jeannie Naughton) Attachments: 1. 1. Draft Ordinance, 2. 2. PC Resolution 22-07, 3. 3. Link to April 19, 2022 Planning Commission Staff Report 4. 4. Link to September 28,, 2022 City Council Staff Report Staff Report Text Honorable Mayor and Members of the Hermosa Beach City Council Regular Meeting of October 11, 2022 Title ADOPTION OF AN ORDINANCE OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT (Community Development Director Jeannie Naughton) Body Recommended Action: Recommendation Staff recommends City Council: 1. Waive full second reading and adopt by title an Ordinance of the City of Hermosa Beach, California, amending Chapter 17.40 (Conditional Use Permit and Other Permit Standards) to add Section 17.40.230 (Timeshare Uses) to Title 17 (Zoning) and amending Section 17.26.030 to permit timeshare uses in specified commercial zones pursuant to a Conditional Use Permit (Attachment 1); and 2. Direct staff to print and publish the summary ordinance in a newspaper of general circulation within 15 days following adoption and post it on the City's bulletin for 30 days. Body Executive Summary_ The City of Hermosa Beach Municipal Code (HBMC) does not currently include regulations governing the use of timeshares within the City, nor any regulations that would explicitly address these emerging businesses offering "fractional ownership" of a property in a way that operates like a timeshare. If left unregulated, these types of uses in the residential zones could limit the City's existing housing stock for use as long-term residency and impair the overall character of the City's residential areas. At its September 28, 2022 meeting, City Council held a public hearing and introduced and waived first reading of the ordinance with amendments to modify the authorized zone from the originally proposed C-1 (Neighborhood Commercial Zone) to the C-2 (Downtown Commercial Zone). Council further directed staff to incorporate the discussion into future Housing Element and Zoning Code update processes. The revised ordinance (Attachment 1) would permit timeshare uses in the C-2 Downtown Commercial Zone within the City pursuant to a Conditional Use Permit (CUP) and prohibit the use in all other zones within the City. Background: The City of Hermosa Beach is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents, those who work in the City, and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance. The City has commercial zones, that provide for uses that serve both visitors and the local community. These commercial uses include: restaurants; retail shops; and visitor -serving hotels and motels. The City also has residential zones, at varying densities, that provide a diversity of housing types for those who live in the community. The City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. At its April 18, 2022 meeting, the Planning Commission reviewed and recommended https://hermosabeach.legistar.com/LegislationDetaii.aspx?ID=5866947&GUID=1 F32BD8F-48D8-4AE4-BC2A-F6EDOAB1146B 1/4 12-98 4/27/23, 9:29 AM City of Hermosa Beach - File #: REPORT 22-0643 approval of the proposed ordinance to permit timeshare uses in specified commercial zones pursuant to a Conditional Use Permit by adopting Resolution P.C. 22-07 (Attachment 2). At its September 28, 2022 meeting, City Council received a staff presentation of the draft ordinance. Following the public hearing, City Council introduced and waived first reading of the ordinance with the following amendments: Section 2 was revised to replace all references of C-1 (Neighborhood Commercial Zone) with C-2 (Downtown Commercial Zone); and Section 3 was revised to shift the "U" from the C-1 column, to the C-2 column, indicating that timeshare uses would be permitted pursuant to a Conditional Use Permit in the C- 2 (Downtown Commercial Zone) and prohibit the use in the C-1 (Neighborhood Commercial Zone). City Council further directed staff to incorporate this discussion into future Housing Element and Zoning Code update processes. Past Planning Commission and City Council Actions Date April 18, 2022 Planning Commission reviewed the proposed ordinance and adopted Resolution P.C. 22-07 September 28, 2022 City Council introduced and waived first reading of an Ordinance with amendments to replace all references of C-1 (Neighborhood Commercial Zone) with C-2 (Downtown Commercial Zone) in Section 2; and Section 3 was amended o shift the "U" from the C-1 column, to the C-2 column, indicating that timeshare uses would be permitted with a Conditional Use Permit in the C-2 (Downtown Commercial one and not permitted in the C-1 (Neighborhood Commercial Zone). City Council further directed staff to incorporate this discussion into future Housing Element and oning Code update processes. City Housing The most recent U.S. Census data lists the median value of owner -occupied homes in Hermosa Beach as $1,542,9000) for the 2015-2019 period, while the Zillow Home Value Index estimates median home values in Hermosa Beach to be approximately $2,174,879(2) as of January 31, 2022. According to the Zillow Home Value Index, home values in the City have gone up 10.1 percent over the past yeart3i. In contrast, the median household income in Hermosa Beach from 2015-2019 was $136,702t4i, and the median income for a four -person household in Los Angeles County for 2021 was approximately $80,000(5). The cost of homes currently in Hermosa Beach are in excess of what median income residents of Hermosa Beach can afford, and certainly over the median income residents of Los Angeles County generally. The conversion of homes in the City's residential neighborhoods to these timeshare -like uses would eliminate residential dwelling units that would otherwise be available for long-term residential use, thereby further exacerbating the lack of long-term available housing in the City. A home that is used for timeshare purposes would no longer be available for households to use as their long-term residence. Impacts to Character of the City's Residential Districts Timesharing projects have the same character as commercial hotels, motels, and other transient occupancy uses due to the multiple short- term occupancies by those participating in timesharing projects. For this reason, the activity is better suited in commercial or quasi - commercial zones. The use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods. The intensity of the activity is a significant reason why these uses can change the character of a residential neighborhood. Long-term residents, whether owners or renters, occasionally have guests and parties, but timeshare homes are used exclusively by people who are coming to the City on a short-term basis -most likely for vacation or leisure, increasing the likelihood of frequent gatherings and parties generating noise in excess of what the neighborhood normally generates. http s:/I mww. census.gov/ou ickfact s/fact /tab le./fiermosab eac licit ycali forni a /HSO410219. LtZIL_ www�zillow.cnln rarrnosa-be.pAg cQhome•valur;s/. https:/Iwww.zillow.com/hermosa-beach-ca/home-values(. ' https://evww_census_eov/ouickfacts/fad/tablelhermosabeachcitvcalifornia/HSD410219. s https-llvnwr.hcd.ca.sovlerants-fundine/income-limits/state-and-federaNncome-limits/dots./income-limits-2021.odf Timeshare owners and visitors will most likely stay out later, entertain more, and gather in larger numbers while on vacation. Timeshare uses can change the character of a residential neighborhood by having it serve not only as a residential area, but also a visitor lodging area and subjecting the neighborhood to the impacts that come with the more intense land use. https://hermosabeach.legistar.com/LegislationDetaii.aspx?ID=5866947&GUID=1 F32BD8F-48D8-4AE4-BC2A-F6EDOAB1146B 2/4 12-99 4/27/23, 9:29 AM City of Hermosa Beach - File #: REPORT 22-0643 Further, the nature of the timeshare use itself can impact the residential character of the City's residential zones because they ensure that the timeshare users can only use their property for a limited amount of time each year. Each co-owner is in the unit on a short-term basis, so they do not have the time to participate in activities or build the relationships that create the fabric of a community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents. Emerging Businesses d Recently, certain businesses have emerged which purport to sell "co -ownership" shares in residential property(6). These businesses, as staff understands the business model, start by purchasing homes or entering contracts to purchase homes in tourist destinations in desirable locations like Hermosa Beach. These businesses then form a limited liability company ("LLC"), which owns title to the residential home. The "co -owners" each purchase a one -eighth share and are entitled to use the residential property for a certain number of days per year according to their share of ownership in the LLC. The one -eighth interest entitles the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special day" (Fourth of July, Thanksgiving, Christmas, etc.). The stays are reserved on an app, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, the business continues to manage the homes, including providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners of the LLC. The Ordinance The City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. The purpose of any ordinance should be to ensure that it the City is able to maintain its existing and limited housing stock for use in long-term residency, and to maintain the character of its residential zones. 6 These types of businesses are merely used as an example. The Ordinance Is not directed at any individual business or businesses; but rather regulate the specific use. Completely banning "fractional ownership," joint tenancies, or ownership by business entities such as LLC is not advisable. There are numerous properties in the City's residential zones currently owned by numerous owners or by LLCs. Thus, the ordinance is geared toward the specific impacts of the at -issue uses -timeshare like uses organized and run by third parties for a fee. The proposed ordinance (Attachment 1) does not target or single out any business or ownership structure. As revised, the ordinance allows for these types of timeshare uses in the City's C-2 Downtown Commercial zone, subject to a Conditions Use Permit. Timeshare uses would be prohibited in all other zones. In order to avoid an over -inclusive ordinance that prohibits joint tenancies or other type of ownership structure that do not have the same deleterious impacts, the proposed ordinance focuses on the actual use of the property, as compared to the ownership structure, and in pertinent regulates this "timeshare use" subject to a "timeshare plan." Timeshare plan is defined as: "Any arrangement, plan, scheme, or similar device, facilitated, offered, or organized by a third -party non -purchaser, whether by membership agreement, bylaws, shareholder agreement, partnership agreement sale, lease, deed, license, right to use agreement, or by any other means, whereby purchasers, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years." Environmental Determination: The proposed ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in C-2 Downtown Commercial zone within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. General Plan Consistency_ https://hermosabeach.legistar.com/Leg islationDetail.aspx?ID=5866947&GUID=1 F32BD8F-48D8-4AE4-BC2A-F6EDOAB1146B 3/4 12-100 4/27123, 9:29 AM City of Hermosa Beach - File #: REPORT 22-0643 This report and associated recommendation have been evaluated for their consistency with the City's General Plan. Relevant Policies are listed below: Land Use and Design Element Goal 1. Create a sustainable urban form and land use patterns that support a robust economy and high quality of life for residents. Policies: • 1.5 Balance resident and visitor needs. Ensure land uses and business provide for the needs of residents as well as visitors. • 1.7 Compatibility of uses. Ensure the placements of new uses does not create or exacerbate nuisances between different types of land uses. Goal 2. Neighborhoods provide for diverse needs of residents of all ages and abilities and are organized to support healthy and active lifestyles. Policies: • 2.4 Single density neighborhoods. Preserve and maintain the Hermosa Hills, Eastside, Valley, North End and Hermosa View neighborhoods as predominantly single-family residential neighborhoods • 2.5 Neighborhood preservation. Preserve and enhance the quality of residential neighborhoods by avoiding or abating the intrusion of disruptive, nonconforming buildings and uses. Fiscal Impact: There is no fiscal impact associated with the recommended action. Attachments: 1. Draft Ordinance 2. PC Resolution 22-07 3. Link to April 19, 2022 Planning Commission Staff Report 4. Link to September 28, 2022 City Council Staff Report Respectfully Submitted by: Patrick Donegan, Assistant City Attorney Concur: Jeannie Naughton, Community Development Director Noted for Fiscal Impact: Viki Copeland, Finance Director Legal Review: Patrick Donegan, Assistant City Attorney Approved: Suja Lowenthal, City Manager https://hermosabeach.legistar.com/LegislationDetaii.aspx?ID=5866947&GUID=1 F32BD8F-48D8-4AE4-BC2A-F6EDOAB1146B 4/4 12-101 CITY OF HERMOSA BEACH ORDINANCE NO. XX AN ORDINANCE OF THE CITY OF HERMOSA BEACH. AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT. THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH DOES HEREBY ORDAIN AS FOLLOWS: Section 1. Findings. A. The City of Hermosa Beach ("City") is a scenic beachfront city, known for its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. B. Preserving the City's costal resource and the quality and character of the City has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's current General Plan. C. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. D. The City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses. E. The City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City. 12-102 F. According to the U.S. Census Bureau, the current median household income in the City is $136,702, while the estimated value of owner - occupied housing units from 2015-2019 was approximately $1,542,900 with current real estate listings suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City. G. The conversion of existing residential units to uses other than long-term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community. H. The City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses. I. The high impact use associated with timeshares, combined with the frequent turnover and commercial management involved in timeshare properties is not consistent with the purpose and nature of residential districts in the City. Rather, they are commercial in nature, in that these timeshare uses are structured as a short-term, tourist oriented, visitor serving use of the subject properties. The use of properties as timeshares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City. J. The use of residential properties for timeshare uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for timeshare uses of residential properties. K. This encroachment of tourist oriented, visitor serving uses in residential neighborhoods is likely to compromise the character of residential areas within the City, and further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City. L. The City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad 12-103 authority to regulate the development and use of real property within its jurisdiction to promote the public welfare. M. Pursuant to and in accordance with this authority, the City Council desires to prohibit timeshare uses in residential areas, and only allow them in the C- 2 commercial zone within the City, pursuant to a conditional use permit. N. The City's Planning Commission held a duly noticed public hearing on April 19, 2022, as required by law to consider all the information presented by staff, and public testimony presented in writing and at the meeting. O. On April 19, 2022, the City's Planning Commission recommended that the City Council adopt this Ordinance amending the City's Municipal Code as described herein. P. On September 28, 2022, the City Council held a duly noticed public hearing, accepting testimony from the public, and discussed the proposed amendments and staff's recommended approval of this Ordinance and adopted on first reading the Ordinance. Q. On October 11, 2022, the Ordinance was brought back for a second reading and adopted by the City Council. R. The proposed zoning amendments are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the character of the City; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply. Section 2. The above recitals are hereby incorporated as though set forth in this section. Section 3. Section 17.40.230 (Time Share Uses) is hereby added to Chapter 17.40 (Conditional Use Permit and Other Permit Standards) of Title 17 (Zoning) of the City of Hermosa Beach Municipal Code, to read as follows: Section 17.40.230 Timeshare Uses A. Purpose and Findings. There is a critical shortage of permanent, long-term housing in the City of Hermosa Beach ("City"). A limited supply of suitable vacant land, land values, 12-104 and market demand for land for other uses, have limited the construction of additional housing in the City. The City is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. Timeshare uses are not an appropriate land use in the City's residential zones due to the multiple occupancy of timeshare properties, the short-term, tourist oriented use of such property and commercial management of timeshare facilities, all of which create increased traffic generation, excessive noise, disruption to residential communities through commercial -level maintenance of the timeshare facilities, and therefore are appropriately confined to commercial zones. Conversion of permanent housing to timeshare facilities removes existing housing units from the City's existing stock and exacerbates an already severe housing shortage. It is therefore in the public interest to prohibit conversions of existing housing units into timeshare facilities, as to do so eliminates needed housing stock by diverting those units to a tourist -oriented, commercial use. B. Definitions. For purposes of this Section, the following words and phrases shall have the meaning respectively ascribed to them by this Section: "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single-family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.040. "Building" shall have the meaning ascribed to it by Section 17.04.040. "Dwelling unit" shall have the meaning ascribed to it by Section 17.04.040. "Managing entity" means the person who undertakes the duties, responsibilities and obligations of the management of a timeshare plan. "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. 12-105 "Timeshare instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a timeshare plan and includes the declaration dedicating accommodations to the timeshare plan. "Timeshare interest" means the right to exclusively occupy a timeshare property for a period of time on a recurring basis pursuant to a timeshare plan, regardless of whether or not such right is coupled with a property interest in the timeshare property or a specified portion thereof. "Timeshare plan" means any arrangement, plan, scheme, or similar device, facilitated, offered, or organized by a third -party non -purchaser, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby purchasers, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. "Timeshare property" means one or more accommodations subject to the same timeshare instrument, together with any other property or rights to property appurtenant to those accommodations. "Timeshare use" means the use of one or more accommodations or any part thereof, as a timeshare property pursuant to a timeshare plan. C. Timeshare Uses Restricted to C-2 Downtown Commercial Zone. Timeshare uses are conditional uses within the City's C-2 Downtown Commercial Zone, subject to approval of a conditional use permit applied for and approved in conformance with this Section. Timeshare uses are not permitted in any other Zones in the City. D. Application Process and Development Standards. A. Application Process. Approval of a conditional use permit for timeshare uses in the C-2 Downtown Commercial Zone within the City shall be required in accordance with the requirements of Chapter 17.40. In addition to the requirements contained in Chapter 17.40, an application for a timeshare use shall be accompanied by the following documents which shall be subject to the approval of the Community Development Director: 1. Management Plan. A management plan shall describe the methods employed by the applicant to guarantee the future adequacy, stability, and 12-106 continuity of a satisfactory level of management and maintenance of the time share use. 2. Application Requirements. In addition to any application requirements established by this section and any other applicable requirements of this code, the following information shall be submitted as part of any application to develop or establish a timeshare use: a. Typical floor plans for each accommodation. b. The phasing of the construction of the accommodations on the timeshare property, if applicable. C. A description of any ancillary uses which are proposed in conjunction with the time share use. d. A description of the method of management of the time share use and indication of the management entity for the time-share property. e. Any restrictions on the use or occupancy of the accommodations. f. Any other information or documentation the applicant, City staff or commission deems reasonably necessary to the consideration of the timeshare use, including any required environmental documents. B. Development Standards and Operational Requirements. Notwithstanding any other provision of this Section, the following conditions must be met by any timeshare use in any conditionally permitted zone. Additional requirements may be attached to a conditional use permit or development agreement if found to be necessary to assure that the timeshare use meets the intent of this Section: 1. Timeshare uses developed in the C-2 Downtown Commercial Zone within the City shall be limited to accommodations in upper floors in conjunction with a mixed -use project. 2. No existing residential use in the C-2 Downtown Commercial Zone within the City shall be converted to a timeshare use. 3. Development Standards. The timeshare use shall comply with all development standards for the zone in which it is located. 4. Parking. Parking shall be provided as follows: 12-107 a. For accommodations of two or fewer bedrooms, one parking space shall be provided for each accommodation. b. For accommodations of three or more bedrooms, two parking spaces shall be provided for each accommodation. 5. Modification or Waiver of Standards. The Planning Commission may modify or waive one or more of the regulations contained in this Section if it determines that strict compliance is not necessary to achieve the purpose and intent of this Section. E. Violations, Enforcement and Civil Penalties. 1. Any responsible person, including but not limited to an owner of a timeshare interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this Section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this Section. Such violation shall be punishable pursuant to Section 1.04.020 of the City of Hermosa Beach Municipal Code. 2. Timeshare use, and/or advertisement for timeshare use, of an accommodation in violation of this Section is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance. Any such nuisance may be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 8.28 except that the civil penalty for a violation shall be one thousand dollars ($1,000.00). Each day the violation occurs shall constitute a separate offense 3. Any responsible person who violates this Section shall be liable and responsible for a civil penalty of one thousand dollars ($1,000.00) per violation per day such violation occurs. The City may recover such civil penalty by either civil action or administrative citation. Such penalty shall be in addition to all other costs incurred by the City, including without limitation the City's staff time, investigation expenses and attorney's fees. a. Where the City proceeds by civil action, the court shall have discretion to reduce the civil penalty based upon evidence presented by the responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the court should consider the purpose of this Section to prevent and deter violations and whether the reduction 12-108 of civil penalties will frustrate that purpose by resulting in the responsible person's enrichment or profit as a result of the violation of this Section. In any such civil action the City also may abate and/or enjoin any violation of this Section. b. Where the City proceeds by administrative citation, the City shall provide the responsible person notice of the right to request an administrative hearing to challenge the citation and penalty, and the time for requesting that hearing. i. The responsible person shall have the right to request the administrative hearing within forty-five (45) days of the issuance of the administrative citation and imposition of the civil penalty. To request such a hearing, the responsible person shall notify the City clerk in writing within forty-five (45) days of the issuance of the citation. The appeal notification shall include all specific facts, circumstances and arguments upon which the appeal is based. ii. The City Manager is hereby authorized to designate a hearing officer to hear such appeal. The City hearing officer shall conduct a hearing on the appeal within ninety (90) days of the request for the hearing unless one of the parties requests a continuance for good cause. The hearing officer shall only consider those facts, circumstances or arguments that the property owner or responsible person has presented in the appeal notification. iii. The hearing officer shall render a decision in writing within thirty (30) days of the conclusion of the hearing. The hearing officer shall have discretion to reduce the civil penalty based upon evidence presented by the property owner or responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the hearing officer should consider the purpose of this Section to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the property owner's or responsible person's enrichment or profit as a result of the violation of this Section. iv. Any aggrieved party to the hearing officer's decision on the administrative appeal may obtain review of the decision by filing a petition forwrit of mandate with the Los Angeles County 12-109 Superior Court in accordance with the timelines and provisions set forth in Government Code Section 53069.4. v. If, following an administrative hearing, appeal, or other final determination, the owner of the property is determined to be the responsible person for the civil penalty imposed by this section, such penalty, if unpaid within forty-five (45) days of the notice of the final determination, shall become a lien to be recorded against the property on which the violation occurred pursuant to Chapter 8.28. Such costs shall be collected in the same manner as county taxes, and thereafter the property upon which they are a lien shall be sold in the same manner as property now is sold for delinquent taxes 4. Any violation of this Section may also be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 8.28 except that the civil penalty under Chapter 8.28 for a violation shall be one thousand dollars ($1,000.00). Each day the violation of this Section occurs shall constitute a separate offense. The remedies under this Section are cumulative and in addition to any and all other remedies available at law and equity. Section 3. Section 17.26.030 of Chapter 17.26 (C 1, C2 and C3 Commercial Zones) of Title 17 (Zoning) is amended to add the following entry to the chart of land use regulations USES I C 1 C2 C3 See Section Timeshares I U 17.40.230 Section 4. CEQA. This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c) (2) and 15060(c) (3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in the C-2 Downtown Commercial zone within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b) (3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. 12-110 Section 5. Effective Date. Pursuant to California Government Code section 36937, this Ordinance shall take effect thirty (30) days after its final passage. Section 6. Certification. The City Clerk is directed to certify the passage and adoption of this Ordinance; cause it to be entered into the City's book of original ordinances; make a note of the passage and adoption in the records of this meeting; and, within fifteen (15) days after the passage and adoption of this Ordinance, cause it to be published or posted in accordance with California law. PASSED, APPROVED and ADOPTED this 1 lth day of October, 2022. Michael Detoy, Mayor PRESIDENT of the City Council and MAYOR of the City of Hermosa Beach, CA ATTEST: Myra Maravilla City Clerk APPROVED AS TO FORM: Michael Jenkins City Attorney 12-111 RESOLUTION P.C. 22-07 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF HERMOSA BEACH RECOMMENDING CITY COUNCIL APPROVAL OF TEXT AMENDMENTS TO THE CITY OF HERMOSA BEACH MUNICIPAL CODE AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERNIINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT. The Planning Commission of the City of Hermosa Beach does hereby resolve as follows: SECTION 1. Findings. A. The Planning Commission held a duly noticed public hearing on April 19, 2022 to consider a text amendments to the City of Hermosa Beach Municipal Code, Title 17 (Zoning), as described in the proposed ordinance attached as Exhibit A. B. The City of Hermosa Beach.("City") is a scenic beachfront city, known for its many diverse restaurants, local retailers and popular commercial areas like its downtown area and Pier Avenue. C. Preserving the City's costal resource and the quality and character of the City has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's current General Plan. D. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. E. The City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses. F. The City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City. 12-112 G. According to the U.S. Census Bureau, the current median household income in the City is $136,702, while the estimated value of owner -occupied housing units from 2015-2019 was approximately $1,542,900 with current real estate listings suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City. H. The conversion of existing residential units to uses other than long-term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community. I. The City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses. J. This high impact use associated with timeshares, combined with the frequent turnover and commercial management involved in timeshare properties is not consistent with the purpose and nature of residential districts in the City. Rather, they are commercial in nature, in that these timeshare uses are structured as a short- term, tourist oriented, visitor serving use of the subject properties. The use of properties as timeshares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City. K. The use of residential properties for timeshare uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for timeshare uses of residential properties. L. This encroachment of tourist oriented, visitor serving uses in residential neighborhoods is likely to compromise the character of residential areas within the City, and further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City. M. The City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad authority to regulate the development and use of real property within its jurisdiction to promote the public welfare. N. Pursuant to and in accordance with this authority, the Planning Commission desires to prohibit timeshare uses in residential areas, and certain commercial zones and to 12-113 update the language of the Zoning Code to provide consistency with the terminology used to define timeshare uses in State law. Further, the City desires to provide greater clarity as to the zones which timeshare uses are permitted as conditional uses, and the standards pursuant to which they will be reviewed in those zones. O. On April 19, 2022, the Planning Commission held a duly -noticed public hearing and considered the staff report, recommendations by staff, and public testimony concerning the proposed ordinance. SECTION 2. This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in specified zones within the City pursuant to a conditional use permit, and prohibits them in all other zones, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. SECTION 3. The Planning Commission finds that the proposed amendments to the Municipal Code to permit timeshares in specified zones within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the character of the City; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply. SECTION 4. Based on the entire record before the Planning Commission, and all written and oral evidence presented, the Planning Commission hereby finds that the proposed ordinance is consistent with the City's adopted General Plan and does not conflict with any of the General Plan's goals or policies. SECTION 5. The Planning Commission hereby recommends that the City Council adopt the attached proposed ordinance entitled, "AN ORDINANCE OF THE CITY OF HERMOSA BEACH. AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING 12-114 THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT. I HEREBY CERTIFY that the foregoing recommendation to the City Council was duly and regularly approved by the Planning Commission of the City of Hermosa Beach at a regular meeting of said Planning Commission held on April 19, 2022, by the following roll call vote: VOTE: AYES: 5 - Chair Pedersen, Vice Chair Izant, Commissioner Saemann, Commissioner Hoffman, and Commissioner Rice NOES: None ABSTAIN: None ABSENT: None CERTIFICATION I hereby certify that the foregoing Resolution P.C. 22-07 is a true and complete record of the action taken by the Planning Commission of the City of Hermosa Beach, California, at its regular meeting of April 19, 2022. � �Ik '�� Dave Pedersen, Chairperson '7 Date Angefa Crespi, Secretary 12-115 4/27/23, 9:30 AM City of Hermosa Beach - File #: REPORT 22-0249 Sign In CITY OF HERMOSA BEACH Legislation Calendar City Council Departments People (�' L®', j®Share; I®RSS 15?Alerts; Details PDF Staff Report File #: REPORT 22-0249 Version: 1 Name: Type: Action Item Status: Passed File created: 4/14/2022 In control: Planning Commission On agenda: 4/19/2022 Final action: 4/19/2022 TA 22-01 ZONE TEXT AMENDMENT TO AMEND THE HERMOSA BEACH MUNICIPAL CODE CHAPTER 17.40 TO ADD SECTION 17.40.230 AND Title: AMEND SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES AND DETERMINE THAT THE PR03ECT IS EXEMPT FROM THE CALIFORNIA ENVIRINMENTAL QUALITY ACT (CEQA) Attachments: 1. 1. Draft Resolution 22-07 Timeshare Ordinance. 2. 2. Hermosa Beach Draft Ordinance Staff Report Text Honorable Chairman and Members of the Hermosa Beach Planning Commission Regular Meeting of April 19, 2022 Title TA 22-01 ZONE TEXT AMENDMENT TO AMEND THE HERMOSA BEACH MUNICIPAL CODE CHAPTER 17.40 TO ADD SECTION 17.40.230 AND AMEND SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES AND DETERMINE THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRINMENTAL QUALITY ACT (CEQA) Recommendation Recommended Action: Staff recommends the Planning Commission adopt Resolution No. 22-07 (Attachment 1) recommending that the City Council approve Zone Text Amendment TA 22-01, thereby amending Chapter 17.40 to add section 17.40.230 and amend section 17.26.030 to permit timeshare uses in specified commercial zones and determine that the project is exempt from the California Environmental Quality Act (CEQA). Body Background: The City of Hermosa Beach ("City") does not currently have regulations in place governing the use of timeshares within the City, nor any regulations that would explicitly address these emerging businesses offering "fractional ownership" of a property in a way that operates like a timeshare. These types of uses in the City's residential zone could limit the City's existing housing stock for use as a long-term residency and impair the character of the City's residential zones. At its March 15, 2022 meeting, the Planning Commission directed staff to bring forward a zone text amendment addressing these types of uses. Analysis: The City is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers, and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents, those who work in the City, and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance. The City has commercial zones including the C-1 and C-2 commercial zones that provide for uses that serve both visitors and the local community such as: restaurants; retail shops; and visitor serving hotels. The City also has residential zones that provide housing for those who live in the community, at varying densities in order to provide a diversity of housing types. _0J y Housing The most recent census data lists the median value of owner -occupied homes in Hermosa Beach as $1,542,900 for the period of 2015- 2019, while the Zillow Home Value Index estimates medial home values in Hermosa Beach to be approximately $2,174,879 as of January 31, 2022. According to the Zillow Home Value Index, homes values in the City have gone up 10.1 percent over the past year. In contrast, the median household income in Hermosa Beach from 2015-2019 was $136,702, and the median income for a four -person household in Los Angeles County for 2021 is approximately $80,000. The cost of homes currently in Hermosa Beach are more than what median income residents of Hermosa Beach can afford, and certainly over the median income residents of Los Angeles County generally. https://hermosabeach.leg istar.com/LegislationDetail.aspx?I D=5557241 &GU ID=8OA64A8C-E51 A-4C26-B2D2-3046537C93D5 1 /3 12-116 4/27/23, 9:30 AM City of Hermosa Beach - File #: REPORT 22-0249 The conversion of homes in the City's residential neighborhoods to these timeshare -like uses would eliminate residential dwelling units that would otherwise be available for long-term residential use, thereby further exacerbating the lack of long-term available housing in the City. A home that is used for timeshare purposes would no longer be available for households to use as their long-term residence. Impacts to Character of the City's Residential Districts Timesharing projects have the same character as commercial hotels, motels, and other transient occupancy uses due to their transient nature and to the multiple short-term occupancies by those participating in timesharing projects. This use is better suited in commercial or quasi -commercial zones and is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods. The intensity of this use is a significant reason that these uses can change the character of a residential neighborhood. Long-term residents, whether owners or renters, occasionally have guests or parties, but these timeshare homes are used exclusively by people who are coming to the City on a short-term basis - most likely for vacation or leisure. As a result, those users may naturally stay out later, entertain more, and gather in larger numbers while on vacation. Timeshare uses can change the character of a residential neighborhood by having it serve not only as a residential area, but also a visitor lodging area, and subjecting it to the impacts that come with that more intense land use. Further, the nature of the timeshare use itself can impact the residential character of the City's residential zones because it would ensure that the time share users can only use their property for a limited amount of time each year. Each co-owner is in the unit on a short-term basis, and without the time to participate in the types of activities or build the relationships that create the fabric of a community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents. Emerging Businesses Recently, certain businesses have emerged which purport to sell "co -ownership" shares in residential property. These businesses, as staff understands the business model, start by purchasing homes or entering into contracts to purchase homes in tourist destinations in desirable locations like the City. These businesses then form a limited liability company ("LLC"), which owns title to the residential home. The "co - owners" each purchase a one -eighth share and are entitled to use the residential property for a certain number of days per year according to their share of ownership in the LLC. The one -eighth interest entitles the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special day" (Fourth of July, Thanksgiving, Christmas, etc.). The stays are reserved on a mobile application, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, the business continues to manage the homes, including providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners of the LLC. Time Share Ordinance As mentioned above, the City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. The purpose of any ordinance should be to ensure that it the City is able to maintain its existing and limited housing stock for use in long term residency and to maintain the character of its residential zones. Completely banning "fractional ownership," joint tenancies, or ownership by business entities such as LLC is not advisable. There are numerous properties in the City's residential zones currently owned by numerous owners or by LLCs. Thus, any ordinance should be geared toward the specific impacts of the at -issue uses - timeshare like uses organized and ran by third parties for a fee. The proposed ordinance (Attachment 2) does not target or single out any business or ownership structure. Environmental Determination: The proposed ordinance is not subject to CEQA because the adoptions of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in C-1 and C-2 commercial zones within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. General Plan Consistency_ The proposed text amendment has been evaluated for consistency with the City's General Plan and is consistent with the following Goals and Policies of Plan Hermosa: Land Use and Design Element Goal 1 Create a sustainable urban form and land use patterns that support a robust economy and high quality of life for residents. Policies: • 1.5 Balance resident and visitor needs. Ensure land uses and business provide for the needs of residents as well as visitors. • 1.7 Compatibility of uses. Ensure the placements of new uses does not create or exacerbate nuisances between different types of land uses. Goal 2 Neighborhoods provide for diverse needs of residents of all ages and abilities, and are organized to support healthy and active lifestyles. Policies: • 2.4 Single density neighborhoods. Preserve and maintain the Hermosa Hills, Eastside, Valley, North End and Hermosa View neighborhoods as predominantly single-family residential neighborhoods https:Hhermosabeach.legistar.com/LegislationDetail.aspx?I D=5557241 &GU I D=8OA64A8C-E51 A-4C26-B2D2-3046537C93D5 2/3 12-117 4/27/23, 9:30 AM City of Hermosa Beach - File #: REPORT 22-0249 • 2.5 Neighborhood preservation. Preserve and enhance the quality of residential neighborhoods by avoiding or abating the intrusion of disruptive, nonconforming buildings and uses. Attachments: 1. Draft Resolution 22-07 Timeshare Ordinance 2. Hermosa Beach Draft Ordinance Respectfully Submitted by: Carlos Luis, Senior Planner Legal Review: Patrick Donegan, Deputy City Attorney Approved: Angela Crespi, Interim Community Development Director https://hermosabeach.leg istar.com/Leg islationDetaii.aspx?I D=5557241 &GU I D=80A64A8C-E51 A-4C26-B2 D2-3046537C93D5 3/3 12-118 4/27/23, 9:31 AM City of Hermosa Beach - File #: REPORT 22-0586 Sign In y'� v CITY OF HERMOSA BEACH Legislation Calendar City Council Departments People LJU ©Share(®RSS,(Y+Alerts Details PDF Staff Report File #: REPORT 22-0586 Version: 1 Name: Type: Action Item Status: Public Hearing File created: 9/19/2022 In control: City Council On agenda: 9/28/2022 Final action: INTRODUCTION OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND Title: AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (Community Development Director Jeannie Naughton) Attachments: 1. 1. SUPPLEMENTAL Draft Ordinance, 2. 2. Resolution P.C. 22-07. 3. 3. Link to April 19, 2022 Planning Commission Staff Report 4. SUPPLEMENTAL Email from Scott Hayes Re Item 13. c.. 5. SUPPLEMENTAL eComments for Item 13. c Staff Report Text Honorable Mayor and Members of the Hermosa Beach City Council Regular Meeting of September 28, 2022 Title INTRODUCTION OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMITAND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (Community Development Director Jeannie Naughton) Body Recommended Action: Recommendation Staff recommends City Council consider waiving full reading and introduce by title only an Ordinance of the City of Hermosa Beach, California, amending Chapter 17.40 (Conditional Use Permit and Other Permit Standards) to add Section 17.40.230 (Timeshare Uses) to Title 17 (Zoning) and amending Section 17.26.030 to permit timeshare uses in specified commercial zones pursuant to a Conditional Use Permit and determining that the project is exempt from the California Environmental Quality Act (Attachment 1). Body Executive Summary_ The City of Hermosa Beach Municipal Code (HBMC) does not currently include regulations governing the use of timeshares within the City, nor any regulations that would explicitly address these emerging businesses offering "fractional ownership" of a property in a way that operates like a timeshare. If left unregulated, these types of uses in the residential zones could limit the City's existing housing stock for use as long-term residency and impair the overall character of the City's residential areas. The proposed draft ordinance (Attachment 1) would permit timeshare uses in She C-1 and G 2 commercial zones within the City pursuant to a Conditional Use Permit (CUP), and prohibit the use in all other zones within the City. Background: The City of Hermosa Beach is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents, those who work in the City, and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance. The City has commercial zones, i .eluding the G 1 and G 2 ^....... eF al _,,ne that provide for uses that serve both visitors and the local community. These commercial uses include: restaurants; retail shops; and visitor -serving hotels and motels. The City also has residential zones, at varying densities, that provide a diversity of housing types for those who live in the community. The City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. At its April 18, 2022 meeting, the Planning Commission reviewed and recommended approval of the proposed ordinance to permit timeshare uses in specified commercial zones pursuant to a Conditional Use Permit by adopting Resolution P.C. 22-07 (Attachment 2). Past Planning Commission Actions https:Hhermosabeach.legistar.com/LegislationDetail.aspx?ID=5850234&GUID=EEC63C4B-88FE-48D0-8735-DD895DF161 B5 1/3 12-119 4/27/23, 9:31 AM City of Hermosa Beach - File #: REPORT 22-0586 Meeting Date IlDescription April 18, 2022 Planning Commission reviewed the proposed ordinance and ado ted Resolution P.C. 22-07 City Housing The most recent U.S. Census data lists the median value of owner -occupied homes in Hermosa Beach as $1,542,900 for the 2015-2019 period, while the Zillow Home Value Index estimates median home values in Hermosa Beach to be approximately $2,174,879 as of January 31, 2022. According to the Zillow Home Value Index, home values in the City have gone up 10.1 percent over the past year. In contrast, the median household income in Hermosa Beach from 2015-2019 was $136,702, and the median income for a four -person household in Los Angeles County for 2021 was approximately $80,000. The cost of homes currently in Hermosa Beach are in excess of what median income residents of Hermosa Beach can afford, and certainly over the median income residents of Los Angeles County generally. The conversion of homes in the City's residential neighborhoods to these timeshare -like uses would eliminate residential dwelling units that would otherwise be available for long-term residential use, thereby further exacerbating the lack of long-term available housing in the City. A home that is used for timeshare purposes would no longer be available for households to use as their long-term residence. Impacts to Character of the City's Residential Districts Timesharing projects have the same character as commercial hotels, motels, and other transient occupancy uses due to the multiple short- term occupancies by those participating in timesharing projects. For this reason, the activity is better suited in commercial or quasi - commercial zones. The use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods. The intensity of the activity is a significant reason why these uses can change the character of a residential neighborhood. Long-term residents, whether owners or renters, occasionally have guests and parties, but timeshare homes are used exclusively by people who are coming to the City on a short-term basis -most likely for vacation or leisure, increasing the likelihood of frequent gatherings and parties generating noise in excess of what the neighborhood normally generates. Timeshare owners and visitors will most likely stay out later, entertain more, and gather in larger numbers while on vacation. Timeshare uses can change the character of a residential neighborhood by having it serve not only as a residential area, but also a visitor lodging area and subjecting the neighborhood to the impacts that come with the more intense land use. Further, the nature of the timeshare use itself can impact the residential character of the City's residential zones because they ensure that the timeshare users can only use their property for a limited amount of time each year. Each co-owner is in the unit on a short-term basis, so they do not have the time to participate in activities or build the relationships that create the fabric of a community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents. Emerging Businesses Recently, certain businesses have emerged which purport to sell "co -ownership" shares in residential property. These businesses, as staff understands the business model, start by purchasing homes or entering contracts to purchase homes in tourist destinations in desirable locations like Hermosa Beach. These businesses then form a limited liability company ("LLC"), which owns title to the residential home. The "co -owners" each purchase a one -eighth share and are entitled to use the residential property for a certain number of days per year according to their share of ownership in the LLC. The one -eighth interest entitles the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special day" (Fourth of July, Thanksgiving, Christmas, etc.). The stays are reserved on an app, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, the business continues to manage the homes, including providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners of the LLC. The Ordinance The City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. The purpose of any ordinance should be to ensure that the City is able to maintain its existing and limited housing stock for use in long-term residency, and to maintain the character of its residential zones. Completely banning "fractional ownership," joint tenancies, or ownership by business entities such as LLC is not advisable. There are numerous properties in the City's residential zones currently owned by numerous owners or by LLCs. Thus, the ordinance is geared toward the specific impacts of the at -issue uses -timeshare -like uses organized and run by third parties for a fee. The proposed ordinance (Attachment 1) does not target or single out any business or ownership structure. The proposed ordinance allows for these types of timeshare uses in the City's C-1 end-GTzonea, subject to a Conditions Use Permit. Timeshare uses would be prohibited in all other zones. In order to avoid an over -inclusive ordinance that prohibits joint tenancies or other type of ownership structure that do not have the same deleterious impacts, the proposed ordinance focuses on the actual use of the property, as compared to the ownership structure, and in pertinent regulates this "timeshare use" subject to a "timeshare plan." Timeshare plan is defined as: https://hermosabeach.legistar.com/LegislationDetaii.aspx?ID=5850234&GUID=EEC63C4B-88FE-48DO-8735-DD895DF161 B5 2/3 12-120 4/27/23, 9:31 AM City of Hermosa Beach - File #: REPORT 22-0586 "Any arrangement, plan, scheme, or similar device, facilitated, offered, or organized by a third -party non -purchaser, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any othermeans, whereby purchasers, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. " At its April 18, 2022 meeting, the Planning Commission reviewed and recommended approval of the proposed ordinance by adopting Resolution P.C. 22-07 (Attachment 2). Environmental Determination: The proposed ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in �jl e_C-1 and 2 commercial zones within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. General Plan Consistency_ The proposed text amendment has been evaluated for consistency with the City's General Plan. Relevant Policies are listed below: Land Use and Design Element Goal 1. Create a sustainable urban form and land use patterns that support a robust economy and high quality of life for residents. Policies: • 1.5 Balance resident and visitor needs. Ensure land uses and business provide for the needs of residents as well as visitors. • 1.7 Compatibility of uses. Ensure the placements of new uses does not create or exacerbate nuisances between different types of land uses. Goal 2. Neighborhoods provide for diverse needs of residents of all ages and abilities and are organized to support healthy and active lifestyles. Policies: • 2.4 Single density neighborhoods. Preserve and maintain the Hermosa Hills, Eastside, Valley, North End and Hermosa View neighborhoods as predominantly single-family residential neighborhoods • 2.5 Neighborhood preservation. Preserve and enhance the quality of residential neighborhoods by avoiding or abating the intrusion of disruptive, nonconforming buildings and uses. Fiscal Impact - There is no fiscal impact associated with the recommended action. Attachments: 1. Draft Ordinance 2. Resolution P.C. 22-07 3. Link to April 19, 2022 Planning Commission Staff Report Respectfully Submitted by: Patrick Donegan, Assistant City Attorney Concur: Jeannie Naughton, Community Development Director Noted for Fiscal Impact: Viki Copeland, Finance Director Legal Review: Patrick Donegan, Assistant City Attorney Approved: Suja Lowenthal, City Manager Staff Report Undated on 9/27/2022 - See Track Changes https://hermosabeach.legistar.com/LegislationDetail.aspx?ID=5850234&GUID=EEC63C4B-88FE-48DO-8735-DD895DF161 B5 3/3 12-121 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81BED8558E CITY OF HERMOSA BEACH ORDINANCE NO. 22-1453 AN ORDINANCE OF THE CITY OF HERMOSA BEACH. AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT. THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH DOES HEREBY ORDAIN AS FOLLOWS: Section 1. Findings. A. The City of Hermosa Beach ("City") is a scenic beachfront city, known for its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. B. Preserving the City's costal resource and the quality and character of the City has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's current General Plan. C. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. D. The City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses. E. The City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City. Page 1 of 10 #22-1453 12-122 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81 BED8558E F. According to the U.S. Census Bureau, the current median household income in the City is $136,702, while the estimated value of owner - occupied housing units from 2015-2019 was approximately $1,542,900 with current real estate listings suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City. G. The conversion of existing residential units to uses other than long-term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community. H. The City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses. I. The high impact use associated with timeshares, combined with the frequent turnover and commercial management involved in timeshare properties is not consistent with the purpose and nature of residential districts in the City. Rather, they are commercial in nature, in that these timeshare uses are structured as a short-term, tourist oriented, visitor serving use of the subject properties. The use of properties as timeshares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City. J. The use of residential properties for timeshare uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for timeshare uses of residential properties. K. This encroachment of tourist oriented, visitor serving uses in residential neighborhoods is likely to compromise the character of residential areas within the City, and further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City. L. The City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad Page 2 of 10 #22-1453 12-123 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81BED8558E authority to regulate the development and use of real property within its jurisdiction to promote the public welfare. M. Pursuant to and in accordance with this authority, the City Council desires to prohibit timeshare uses in residential areas, and only allow them in the C- 2 commercial zone within the City, pursuant to a conditional use permit. N. The City's Planning Commission held a duly noticed public hearing on April 19, 2022, as required by law to consider all the information presented by staff, and public testimony presented in writing and at the meeting. O. On April 19, 2022, the City's Planning Commission recommended that the City Council adopt this Ordinance amending the City's Municipal Code as described herein. P. On September 28, 2022, the City Council held a duly noticed public hearing, accepting testimony from the public, and discussed the proposed amendments and staff's recommended approval of this Ordinance and adopted on first reading the Ordinance. Q. On October 11, 2022, the Ordinance was brought back for a second reading and adopted by the City Council. R. The proposed zoning amendments are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the character of the City; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply. Section 2. The above recitals are hereby incorporated as though set forth in this section. Section 3. Section 17.40.230 (Time Share Uses) is hereby added to Chapter 17.40 (Conditional Use Permit and Other Permit Standards) of Title 17 (Zoning) of the City of Hermosa Beach Municipal Code, to read as follows: Section 17.40.230 Timeshare Uses A. Purpose and Findings. There is a critical shortage of permanent, long-term housing in the City of Hermosa Beach ("City"). A limited supply of suitable vacant land, land values, Page 3 of 10 # 22-1453 12-124 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81 BED8558E and market demand for land for other uses, have limited the construction of additional housing in the City. The City is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. Timeshare uses are not an appropriate land use in the City's residential zones due to the multiple occupancy of timeshare properties, the short-term, tourist oriented use of such property and commercial management of timeshare facilities, all of which create increased traffic generation, excessive noise, disruption to residential communities through commercial -level maintenance of the timeshare facilities, and therefore are appropriately confined to commercial zones. Conversion of permanent housing to timeshare facilities removes existing housing units from the City's existing stock and exacerbates an already severe housing shortage. It is therefore in the public interest to prohibit conversions of existing housing units into timeshare facilities, as to do so eliminates needed housing stock by diverting those units to a tourist -oriented, commercial use. B. Definitions. For purposes of this Section, the following words and phrases shall have the meaning respectively ascribed to them by this Section: "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single-family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.040. "Building" shall have the meaning ascribed to it by Section 17.04.040. "Dwelling unit" shall have the meaning ascribed to it by Section 17.04.040. "Managing entity" means the person who undertakes the duties, responsibilities and obligations of the management of a timeshare plan. "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. Page 4 of 10 #22-1453 12-125 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81BED8558E "Timeshare instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a timeshare plan and includes the declaration dedicating accommodations to the timeshare plan. "Timeshare interest" means the right to exclusively occupy a timeshare property for a period of time on a recurring basis pursuant to a timeshare plan, regardless of whether or not such right is coupled with a property interest in the timeshare property or a specified portion thereof. "Timeshare plan" means any arrangement, plan, scheme, or similar device, facilitated, offered, or organized by a third -party non -purchaser, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby purchasers, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. "Timeshare property" means one or more accommodations subject to the same timeshare instrument, together with any other property or rights to property appurtenant to those accommodations. "Timeshare use" means the use of one or more accommodations or any part thereof, as a timeshare property pursuant to a timeshare plan. C. Timeshare Uses Restricted to C-2 Downtown Commercial Zone. Timeshare uses are conditional uses within the City's C-2 Downtown Commercial Zone, subject to approval of a conditional use permit applied for and approved in conformance with this Section. Timeshare uses are not permitted in any other Zones in the City. D. Application Process and Development Standards. A. Application Process. Approval of a conditional use permit for timeshare uses in the C-2 Downtown Commercial Zone within the City shall be required in accordance with the requirements of Chapter 17.40. In addition to the requirements contained in Chapter 17.40, an application for a timeshare use shall be accompanied by the following documents which shall be subject to the approval of the Community Development Director: l . Management Plan. A management plan shall describe the methods employed by the applicant to guarantee the future adequacy, stability, and Page 5 of 10 #22-1453 12-126 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81BED8558E continuity of a satisfactory level of management and maintenance of the time share use. 2. Application Requirements. In addition to any application requirements established by this section and any other applicable requirements of this code, the following information shall be submitted as part of any application to develop or establish a timeshare use: a. Typical floor plans for each accommodation. b. The phasing of the construction of the accommodations on the timeshare property, if applicable. C. A description of any ancillary uses which are proposed in conjunction with the time share use. d. A description of the method of management of the time share use and indication of the management entity for the time-share property. e. Any restrictions on the use or occupancy of the accommodations. f. Any other information or documentation the applicant, City staff or commission deems reasonably necessary to the consideration of the timeshare use, including any required environmental documents. B. Development Standards and Operational Requirements. Notwithstanding any other provision of this Section, the following conditions must be met by any timeshare use in any conditionally permitted zone. Additional requirements may be attached to a conditional use permit or development agreement if found to be necessary to assure that the timeshare use meets the intent of this Section: 1. Timeshare uses developed in the C-2 Downtown Commercial Zone within the City shall be limited to accommodations in upper floors in conjunction with a mixed -use project. 2. No existing residential use in the C-2 Downtown Commercial Zone within the City shall be converted to a timeshare use. 3. Development Standards. The timeshare use shall comply with all development standards for the zone in which it is located. 4. Parking. Parking shall be provided as follows: Page 6 of 10 #22-1453 12-127 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81 BED8558E a. For accommodations of two or fewer bedrooms, one parking space shall be provided for each accommodation. b. For accommodations of three or more bedrooms, two parking spaces shall be provided for each accommodation. 5. Modification or Waiver of Standards. The Planning Commission may modify or waive one or more of the regulations contained in this Section if it determines that strict compliance is not necessary to achieve the purpose and intent of this Section. E. Violations, Enforcement and Civil Penalties. 1. Any responsible person, including but not limited to an owner of a timeshare interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this Section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this Section. Such violation shall be punishable pursuant to Section 1.04.020 of the City of Hermosa Beach Municipal Code. 2. Timeshare use, and/or advertisement for timeshare use, of an accommodation in violation of this Section is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance. Any such nuisance may be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 8.28 except that the civil penalty for a violation shall be one thousand dollars ($1,000.00). Each day the violation occurs shall constitute a separate offense 3. Any responsible person who violates this Section shall be liable and responsible for a civil penalty of one thousand dollars ($1,000.00) per violation per day such violation occurs. The City may recover such civil penalty by either civil action or administrative citation. Such penalty shall be in addition to all other costs incurred by the City, including without limitation the City's staff time, investigation expenses and attorney's fees. a. Where the City proceeds by civil action, the court shall have discretion to reduce the civil penalty based upon evidence presented by the responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the court should consider the purpose of this Section to prevent and deter violations and whether the reduction Page 7 of 10 #22-1453 12-128 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81BED8558E of civil penalties will frustrate that purpose by resulting in the responsible person's enrichment or profit as a result of the violation of this Section. In any such civil action the City also may abate and/or enjoin any violation of this Section. b. Where the City proceeds by administrative citation, the City shall provide the responsible person notice of the right to request an administrative hearing to challenge the citation and penalty, and the time for requesting that hearing. i. The responsible person shall have the right to request the administrative hearing within forty-five (45) days of the issuance of the administrative citation and imposition of the civil penalty. To request such a hearing, the responsible person shall notify the City clerk in writing within forty-five (45) days of the issuance of the citation. The appeal notification shall include all specific facts, circumstances and arguments upon which the appeal is based. ii. The City Manager is hereby authorized to designate a hearing officer to hear such appeal. The City hearing officer shall conduct a hearing on the appeal within ninety (90) days of the request for the hearing unless one of the parties requests a continuance for good cause. The hearing officer shall only consider those facts, circumstances or arguments that the property owner or responsible person has presented in the appeal notification. iii. The hearing officer shall render a decision in writing within thirty (30) days of the conclusion of the hearing. The hearing officer shall have discretion to reduce the civil penalty based upon evidence presented by the property owner or responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the hearing officer should consider the purpose of this Section to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the property owner's or responsible person's enrichment or profit as a result of the violation of this Section. iv. Any aggrieved party to the hearing officer's decision on the administrative appeal may obtain review of the decision by filing a petition for writ of mandate with the Los Angeles County Page 8 of 10 #22-1453 12-129 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81BED8558E Superior Court in accordance with the timelines and provisions set forth in Government Code Section 53069.4. v. If, following an administrative hearing, appeal, or other final determination, the owner of the property is determined to be the responsible person for the civil penalty imposed by this section, such penalty, if unpaid within forty-five (45) days of the notice of the final determination, shall become a lien to be recorded against the property on which the violation occurred pursuant to Chapter 8.28. Such costs shall be collected in the same manner as county taxes, and thereafter the property upon which they are a lien shall be sold in the same manner as property now is sold for delinquent taxes 4. Any violation of this Section may also be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 8.28 except that the civil penalty under Chapter 8.28 for a violation shall be one thousand dollars ($1,000.00). Each day the violation of this Section occurs shall constitute a separate offense. The remedies under this Section are cumulative and in addition to any and all other remedies available at law and equity. Section 3. Section 17.26.030 of Chapter 17.26 (C1, C2 and C3 Commercial Zones) of Title 17 (Zoning) is amended to add the following entry to the chart of land use regulations USES I C1 C2 C3 See Section Timeshares I U 1 17.40.230 Section 4. CEQA. This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c) (2) and 15060(c) (3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in the C-2 Downtown Commercial zone within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b) (3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. Page 9 of 10 #22-1453 12-130 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81BED8558E Section 5. Effective Date. Pursuant to California Government Code section 36937, this Ordinance shall take effect thirty (30) days after its final passage. Section 6. Certification. The City Clerk is directed to certify the passage and adoption of this Ordinance; cause it to be entered into the City's book of original ordinances; make a note of the passage and adoption in the records of this meeting; and, within fifteen (15) days after the passage and adoption of this Ordinance, cause it to be published or posted in accordance with California law. PASSED, APPROVED and ADOPTED this 11 th day of October, 2022. AYES: Councilmembers Campbell, Massey, Mayor Pro Tem Jackson, and Mayor Detoy NOES: None. ABSTAIN: None. ABSENT: None Mayor Raymond A. Jackson PRESIDENT of the City Council and MAYOR of the City of Hermosa Beach, CA ATTEST: APPROVED AS TO FORM: -J�� patyu p6mytA, Myra Maravilla Patrick Donegan City Clerk City Attorney Page 10 of 10 #22-1453 12-131 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81BED8558E State of California ) County of Los Angeles ) ss City of Hermosa Beach ) December 27, 2022 Certification of Council Action ORDINANCE NO.22-1453 AN ORDINANCE OF THE CITY OF HERMOSA BEACH. AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT. I, Myra Maravilla, City Clerk of the City of Hermosa Beach, California, do hereby certify that the above and foregoing Ordinance No. 22-1453 was duly approved and adopted by the City Council of said City at its adjourned regular meeting thereof held via hybrid on the 11th day of October 2022 and passed by the following vote: AYES: Mayor Detoy, Mayor Pro Tern Jackson, Councilmembers Campbell, Armato, and Massey NOES: None ABSTAIN: None ABSENT: None Myra Maravilla, MPA, CMC City Clerk 12-132 Exhibit M City of Palm Desert Time Share Ordinance and Supporting Evidence 12-133 CITY OF PALM DESERT DEPARTMENT OF DEVELOPMENT SERVICES CITY COUNCIL STAFF REPORT MEETING DATE: April 28, 2022 PREPARED BY: Rosie Lua, Principal Planner REQUEST: Consideration of approval to the City Council for Zoning Ordinance Amendment to modify Palm Desert Municipal Code Section 25.34.060 regarding Time -Share Projects. Recommendation Waive further reading and pass to second reading City Council Ordinance No. approving Zoning Ordinance Amendment 22-0001 to modify Palm Desert Municipal Code Section 25.34.060 regarding Time -Share Projects. Planning Commission Recommendation On January 18, 2022, the Planning Commission considered the Zoning Ordinance Amendment (ZOA) 22-0001 to modify Palm Desert Municipal Code Section 25.34.060 regarding Time -Share Projects. Planning Commission approved Resolution No. 2805 recommending to the City Council approval by vote 5-0. City Council Meetings On February 24, 2022, the City Council opened the public hearing and approved a request from staff to continue to the meeting of March 24, 2022. On March 24, 2022, another continuance of the public hearing was granted to April 28, 2022, allowing staff to meet with the City's Short Term Rental (STR) Subcommittee and time for staff to make appropriate changes to the zoning ordinance. Strategic Plan Land Use, Housing & Open Space — Priority 5: "Utilize progressive land use policies and standards to support ongoing and future needs." Background Analysis On November 18, 2021, the City Attorney presented a memo to City Council addressing the Pacaso business model purchasing property in tourist destinations like the City of Palm Desert targeting the second or vacation home market. Founded in 2020, the Pacaso owns title to the residential home by forming a limited liability company ("LLC"), then markets "co - ownership" interests in the homes to up to eight individuals for a certain number of days per 12-134 April 28, 2022 —Staff Report Case No. ZOA 22-0001 Time -Share Uses - Pacaso Page 2 of 4 year as specified in their share of ownership in the LLC. The one -eighth interest entitles the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special day" (Fourth of July, Thanksgiving, Christmas, etc.). The stays are reserved through a mobile application, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, a Pacaso manages the homes, providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners of the LLC. The City Attorney opined that the Pacaso business formation is a "timeshare" as defined in the Business and Profession Code Section 11212(z) and regulated by Section 25.34.060 (Time -Share Projects) of the Palm Desert Municipal Code (PDMC). The Pacaso's are not regulated by the state law since there are less than ten co -owners, the minimum number of co -owners required to be regulated by state law. The PDMC permits timeshare projects in planned residential zones, general commercial zone, or the planned commercial resort zone and includes a requirement for a resort hotel having 500 or more rooms and an 18-hole golf course of not less than 6,400 yards, and then only if and when a conditional use permit has been obtained from the Commission in accordance with Section 25.72.050 (Conditional Use Permit) of the code. The Pacaso type of business formation would not be permitted to operate in a single-family residential property and operate as a timeshare use since the use does not meet all the criteria of the PDMC. The purpose of this ordinance is to ensure that the City is able to maintain its existing and limited housing stock for use in long term residency, and to maintain the character of its residential zones. The conversion of homes in the city to timesharing projects would eliminate residential dwelling units that would otherwise be available for long-term residential use, thereby further exacerbating the lack of long-term available housing in the City. To Staff's knowledge, Pacaso has facilitated the purchase of and management of at least one (1) single family home and currently advertising three (3) homes for one -eighth purchase within the City of Palm Desert. No other Pacaso type entities are known to have ownership of homes within the City. Discussion Staff has studied the timeshare ordinance amendment and its intended regulations including a consultation with the Short -Term Rental (STR) subcommittee to discuss the proposed amendment and the Pacaso type business formations. The Pacaso's are not regulated by the Short -Term Rental Ordinance of the city since the business operations do not allow short term rentals as part of their structure. In addition, the subcommittee discussed the City's intent to regulate arrangements of multiple parties and its direct impact on the housing stock. In the formation of this ordinance, it is not the City's intent to regulate arrangements whereby multiple parties join in directly purchasing full ownership of an accommodation and thereafter agree upon arrangements for their shared use. For example, the city is not regulating ownership between family or friends who chose to purchase a property, form an LLC, and the manage the rental or upkeep through a management company so long as a fractional ownership structure is not formed. 12-135 April 28, 2022 —Staff Report Case No. ZOA 22-0001 Time -Share Uses - Pacaso Page 3 of 4 The proposed ordinance amendment to Section 25.34.060 (Time -Share Project) includes a more robust definition, to refer to current California law, and to provide a broader scope to include Pacaso types of business formations. In addition, it includes a section for violations, enforcement, and civil penalties to regulate such proposed business operations. It should be noted that the ordinance in this staff report differs from the Planning Commission's recommendation, Resolution No. 2805 which was revised to provide further clarifications on the intent of the ordinance as stated in the discussion above. General Plan The General Plan promotes goals and policies to protect and enhance community value in neighborhoods and its surroundings. Land Use and Community Character Policy 1.1 (Scale of development) promotes the City's corridors to use design techniques to a moderate height and use and ensure compatible fit with surrounding development. Therefore, the proposed amendment to the timeshare ordinance supports the City's goal in meeting the intent of the General Plan. Public Input Public noticing was conducted in accordance with State law. A public hearing notice was published on February 11, 2022, in The Desert Sun. The public hearing was opened on February 11, 2022, continued to March 24, 2022, and further continued to April 28, 2022. Staff has received a half dozen phone calls from the public concerning Pacaso co - ownership within their neighborhoods and inquiring if Short-term Rental Ordinances would apply. On March 10, staff received a phone call from Marcus Schwab, a resident that lives on Bel Air Road expressing concern of business formations functioning like timeshares that affects the character of his neighborhood. Not knowing who their neighbors are was expressed as a real concern. Mr. Schwab identified the property as 72870 Bel Air Rd which is being advertised on eXp Realty's website, a home selling in his neighborhood that he says is priced high which can result in pricing out qualified homebuyers. Other residents have expressed concerned of properties on 72694 Skyward Way and 72985 Somera Rd being advertised as timeshare ownership. These particular properties are listed in the Pacaso website as well as other realtor websites including Trulia, Zillow, Redfin, etc. The properties mentioned above have all been confirmed to be associated with Pacaso. However, since the ownership of these properties includes eight owners (1/8 ownership), it is difficult to track if any property has been sold full or partial ownership. Environmental Review The adoption of this ordinance has been analyzed for compliance with the California Environmental Quality Act (CEQA) pursuant to CEQA (Pub. Resources Code, § 21000 et seq.) ("CEQA") and the State CEQA Guidelines (Cal. Code Regs., tit. 14, § 15000 et seq.) it has been determined that the amendments do not meet the definition of a project because the amendments do not have the potential to cause either a direct physical change or a 12-136 April 28, 2022 —Staff Report Case No. ZOA 22-0001 Time -Share Uses - Pacaso Page 4 of 4 reasonably foreseeable indirect physical change in the environment. The proposed amendments are consistent with the General Plan goals of ensuring the quality of life for the community. Because the amendment is not a project under CEQA, they are not subject to further environmental review. Findings of Approval Findings can be made in support of the amendment and in accordance with the City's Municipal Code. Findings in support of this ZOA are contained in the Ordinance No. attached to this staff report. LEGAL REVIEW DEPT. REVIEW FINANCIAL REVIEW ASSISTANT CITY MANAGER Ma-ti Abvrare�z N/A .Andy ,F'irestine Robert W. Hargreaves Martin Alvarez, Dir. of Veronica Chavez Andy Firestine City Attorney Development Services Director of Finance Assistant City. Manager City Manager L. Todd Hileman: t.. Todd WteMRK, ATTACHMENTS: 1. Draft City Council Ordinance No. 2. Exhibit A —Ordinance 3. Planning Commission Resolution No. 2805 4. Planning Commission Draft Minutes of January 18, 2022 5. City Council Public Hearing Notice 6. City Council Memo dated November 18, 2021 7. Public Comments 12-137 ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING PALM DESERT MUNICIPAL CODE, CHAPTER 25, MODIFYING SECTION 25.34.60 REGARDING TIME-SHARE PROJECTS CASE NO: ZOA 22-0001 WHEREAS, the Planning Commission of the City of Palm Desert, California, did on the 18th day of January 2022, hold a duly noticed public hearing to consider the request by the City of Palm Desert for approval of the above -noted, and adopted Resolution No. 2805, recommending that the City Council adopt the Zoning Ordinance Amendment (ZOA) for said projects regulating the time-share projects; and WHEREAS, the Zoning Ordinance Amendment (ZOA) modifies the Palm Desert Municipal Code (PDMC) Section 25.34.60 (Time -Share Projects) and implements a requirement for time share uses; and WHEREAS, the City Council of the City of Palm Desert, did on the 24th day of February 2022, hold a duly noticed public hearing to, the City Council opened the public hearing and approved staff's request to continue to the 24th of March 2022. On the 24th of March 2022, another continuance of the public hearing was granted to the 28th of April 2022. On the 28th of April 222, the City Council considered the request by the City of Palm Desert for approval of a ZOA determined that the time-share process is consistent with the City's General Plan; and WHEREAS, at said public hearing, upon hearing and considering all testimony and arguments, if any, of all interested persons desiring to be heard, said City Council did find the following facts and reasons exist to approve said request: SECTION 1. Adoption of Recitals. The City Council hereby adopts the foregoing recitals as its findings in support of the following regulations and further finds that the following regulations are beneficial and appropriate to protect the health, safety, and welfare of the residents and businesses of Palm Desert within the City limits. A. The City of Palm Desert, California ("City") is a municipal corporation, duly organized under the constitution and laws of the State of California; and B. The Planning and Zoning Law authorizes cities to establish by ordinance the regulations for land use and development. SECTION 2. Amendment. The City Council of the City of Palm Desert, California, approve, and adopt the PDMC amendment to Section 25.34.60 (Time -Share Projects) as shown in Exhibit A, which is attached hereto and incorporated herewith. SECTION 3. Severability. If any section, subsection, subdivision, paragraph, sentence, clause, or phrase in this ordinance or any part thereof is for any reason held to be unconstitutional or invalid or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this ordinance or any 12-138 ORDINANCE NO. part thereof. The City Council hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause, or phrase thereof irrespective of the fact that one (1) or more subsections, subdivisions, paragraphs, sentences, clauses, or phrases be declared unconstitutional, invalid, or ineffective. SECTION 4. Publication. The City Clerk of the City of Palm Desert, California, is hereby directed to publish this ordinance in The Desert Sun, a newspaper of general circulation, published and circulated in the City of Palm Desert, California, and shall be in full force and in effect thirty (30) days after its adoption. PASSED, APPROVED, AND ADOPTED by the City Council of the City of Palm Desert, California, at its regular meeting held on the 28t" day of April 2022, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: ATTEST: ANTHONY J. MEJIA, CITY CLERK CITY OF PALM DESERT, CALIFORNIA 2 JAN C. HARNIK, MAYOR 12-139 "EXHIBIT A" ZONING ORDINANCE AMENDMENT SECTION 1. Amendment to Palm Desert Municipal Code. Palm Desert Municipal Code section 25.34.060 is hereby amended as follows: "25.34.060 Time -Share Ppeje6fs-Uses A. Purpose. The purpose of the special use regulations for time-share prejests uses is to establish special location and site development standards. B. Definitions. 1. "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.160. 2. "Developer" means person, who at any point in time, owns, or has an option or contract to acquire eleven or more time-share interests for purposes of sale in the ordinary course of business if the time-share interests were acquired or are to be acquired from the original recipient of a public report for the time-share plan, or from a person who succeeded to the interest of the original recipient in eleven or more time-share interests in a time-share plan. 3. "Owner" means owner of a time-share interest. 4. "Person" means a natural person, corporation, limited liability company, partnership, ioint venture, association, estate, trust, or other legal entity, or any combination thereof. 5. "Time-share instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a time-share plan and includes the declaration dedicating accommodations to the time-share plan. 6. "Time-share interest" means and includes either of the following: (i) A "time-share estate," which is the right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, coupled with a freehold estate or an estate for nears with a future interest in a time-share property or a specified portion thereof. (ii) A "time-share use," which is the right to exclusively occupy a time-share Property for a period of time on a recurring basis pursuant to a time-share plan which right is neither coupled with a freehold interest, nor coupled with an estate for years with a future interest, in a time-share property. 7. "Time-share plan" means any arrangement, plan, scheme, or similar device, whether by membership agreement, sale, lease, deed, license, right to use agreement or 12-140 by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. "Timeshare Plan" does not include arrangements whereby multiple parties ioin in directiv purchasing full ownership of an accommodation and thereafter agree upon arrangements for their shared use. 8. "Time-share property" means one or more accommodations subject to the same time-share instrument, together with any other property or rights to property appurtenant to those accommodations. 9. "Time-share use" means the use of one or more accommodations or any part thereof, as a time-share property pursuant to a time-share plan. & C. Permitted zones. A time-share pFejeet use shall be permitted only in a planned residential zone, a general commercial zone, or a planned commercial resort zone. Any time- share prejest use shall be developed in conjunction with a resort hotel having 500 or more rooms and an 18-hole golf course of not less than 6,400 yards, and then only if and when a conditional use permit has been obtained from the Commission in accordance with Section 25.72.050 (Conditional Use Permit) of this code. S- D. Application submittal requirements. In addition to standard application submittal requirements, an applicant for a conditional use permit approval involving a time- share PFe}est use shall submit in the application at least the following information: 1. Copies of documents and information required pursuant to Article 12.2 of the California AdMiRiGtFatiV& Code of Regulations, Sections 2819 2809.1, 2809.2, and 2809.3 wherein the requirements for a "substantially properly completed" application for a final subdivision public report are enumerated, excluding those documents so enumerated which are subject to the approval of the City and therefore otherwise available to the City. In the event such documents and information have not been filed with the California Department of Real Estate at the time an applicant applies for a conditional use permit, the applicant shall furnish such documents and information upon the submission of such documents and information to the Department of Real Estate, but in no event later than the issuance of the conditional use permit. 2. In the event an existing condominium project is proposed to be converted to a whole or partial time-share prejest use, a verified description or statement of the number and percentage of the current condominium owners desiring or consenting to the proposed conversion of some or all of the units to a time-share basis shall be submitted. Also, in such instance there shall be submitted to the Commission prior to or during the hearing process, a verified statement of the number and percentage of owners who have received notification, either personally or by receipted certified US mail. 3. In the case of a new mixed project (i.e., time-sharing condominium/rental), a description of the means proposed to be employed to disclose the number and location of all time-share un46 accommodations within the project time-share use shall be submitted. 12-141 4. Description of time periods, types of s accommodations, and which 4p4s, accommodations are in the time-share program (if less than all), and the length of time each of the up#s accommodations are committed to the time-share program plan shall be submitted. D. E. Requirements. Notwithstanding any other provisions of this chapter, the following requirements must be met by any time-share deye'^,- men+ use in any permitted zone: 2. All maintenance agreements and conditions, covenants, and restrictions must be approved by the City. 3. The minimum time-share use interest exclusive occupancy period shall be for one week (seven days). 4. P-rejeGt Sponsor Developer of the time-share plan shall post a maintenance bond, letter of credit, or cash deposit to ensure the maintenance of any landscaping along the perimeter of the prejeet time-share use abutting any public right-of-way. The amount of the bond, letter of credit, or cash deposit shall be equal to 25 percent of the annual budget of the time-share use owner's association having the duty to maintain the exterior of the time- share property prejesf which is for such landscaping expenses. The bond, letter of credit, or cash deposit shall run to the City and shall remain in place for life of the project time-share plan. 5. With respect to a time-share prejest use, all interests created therein shall be subject to a public facilities impact mitigation fee of $150 per week share. With respect to each week share in a time-share p4: j Ise, a public facilities impact fee payable under this section shall be paid on the first day of the first calendar month following the sale and conveyance of such week share by the spencer developer of a time-share prejest plan to an individual consumer (excluding bulk sales from one spencer developer to another, in which case the successor speRse developer shall have the obligation to pay the public facilities impact fee described herein upon the sale and conveyance of a week share to a consumer). On the first day of each calendar month, or less frequently if required by the Council, a seenseF developer of a time-share prejesf plan shall also submit a written report to the City which specifies the number of week shares in the time-share projectt plan which have been sold and conveyed in the preceding calendar month. F. Minimum number of units. The minimum number of units in a time-share project shall be 50. G. Development standards. Time-share prejests uses shall be designed to conform to the standards for hotel developments in the event the time-share prejest use is located in a planned commercial resort or general commercial zone. The time-share prejest use must comply with all development standards of the zone in which it is located. With respect to time-share prA}eGtS uses developed within a planned residential zone, the density of the time-share prejesf uses shall not exceed the density permitted in such zone for 12-142 residential projects; with respect to time-share prejests uses developed in a general commercial zone or a planned commercial resort zone, the density of the time-share projec-� uses shall not exceed the density permitted in such zone for general commercial or planned commercial projects. In determining the density of a time-share prejest use, upon the request of an applicant, the Director shall have the authority to transfer the density permitted in other similarly zoned property owned by an applicant to the time-share prejest use. H. Violations, Enforcement and Civil Penalties 1. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this section is -guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.12 (General Penalty). 2. Any responsible person, including by not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this section is subject to administrative fines as set forth in Chapter 8.81 (Administrative Citations). Any person issued an administrative citation pursuant to this section shall for each separate violation be subject to: (1) an administrative fine in an amount not to exceed one thousand dollars ($1,000) for the first citation: (2) an administrative fine in an amount not to exceed three thousand dollars ($3,000) for a second citation issued for the same offense within a twelve-month period of the date of the first offense: and (3) a fine in an amount not to exceed five thousand dollars ($5,000). 3. Time-share use, and/or advertisement for time-share use, of an accommodation in violation of this section is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance and may be abated pursuant to Chapter 8.20 (Public Nuisances), Chapter 9.24 (Noise Control), and Chapter 9.25 (Multiple Responses to Loud or Unruly Parties, Gatherings or Other Similar Events.) 4. Each day the violation of this chapter occurs shall constitute a separate offense. 5. The remedies under this section are cumulative and in addition to any and all other remedies available at law and equity." 12-143 PLANNING COMMISSION RESOLUTION NO.2805 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF PALM DESERT, CALIFORNIA, RECOMMENDING APPROVAL OF A ZONING ORDINANCE AMENDMENT TO MODIFY PALM DESERT MUNICIPAL CODE SECTION 25.34.60 REGARDING TIMESHARE PROJECTS CASE. NO:.ZOA 22-000.1 WHEREAS, the Planning Commission of the City of Palm Desert, California, did on the 181h day of January 2022, hold a duly noticed public hearing to consider the request by the City of Palm Desert for approval of the above -noted; and WHEREAS, the Zoning Ordinance Amendment (ZOA) modifies the Palm Desert Municipal Code (PDMC) Section 25.34.60 (Timeshare Projects) to update the ordinance to clarify definitions and add enforcement options; and WHEREAS, the Planning Commission of the City of PalmDesert, in reviewing all the facts and any testimony given, adopts the following as its Findings in recommended. approval of the ZOA to the City Council: SECTION 1. Findings. The Planning Commission of the City of Palm Desert hereby finds that: A. The City of Palm Desert, California ("City") is a municipal corporation, duly organized under the constitution and laws of the State of California; and B. The Planning and Zoning Law authorizes cities to establish by ordinance the regulations for land use and development. SECTION 2. Amendment. The Planning Commission of the City of Palm Desert recommends that the City Council of the City of Palm Desert, California, approve and adopt the PDMC amendment to Section 25.34.60 (Timeshare Projects) as shown in Exhibit A, which is attached hereto and incorporated herewith. SECTION 3. Severability. If any section, subsection, subdivision, paragraph, sentence, clause, or phrase in this ordinance or any part thereof is for any reason held to be unconstitutional or invalid or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this ordinance or any part thereof. The Planning Commission hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause, or phrase thereof irrespective of the fact that one (1) or more :subsections, subdivisions, paragraphs, sentences, clauses, or phrases be declared unconstitutional, invalid, or ineffective. SECTION 4. CEQA. The City Council finds that adoption of this ordinance is not a "project," as defined in the California Environmental Quality Act (CEQA) because it does not have a potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and concerns general policy and procedure making. 12-144 PLANNING COMMISSION RESOLUTION NO.2805 PASSED, APPROVED, AND ADOPTED by the Planning Commission of the City of Palm Desert, California, at its regular meeting held on the 18th day of January 2022, by the following vote, to wit: AYES: DE LUNA, GREENWOOD, GREGORY, HOLT, and PRADETTO NOES: NONE ABSENT: NONE ABSTAIN: NONE ti rse��s■ t1 • • DI/ ATTEST: MARTIN ALVAREZ, SECRETARY PALM DESERT PLANNING COMMISSION 1 12-145 CITY OF PALM DESERT PALM DESERT PLANNING COMMISSION MINUTES TUESDAY, JANUARY 18, 2022 — 6:00 P.M. ZOOM VIRTUAL MEETING I. CALL TO ORDER Chair John Greenwood called the meeting to order at 6:01 p.m. If. ROLL CALL Present: Chair John Greenwood Vice;Chair Nancy DeLuna Commissioner Ron Gregory Commissioner Lindsay Holt Commissioner Joseph Pradetto Also Present: Craig Hayes, Assistant City Attorney Martin Alvarez, Director of Development Services Eric Ceia, Deputy Director of Development Services/Economic Development Rosie Lua, Principal Planner Jessica Gonzales, Senior Management Analyst Monica O'Reilly, Management Specialist II III. PLEDGE OF ALLEGIANCE Vice -Chair Nancy DeLuna led the Pledge of Allegiance. IV. SUMMARY OF COUNCIL ACTIONS Director of Development Services Martin Alvarez summarized pertinent City Council actions from the meeting of January 13, 2022. V. ORAL COMMUNICATIONS None 12-146 MINUTES PALM DESERT PLANNING COMMISSION JANUARY 18, 2021 VI. CONSENT CALENDAR A. MINUTES of the Regular Planning Commission meeting of December 21, 2021. Rec: Approve as presented. Upon a motion by Vice -Chair DeLuna, seconded by Commissioner Holt, and a 5-0 vote of the Planning Commission, the Consent Calendar was approved as presented (AYES: DeLuna, Greenwood, Gregory, Holt, and Pradetto; NOES: None). VII. CONSENT ITEMS HELD OVER None VIII. NEW BUSINESS None IX. CONTINUED BUSINESS None X. PUBLIC HEARINGS A. REQUEST FOR CONSIDERATION to adopt a Notice of Exemption in accordance with the California Environmental Quality Act (CEQA) and approval of a Precise Plan (PP) and a Conditional Use Permit (CUP) to demolish the former Pizza Hut building and construct a new 7,500-square-foot retail and restaurant building located at 72310 Highway 111. Case No. PP/CUP 20-0002 (Nadel Architects. Inc, Los Angeles, California, Applicant). Note, the staff report(s) and Zoom video of the meeting are available on the City's website. Click on the following link to access: www.planning-commission- information-center. Vice -Chair DeLuna disclosed that she works for a company that is involved with a property in the Housing Element; therefore, she recused herself. Ms. Nicole Criste, Terra Nova Planning, the City's consultant, Palm Desert, California, presented a PowerPoint presentation regarding the Housing Element update. She recommended that the Planning Commission continue this item to February 1, 2022, to allow staff to work with the Department of Housing and Community Development to finalize details of the Housing Element. She also recommended opening the public hearing, taking public testimony, and leaving the public hearing open to the February 1 meeting. Chair Greenwood declared the public hearing open and invited public testimony FAVORING or OPPOSING this matter. 2 12-147 MINUTES PALM DESERT PLANNING COMMISSION JANUARY 18, 2021 Ms. Liliana Figueroa and Mr. Mark Stein, with CPMC Realty, Palm Desert, California, voiced their concern with the designation for affordable housing units on their client's site. Commissioner Pradetto moved to, by Minute Motion, leaving the public hearing open and continuing Case No. GPA 21-0002 to February 1, 2022. The motion was seconded by Commissioner Gregory and carried by a 4-0 vote (AYES: Greenwood, Gregory, Holt, and Pradetto; NOES: None; ABSENT: DeLuna). B. REQUEST FOR CONSIDERATION of a recommendation to the City Council for approval of a Zoning Ordinance Amendment to modify Palm Desert Municipal Code Section 25.34.060 regarding Timeshare Projects. Case No. ZOA 22-0001 (City of Palm Desert, Palm Desert California, Applicant). Principle Planner Rosie Lua gave a PowerPoint presentation reviewing the staff report in detail and recommended approval to the City Council. At this point, staff and the City Attorney responded to questions asked by the Planning Commission. Chair Greenwood declared the public hearing open and invited public testimony FAVORING or OPPOSING this matter. With no testimony offered, Chair Greenwood declared the public hearing closed. The Planning Commission concurred with the direction that the City is taking regarding timeshare projects. Commissioner Pradetto moved to waive further reading and adopt Planning Commission Resolution No. 2805, recommending approval to the City Council for Case No. ZOA 22-0001. The motion was seconded by Vice -Chair DeLuna and carried by a 5-0 vote (AYES: DeLuna, Greenwood, Gregory, Holt, and Pradetto; NOES: None). XI. MISCELLANEOUS None XII. COMMITTEE MEETING UPDATES A. CULTURAL ARTS COMMITTEE Commissioner Holt mentioned that she shared the San Pablo Corridor Art Plan and the details for the meeting scheduled on Monday, January 24 at 11:30 a.m. to discuss the plan. 3 12-148 MINUTES PALM DESERT PLANNING COMMISSION JANUARY 18, 2021 B. PARKS & RECREATION COMMISSION Mr. Alvarez stated that the Planning staff presented a concept plan for a park on Gerald Ford Drive and near Interstate 10. Staff hoped that the City would develop the park in two to three years. Chair Greenwood asked for the status of the Portola Avenue interchange. Mr. Alvarez responded that currently, the project is not feasible due to needing additional funding. Staff would discuss funding during the budget process and the City Council. XIII. REPORTS AND REMARKS None XIV. ADJOURNMENT With the Planning Commission concurrence, Chair Greenwood adjourned the meeting at 7:19 p.m. ATTEST; MARTIN ALVAREZ, SECRETARY HN REEN O D, CH -YN-vnzg=�) MONK 'REILLY, REC DING SECRETARY 4 G 12-149 I I I Y 01 P 0 1 M 9151RT 73-510 PRED WANNO DEwn PALM DRsERT, CALIPORNIA g226o—a578 Tea:76b 346—o6ii info©ciryofpalmdesctt org CITY OF PALM DESERT LEGAL NOTICE NOTICE OF A PUBLIC HEARING BEFORE THE CITY COUNCIL OF THE CITY OF PALM DESERT TO CONSIDER APPROVAL FOR A ZONING ORDINANCE AMENDMENT TO MODIFY THE PALM DESERT MUNICIPAL CODE SECTION 25.34.060 (TIME-SHARE PROJECTS) The City of Palm Desert City Council (City), in its capacity as the Lead Agency, finds that this Ordinance 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, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly; it prevents changes in the environment pending the completion of the contemplated study of impacts. Project Location/Description: Proiect Location: City wide Project Description: Zoning Ordinance Amendment to update the Time Share Project ordinance (Chapter 25.34.60) to consider a regulatory response to the Pacaso type businesses related to "co -ownership" shares in residential properties operating within the City. Recommendation: City Council to approve the first reading of the Time -Share uses and its regulations and pass to second reading in accordance to CEQA Guidelines. Public Hearing: The public hearing will be held before the City Council on February 24, 2022, at 4:00 p.m. via Zoom. The hearing will be conducted in accordance with the City's emergency protocols for social distancing. Options for remote participation will be listed on the Posted Agenda for the meeting at: https://www.cityofpalmdesert.orq/our-city/mavor-and-city-council- /city-counci I-meeti ng-i nformation-center. Comment Period: The public comment period for this project is from February 14, 2022 to February 24, 2022. Public Review: The plans and related documents are available for public review Monday through Thursday from 8:00 a.m. to 5:00 p.m. by contacting the project planner, Rosie Lua, Principal Planner. Please submit written comments to the Planning/Land Development Division. If any group challenges the action in court, issues raised may be limited to only those issues raised at the public hearing described in this notice or in written correspondence at, or prior to the City Council hearing. All comments and any questions should be directed to: Rosie Lua, Principal Planner City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 (760) 346-0611, Extension 480 rlua@cityofpalmdesert.org PUBLISH: DESERT SUN NIAMH M. ORTEGA, DEPUTY CITY CLERK FEBRUARY 10, 2022 PALM DESERT CITY COUNCIL 12-150 STAFF REPORT CITY OF PALM DESERT MEETING DATE: November 18, 2021 PREPARED BY: Robert Hargreaves, City Attorney, Best Best & Krieger LLP REQUEST: ' Update on Timeshare Ordinance Recommendation By Minute Motion, request the Planning Commission to review of the timeshare ordinance and provide City Council with any recommended amendments. Background Analysis INTRODUCTION Recently, the City has become aware that a new business model, "Pacaso", that features "co -ownership" shares in residential properties, has begun operating within the City. Given the nature of its use of residential property, it is my opinion that it is a timeshare use, as defined by California law and regulated by Section 25.34.060 of the Municipal Code. The Palm Desert timeshare ordinance (Municipal Code Section 25.34.060) has not been updated since 2013. As a preliminary matter in considering regulatory responses to the Pacaso-type businesses, we are recommending that Section 25.34.060 be updated to provide a more robust definition, to referto current California law, and to provide a broader scope of potential regulation, should the city decide to pursue it. DISCUSSION Pacaso is a corporation that sells "co -ownership" shares in residential property. The company started by purchasing homes in tourist destinations in California, though they are rapidly expanding throughout the United States and internationally. Pacaso's business model is as follows: Pacaso will purchase or enter into a contract to purchase single family homes, then markets "co -ownership" interests in the homes to up to eight individuals. Pacaso then forms a limited liability company ("LLC"), which owns title to the residential home. The "co -owners" each purchase a one -eighth share, and are entitled to use the residential property for a certain number of days per year according to their share of ownership in the LLC. The one -eighth interest entitles the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special 12-151 November 18, 2021 - Staff Report Update of Timeshare Ordinance Page 2 of 4 day" (Fourth of July, Thanksgiving, Christmas, etc.). The stays are reserved on an app, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, Pacaso continues to manage the homes, including providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners. It is our understanding that there is currently at least one property in Palm Desert that is being marketed by Pacaso. Section 11212(z) of the Business and Profession Code defines the following significant terms: "Time-share plan" means any arrangement, plan, scheme, or similar device, other than an exchange program, whether by membership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby a purchaser, in exchange for consideration, receives ownership rights in or the right to use accommodations for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A time-share plan may be either of the following: (1) A "single site time-share plan" that is the right to use accommodations at a single time-share property. (2) A "multisite time-share plan" that includes either of the following: (A) A "specific timeshare interest" that is the right to use accommodations at a specific time-share property together with use rights in accommodations at one or more other component sites created by or acquired through the time-share plan's reservation system. (B) A "nonspecific time-share interest" that is the right to use accommodations at more than one component site created by or acquired through the time-share plan's reservation system, but including no specific right to use any particular accommodations. It is clear that the Pacaso model fits within that definition of "time-share plan" as co -owners receive ownership rights to use a property for less than a year on a recurring basis. Pacaso is not currently regulated by the State, as it does not meet the State's ten -share threshold for regulation. Palm Desert Section 25.34.060 does not dwell on the definition of "time-share" and provides: "The time-share project must be composed of "time-share estates" as defined in California Business and Professions Code Section 11003.5 [now section 1121 ]." Nor does the ordinance provide any specific enforcement provisions. 12-152 November 18, 2021 - Staff Report Update of Timeshare Ordinance Page 3 of 4 In the attached draft ordinance, the definition of time-share is more elaborate, and is consistent with current California statutes. It also provides enforcement options against persons that own, manage, or market illegal time-shares. At this point, the draft ordinance is before the council for discussion and direction. If the council directs that the update proceed, the ordinance will be put before the planning commission for consideration and recommendation, before it is brought back to the city council for adoption. 12-153 November 18, 2021 - Staff Report Update of Timeshare Ordinance Page 4 of 4 Fiscal Analysis There is no direct fiscal impact associated with this item. LEGAL REVIEW DEPT. REVIEW FINANCIAL REVIEW ASSISTANT CITY MANAGER RWH N/A N/A .Andy Firestine Robert W. Hargreaves Janet M. Moore Andy Firestine City Attorney Director of Finance Assistant City Manager City Manager L. Todd Hileman: L . T001ot W1.6t ta14, ATTACHMENTS: Draft ordinance 12-154 ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING PALM DESERT MUNICIPAL CODE SECTION 25.34.060 REGARDING TIME-SHARE PROJECTS THE CITY COUNCIL OF THE CITY OF PALM DESERT DOES ORDAIN AS FOLLOWS: SECTION 1. Amendment to Palm Desert Municipal Code. Palm Desert Municipal Code section 25.34.060 is hereby amended as follows: "25.34.060 Time -Share Projects -Uses A. Purpose. The purpose of the special use regulations for time-share prejeets uses is to establish special location and site development standards. B. Definitions. 1. "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.160. 2. "Developer" means person, who at aU point in time, owns, or has an option or contract to acquire eleven or more time-share interests for purposes of sale in the ordinary course of business if the time-share interests were acquired or are to be acquired from the original recipient of a public report for the time-share plan, or from a person who succeeded to the interest of the original recipient in eleven or more time-share interests in a time-share plan. 3. "Owner" means owner of a time-share interest. 4. "Person" means a natural person, corporation, limited liabilily company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. 5. "Time-share instrument" means one or more documents, by whatever name denominated, creating or governing_ the operation of a time-share plan and includes the declaration dedicating accommodations to the time-share plan. 6._ "Time-share interest" means and includes either of the following: (i) A "time-share estate," which is the right to exclusively occ2py a time-share grope for a period of time on a recurring basis pursuant to a time-share plan, coupled with a freehold estate or an estate for years with a future interest in a time-share propegy or a specified portion thereof. 12-155 60 A "time-share use," which is the right to exclusively occupy a time-share pro e�rty for a period of time on a recurringbasis asis pursuant to a time-share plan, which right is neither coupled with a freehold interest, nor coupled with an estate for years with a future interest, in a time-share property. 7. "Time-share plan" means anarrangement, plan, scheme, or similar device, whether by membership agreement, sale, lease, deed, license, right to use agreement, or by any other means, wherebyapurchaser, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during an given year, on a recurring basis for more than one year, but not necessarily for consecutive years. 8. "Time-share property" means one or more accommodations subject to the same time-share instrument, together with an o�ther_property or rights to property appurtenant to those accommodations. 9. "Time-share use" means the use of one or more accommodations or any part thereof, as a time-share property_ pursuant to a time-share plan. C. Permitted zones. A time-share pr-ejeet use shall be permitted only in a planned residential zone, a general commercial zone, or a planned commercial resort zone. Any time- share pr-ejeet use shall be developed in conjunction with a resort hotel having 500 or more rooms and an 18-hole golf course of not less than 6,400 yards, and then only if and when a conditional use permit has been obtained from the Commission in accordance with Section 25.72.050 (Conditional Use Permit) of this code. Q D. Application submittal requirements. In addition to standard application submittal requirements, an applicant for a conditional use permit approval involving a time-share pr-ejeet use shall submit in the application at least the following information: 1. Copies of documents and information required pursuant to Article 12.2 of the California ^ dmin ,,tri4i Code of Regulations, Sections M-0 2809.1, 2809.2, and 2809.3 wherein the requirements for a "substai#ially properly completed" application for a final subdivision public report are enumerated, excluding those documents so enumerated which are subject to the approval of the City and therefore otherwise available to the City. In the event such documents and information have not been filed with the California Department of Real Estate at the time an applicant applies for a conditional use permit, the applicant shall furnish such documents and information upon the submission of such documents and information to the Department of Real Estate, but in no event later than the issuance of the conditional use permit. 2. In the event an existing condominium project is proposed to be converted to a whole or partial time-share pr-ejeet use, a verified description or statement of the number and percentage of the current condominium owners desiring or consenting to the proposed conversion of some or all of the units to a time-share basis shall be submitted. Also, in such instance there shall be submitted to the Commission prior to or during the hearing process, a verified statement of the number and percentage of owners who have received notification, either personally or by receipted certified US mail. 12-156 3. In the case of a new mixed project (i.e., time-sharing condominium/rental)1 a description of the means proposed to be employed to disclose the number and location of all time-share uptits accommodations within the pr-ejuet time-share use shall be submitted. 4. Description of time periods, types of units accommodations, and which uRits accommodations are in the time-share program (if less than all), and the length of time each of the units accommodations are committed to the time-share pregranfr plan shall be submitted. 44. E. Requirements. Notwithstanding any other provisions of this chapter, the following requirements must be met by any time-share develepfneet use in any permitted zone: 1. The time-share prejeet use must be composed of "time-share estates" interests -as defined in Califemia Business and Professions Cede Seel o 11003.5. 2. All maintenance agreements and conditions, covenants, and restrictions must be approved by the City. 3. The minimum time-share use interest exclusive occupancy_period shall be for one week (seven days). 4. Pfejeet spensef Developer of the time-share plan shall post a maintenance bond, letter of credit, or cash deposit to ensure the maintenance of any landscaping along the perimeter of the prejeet time-share use abutting any public right-of-way. The amount of the bond, letter of credit, or cash deposit shall be equal to 25 percent of the annual budget of the time-share use owner's association having the duty to maintain the exterior of the time-share property-prejea which is for such landscaping expenses. The bond, letter of credit, or cash deposit shall run to the City and shall remain in place for life of the pr-ejee time-share plan. 5. With respect to a time-share prejeet use, all interests created therein shall be subject to a public facilities impact mitigation fee of $150 per week share. With respect to each week share in a time-share preje�use, a public facilities impact fee payable under this section shall be paid on the first day of the first calendar month following the sale and conveyance of such week share by the spenser- developer of a time-share prejest plan to an individual consumer (excluding bulk sales from one spencer developer to another, in which case the successor spencer developer shall have the obligation to pay the public facilities impact fee described herein upon the sale and conveyance of a week share to a consumer). On the first day of each calendar month, or less frequently if required by the Council, a spenser developer of a time- share prejuet lean shall also submit a written report to the City which specifies the number of week shares in the time-share prejest plan which have been sold and conveyed in the preceding calendar month. E— F. Minimum number of units. The minimum number of units in a time-share project shall be 50. G. Development standards. Time-share prejests uses shall be designed to conform to the standards for hotel developments in the event the time-share prejeet use is located in a planned commercial resort or general commercial zone. The time-share project use must comply with all development standards of the zone in which it is located. With respect to time-share 12-157 pr-ejeets uses developed within a planned residential zone, the density of the time-share pr-ejeat uses shall not exceed the density permitted in such zone for residential projects; with respect to time-share pr-ejests uses developed in a general commercial zone or a planned commercial resort zone, the density of the time-share prejeet uses shall not exceed the density permitted in such zone for general commercial or planned commercial projects. In determining the density of a time-share pr-ejeet use, upon the request of an applicant, the Director shall have the authority to transfer the density permitted in other similarly zoned property owned by an applicant to the time-share pr-ejeet use. H. Violations, Enforcement and Civil Penalties 1. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.12 General Penalty). 2. AU responsible person, including by not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised or disseminated in angy and through any medium, the availability for sale or use of an accommodation in violation of this section is subject to administrative fines as set forth in Chapter 8.81 (Administrative Citations). Any person issued an administrative citation pursuant to this section shall for each separate violation be subject to: (1) an administrative fine in an amount not to exceed one thousand dollars ($1,000) for the first citation; (2) an administrative fine in an amount not to exceed three thousand dollars ($3,000) for a second citation issued for the same offense within a twelve-month period of the date of the first offense, and (3) a fine in an amount not to exceed five thousand dollars ($5,000) 3. Time-share use, and/or advertisement for time-share use, of an accommodation in violation of this section is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance and may be abated pursuant to Chapter 8.20 (Public Nuisances) Chapter 9.24 (Noise Control), and Chapter 9.25 (Multiple Responses to Loud or Unruly Parties, Gatherings or Other Similar Events.) 4. Each day the violation of this chapter occurs shall constitute a separate offense. 5. The remedies under this section are cumulative and in addition to any and all other remedies available at law and equity." SECTION 2. Severability. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this Ordinance, or any part thereof, is for any reason held to be unconstitutional, such decision shall not affect the validity of the remaining portion of this Ordinance or any part thereof. The City Council hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause or phrase thereof, irrespective of the fact that any one or more section, subsection, subdivision, paragraph, sentence, clause or phrase 12-158 be declared unconstitutional. If for any reason any portion of this Ordinance is found to be invalid by a court of competent jurisdiction, the balance of this Ordinance shall not be affected. SECTION 3. Certification and Publication. The City Clerk of the City of Palm Desert shall certify to the adoption of this Ordinance and cause publication to occur in a newspaper of general circulation and published and circulated in the City in a manner permitted under California Government Code Section 36933. SECTION 4. CEQA. The City Council finds that adoption of this Ordinance is not a "project," as defined in the California Environmental Quality Act because it does not have a potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and concerns general policy and procedure making. PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of the City of Palm Desert on the day of , 2021, by the following vote. AYES: NOES: ABSTAIN: ABSENT: Kathleen Kelly, Mayor ATTEST: Norma Alley, City Clerk APPROVED AS TO FORM: Robert Hargreaves, City Attorney 12-159 From: Kevin Swartz To: Rosie Lua Subject: FW: Latest Pacaso Report Date: Monday, April 11, 2022 7:56:25 AM FYI. Kevin Swartz Associate Planner Ph:760.346.0611 Direct:760.776.6485 kswartz@cityofpalmdesert.org From: Kathleen Kelly <kkelly@cityofpalmdesert.org> Sent: Friday, April 8, 2022 7:04 AM To: Robert Hargreaves <Robert.Hargreaves@bbklaw.com>; Kevin Swartz <kswartz@cityofpalmdesert.org> Subject: Latest Pacaso Report From Ellen Kane: Looks like Picasso bought the house at the corner of Somera and Alamo. If you google the address with Picasso after it is on their webpage and is showing as "available now". Think it just closed escrow because the for sale sign is down. That makes three Picasso's in my immediate area now (Be[ Air, Skyward & Somera). Would really love neighbors not 1/8 ownerships (timeshares?) 12-160 C I T Y Of P 0 1 M 0ESEfl1 73-510 FREI) WAR[NG DRIVE PALM DESERT, CALIFORNIA 92260-2578 TEL: 760 346-o6z z info Ca city4palmdesert.org NOTICE OF CONTINUED PUBLIC HEARING NOTICE IS HEREBY GIVEN that the following Public Hearing was continued from the City Council meeting of March 24, 2022 to the City Council meeting of April 28, 2022: Ordinance No. 1378 to approve Zoning Ordinance Amendment 22-0001 to modify Palm Desert Municipal Code Section 25.34.060 regarding the Time - Share Projects (Continued from February 24, 2022) NOTICE IS FURTHER GIVEN that the City Council meeting of April 28, 2022 will take place virtually at 3:00 p.m. at cityofpaimdesert.org/zoom. All interested persons are invited to attend said Public Hearing. DATED this 28th day of March, 2022. NIAMH M. ORTE Deputy City Clerk 45 me 10 o. ucra roNVE. 12-161 STAFF REPORT CITY OF PALM DESERT MEETING DATE: May 12, 2022 PREPARED BY: Niamh Ortega, Deputy City Clerk APPROVING AUTHORITY: City Council REQUEST: Second reading and adoption of Ordinance No. 1378 to approve Zoning Ordinance Amendment 22-0001 to modify Palm Desert Municipal Code Section 25.34.060 regarding Time -Share Projects. Recommendation: Waive the second reading of the ordinance text in its entirety and read by title only; and adopt Ordinance No. 1378 entitled, "AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING PALM DESERT MUNICIPAL CODE, CHAPTER 25, MODIFYING SECTION 25.34.60 REGARDING TIME-SHARE PROJECTS, CASE NO. ZOA 22- 0001." Background/Analysis: On April 28, 2022, the City Council introduced Ordinance No. 1378 for first reading, as noted below: Motion by Councilmember Kelly, second by Councilmember Quintanilla, carried 3-1-1 (with Mayor Pro Tem Jonathan voting no and Councilmember Nestande recused), to waive further reading and pass to second reading Ordinance No. 1378 approving Zoning Ordinance Amendment 22-0001 to modify Palm Desert Municipal Code Section 25.34.60 regarding Time - Share Projects. This report provides for the City Council to waive further reading and adopt the ordinance. The ordinance shall be effective 30 days from adoption. Financial Impact: There is no direct financial impact associated with this item. Attachments: 1. Ordinance No. 1378 12-162 MEETING DATE LoAT - A 3 - 65ZD ❑ CONTINUED TO 'Q PASSES TO 2ND READING ORDINANCE NO.1378 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING PALM DESERT MUNICIPAL CODE, CHAPTER 25, MODIFYING SECTION 25.34.60 REGARDING TIME-SHARE PROJECTS CASE NO: ZOA 22-0001 WHEREAS, the Planning Commission of the City of Palm Desert, Califomia, did on the 18th day of January 2022, hold a duly noticed public hearing to consider the request by the City of Palm Desert for approval of the above -noted, and adopted Resolution No. 2805, recommending that the City Council adopt the Zoning Ordinance Amendment (ZOA) for said projects regulating the time-share projects; and WHEREAS, the Zoning Ordinance Amendment (ZOA) modifies the Palm Desert Municipal Code (PDMC) Section 25.34.60 (Time -Share Projects) and implements a requirement for time share uses; and WHEREAS, the City Council of the City of Palm Desert, did on the 240, day of February 2022, hold a duly noticed public hearing to, the City Council opened the public hearing and approved staff's request to continue to the 24th of March 2022. On the 24th of March 2022, another continuance of the public hearing was granted to the 281h of April 2022. On the 281h of April 222, the City Council considered the request by the City of Palm Desert for approval of a ZOA determined that the time-share process is consistent with the City's General Plan; and WHEREAS, at said public hearing, upon hearing and considering all testimony and arguments, if any, of all interested persons desiring to be heard, said City Council did find the following facts and reasons exist to approve said request: SECTION 1. Adoption of Recitals. The City Council hereby adopts the foregoing recitals as its findings in support of the following regulations and further finds that the following regulations are beneficial and appropriate to protect the health, safety, and welfare of the residents and businesses of Palm Desert within the City limits. A. The City of Palm Desert, California ("City") is a municipal corporation, duly organized under the constitution and laws of the State of California; and B. The Planning and Zoning Law authorizes cities to establish by ordinance the regulations for land use and development. SECTION 2. Amendment. The City Council of the City of Palm Desert, California, approve, and adopt the PDMC amendment to Section 25.34.60 (Time -Share Projects) as shown in Exhibit A, which Is attached hereto and incorporated herewith. SECTION 3. Severability. If any section, subsection, subdivision, paragraph, sentence, clause, or phrase in this ordinance or any part thereof is for any reason held to be 12-163 1 ORDINANCE NO. 1378 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING PALM DESERT MUNICIPAL CODE, CHAPTER 25, MODIFYING SECTION 25.34.60 REGARDING TIME-SHARE PROJECTS CASE NO: ZOA 22-0001 WHEREAS, the Planning Commission of the City of Palm Desert, California, did on the 18th day of January 2022, hold a duly noticed public hearing to consider the request by the City of Palm Desert for approval of the above -noted, and adopted Resolution No. 2805, recommending that the City Council adopt the Zoning Ordinance Amendment (ZOA) for said projects regulating the time-share projects; and WHEREAS, the Zoning Ordinance Amendment (ZOA) modifies the Palm Desert Municipal Code (PDMC) Section 25.34.60 (Time -Share Projects) and implements a requirement for time share uses; and WHEREAS, the City Council of the City of Palm Desert, did on the 24th day of February 2022, hold a duly noticed public hearing to, the City Council opened the public hearing and approved staffs request to continue to the 24th of March 2022. On the 24th of March 2022, another continuance of the public hearing was granted to the 28th of April 2022. On the 28th of April 222, the City Council considered the request by the City of Palm Desert for approval of a ZOA determined that the time-share process is consistent with the City's General Plan; and WHEREAS, at said public hearing, upon hearing and considering all testimony and arguments, if any, of all interested persons desiring to be heard, said City Council did find the following facts and reasons exist to approve said request, SECTION 1. Adoption of Recitals. The City Council hereby adopts the foregoing recitals as its findings in support of the following regulations and further finds that the following regulations are beneficial and appropriate to protect the health, safety, and welfare of the residents and businesses of Palm Desert within the City limits. A. The City of Palm Desert, California ("City") is a municipal corporation, duly organized under the constitution and laws of the State of California; and B. The Planning and Zoning Law authorizes cities to establish by ordinance the regulations for land use and development. SECTION 2. Amendment. The City Council of the City of Palm Desert, California, approve, and adopt the PDMC amendment to Section 25.34.60 (Time -Share Projects) as shown in Exhibit A, which is attached hereto and incorporated herewith. SECTION 3. Severability. If any section, subsection, subdivision, paragraph, sentence, clause, or phrase in this ordinance or any part thereof is for any reason held to be 12-164 ORDINANCE NO. 1378 unconstitutional or invalid or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this ordinance or any part thereof. The City Council hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause, or phrase thereof irrespective of the fact that one (1) or more subsections, subdivisions, paragraphs, sentences, clauses, or phrases be declared unconstitutional, invalid, or ineffective. SECTION 4. Publication. The City Clerk of the City of Palm Desert, California, is hereby directed to publish this ordinance in The Desert Sun, a newspaper of general circulation, published and circulated in the City of Palm Desert, California, and shall be in full force and in effect thirty (30) days after its adoption. PASSED, APPROVED, AND ADOPTED by the City Council of the City of Palm Desert, California, at its regular meeting held on the 12th day of May 2022, by the following vote, to wit: n AYES: KELLY, QUINTANILLA AND HARNIK NOES: JONATHAN ABSENT: NESTANDE ABSTAIN: NONE J C. HA IK,'MAYOR /y 6 W ZC'71— IONY J. MVm, C—fry CLE K OF PALM ESERT, CALIFORNIA 2 p oly of Pdm Desert D cu t 1 12-165 ORDINANCE NO. 1378 "EXHIBIT A" ' ZONING ORDINANCE AMENDMENT SECTION 1. Amendment to Palm Desert Municipal Code. Palm Desert Municipal Code section 25.34.060 is hereby amended as follows: 25.34.060 Time -Share Uses A. Purpose. The purpose of the special use regulations for time-share uses is to establish special location and site development standards. B. Definitions. 1. "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.160. 2. "Developer" means person, who at any point in time, owns, or has an option or contract to acquire eleven or more time-share interests for purposes of sale in the ordinary course of business if the time-share interests were acquired or are to be acquired from the original recipient of a public report for the time-share plan, or from a person who succeeded to the interest of the original recipient in eleven or more time-share interests in a time-share plan. 3. "Owner" means owner of a time-share interest. 4. "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. 5. "Time-share instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a time-share plan and includes the declaration dedicating accommodations to the time-share plan. 6. "Time-share interest" means and includes either of the following: (i) A "time-share estate," which is the right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, coupled with a freehold estate or an estate for years with a future interest in a time-share property or a specified portion thereof. (ii) A "time-share use," which is the* right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, which right is neither coupled with a freehold interest, nor coupled with an estate for years with a future interest, in a time-share property. 7. "Time-share plan" means any arrangement, plan, scheme, or similar device, whether by membership agreement, sale, lease, deed, license, right to use agreement, or 12-166 ORDINANCE NO. 1378 by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. "Timeshare Plan" does not include arrangements whereby multiple parties join in directly purchasing full ownership of an accommodation and thereafter agree upon arrangements for their shared use. 8. "Time-share property" means one or more accommodations subject to the same time-share instrument, together with any other property or rights to property appurtenant to those accommodations. 9. "Time-share use" means the use of one or more accommodations or any part thereof, as a time-share property pursuant to a time-share plan. C. Permitted zones. A time-share use shall be permitted only in a planned residential zone, a general commercial zone, or a planned commercial resort zone. Any time- share use shall be developed in conjunction with a resort hotel having 500 or more rooms and an 18-hole golf course of not less than 6,400 yards, and then only if and when a conditional use permit has been obtained from the Commission in accordance with Section 25.72.050 (Conditional Use Permit) of this code. D. Application submittal requirements. In addition to standard application submittal requirements, an applicant for a conditional use permit approval involving a time- share use shall submit in the application at least the following information: 1. Copies of documents and information required pursuant to Article 12.2 of the California Code of Regulations, Sections 2809.1, 2809.2, and 2809.3 wherein the requirements for a "properly completed" application for a final subdivision public report are enumerated, excluding those documents so enumerated which are subject to the approval of the City and therefore otherwise available to the City. In the event such documents and information have not been filed with the California Department of Real Estate at the time an applicant applies for a conditional use permit, the applicant shall furnish such documents and information upon the submission of such documents and information to the Department of Real Estate, but in no event later than the issuance of the conditional use permit. 2. In the event an existing condominium project is proposed to be converted to a whole or partial time-share use, a verified description or statement of the number and percentage of the current condominium owners desiring or consenting to the proposed conversion of some or all of the units to a time-share basis shall be submitted. Also, in such instance there shall be submitted to the Commission prior to or during the hearing process, a verified statement of the number and percentage of owners who have received notification, either personally or by receipted certified US mail. 3. In the case of a new mixed project (i.e., time-sharing condominium/rental), a description of the means proposed to be employed to disclose the number and location of all time-share accommodations within the time-share use shall be submitted. L. City o Y a.,.,..,....,re,+ 7r..� �, t, 1„ 12-167 ORDINANCE NO. 1378 4. Description of time periods, types of accommodations, and which accommodations are in the time-share program (if less than all), and the length of time each of the accommodations are committed to the time-share plan shall be submitted. E. Requirements. Notwithstanding any other provisions of this chapter, the following requirements must be met by any time-share use in any permitted zone: 1. The time-share use must be composed of time-share interests. 2. All maintenance agreements and conditions, covenants, and restrictions must be approved by the City. 3. The minimum time-share interest exclusive occupancy period shall be for one week (seven days). 4. Developer of the time-share plan shall post a maintenance bond, letter of credit, or cash deposit to ensure the maintenance of any landscaping along the perimeter of the time-share use abutting any public right-of-way. The amount ,of the bond, letter of credit, or cash deposit shall be equal to 25 percent of the annual budget of the time-share use owner's association having the duty to maintain the exterior of the time-share property which is for such landscaping expenses. The bond, letter of credit, or cash deposit shall run to the City and shall remain in place for life of the time-share plan. 5. With respect to a time-share use, all interests created therein shall be subject to a public facilities impact mitigation fee of $150 per week share. With respect to each week share in a time-share use, a public facilities impact fee payable under this section shall be paid on the first day of the first calendar month following the sale and conveyance of such week share by the developer of a time-share plan to an individual consumer (excluding bulk sales from one developer to another, in which case the successor developer shall have the obligation to pay the public facilities impact fee described herein upon the sale and conveyance of a week share to a consumer). On the first day of each calendar month, or less frequently if required by the Council, a developer of a time-share plan shall also submit a written report to the City which specifies the number of week shares in the time-share plan which have been sold and conveyed in the preceding calendar month. F. Minimum number of units. The minimum number of units in a time-share project shall be 50. G. Development standards. Time-share uses shall be designed to conform to the standards for hotel developments in the event the time-share use is located in a planned commercial resort or general commercial zone. The time-share use must comply with all development standards of the zone in which it is located. With respect to time-share uses developed within a planned residential zone, the density of the time-share uses shall not exceed the density permitted in such zone for residential projects; with respect to time-share uses developed in a general commercial zone or a planned commercial resort zone, the density of the time-share uses shall not exceed the density permitted in such zone for general commercial or planned commercial projects. In determining the density of a time-share use, upon the request of an applicant, the Director shall have the authority to transfer the density permitted in other similarly zoned property owned by an applicant to the time-share use. .gay" t,.i � D y � y rt % 9 �. .,, ,. �.., `. ��.,�.n. �,,;� �..., ..�? w. yty,. 1 e2.; ., U 12-168 ORDINANCE NO. 1378 H. Violations, Enforcement and Civil Penalties 1. Any responsible person, including but�not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter, Such violation shall be punishable pursuant to Chapter 1.12 (General Penalty). 2. Any responsible person, including by not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this section is subject to administrative fines as set forth in Chapter 8.81 (Administrative Citations). Any person issued an administrative citation pursuant to this section shall for each separate violation be subject to: (1) an administrative fine in an amount not to exceed one thousand dollars ($1,000) for the first citation; (2) an administrative fine in an amount not to exceed three thousand dollars ($3,000) for a second citation issued for the same offense within a twelve-month period of the date of the first offense; and (3) a fine in an amount not to exceed five thousand dollars ($5,000). 3. Time-share use, and/or advertisement for time-share use, of an accommodation in violation of this section is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance and may be abated pursuant to Chapter 8.20 (Public Nuisances), Chapter 9.24 (Noise Control), and Chapter 9.25 (Multiple Responses to Loud or Unruly Parties, Gatherings or Other Similar Events). 4. Each day the violation of this chapter occurs shall constitute a separate offense. 5. The remedies under this section are cumulative and in addition to any and all other remedies available at law and equity. City fSr ,vr a l e. i i, ..t i...� 1 12-169 Exhibit N City of Sonoma Time Share Ordinance and Supporting Evidence 12-170 irks«t� o„ City of Sonoma �a Agenda Item Summary a Meeting: City Council - 01 Jun 2022 Department Planning and Community Services Agenda Item Title Staff Contact David A. Storer, AICP, Director Kristina Tierney, Associate Planner Discussion, Consideration, and Possible Action to Introduce an Ordinance Amending the Sonoma Municipal Code Title 19, Section 19.10.050 (Allowable Land Uses and Permit Requirements) and Adding Title 19, Section 19.50.140 (Time-shares) to the City of Sonoma Municipal Code and Finding this Action Exempt from Further Environmental Review Under the General Rule in California Environmental Quality Act (CEQA) Guidelines Section 15061(b)(3) That CEQA Only Applies to Projects that Have the Potential for Causing a Significant Effect on the Environment Summary On January 19, 2022, the Sonoma City Council unanimously adopted an Urgency Ordinance governing the use of properties as time-shares. Previously, the Municipal Code did not contain any regulation governing the use of properties as time-shares which meant that as a non - enumerated use, time-shares were prohibited throughout the City. However, due to the rise in fractional home ownership, the City Council directed staff to address potential ambiguity regarding whether fractional home ownership uses constitutes a prohibited time-share or an allowed residential use. The Urgency Ordinance was presented to the Planning Commission on January 13th, 2022, for comment and direction to staff, and the Planning Commission unanimously recommended approval to City Council. The Urgency Ordinance added Section 19.50.140 — Timeshares into Title 19 and was effective on January 19, 2022. On February 10, 2022, staff presented a draft Regular Ordinance to the Planning Commission for review. The Planning Commission unanimously recommended that the City Council introduce and adopt the attached ordinance. The ordinance is tentatively scheduled to be introduced on June 1, 2022, and could be adopted on June 15, 2022, to supersede the Urgency Ordinance; however, the Urgency Ordinance would be in effect until a regular ordinance becomes effective. The regular ordinance would go into effect 30 days after adoption - July 15, 2022. Recommended Council Action Introduce an Ordinance Amending the Sonoma Municipal Code Title 19, Section 19.10.050 (Allowable land uses and permit requirements) and Adding Title 19, Section 19.50.140 (Time- shares) to the City of Sonoma Municipal Code. Alternative Actions Council discretion. Financial Impact None. 12-171 Environmental Review Status ❑ Environmental Impact Report ® Approved/Certified ❑ Negative Declaration ❑ No Action Required P Exempt ® Action Requested ® Not Applicable Attachments PUBLIC COMMENT ATTACHMENT Timeshare Regular Ordinance 12-172 rA PUBLIC COMMENT TO THE CITY COUNCIL OR ONE OF THE CITY'S COMMISSIONS Any Public Correspondence Received by the City Regarding an Item that Will be Considered at a Public Meeting by the City Council or One of Its Commissions Can be Found on the City's CivicWeb Portal at the Following Link. It is Updated as New Correspondence is Received. https://sonomacity.civicweb.net/filepro/documents STAFF CONTACTS: City Council City Clerk (707) 933-2216 Planning, DRHP, CSEC Planning (707) 933-2204 12-173 Cite of *Ottoma ORDINANCE # - 2022 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SONOMA AMENDING SONOMA MUNICIPAL CODE TITLE 19, SECTION 19.10.050 (ALLOWABLE LAND USES AND PERMIT REQUIREMENTS) AND AMENDING TITLE 19, SECTION 19.60.140 (TIME-SHARES) TO THE CITY OF SONOMA MUNICIPAL CODE WHEREAS, time share and fractional interest uses have been and currently are prohibited as uses not specifically enumerated in the Sonoma development code; and WHEREAS, the City has recently become aware of time-share companies or fractional interest companies wishing to operate in the City; and WHEREAS, a severe housing crisis exists in the state with the demand for housing outpacing the supply; and WHEREAS, the City of Sonoma is particularly experiencing a housing emergency due to its relative isolation, limited housing supply, and desirable location; and WHEREAS, time-share or fractional interest uses threaten to reduce the housing supply in the City by turning long-term housing in the City into vacation rentals and reducing the affordable housing stock in the City; and WHEREAS, time-share and fractional interest uses increase traffic and noise impacts and have the same character as commercial hotels, motels, and other transient occupancy uses due to their transient nature making them inappropriate for residential zones; and WHEREAS, the development of time-share or fractional interest uses in Commercial and Mixed Use zones (which also have a "residential component" requirement) will reduce the City's ability to collect valuable property tax, sales tax, or Transient Occupancy Tax; and WHEREAS, by allowing time-share or fractional interest uses in the City, market pressure will incentivize property owners to convert their existing commercial, hotel or residential uses, thereby reducing revenue to the City in the form of commercial property taxes, sales tax, Transient Occupancy Tax, and valuable existing housing stock; and WHEREAS, allowing time-share or fractional interest uses in the Commercial and Mixed Use zones reduces the availability of suitable lands to provide housing units to meet the City's Regional Housing Needs Allocation for the 51h and 611 Cycles; and WHEREAS, by allowing times -share or fractional interest uses in the City, developers of those uses will seek to convert underutilized commercial uses (in Commercial and Mixed Use zones), thereby reducing the City's ability to identify those sites as potential Housing Opportunity sites in the development of the City's 61h Cycle Housing Element; and WHEREAS, on January 19, 2022 the City Council adopted an Urgency Ordinance pursuant to Government Code Sections 36934 and 36937 to make express the City's existing prohibition on time-share and fractional ownership uses in all zones in the City; and 276349.3 12-174 WHEREAS, the City Council desires to adopt a non -urgency ordinance to supersede the urgency ordinance to ensure the City's municipal code addresses the impact that time-share and fractional ownership uses have and could have on the City's housing supply; and WHEREAS, on February 10, 2022, the Planning Commission reviewed and discussed potential changes to the Sonoma Municipal Code to address time-share and fractional ownership uses and unanimously recommended that the item be continued to March 10, 2022; and WHEREAS, on March 10, 2022, the Planning Commission held a public hearing to review and discuss potential changes to the Sonoma Municipal Code to address time-share and fractional ownership uses and unanimously recommended that the City Council introduce the attached ordinance; and WHEREAS, the City Council found this action to be exempt from the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.) ("CEQA") and the State CEQA Guidelines (Cal. Code Regs., tit. 14, § 15000 et seq.) pursuant to CEQA Guidelines section 15061(b) (3) prior to taking action; and WHEREAS, on June 1, 2022, the City Council considered amendments to the Sonoma Municipal Code, consistent with the applicable policies of the Sonoma General Plan, at a public hearing; and WHEREAS, the proposed amendments to the Sonoma Municipal Code are consistent with State Law. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SONOMA DOES ORDAIN AS FOLLOWS: SECTION 1. RECITALS. The above set forth recitals and findings are true and correct and incorporated herein by reference, as if set forth herein in full. SECTION 2. FINDINGS FOR DEVELOPMENT CODE AMENDMENTS. Pursuant to Section 19.86.070(B) of the Sonoma Municipal Code, the proposed amendments of the development code under this ordinance: A. Are consistent with the goals, policies, and actions of the General Plan because the amendments the amendments promote and preserve the use of property for vital housing; B. Would not be detrimental to the public interest, health, safety, convenience, or welfare of the city for the reasons described in the recitals above; C. Comply with the provisions of the California Environmental Quality Act (CEQA) as described in Section 4 below; and D. Are internally consistent with other applicable provisions of this development code because the amendments merely codify the existing prohibition on time-share and fractional ownership uses under the City's permissive zoning regime. 276349.3 12-175 SECTION 3. MUNICIPAL CODE AMENDMENTS. A. Tables 2-1, 2-2, 2-3 and 2-4 set forth in Sonoma Municipal Code section 19.10.050 are amended to read as set forth in Exhibit "A". B. Section 19.50.140 of the Sonoma Municipal Code is amended to read as follows: 19.50.140 Time -Shares. This section sets forth requirements for the establishment and operation of time-share uses. A. Definitions. 1. "Accommodation" means any dwelling unit, multifamily dwelling, apartment, condominium or cooperative unit, cabin, lodge, hotel or motel room, or other private or commercial structure containing toilet facilities therein that is designed and available, pursuant to applicable law, for use and occupancy as a residence by one or more individuals. 2. "Management entity" means the person who undertakes the duties, responsibilities, and obligations of the management of a time-share plan. 3. "Owner" means owner of a time-share interest. 4. "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. 5. "Time-share instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a time-share plan and includes the declaration dedicating accommodations to the time-share plan. 6. "Time-share interest' means and includes either of the following: a. The right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, coupled with a freehold estate or an estate for years with a future interest in a time-share property or a specified portion thereof. b. The right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, which right is neither coupled with a freehold interest, nor coupled with an estate for years with a future interest, in a time-share property or a specified portion thereof. 7. "Time-share plan" means any arrangement, plan, scheme, or similar device, whether by membership agreement, sale, lease, deed, license, right to use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. 276349.3 12-176 8. "Time-share property" means one or more accommodations subject to the same time-share instrument, together with any other property or rights to property appurtenant to those accommodations. 9. "Time-share use" and "fractional interest use" means the use of one or more accommodations or any part thereof, as a time-share property pursuant to a time-share plan. B. Permitted zones. None. Time share uses and fractional interest uses are prohibited throughout the City of Sonoma C. Violations, Enforcement and Civil Penalties 1. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.12 (General Penalty). 2. Any responsible person, including by not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this section is subject to administrative fines and/or penalties as set forth in Chapter 1.28 (Administrative Citations). 3. Time-share use, fractional interest use and/or advertisement for time-share use and/or fractional ownership use, of an accommodation in violation of this section is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance and may be abated pursuant to Chapter 1.12 (General Penalty), Chapter 1.30 (Administrative Notice and Order Proceedings), Chapter 9.56 (Noise), and any other relevant provision of this code as it may be amended from time to time. 4. Each day a violation of this chapter occurs shall constitute a separate offense. 5. The remedies under this section are cumulative and in addition to any and all other remedies available at law and equity. SECTION 4. CEQA. This Ordinance has been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines, and the environmental regulations of the city. City Planning Staff has determined that the adoption and implementation of the Ordinance is exempt from further environmental review under the general rule in California Environmental Quality Act (CEQA) Guidelines Section 15061(b)(3) that CEQA only applies to projects that have the potential for causing a significant effect on theenvironment. As a text amendment and addition without any physical project being approved, it can be seen with certainty that there is no possibility that the Ordinance will have a significant effect on the environment. The 276349.3 12-177 proposed Ordinance is therefore exempt from the provisions of CEQA because it does not involve a commitment to any specific project that may result in a potentially significant physical impact on the environment. The City Council concurs in these findings and adopts them as its own. The City Council, therefore, directs that a Notice of Exemption be filed with the County Clerk of the County of Sonoma in accordance with CEQA Guidelines. SECTION 5. SEVERABILITY. If any section, subsection, subdivision, sentence, clause, phrase, or portion of this Ordinance for any reason is held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have adopted this Ordinance, and each section, subsection, subdivision, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, subdivisions, sentences, clauses, phrases, or portions thereof be declared invalid or unconstitutional. SECTION 6. EFFECTIVE DATE. This ordinance shall take effect thirty (30) days after passage thereof. SECTION 7. PUBLICATION. This ordinance shall be published in accordance with the provisions of Government Code section 36933, subdivision (c)(1). SECTION 8. THIS ORDINANCE PREVAILS WHERE THERE IS CONFLICT. To the extent that this Ordinance conflicts with any other provision in the Sonoma Municipal Code or city ordinance (urgency or otherwise), policy or regulation, this Ordinance will control. APPROVED: Jack Ding, Mayor ATTEST: Rebekah Barr, MMC, City Clerk 276349.3 12-178 I HEREBY CERTIFY the foregoing ordinance was duly adopted at a Regular Meeting of the City Council of the City of Sonoma held on the , 2022 by the following vote: AYES: NOES: ABSENT: ABSTAIN: Rebekah Barr, MMC, City Clerk 276349.3 12-179 �,4y4CirQ City of Sonoma a Agenda Item Summary Meeting: City Council - 15 Jun 2022 Department Staff Contact Planning and Community Services Kristina Tierney, Associate Planner David A. Storer, AICP, Director Agenda Item Title Discussion, Consideration, and Possible Action to Adopt an Ordinance Amending the Sonoma Municipal Code Title 19, Section 19.10.050 (Allowable Land Uses and Permit Requirements) and Adding Title 19, Section 19.50.140 (Time-shares) to the City of Sonoma Municipal Code and Finding this Action Exempt from Further Environmental Review Under the General Rule in California Environmental Quality Act (CEQA) Guidelines Section 15061(b)(3) That CEQA Only Applies to Projects that Have the Potential for Causing a Significant Effect on the Environment Summary The attached regular ordinance prohibits timeshares and fractional interest uses in the City of Sonoma and was introduced unanimously on June 1, 2022. Upon its effective date on July 15, 2022, it repeals and replaces the Urgency Ordinance currently in place. Recommended Council Action Adopt an Ordinance Amending the Sonoma Municipal Code Title 19, Section 19.10.050 (Allowable land uses and permit requirements) and Adding Title 19, Section 19.50.140 (Time- shares) to the City of Sonoma Municipal Code. Alternative Actions Council discretion. Financial Impact None. Environmental Review Status ❑ Environmental Impact Report ❑ Approved/Certified ❑ Negative Declaration ❑ No Action Required Exempt ❑ Action Requested ❑ Not Applicable Attachments PUBLIC COMMENT ATTACHMENT Timeshare Regular Ordinance Exhibit A Alignment with Council Goals: 12-180 Not Applicable Compliance with Climate Action 2020 Target Goals: CC: n/a 12-181 PUBLIC COMMENT TO THE CITY COUNCIL OR ONE OF THE CITY'S COMMISSIONS Any Public Correspondence Received by the City Regarding an Item that Will be Considered at a Public Meeting by the City Council or One of Its Commissions Can be Found on the City's CivicWeb Portal at the Following Link. It is Updated as New Correspondence is Received. https://sonomacitV.civicweb.net/filepro/documents STAFF CONTACTS: City Council City Clerk (707) 933-2216 Planning, DRHP, CSEC Planning (707) 933-2204 12-182 (fitp of *Dnoma AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SONOMA AMENDING SONOMA MUNICIPAL CODE TITLE 19, SECTION 19.10.050 (ALLOWABLE LAND USES AND PERMIT REQUIREMENTS) AND AMENDING TITLE 19, SECTION 19.50.140 (TIME-SHARES) TO THE CITY OF SONOMA MUNICIPAL CODE WHEREAS, time share and fractional interest uses have been and currently are prohibited as uses not specifically enumerated in the Sonoma development code; and WHEREAS, the City has recently become aware of time-share companies or fractional interest companies wishing to operate in the City; and WHEREAS, a severe housing crisis exists in the state with the demand for housing outpacing the supply; and WHEREAS, the City of Sonoma is particularly experiencing a housing emergency due to its relative isolation, limited housing supply, and desirable location; and WHEREAS, time-share or fractional interest uses threaten to reduce the housing supply in the City by turning long-term housing in the City into vacation rentals and reducing the affordable housing stock in the City; and WHEREAS, time-share and fractional interest uses increase traffic and noise impacts and have the same character as commercial hotels, motels, and other transient occupancy uses due to their transient nature making them inappropriate for residential zones; and WHEREAS, the development of time-share or fractional interest uses in Commercial and Mixed Use zones (which also have a "residential component" requirement) will reduce the City's ability to collect valuable property tax, sales tax, or Transient Occupancy Tax; and WHEREAS, by allowing time-share or fractional interest uses in the City, market pressure will incentivize property owners to convert their existing commercial, hotel or residential uses, thereby reducing revenue to the City in the form of commercial property taxes, sales tax, Transient Occupancy Tax, and valuable existing housing stock; and WHEREAS, allowing time-share or fractional interest uses in the Commercial and Mixed Use zones reduces the availability of suitable lands to provide housing units to meet the City's Regional Housing Needs Allocation for the 5th and 6th Cycles; and WHEREAS, by allowing times -share or fractional interest uses in the City, developers of those uses will seek to convert underutilized commercial uses (in Commercial and Mixed Use zones), thereby reducing the City's ability to identify those sites as potential Housing Opportunity sites in the development of the City's 6th Cycle Housing Element; and WHEREAS, on January 19, 2022 the City Council adopted an Urgency Ordinance pursuant to Government Code Sections 36934 and 36937 to make express the City's existing prohibition on time-share and fractional ownership uses in all zones in the City; and 276349.3 12-183 WHEREAS, the City Council desires to adopt a non -urgency ordinance to supersede the urgency ordinance to ensure the City's municipal code addresses the impact that time-share and fractional ownership uses have and could have on the City's housing supply; and WHEREAS, on February 10, 2022, the Planning Commission reviewed and discussed potential changes to the Sonoma Municipal Code to address time-share and fractional ownership uses and unanimously recommended that the item be continued to March 10, 2022; and WHEREAS, on March 10, 2022, the Planning Commission held a public hearing to review and discuss potential changes to the Sonoma Municipal Code to address time-share and fractional ownership uses and unanimously recommended that the City Council introduce the attached ordinance; and WHEREAS, the City Council found this action to be exempt from the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.) ("CEQA") and the State CEQA Guidelines (Cal. Code Regs., tit. 14, § 15000 et seq.) pursuant to CEQA Guidelines section 15061(b) (3) prior to taking action; and WHEREAS, on June 1, 2022, the City Council considered amendments to the Sonoma Municipal Code, consistent with the applicable policies of the Sonoma General Plan, at a public hearing; and WHEREAS, the proposed amendments to the Sonoma Municipal Code are consistent with State Law. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SONOMA DOES ORDAIN AS FOLLOWS: SECTION 1. RECITALS. The above set forth recitals and findings are true and correct and incorporated herein by reference, as if set forth herein in full. SECTION 2. FINDINGS FOR DEVELOPMENT CODE AMENDMENTS. Pursuant to Section 19.86.070(B) of the Sonoma Municipal Code, the proposed amendments of the development code under this ordinance: A. Are consistent with the goals, policies, and actions of the General Plan because the amendments the amendments promote and preserve the use of property for vital housing; B. Would not be detrimental to the public interest, health, safety, convenience, or welfare of the city for the reasons described in the recitals above; C. Comply with the provisions of the California Environmental Quality Act (CEQA) as described in Section 4 below; and D. Are internally consistent with other applicable provisions of this development code because the amendments merely codify the existing prohibition on time-share and fractional ownership uses under the City's permissive zoning regime. 276349.3 12-184 SECTION 3. MUNICIPAL CODE AMENDMENTS. A. Tables 2-1, 2-2, 2-3 and 2-4 set forth in Sonoma Municipal Code section 19.10.050 are amended to read as set forth in Exhibit "A". B. Section 19.50.140 of the Sonoma Municipal Code is amended to read as follows: 19.50.140 Time -Shares. This section sets forth requirements for the establishment and operation of time-share uses. A. Definitions. 1. "Accommodation" means any dwelling unit, multifamily dwelling, apartment, condominium or cooperative unit, cabin, lodge, hotel or motel room, or other private or commercial structure containing toilet facilities therein that is designed and available, pursuant to applicable law, for use and occupancy as a residence by one or more individuals. 2. "Management entity" means the person who undertakes the duties, responsibilities, and obligations of the management of a time-share plan. 3. "Owner" means owner of a time-share interest. 4. "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. 5. "Time-share instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a time-share plan and includes the declaration dedicating accommodations to the time-share plan. 6. "Time-share interest" means and includes either of the following: a. The right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, coupled with a freehold estate or an estate for years with a future interest in a time-share property or a specified portion thereof. b. The right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, which right is neither coupled with a freehold interest, nor coupled with an estate for years with a future interest, in a time-share property or a specified portion thereof. 7. "Time-share plan" means any arrangement, plan, scheme, or similar device, whether by membership agreement, sale, lease, deed, license, right to use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. 276349.3 12-185 8. "Time-share property" means one or more accommodations subject to the same time-share instrument, together with any other property or rights to property appurtenant to those accommodations. 9. "Time-share use" and "fractional interest use" means the use of one or more accommodations or any part thereof, as a time-share property pursuant to a time-share plan. B. Permitted zones. None. Time share uses and fractional interest uses are prohibited throughout the City of Sonoma C. Violations, Enforcement and Civil Penalties 1. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.12 (General Penalty). 2. Any responsible person, including by not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this section is subject to administrative fines and/or penalties as set forth in Chapter 1.28 (Administrative Citations). 3. Time-share use, fractional interest use and/or advertisement for time-share use and/or fractional ownership use, of an accommodation in violation of this section is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance and may be abated pursuant to Chapter 1.12 (General Penalty), Chapter 1.30 (Administrative Notice and Order Proceedings), Chapter 9.56 (Noise), and any other relevant provision of this code as it may be amended from time to time. 4. Each day a violation of this chapter occurs shall constitute a separate offense. 5. The remedies under this section are cumulative and in addition to any and all other remedies available at law and equity. SECTION 4. CEQA. This Ordinance has been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines, and the environmental regulations of the city. City Planning Staff has determined that the adoption and implementation of the Ordinance is exempt from further environmental review under the general rule in California Environmental Quality Act (CEQA) Guidelines Section 15061(b)(3) that CEQA only applies to projects that have the potential for causing a significant effect on theenvironment. As a text amendment and addition without any physical project being approved, it can be seen with certainty that there is no possibility that the Ordinance will have a significant effect on the environment. The 276349.3 12-186 proposed Ordinance is therefore exempt from the provisions of CEQA because it does not involve a commitment to any specific project that may result in a potentially significant physical impact on the environment. The City Council concurs in these findings and adopts them as its own. The City Council, therefore, directs that a Notice of Exemption be filed with the County Clerk of the County of Sonoma in accordance with CEQA Guidelines. SECTION 5. SEVERABILITY. If any section, subsection, subdivision, sentence, clause, phrase, or portion of this Ordinance for any reason is held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have adopted this Ordinance, and each section, subsection, subdivision, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, subdivisions, sentences, clauses, phrases, or portions thereof be declared invalid or unconstitutional. SECTION 6. EFFECTIVE DATE. This ordinance shall take effect thirty (30) days after passage thereof. SECTION 7. PUBLICATION. This ordinance shall be published in accordance with the provisions of Government Code section 36933, subdivision (c)(1). SECTION 8. THIS ORDINANCE PREVAILS WHERE THERE IS CONFLICT. To the extent that this Ordinance conflicts with any other provision in the Sonoma Municipal Code or city ordinance (urgency or otherwise), policy or regulation, this Ordinance will control. U1Z!Z! Jack Ding, Mayor ATTEST: Rebekah Barr, MMC, City Clerk 276349.3 12-187 I HEREBY CERTIFY the foregoing ordinance was duly adopted at a Regular Meeting of the City Council of the City of Sonoma held on the , 2022 by the following vote: AYES: NOES: ABSENT: ABSTAIN: Rebekah Barr, MMC, City Clerk 276349.3 12-188 EXHIBIT A Amendments to "Zones and Allowable Uses" (Title 19, Section 19.10.050) of the Sonoma Municipal Code. A. Table 2-1 (Residential Uses and Permit Requirements) is hereby amended as follows: Allowed Uses and Permit Permit Required by District P Use permitted Requirements for Residential (2) UP Use Permit Districts (1) required L License required — Use not allowed Land Use (1) R- R-R R-L R-S R-M R-H R-O R-P Specific HS Use Regulation s AGRICULTURE, RESOURCE AND OPEN SPACE USES Animal Keeping P P UP — — — — — Chapter 8.08 SMC Crop Production P P UP - — — — and Horticulture Produce Stands P P UP — — — — — SMC for On -Site 19.50.070 Production MANUFACTURING AND PROCESSING USES Existing -Uses — — — — — — — — SMC 19.82.020 RECREATION, EDUCATION AND PUBLIC ASSEMBLY USES Equestrian UP UP - - - - - - Facilities Parks and P11 P P P P P P — Playgrounds Religious — — UP UP UP UP — — Facilities Schools — Public — — UP UP UP UP — and Private RESIDENTIAL USES (2) Ord. Title 19 SMC 2022 Page 1 of 14 12-189 Duplex — — UP P P UP UP — Emergency — — — — UP UP UP — SMC Shelters 19.50.033 Home P P P P P P P P SMC Occupation 19.50.035 Live/Work — — — — UP — — — Facilities Mobile Home — — — — — — — UP SMC Park 19.50.035 Multi -family — — — UP P P P — Dwelling (Four or fewer units) Multi -family — — — UP UP UP P — Dwelling (Five or more units) Personal Indoor P P P P P P P P SMC Cannabis 19.50.032. Cultivation (4) A Personal Outdoor P P P P P P P P SMC Cannabis 19.50.032. Cultivation (4) B (Prohibited if multifamily dwelling or mobile home) Residential P P P P P P P P Accessory Structures Residential Care — — P P P — — — Homes, Six or fewer clients Residential Care — — — UP — — — Homes, Seven or more clients Single -Family P P P P P UP — — SMC Dwellings 19.50.035 Accessory P P P P P P P P SMC Dwelling Units 19.50.090 Accessory P P P P P P P P SMC Dwelling Units, 19.50.090 Junior Ord. Title 19 SMC 2022 Page 2 of 14 12-190 Supportive P P P/UP P/UP P/UP P/UP — — Housing (3) Transitional P P P/UP P/UP P/UP P/UP — — Housing (3) RETAIL TRADE AND SERVICES Art, Antique, — — — UP — — — — Collectible and Gift Sales Artisan Shops — — — UP — — — — Bed and UP UP UP — — — — — SMC Breakfast Inns 19.50.030 (B&Bs) Child Day Care — UP UP UP UP UP UP — Center Child Day Care: — UP UP UP UP UP — — Small Family Day Care Home Child Day Care: — — UP UP UP UP UP — Large Family Day Care Home General Retail — — — UP — — — — Governmental — UP UP UP UP UP UP and Public Facilities Libraries and — — — UP — — — — Museums Medical Services — — — UP UP — — - - Extended Care Offices, — — — UP — — — — Professional and Administrative Personal — — — UP — — — — Services Restaurant — — — UP — — — — Senior — — — — UP — — — Residential Care Facilities Telecommunicati See Chapter 5.32 SMC, Telecommunications Facility and Antenna ons Facilities, Criteria Commercial Time-shares — — — — — _ _ _ SMC Ord. Title 19 SMC 2022 Page 3 of 14 12-191 19.50.14 0 SPECIAL PURPOSE USES Public Utility — — — — — — — — Facilities Public Utility P P P P P P P P Equipment Notes: 1. See SMC 19.10.050(C) regarding uses not listed. See Division VIII for definitions of the listed land uses. 2. New residential developments subject to the City's Growth Management Ordinance (SMC 19.94). 3. Supportive and Transitional Housing shall be subject to those restrictions that apply to other residential dwellings of the same type in the same zone. For example, such housing structured as single-family is permitted in the R-HS, R-R, RL and IRS residential zones, whereas Supportive and Transitional housing structured as multi -family is limited to the RM and RH residential zones and the Mixed -Use Zone. 4. Personal cultivation of cannabis (Indoor and Outdoor) only allowable in conjunction with residential use subject to SMC 19.50.032. B. Table 2-2 (Commercial Uses and Permit Requirements) is amended as follows: Allowed Uses and Permit Permit Required by District P Use permitted Requirements for Commercial (2) UP Use Permit required Zoning Districts (1) L License required — Use not allowed Land Use C CG Specific Use Regulations MANUFACTURING AND PROCESSING USES Artisans/Craft Product UP UP Manufacturing Food and Beverage UP UP Manufacturing Furniture/Fixtures UP UP Manufacturing, Cabinet Shops Recycling Facilities — Reverse UP P Vending Machines Recycling Facilities — Small UP UP Collection Facilities Research and Development UP — (R&D) Ord. Title 19 SMC 2022 Page 4 of 14 12-192 Warehousing, Wholesaling and Distribution UP RECREATION, EDUCATION, and PUBLIC ASSEMBLY USES Clubs, Lodges and Private Meeting Halls — UP Community Centers UP UP Health/Fitness Facilities P UP Indoor Amusement/Entertain ment Facilities UP UP Libraries and Museums P P Nightclubs and Bars UP UP , Outdoor Commercial Recreation UP UP Religious Facilities P — Schools — Specialized Education and Training UP UP Studios for Art, Dance, Music, Photography, Etc. P UP Theaters and Auditoriums UP UP RESIDENTIAL USES (4) Emergency Shelters UP UP SMC 19.50.033 Live/Work Facilities UP UP SMC 19.50.050 Multi -family Dwelling (Four or fewer units) UP UP Multi -family Dwelling (Five or more units) UP UP Personal Indoor Cannabis Cultivation (7) P P SMC 19.50.032.A Personal Outdoor Cannabis Cultivation (7) P P SMC 19.50.032.13 (Prohibited if multifamily dwelling or mobile home) Single Room Occupancy Housing UP — Supportive Housing UP UP Transitional Housing UP UP RETAIL TRADE (3) Accessory Retail Uses P P Adult Business UP — Ord. Title 19 SMC 2022 Page 5 of 14 12-193 Art, Antique, Collectible and Gift Sales P P Artisan Shops P UP Auto and Vehicle Sales/Rental UP — Building Material Stores UP UP Commercial Cannabis Activities (8): SMC Chapter 5.36 Manufacturing UP — Non -store front retail UP — Store -front retail UP — Testing laboratory UP — Drive -In and Drive Through Sales UP — Furniture, Furnishings and Equipment Stores P P General Retail P P Grocery Store P P Music Venue L L SMC Chapter 5.34 Outdoor Retail Sales and Activities UP' UP Plant Nurseries and Garden Supply Stores P P Restaurant UP UP Second Hand Stores P P Shopping Center UP UP Special Event Venue (6) UP UP Wine Tasting Facilities/Wine Bars WTUP WTUP SMC 19.50.120 Tap Rooms UP UP SMC 19.50.130 SERVICES Banks and Financial Services P P Bed and Breakfast Inns (B&Bs) UP UP SMC 19.50.030 Business Support Services P UP Child Day Care Facilities P P Drive -In and Drive -Through Services UP — Equipment Rental UP — Governmental and Public Facilities P P Ord. Title 19 SMC 2022 Page 6 of 14 12-194 Hotel or Motel UP UP Medical Services - Clinics, Offices, Laboratories UP UP Medical Services - Hospitals UP UP Mortuaries and Funeral Homes UP — Offices, Professional and Administrative P UP Personal Services P P Storage - Outdoor UP — Storage - Personal Storage Facility (Mini -Storage) UP — Telecommunications Facilities, Commercial See Chapter 5.32 SMC, Telecommunications Facility and Antenna Criteria Time-shares — — SMC 19.50.140 Auto Parts Sales P — Vacation Rental — — SMC 19.50.110 Vehicle Services, Car Washes UP — Vehicle Services, Repair and Maintenance UP — Vehicle Services, Service Station UP — SMC 19.50.100 Repair Services, for Consumer Products P UP SPECIAL CIRCUMSTANCES COMMERCIAL DEVELOPMENT Commercial Development, Large UP UP Chapter 5.34 SMC Development Adjacent to a Residential Zone (4) UP UP Formula Business, Small P/UP (5) P SMC 19.50.035 Formula Business, Large UP UP SMC 19.50.035 Formula Restaurant, Large UP/- (6) UP SMC 19.50.035 Shopping Center, Reconfiguration UP UP SPECIAL PURPOSE USES Public Utility Facilities — — Public Utility Equipment L P P Notes: Ord. Title 19 SMC 2022 Page 7 of 14 12-195 1. See SMC 19.10.050(C) regarding uses not listed. See Division VIII for definitions of the listed land uses. 2. New residential developments subject to the City's Growth Management Ordinance (SMC 19.94). 3. Supportive and Transitional Housing shall be subject to those restrictions that apply to other residential dwellings of the same type in the same zone. For example, such housing structured as single-family is permitted in the R-HS, R-R, RL and RS residential zones, whereas Supportive and Transitional housing structured as multi -family is limited to the RM and RH residential zones and the Mixed -Use Zone. 4. Defined as new commercial construction or an addition to an existing commercial building, having an area of 1,000 square feet or greater. 5. Use Permit required within the historic overlay zone 6. Prohibited in /P Plaza Retail District. See SMC 19.50.035. 7. Personal cultivation of cannabis (indoor and outdoor) only allowable in conjunction with residential use subject to SMC 19.50.032. 8. No commercial cannabis activity may occur in these 7nninn disfrictc unipcc and unfid a C. Table 2-3 (Mixed Uses and Permit Requirements) is amended as follows: Allowed Uses and Permit Permit Required by District P Use permitted Requirements for Mixed Use _(2) UP Use Permit required Zoning Districts (1) L License required — Use not allowed Land Use MX Specific' Use Regulations MANUFACTURING AND PROCESSING USES (3) Artisans/Craft Product UP Manufacturing Food and Beverage UP Manufacturing Furniture/Fixtures UP Manufacturing, Cabinet Shops Change'in. Existing UP SMC 19.82.020 Nonconforming Uses Recycling Facilities — Small — Collection Facilities Research and Development UP (R&D) Warehousing, Wholesaling and Distribution RECREATION, EDUCATION AND PUBLIC ASSEMBLY USES (3) Clubs, Lodges, and Private UP Meeting Halls Community Centers UP Ord. Title 19 SMC 2022 Page 8 of 14 12-196 Health/Fitness Facilities UP Indoor Amusement/Entertainment Facilities UP Libraries and Museums UP Outdoor Commercial Recreation — Religious Facilities UP Schools — Specialized Education and Training UP Studios for Art, Dance, Music, Photography, Etc. UP Theaters and Auditoriums UP RESIDENTIAL USES (4) Emergency Shelters UP SMC 19.50.033 Live/Work Facilities UP SMC 19.50.050 Multi -family Dwelling (Four or fewer units) P Multi -family Dwelling (Five or more units) UP Personal Indoor Cannabis Cultivation (7) P SMC 19.50.032.A Personal Outdoor Cannabis Cultivation (7) P SMC 19.50.032.E (Prohibited if multifamily dwelling or mobile home) Residential Care Homes, Seven or more clients UP Single -Family Dwellings. P (5) Supportive Housing, four or fewer units P Supportive Housing, five or more units UP Transitional Housing, four or fewer units P Transitional Housing, five or more units UP RETAIL TRADE (3) Accessory Retail Uses UP Art, Antique, Collectible and Gift Sales UP Artisan Shops UP Ord. Title 19 SMC 2022 Page 9of14 12-197 Auto and Vehicle Sales/Rental — Building Material Stores — Commercial Cannabis Activities (8): Manufacturing UP SMC Chapter 5.36 Non -store front retail UP SMC Chapter 5.36 Testing laboratory UP SMC Chapter 5.36 Drive -In and Drive -Through Sales UP Farmers Market UP Fueling Station UP Furniture, Furnishings and Equipment Stores UP General Retail UP Grocery Store UP Music Venue L Chapter 5.34 SMC Outdoor Retail Sales and Activities UP Plant Nurseries and Garden Supply Stores UP Restaurant UP Second Hand Stores UP' Shopping Center UP Special Event Venue (6) UP Wine Tasting Facilities/Wine Bars WTUP SMC 19.50.120 Tap Rooms UP SMC 19.50.130 SERVICES (3) Auto Parts.Sales UP Banks and Financial Services UP Bed and Breakfast Inns (B&Bs) UP Business Support Services UP Child Day Care Facilities UP Drive -In and Drive -Through Facilities UP Equipment Rental UP Governmental and Public Facilities UP 10 Ord. Title 19 SMC 2022 Page 10 of 14 12-198 Hotel or Motel UP Medical Services - Clinics, UP Offices, Laboratories Medical Services - Hospitals — Mortuaries and Funeral UP Homes Offices, Professional and UP Administrative Personal Services UP Storage - Outdoor — SMC 19.40.100(D) Storage - Personal Storage — Facility (Mini -Storage) Telecommunications See Chapter 5.32 SMC, Telecommunications Facility and Facilities, Commercial Antenna Criteria SMC Time-shares _ 19.50.140 Vacation Rental — SMC 19.50.110 Vehicle Services, Repair and UP Maintenance Vehicle Services, Service — SMC 19.50.100 Stations Repair Services for UP Consumer Products SPECIAL CIRCUMSTANCES COMMERCIAL DEVELOPMENT Formula Business, Small UP SMC 19.50.035 Formula Business, Large UP SMC 19.50.035 Formula Restaurant, Large UP SMC 19.50.035 SPECIAL PURPOSE USES Public Utility Facilities — Public Utility Equipment P Notes: 1. See SMC 19.10.050(C) regarding uses not listed. See Division VIII for definitions of the listed land uses. 2. New development in the Mixed -Use zone shall include a residential component unless waived by the planning commission through use permit review (see SMC 19.10.020(C)). 3. Uses within these categories are allowed only if the planning commission finds that the use will not result in the encroachment of incompatible commercial uses within an established residential area. 4. New residential developments subject to the city's growth management ordinance. 5. Limited to a single residence on an existing lot of record; otherwise, use permit approval is required. 6. On sites of one acre in size or larger. 7. Personal cultivation of cannabis (indoor and outdoor) only allowable in conjunction with residential use subject to SMC 19.50.032. 11 Ord. Title 19 SMC 2022 Page 11 of 14 12-199 8. No commercial cannabis activity may occur in these zoning districts unless and until a commercial cannabis business permit has been issued for that activity under Chapter 5.36. D. Table 2-4 (Special Purpose Uses and Permit Requirements) is hereby amended as follows: Allowed Uses and Permit Requirements for Special Purpose Zoning Districts Permit Required by District P Use permitted UP Use Permit required L License required — Use not allowed Land Use (1) A Pk P W Specific Use Regulations AGRICULTURAL AND OPEN SPACE USES Crop Production and Horticulture P - — P Livestock Raising P — — — SMC 19.50.020 Prescribed Grazing — UP - — Produce Stands for On -Site Production P — — — SMC 19.50.070 Trails, Hiking and Bicycling P P P — MANUFACTURING AND PROCESSING USES Agricultural or Food Processing — — — UP Wineries — — — UP Winery Accessory Uses — — — UP SMC 19.50.020 RECREATION, EDUCATION AND PUBLIC ASSEMBLY USES Community Centers — — UP — Community Garden — UP UP — Equestrian Facilities UP UP — — SMC 19.50.020 Libraries and Museums — UP UP — Parks and Playgrounds — P P — Recreational Facilities — UP P — 12 Ord. Title 19 SMC 2022 Page 12 of 14 12-200 Schools, Public and Private — — P — Theaters and Auditoriums — UP P — RESIDENTIAL USES (2) Agricultural Employee Housing P — — — Caretaker and Employee Housing UP UP UP UP Emergency Shelters, 15 or fewer beds — — P — SMC 19.50.035 Emergency Shelters, 16 or more beds — — UP — Personal Indoor Cannabis Cultivation (3) P P P P SMC 19.50.032.A Personal Outdoor Cannabis Cultivation (3) P P P P SMC 19.50.032.13 (Prohibited if multifamily dwelling or mobile home) Residential Accessory Structures and Uses P — — — SMC 19.50.035 Single -Family Dwellings P — - — SMC 19.50.035 Supportive Housing (4) — — UP — Transitional Housing (4) — — UP — Vacation Rental - UP — — SMC 19.50.110 SERVICES Offices — Administrative — UP UP — Cemeteries — — P — Child Day Care Facilities — — P — Corporation Yard — — P — Farmers Market P P P — Governmental and Public Facilities — UP UP — Kennel — — UP — Medical Services — Hospitals - I — UP — Telecommunications Facilities, Commercial See Chapter 5.32 SMC, Telecommunications Facility and Antenna Criteria Timeshares — — — — SMC 19.50.140 SPECIAL PURPOSE USES Public Utility Facilities — — UP — Public Utility Equipment P P P P 13 Ord. Title 19 SMC 2022 Page 13 of 14 12-201 Notes: 1. See Section 19.10.050.0 regarding uses not listed. See Division VIII for definitions of the listed land uses. 2. New residential developments subject to the City's Growth Management Ordinance (SMC 19.94). I Personal cultivation of cannabis (indoor and outdoor) only allowable in conjunction with residential use subject to SMC 19.50.032. 4. Supportive and transitional housing shall be subject to those restrictions that apply to other residential dwellings of the same type in the same zone. 14 Ord. Title 19 SMC 2022 Page 14 of 14 12-202 Exhibit O City of St. Helena Time Share Ordinance and Supporting Evidence 12-203 Report to the City Council Regular City Council - 22 Mar 2022 Agenda Section: PUBLIC HEARINGS Subject: Ordinance Adding Chapter 17.138 "Time Share Uses" and Sections 17.138.060 to Title 17, Zoning of the St. Helena Municipal Code, amending sections 17.48.030 (Central Business) and 17.52.030 (Service Commercial) and Deleting Section 17.112.130 of the St. Helena Municipal Code CEQA Exempt Determination: Prepared By: Ethan Walsh, City Attorney Reviewed By: April Mitts, Administrative Services Director Approved By: James C. McCann, Interim City Manager BACKGROUND Over the past two years, there has been significant discussion in the community regarding Section 17.112.130 of the City's Zoning Code, which prohibits the creation of a time-share project as a means of ownership of any single-family, two-family or multiple -family dwelling or any apartment house in the City (the "Time Share Ordinance"). The City Council discussed the Time Share Ordinance at its July 14, 2020 meeting in response to concerns raised regarding a real estate listing for a fractional or partial ownership interest in a residential home in the City. The prior City Attorney discussed this issue with the City, focusing on the question of the extent to which the City Council could regulate an ownership structure through the City's zoning authority, and noted the challenges of doing so. At the conclusion of the Council's discussion of this issue, Council directed the City Attorney and staff to continue to research its options to address the concerns raised by members of the community in response to the listing of the home at issue. In the months following the July 2020 Council meeting, the company that had been marketing that, original home, now known as Pacaso, began marketing other homes in the City, and the City received additional complaints from members of the community. Based on new information that was available to the City, primarily through Pacaso's marketing materials, the City Attorney's office concluded that the properties being marketed by Pacaso were 12-204 not just fractional or partial ownership structures, but were also being marketed to be used as a time share project that would be prohibited under the City's ordinance, and informed Pacaso of that conclusion. Pacaso disagreed with the City Attorney's conclusion, and initiated a lawsuit in an effort to compel the City to retract its conclusion. That litigation is ongoing. When reviewing the Time Share Ordinance in this context, the City Attorney's office found that the substance of the Time Share Ordinance has not been updated since its adoption in 1982. The City Attorney's office concluded that the Time Share Ordinance would benefit from an update to refine the definitions to more directly address the impacts of time-share uses, to clarify the means used by the City to enforce the restrictions on time share uses, and to clarify how time share uses are treated in non-residential districts. City staff initially delayed initiating any changes to the Time Share Ordinance while the litigation was ongoing. However, due to the continued marketing of time share uses within the City, staff has decided to move forward with recommending the proposed updates to the City's ordinance. On March 1, 2022, the Planning Commission voted unanimously to recommend the City Council approve the proposed ordinance. DISCUSSION The Discussion section of the Staff Report is organized as follows: First, the section provides a brief explanation for the City's conclusion that the homes that have been marketed by Pacaso constitute time share projects. While the City's conclusion does not directly affect the changes to the Zoning Code set forth in the proposed ordinance, it is helpful to understand that the Time Share Ordinance, both in its original form and as proposed to be amended, is intended to protect against the impacts that these homes and similar uses could have on the City's housing supply and the character of the City's residential districts. Second, this section discusses the legal basis for the City's Time Share Ordinance, the reasons why the City prohibited time share uses in residential properties, and why those reasons continue to apply today. Third, this section outlines the changes made in the proposed ordinance and the reasons for the proposed changes. A.Current Time Share Ordinance and Application to Pacaso Homes Section 17.112.130 of the Zoning Code prohibits the creation of a time-share project as a means of ownership of any single-family, two-family or multiple family dwelling or apartment house within the City. A time-share project is defined in that section as any real property that is subject to a time-share program. A time-share program is in turn defined in part as an arrangement whereby the use, occupancy or possession of the property circulates among purchasers according to a fixed or floating time schedule on a periodic basis for a specific period of time during any given year. Pacaso provides a significant amount of information on its website regarding the manner in which its homes are used by the purchasers of a Pacaso home. According to Pacaso's website, the single family residences marketed by Pacaso are held by a property -specific 12-205 limited liability company ("LLC"), and each co-owner purchases a 1/8 share in the LLC. (Pacaso.com/learn) Each 1/8 share entitles the co-owner to 44 stay nights within any 365 day window. Stays can be from 2 to 14 nights in duration for each 1/8 share. Back-toback stays are not permitted. (Pacaso.com/faq/scheduling) Stays are booked on an app, with specific rules governing the number of "special dates" that each co-owner can book, and the number of stays that each owner can book during "peak seasons." (Id.) Each owner can book the residence to use themselves, or may allow guests to use the residence, whether or not the co-owner is present. (Id.) Between each stay, Pacaso conducts a thorough inspection and cleaning. ("5 reasons Pacaso is better than a timeshare." Pacaso.com/blog/better-than-resort-timeshare) The Pacaso model grants each 1/8 owner the right to use the property for a specific period of time (44 days in a year) in increments of 2-14 days. The use, occupancy and possession of the property circulates among the co -owners according to a floating time schedule that gives each co-owner exclusive rights to the property for -a specific period of time each year. This use structure fits squarely in the City's definition of a time-share program, and the properties operated by Pacaso in this manner would therefore be timeshare projects under the existing Time Share Ordinance. B.Reasons for the Time Share Ordinance 1. The City's General Plan The City of St. Helena has long been defined by its rural, small town quality and agricultural character. In adopting the St. Helena General Plan Update 2040, the City noted that the defining, unifying goal of all the elements of the 1993 General Plan was: To protect the rural, small town quality and agricultural character of St. Helena. It is the General Plan's intent that the preservation of this small town character be the unifying philosophy that overlays all other stated goals and policies. (General Plan 2040, p. 1-2.) While the 2040 General Plan acknowledges that this is no longer the sole, overriding focus of the General Plan, retaining the small town character of St. Helena remains a primary focus of the City's land use planning. (Id.) A key component of retaining the City's small town character is maintaining a balance between the economic benefits that arise from visitors who come to St. Helena for its wineries, restaurants and historic downtown, and maintaining its authentic small town quality of life for the City's residents. This theme is consistent throughout the City's General Plan, and maintaining this balance is key to the City's long term viability. The General Plan notes in its Introduction that "[t]he community stands out in the Valley for its unique, historic character and its ability to attract visitors while also supporting the needs of its resident population." (General Plan p. 1-8.) The City has set goals to maintain that balance, striving to achieve an economy that "will meet the basic needs of residents, while balancing the benefits and impacts of visitors and provide better economic opportunities. (General Plan 1-15.) The City further seeks to "promote sustainable tourism practices that allow the City to enjoy the economic benefits of visitors to the region while maintaining the authentic small-town quality of life." (General Plan p. 3-9.) 12-206 St. Helena is a renowned tourist destination, bringing visitors from throughout the world to its wineries, restaurants and downtown, but it is also a functioning City and community, with residents who contribute to its social fabric. Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance. The City has commercial districts, like the Service Commercial district and the Central Business district, that provide for uses that serve both visitors and the local community, such as restaurants, retail shops and winery tasting rooms, among others, along with lodging where those visitors can stay. (St. Helena Municipal Code §§17.48.030, 17.52.030.) The City also has residential districts that provide housing for those who live in the community, at varying densities in order to provide a diversity of housing types. 2. Use of Zoning to Preserve Residential Areas The use of zoning to preserve the character of the residential districts of a City has been common for over a century. In the seminal case of Euclid v. Ambler the United States Supreme Court upheld the validity of comprehensive zoning that would set aside residential districts "from which business and trade of every sort, including hotels and apartment houses, are excluded." (Euclid v. Ambler Co. 272 U.S. 365, 390.) The U.S. Supreme Court upheld the Village of Euclid's zoning ordinance in that instance, noting that the inclusion of non-residential uses in residential districts may have an increasingly deleterious impact on the residential area "until, finally, the residential character of the neighborhood and its desirability as a place of detached residences are utterly destroyed." (Id. at 394.) The California Court of Appeals followed Euclid and subsequent cases in upholding the City of Carmel-by-the-Sea's zoning restriction on short-term rentals. (Ewing v. City of Carmel -By -The -Sea (1991) 234 Cal.App.3d 1579.) In that case, the Court noted that the City's chief purpose in adopting the short-term rental restriction was "to provide an appropriately zoned land area within the City for permanently single-family residential uses and structures and to enhance and maintain the residential character of the City." (Id. at 1579.) In upholding Carmel's short-term rental restriction, the Court found that short-term rentals "undoubtedly affect the essential character of a neighborhood and the stability of a community. Short-term tenants have little interest in public agencies or in the welfare of the citizenry. They do not participate in local government, coach little league, or join the hospital guild. They do not lead a scout troop, volunteer at the library, or keep an eye on an elderly neighbor. Literally, they are here today and gone tomorrow —without engaging in the sort of activities that weld and strengthen a community." (Id. at 1591.) 3.Impacts of Time Share Uses on Residential Districts Like Carmel, the City of St. Helena strives to maintain the character of its residential areas in the face of intense demand for accommodations to serve visitors to St. Helena. The 12-207 Time Share Ordinance is one of the means that the City has in place to ensure that it is able to maintain its existing and limited housing stock for use in long term residency, and to maintain the character of its residential zoning districts. When the City originally adopted the Time Share Ordinance in 1982, the City Council made specific findings based on the impact it foresaw if time share uses were to locate in the residential areas of the City. Those findings were as follows: 1. There is a critical shortage of affordable housing in the city for long-term occupancies (more than six months annually), and the availability of additional residential dwelling units is substantially restricted by the growth management system. 2. The conversion of residential dwelling units within the city to time-sharing projects eliminates residential dwelling units otherwise available for long-term occupancies (more than six months annually) in the city. 3. Time-sharing projects have the same character as commercial hotels, motels and other transient occupancy uses due to their transient nature and to the multiple shortterm (less than six months annually) occupancies by those participating in timesharing projects. 4. Such commercial or quasi -commercial like use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods. 5. The city council finds and determines that this section is necessary to protect the public health, safety and welfare of the citizens of the city. As discussed in more detail below, these findings continue to hold true in St. Helena, and continue to support the City's decision to restrict time-share uses in residential districts. i. Housing Shortages and Impacts of Time -Share Uses on Existing Housing Stock In adopting the current Time Share Ordinance, the City Council found that there was a critical shortage of affordable housing in the City for long-term occupancies. That continues to be the case, and is undoubtedly worse than was the case at the time the Time Share Ordinance was originally adopted. The most recent census data lists the median value of owner occupied homes in St. Helena at $1,112,100 for the period of 2015-2019, while the Zillow Home Value Index estimates medial home values in St. Helena to be approximately $1,870,000 as of February 2022. www.census.gov/quickfacts/sthelenacitycalifornia; zillow.com/home-values/.) In contrast, the median household income in St. Helena from 2015-2019 was $90,031, and the median income for a four person household in Napa County for 2021 is approximately $109,200. (www.census.gov/quickfacts/sthelenacitycalifornia; www.hcd.ca.gov/grantfunding/income-limits/state-and-federal-income- limits/docs/income-limits-2021. pdf.) At the time of adoption of the City's Housing Element in 2015, the income necessary to purchase a median priced single family home was nearly $200,000 per year, and prices 12-208 have risen dramatically since then. (City of St. Helena Housing Element Update 2015-23, p. 3.) The cost of homes currently in St. Helena are well in excess of what median income residents of St. Helena can afford, as well as median income residents of Napa County generally. Further, as Erika Sklar observed in the St. Helena Housing Update Report that she prepared for the City in April 2018, "St. Helena has more local jobs than people in the labor force, demanding large numbers of commuters to fill local jobs. Workers commute daily into St. Helena, many because there is no local housing that is affordable at the incomes that they make. 36% of St. Helena households cannot afford market rents while 70% of St. Helena households cannot afford to purchase a home. Paramedics and preschool teachers cannot afford St. Helena's market rents. Teachers, registered nurses, winery and hospitality managers and non-profit directors cannot afford homeownership in St. Helena." (St. Helena Housing Update Report, p. 7 (April 2018).) The City has made and continues to make efforts to address the need for affordable housing in the City, including providing assistance for the Brenkle Court, Turley Flats and 963 Pope Street projects. The City has also ensured that new non-residential development will assist the City in providing adequate affordable housing, as evidenced by the significant contributions to affordable housing made by the Farmstead Lodging project through its development agreement with the City. These efforts, however, have highlighted the challenges of providing housing at all income levels, with the most significant challenge being a limited supply of existing housing stock in the City, and a limited supply of available land for new housing. Given the housing shortage already in existence, losing additional housing stock will only make this problem worse. The findings in the original Time Share Ordinance also note that the conversion of homes to time sharing projects would eliminate residential dwelling units that would otherwise be available for long term residential use. This continues to be true, as a home that is used for time share purposes will no longer be available for households to use as their long term residence. This threat to the City's existing housing stock is not insignificant. The publicity regarding Pacaso's rise as a company speaks to a pent up demand for homes that could be converted to time share use, reducing available housing stock for long term use. Pacaso's co-founder has indicated that "[t]here are tens of millions of families that aspire to own second homes but are unable to, due to reasons of cost." (Just Five Months Old, Zillow Co -founder's Pacaso Claims It's Already A Unicorn" Noah Kirsch, March 24, 2021 (www.forbes.com/sites/noahkirsch/2021 /03/24/just-five-months-old- zillowcofounders-pacaso-claims-its-aIread-a-unicorn/.)) In discussing Pacaso's model, Dan Wenhold of the venture capital firm Fifth Wall said "[t]hey were taking a previously illiquid asset, which was a timeshare, and making it affordable for the masses, also making it attainable for folks who wanted to own a second home but previously weren't able to." ("Pacaso, the Proptech Startup Founds by Zillow Alums, Raises $125M Series C" Sophia Kunthara (September 14, 2021) (news. crunchbase.com/news/proptech- startup-pacasoraises-125m-series-c.)) Creating a new market for these prospective buyers who otherwise would not buy second homes unquestionably increases demand for these homes by creating an incentive for timeshare companies to buy up residences to meet this market demand. Creating more demand, and reducing supply, will further 12-209 ratchet up housing costs, exacerbating the already significant housing shortage in the City. ii. Impacts to Character of the City's Residential Districts The City Council additionally found as part of the adoption of the original Time Share Ordinance that time-sharing projects have the same character as commercial hotels, motels and other transient occupancy uses due to their transient nature and to the multiple short-term occupancies by those participating in time-sharing projects. The Council concluded that this commercial orquasi-commercial like use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods. This continues to be the case, as the nature of time share uses of residential property is different than the typical long term residential uses for which the residential districts of the City are intended. The complaints that have been made by some local residents regarding the Pacaso homes are illustrative of the distinctions between time share uses and long term residential uses. A sampling of the email complaints received by the City are included in Attachment No. 2 to this Staff Report. The complaints received center on concerns over more intense traffic and parking issues, outdoor parties and conversations going late into the evening, sometimes as late as 2 A.M. One neighbor complained of outdoor lighting shining into her daughter's room at night. They complained of traffic and inadequate parking for the visitors to these homes. Further, neighbors have noted that with each turnover from one stay to another, cleaning and landscaping crews come to clean the unit and prepare it for the next user. While this level of maintenance is appropriate for a commercial vacation property, it impacts the residential character of the surrounding area by adding parking and noise burdens in the neighborhood. Living next door to a home where the residents turnover every 2-14 days, and professional cleaning and landscaping crews come to the property between each visit is much more akin to living by a commercial lodging project than a residential home. This is not at all surprising, given that these time share homes are used by people who are on vacation. While long term residents may have an occasional party at their home, the time share model means that these residences are constantly being used by people who are on vacation, hosting parties or celebrating special occasions. These activities by their nature are more intense than typical residential use of property. The intensity of this use is a significant reason that these uses can change the character of a residential neighborhood. Long term residents, whether owners or renters, will occasionally have guests, and will occasionally have parties, but these time-share homes are used exclusively by people who are coming to the City on a short term basis for vacation or leisure. People will naturally stay out later, entertain more and gather in larger numbers while on vacation. That is the reason that these uses are more appropriate in non-residential areas that are intended to cater to the City's visitors and tourists. Time share uses can change the character of a residential neighborhood by having it serve not only as a residential area but also a visitor lodging area, and subjecting it to the impacts that come with that more intense land use. 12-210 In their marketing materials, Pacaso cites this intensity of use as a benefit, indicating that having these units filled with visitors seven days a week will benefit the local economy, since these visitors will patronize local businesses. (pacaso.com/communities) However, as noted above, the City strives through its General Plan to achieve a balance between benefits to the local economy and maintaining the character of the City. The City seeks to achieve this balance by promoting "sustainable tourist practices that allow the City to enjoy the economic benefits of visitors to the region while maintaining the authentic smalltown quality of life, (General Plan p. 3-9) and striving to achieve a local economy that "will meet the basic needs of residents, while balancing the benefits and impacts of visitors." (General Plan p. 1-15.) Bringing more visitors into residential neighborhoods to improve the local economy does not help to achieve that balance. It instead tips the scales in favor of the local economy, at the expense of the residential character of these neighborhoods. The nature of the timeshare use itself can impact the residential character of the City's residential districts because it will ensure that the time share users can only use their property for a limited amount of time each year. In the case of Pacaso owners, each stay is limited to 2-14 days. As discussed above, in the Ewing v. City of Carmel -by -the -Sea case, the California Court of Appeal found that short term rentals would affect the essential character of a neighborhood and the stability of a community. The Court noted that "[s]hort term rentals have little interest in public agencies or in the welfare of the citizenry. They do not participate in local government, coach little league, or join the hospital guild. They do not lead a Scout troop, volunteer at the library, or keep an eye on an elderly neighbor. Literally they are here today and gone tomorrow —without engaging in the sort of activities that weld and strengthen a community." This same problem is present with time-share uses. Each co-owner is in the unit on a short-term basis, and without the time to participate in the types of activities or build the relationships that create the fabric of a community. At the April 28, 2021 council meeting several Pacaso co -owners spoke of their experiences in St. Helena. All of them spoke of their affection for the community and the traditions they had established, but these were centered on attending local events and visiting shops, restaurants and wineries. These types of transactional activities are all beneficial to the City's local economy and are what the City hopes to see from visitors to the City, but it is not the type of community involvement described in the Ewing case that binds and strengthens a residential community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its small town character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents who will engage in the community in the manner described by the Court in Ewing, to the betterment of the entire community. C.Proposed Amendments to the Time Share Ordinance The proposed Ordinance would make certain changes to the City's Existing Time Share Ordinance, as described below. 12-211 15indings and Establishment of New Chapter The proposed Ordinance includes detailed recitals and findings describing the policy bases for the City's regulation of time share uses. The findings are consistent with the findings made as part of the original Time Share Ordinance, but more detail has been added. The policy bases for the proposed Ordinance are discussed in the sections above, and further discussion is not necessary here. The proposed Ordinance also relocates the restrictions on time share uses to its own chapter at Chapter 17.138. The Time Share Ordinance is currently located in Chapter 17.112, General Site Design and Development Standards. City staff believes that with the added level of detail in the Proposed Ordinance, these provisions merit being located in a separate chapter, and has changed the location of the Timeshare Ordinance accordingly. 2.Definitions The Proposed Ordinance amends the definitions that are used to define time share uses, with the new definitions set forth in Section 17.138.020. The new definitions are modeled on the definitions utilized by the state to regulate time-shares in the Vacation Ownership and Time -Share Act of 2004 (Bus. & Prof. Code §§11210-11288), but are modified somewhat to better apply in the land use regulation context. The new ordinance includes a number of definitions that work in concert to define a timeshare use. The ordinance defines a "time-share use" as the use of one or more accommodations, or any part thereof, as part of a time-share property pursuant to a timeshare plan. An "accommodation" is defined in this Chapter to include a range of residential units that could potentially be used for time-share purposes. The types of residential units that can be accommodations are listed at the beginning of Section 17.138.020 in the proposed ordinance. A "time-share plan" is defined in the ordinance, and generally includes any arrangement, plan, scheme or similar device whereby a purchase receives the right to exclusive use of the accommodation, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year. A "time-share property", in turn is defined as one or more accommodations that are subject to the same time-share plan together with any property rights that are appurtenant to the accommodations. A "time-share instrument", is the document or documents that create or govern the operation of the time-share plan. Therefore a time-share use is the use of a residential property that fits within the definition of an "accommodation" under the ordinance, pursuant to a "time-share plan", which grants each owner of the time-share property exclusive use of the property for a certain period of time each year, but not the full year. 12-212 It is important to note that not all properties with multiple owners or owned by business entities (such as LLCs) would constitute a time-share use under these definitions. The definitions focus on the manner in which the accommodation is used, not how it is owned. A time-share plan allows each owner exclusive use of the property for a specific period of time. This manner of use prevents the property from being used for long term residency, and leads to the continual cycling of visitors through the property and the more intense, constant vacation oriented use that the ordinance seeks to limit in residential districts of the City. A property that is owned by a group of friends or extended family members, whether through a separate business entity or otherwise, will not necessarily mandate that only one owner will be able to use the property at a time. The more formal arrangement found in time-share uses increases the intensity of use, in that each individual time-share owner cycles through the property, whereas families orfriends are more likely to use the property together or in groups leading to less transition in the residential neighborhood. The more formal relationship, use of professional property managers and rights to exclusive use found in timeshare uses contributes to the commercial character of the property, with added traffic due to the more frequent turnover of visitors and more frequent cleaning and inspection between each user, which is common for a commercial vacation property, but not for a home owned by family or friends. 3.Enforcement The new ordinance additionally adopts a new enforcement structure for the City timeshare restrictions, modeled on the City's short-term rental ordinance. The ordinance prohibits both the use of accommodations for time-share use, and the advertisement of accommodations for time-share uses. This will better allow the City to prevent time-share uses in residential neighborhoods before they occur. The proposed Ordinance also outlines the process that will be used to enforce this new Chapter, again based on the City's existing short-term rental regulations. This approach has proved to be effective in enforcing the City's short-term rental regulations, and will help the City to take a more preventative approach to enforcing its time-share regulations as well. 4.Time Share Uses in Service Commercial and Central Business Districts Finally, while the City's existing Time Share Ordinance did prohibit time-share projects within certain types of residential dwelling units within the City, it does not make distinctions based on the various zoning districts of the City. Given that the primary concerns and impacts of this use arise from the high intensity use of property that negatively impacts the residential character of residential districts within the City, this use may not have the same impacts in commercial districts where visitors can be closer to the amenities in the City that cater to visitors. The proposed new ordinance would allow time-share uses in the Service Commercial and Central Business Districts as conditional uses, provided that such time-share uses would be limited to accommodations in upper floors in conjunction with a mixed use project, would be required to provide at least one parking space for accommodations of two or fewer bedrooms, and at least two parking 12-213 spaces for accommodations of three or more bedrooms, and would be subject to such other conditions imposed by the City has part of the conditional use permit process. As part of the application for a time-share use, the applicant would have to provide specific information including a management plan and specific information on the accommodations and any ancillary uses. The City would then review the application process in accordance with its normal process for review of conditional uses. This would allow the City to address potential impacts associated with this use, similar to the approach that the City uses with hotels and other lodging accommodations in these districts. Consistent with this change, the proposed ordinance updates the list of conditional uses in both the Service Commercial and Central Business Districts to include time share uses as regulated by the new Chapter 17.138. The Planning Commission held a public hearing to consider the proposed ordinance at its regular meeting of March 1, 2022. Following the public hearing, the Planning Commission unanimously recommended that the City Council adopt the proposed ordinance. City staff has made minor, non -substantive edits to the proposed ordinance that went to the Planning Commission to correct typographical errors, and to add the sections amending the list of conditional uses in the Service Commercial and Central Business Districts. FISCAL IMPACT None RECOMMENDED ACTION Staff recommends that the City Council introduce by title only and waive further reading of an Ordinance Adding Chapter 17.138 "Time Share Uses" and Sections 17.138.010- 17.138.060 to Title 17, Zoning, of the St. Helena Municipal Code, amending sections 17.48 (Central Business) and 17.52 (Service Commercial) and Deleting Section 17.112.130 of the St. Helena Municipal Code. ATTACHMENTS Attachment 1-St. Helena Time Share Ordinance -Final Attachment 2-Community email comments 12-214 CITY OF ST. HELENA ORDINANCE NO. ADDING CHAPTER 17.138 "TIME SHARE USES" AND SECTIONS 17.138.010 — 17.138.060 TO TITLE 17, ZONING, OF THE ST. HELENA MUNICIPAL CODE, AMENDING SECTIONS 17.48.030 AND 17.52.030 AND DELETING SECTION 17.112.130 OF THE ST. HELENA MUNICIPAL CODE WHEREAS, the City of St. Helena is a popular tourist destination, known for its scenic Napa Valley location, exceptional wineries and restaurants, historic Main Street and small town agricultural character; and WHEREAS, preserving the rural, small town quality and agricultural character of the City of St. Helena has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's 2040 General Plan; and WHEREAS, the City of St. Helena stands out in the Napa Valley for its ability to attract visitors while also supporting the needs of its resident population. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy; and WHEREAS, the City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses; and WHEREAS, the City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City of St. Helena; and WHEREAS, according to the U.S. Census Bureau, the current median household income in the City of St. Helena is $90,031,- while the estimated value of owner - occupied housing units from 2015-2019 was approximately $1,112,100, with current real estate listings suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City; and WHEREAS, as noted in the St. Helena Housing Update Report prepared for the City in April 2018, "St. Helena has more local jobs than people in the labor force, demanding large numbers of commuters to fill local jobs. Workers commute daily into -1- 12-215 St. Helena, many because there is no local housing that is affordable at the incomes that they make. Thirty six percent (36%) of St. Helena households cannot afford market rents while seventy percent (70%) of St. Helena households cannot afford to purchase a home. Paramedics and preschool teachers cannot afford St. Helena's market rents. Teachers, registered nurses, winery and hospitality managers and nonprofit directors cannot afford homeownership in St. Helena"; and WHEREAS, the City has made significant efforts to address the need for housing at lower income levels, of which recent examples include providing assistance to local nonprofit Our Town St. Helena for the Brenkle Court development, a mutual self-help housing development providing homeownership opportunities to eight low income working families, as well as the acquisition of a home located at 963 Pope Street using a charitable sale strategy. The property at 963 Pope Street is being developed with an additional four units to provide a total of five new affordable rental units in the City; and WHEREAS, further, in connection with the recently approved Farmstead lodging project, the City negotiated with the developer to contribute one million dollars toward the purchase of property to be used for the development of not less than twenty units of housing that will be affordable to low and very low income households, and an additional two million two hundred thousand dollars to be used more generally toward the development of affordable housing in the City; and WHEREAS, the City additionally provided substantial financial assistance to the recently completed Turley Flats Affordable Housing development, which provides eight units of rental affordable housing in a three story building located at 1105 Pope Street; and WHEREAS, these efforts have helped to address the City's need for affordable housing, but have also highlighted the challenge of providing sufficient housing to meet demand, particularly at more affordable levels, due to the significant costs of acquiring housing or land for the development of housing in the City and the limited supply of such land; and WHEREAS, the conversion of existing residential units to uses other than long- term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community; and WHEREAS, the City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses; and -2- 12-216 WHEREAS, to this end, in 1982 the City adopted Ordinance No. 82-07, which prohibited the creation of time-share projects as a means of ownership of any single- family, two-family or multiple -family dwelling or any apartment house within the City. This restriction was imposed because the conversion of residential dwelling units to time-sharing projects would eliminate residential dwelling units that would otherwise be available for long-term occupancies, and were inappropriate in residential areas because those uses have the same character as commercial hotels, motels and other transient occupancy uses, and would result in increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods; and WHEREAS, the City has historically not received complaints about time-sharing uses in residential neighborhoods. Commencing in 2020, however, the City began receiving complaints regarding single family homes in the City that were being sold and/or marketed as "fractional ownership" or "co -ownership" homes, wherein each buyer may acquire a one -eighth interest in a limited liability company that will own the home. Under the structure pursuant to which these dwelling units are marketed and sold, each owner gets a one -eighth share along with the right to use the home for one - eighth of each year indefinitely. During each owner's usage period, that owner has exclusive use of the entire house. All rentals are prohibited; only owners and their guests are permitted to use the house. Each owner pays regular assessments to fund the operating costs of the home and maintenance reserves; and WHEREAS, this arrangement, which provides that each purchaser is entitled to exclusive use of the property for a fixed number of days each year, is a "time-share plan" as defined in Business and Professions Code section 11212, and a "time share program" as defined in Section 17.112.130 of the City's Municipal Code; and WHEREAS, the City has received numerous complaints regarding these properties, including parking impacts from large numbers of people staying at these properties; excessive noise late into the evening due to frequent outdoor parties; traffic due to frequent visitor turnover; traffic, noise and parking concerns due to frequent visits from cleaning, landscape maintenance and pool cleaning services that come to the properties in between each stay to prepare the home for the next guest; and an inability to maintain lines of communication to set community expectations with the users of the unit, as visitors only frequent the homes for short term stays of 2 to 14 days; and WHEREAS, the complaints received by the City are reflective of the reasons that the City prohibited time-share projects within residential areas of the City. The time- share uses provide a short-term, high impact vacation oriented use of the property, where those that buy into the time-share use the home for entertaining and short term stays while visiting restaurants, wineries and other tourist oriented locations in St. Helena and the surrounding Napa Valley; and WHEREAS, this high impact use, combined with the frequent turnover and commercial management of these properties is not consistent with the residential districts in which they are located. It is commercial in nature, in that these time-share -3- 12-217 uses are structured as a short-term, tourist oriented, visitor serving use of the subject properties. The use of these properties as time-shares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City; and WHEREAS, expanded use of residential properties for time-share uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for time-share uses of residential properties; and WHEREAS, this encroachment of tourist oriented, visitor serving uses in residential neighborhoods will not only compromise the residential character of these areas, but will also further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City; and WHEREAS, the City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad authority to regulate the development and use of real property within its jurisdiction to promote the public welfare; and WHEREAS, pursuant to and in accordance with this authority, the City Council desires to reaffirm its restrictions on time-share uses in residential areas, and to update the language of the Zoning Code to provide consistency with the terminology used to define time-share uses in State law. Further, the City desires to provide greater clarity as to the zoning districts in which time-share uses are permitted as conditional uses, and the standards pursuant to which they will be reviewed in those zoning districts; and WHEREAS, the Planning Commission of the City of St. Helena held a duly noticed public hearing on March 1, 2022, as required by law to consider all the information presented by staff, and public testimony presented in writing and at the meeting; and WHEREAS, on March 1 2022, the Planning Commission of the City of St. Helena recommended that the City Council adopt this Ordinance amending the Municipal Code as described herein by a 5-0 vote; and WHEREAS, on March 22, 2022, the City Council held a duly noticed public hearing, accepting testimony from the public, and discussed the proposed amendments and staffs recommended approval of this Ordinance; and WHEREAS, the proposed zoning amendments are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the agricultural, small town character of the City of St. Helena; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply; and -4- 12-218 Now, therefore, the City Council of the City of St. Helena does hereby ordain as follows: SECTION 1: The above recitals are hereby incorporated as though set forth in this section. SECTION 2: Chapter 17.138 and sections 17.138.010 — 17.138.060 are hereby added to Title 17 of the St. Helena Municipal Code, to read as follows: "Chapter 17.138 TIME-SHARE USES 17.138.010 Purpose and Findings 17.138.020 Definitions 17.138.030 Time-share Uses Restricted to Service Commercial (SC) and Central Business (CB) Districts 17.138.040 Application Process and Development Standards 17.138.050 Violations, Enforcement and Civil Penalties 17.138.010 Purpose and Findings A. There is a critical shortage of permanent, long-term housing in the City of St. Helena. B. A limited supply of suitable vacant land, land values, and market demand for land for other uses, including but not limited to use of property for vineyards, have limited the construction of additional housing in the City of St. Helena. C. St. Helena is a popular tourist destination known for its scenic Napa Valley location, exceptional wineries and restaurants, historic Main Street and small town agricultural character. D. The City of St. Helena stands out in the Napa Valley for its ability to attract visitors while also supporting the needs of its resident population. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. E. Time-share uses are not an appropriate land use in the City's residential districts due to the multiple occupancy of time-share properties, the short-term, tourist oriented use of such property and commercial management of time-share facilities, all of which -5- 12-219 create increased traffic generation, excessive noise, disruption to residential communities through commercial -level maintenance of the time-share facilities, and therefore are appropriately confined to commercial zoning districts. F. Conversion of permanent housing to time-share facilities removes existing housing units from the City's existing stock and exacerbates an already severe housing shortage. G. It is therefore in the public interest to prohibit conversions of existing housing units into time-share facilities, as to do so eliminates needed housing stock by diverting those units to a tourist -oriented, commercial use. 17.138.020 Definitions For purposes of this Chapter, the following words and phrases shall have the meaning respectively ascribed to them by this Section: "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.160. "Building" shall have the meaning ascribed to it by Section 17.04.160. "Dwelling unit" shall have the meaning ascribed to it by Section 17.04.160. "Managing entity" means the person who undertakes the duties, responsibilities and obligations of the management of a time-share plan. "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. "Time-share instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a time-share plan and includes the declaration dedicating accommodations to the time-share plan. "Time-share interest" means the right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, regardless of whether or not such right is coupled with a property interest in the time-share property or a specified portion thereof. "Time-share plan" means any arrangement, plan, scheme, or similar device, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given 12-220 year, on a recurring basis for more than one year, but not necessarily for consecutive years. "Time-share property" means one or more accommodations subject to the same time- share plan, together with any other property or rights to property appurtenant to those accommodations. "Time-share use" means the use of one or more accommodations or any part thereof, as a time-share property pursuant to a time-share plan. 17.138.030 Time-share Uses Restricted to Service Commercial (SC) and Central Business (CB) Districts Time-share uses are conditional uses within the City's Service Commercial (SC) District and Central Business (CB) District, subject to approval of a conditional use permit applied for and approved in conformance with this Chapter. Time-share uses are not permitted in all other Zoning Districts in the City. 17.138.040 Application Process and Development Standards A. Application Process. Approval of a conditional use permit for time-share uses in the Service Commercial District or Central Business District shall be required in accordance with the requirements of Chapter 17.168. In addition to the application requirements contained in Chapter 17.168, an application for a time-share use shall be accompanied by the following documents which shall be subject to the approval of the planning director: 1. Management Plan. A management plan shall describe the methods employed by the applicant to guarantee the future adequacy, stability, and continuity of a satisfactory level of management and maintenance of the time share use. 2. Application Requirements. In addition to any application requirements established by this section and any other applicable requirements of this code, the following information shall be submitted as part of any application to develop or establish a time-share use: a. Typical floor plans for each accommodation. b. The phasing of the construction of the accommodations on the time- share property, if applicable. c. A description of any ancillary uses which are proposed in conjunction with the time share use. d. A description of the method of management of the time share use and indication of the management entity for the time-share property. e. Any restrictions on the use or occupancy of the accommodations. -7- 12-221 f. Any other information or documentation the applicant, city staff or commission deems reasonably necessary to the consideration of the time-share use, including any required environmental documents. B. Development Standards and Operational Requirements. Notwithstanding any other provision of this chapter, the following conditions must be met by any time-share use in any conditionally permitted zone. Additional requirements may be attached to a conditional use permit or development agreement if found to be necessary to assure that the time-share use meets the intent of this chapter: 1. Time-share uses developed in the Service Commercial District or Central Business District shall be limited to accommodations in upper floors in conjunction with a mixed -use project. 2. No existing residential use in the Service Commercial or Central Business District shall be converted to a time-share use. 3. Development Standards. The time-share use shall comply with all development standards for the zone in which it is located. 4. Parking. Parking shall be provided as follows: a. For accommodations of two or fewer bedrooms, one parking space shall be provided for each accommodation. b. For accommodations of three or more bedrooms, two parking spaces shall be provided for each accommodation. 4. Modification or Waiver of Standards. The planning commission may modify or waive one or more of the regulations contained in this section if it determines that strict compliance is not necessary to achieve the purpose and intent of this section. 17.138.060 Violations, Enforcement and Civil Penalties A. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this chapter is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.20. B. Time-share use, and/or advertisement for time-share use, of an accommodation in violation of this chapter is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance. Any such nuisance may be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 1.12, except that the civil penalty for a violation shall be one thousand dollars ($1,000.00). Each day the violation occurs shall constitute a separate offense. 12-222 C. Any responsible person who violates this chapter shall be liable and responsible for a civil penalty of one thousand dollars ($1,000.00) per violation per day such violation occurs. The city may recover such civil penalty by either civil action or administrative citation. Such penalty shall be in addition to all other costs incurred by the city, including without limitation the city's staff time, investigation expenses and attorney's fees. 1. Where the city proceeds by civil action, the court shall have discretion to reduce the civil penalty based upon evidence presented by the responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the court should consider the purpose of this chapter to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the responsible person's enrichment or profit as a result of the violation of this chapter. In any such civil action the city also may abate and/or enjoin any violation of this chapter. 2. Where the city proceeds by administrative citation, the city shall provide the responsible person notice of the right to request an administrative hearing to challenge the citation and penalty, and the time for requesting that hearing. a. The responsible person shall have the right to request the administrative hearing within forty-five (45) days of the issuance of the administrative citation and imposition of the civil penalty. To request such a hearing, the responsible person shall notify the city clerk in writing within forty- five (45) days of the issuance of the citation. The appeal notification shall include all specific facts, circumstances and arguments upon which the appeal is based. b. The city manager is hereby authorized to designate a hearing officer to hear such appeal. The city hearing officer shall conduct a hearing on the appeal within ninety (90) days of the request for the hearing unless one of the parties requests a continuance for good cause. The hearing officer shall only consider those facts, circumstances or arguments that the property owner or responsible person has presented in the appeal notification. c. The hearing officer shall render a decision in writing within thirty (30) days of the conclusion of the hearing. The hearing officer shall have discretion to reduce the civil penalty based upon evidence presented by the property owner or responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the hearing officer should consider the purpose of this chapter to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the property owner's or responsible person's enrichment or profit as a result of the violation of this chapter. d. Any aggrieved party to the hearing officer's decision on the administrative appeal may obtain review of the decision by filing a petition for writ 12-223 of mandate with the Napa County superior court in accordance with the timelines and provisions set forth in Government Code Section 53069.4. e. If, following an administrative hearing, appeal, or other final determination, the owner of the property is determined to be the responsible person for the civil penalty imposed by this section, such penalty, if unpaid within forty-five (45) days of the notice of the final determination, shall become a lien to be recorded against the property on which the violation occurred pursuant to Chapter 1.12. Such costs shall be collected in the same manner as county taxes, and thereafter the property upon which they are a lien shall be sold in the same manner as property now is sold for delinquent taxes. D. Any violation of this chapter may also be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 1.12, except that the civil penalty under Chapter 1.12 for a violation shall be one thousand dollars ($1,000.00). E. Each day the violation of this chapter occurs shall constitute a separate offense. F. The remedies under this chapter are cumulative and in addition to any and all other remedies available at law and equity." SECTION 3: Deletion of Section 17.112.130 Section 17.112.130 is hereby deleted in its entirety. SECTION 4: Amendment of Section 17.48.030 Section 17.48.030 is hereby amended to add the following text as a separate line immediately following "Theaters, movie and legitimate;", and immediately prior to "Tobacco/smoke shop, including the sale of tobacco, tobacco and/or nicotine products and equipment for smoking;": "Time share uses, pursuant to Sections 17.138.030 and 17.138.040;" SECTION 5: Amendment of Section 17.52.030 Section 17.52.030 is hereby amended to add the following text as a separate line immediately following "Theaters, movie and legitimate;", and immediately prior to "Tobacco/smoke shop, including the sale of tobacco, tobacco and/or nicotine products and equipment for smoking;": "Time share uses, pursuant to Sections 17.138.030 and 17.138.040;" SECTION 6: CEQA -10- 12-224 This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. SECTION 6: Effective Date This ordinance shall take effect 30 days after its final adoption, and a summary of this ordinance shall be published once with the names of the members of the Council voting for and against the ordinance in the St. Helena Star, a newspaper of general circulation published in the City of St. Helena. THE FOREGOING ORDINANCE was introduced at a regular meeting of the St. Helena City Council on the day of , 2022, and was adopted at a regular meeting of the St. Helena City Council on the day of 2022, by the following vote: Mayor Ellsworth: Vice Mayor Dohring: Councilmember Chouteau: Councilmember Hardy: Councilmember Hall: APPROVED: Geoff Ellsworth, Mayor ATTEST: CITY OF ST. HELENA Cindy Tzafopoulos, City Clerk -11- 12-225 From: Mari Jansdotter <mjansdotter@yahoo.com> To: Anna Chouteau Sent: 6/8/2021 7:25:45 AM Subject: Re: [External] 1242 Madrona pictures Re: Pacaso Thank you, Anna, for your kind reply. I'm sorry you all have to go through this lawsuit by Pacaso and hope the judge find in your favor. I have a follow-up question. Do you know who I should address it to? The Pacas house building on Kearney across the street from us has installed lights under the roofline that are on all night and installed in such a way they shine straight into our house, especially my daughter's bedroom. Are there any ordinances that I could refer to that help me ask them to please cover 1 redirect those lights or at least turn them off after 10 p.m? Thank you! Best Mari 12-226 P-1 12-228 Sent from Yahoo Mail on Android On Tue, Jun 8, 2021 at 7:12 AM, Anna Chouteau <AChouteau@cityofsthelena.org> wrote: Hi Mari, Thank you for your email. I forwarded your email to City staff about the specific permitting questions. Our planning director is out of the office this week. We are defending ourselves in the lawsuit. Our City Attorney filed an anti-SLAPP motion that is now public information and the hearing will be coming Lip this summer. All my best, Anna Sent from my Wad On Jun 7, 2021, at 6:01 PM, Mari Jansdotter <mjansdotter@yahoo.com> wrote: To clarify, do they have permit allowing the new structure going up at 1242 Madrona? The rendering from original sales listing shows a trellis (see attached) but a structure looking like a live -on unit close to (and taller than) the Oak neighbour' fence is being built. See pictures from today <20210607_175202jpg> <20210607_175219jpg> Sent from Yahoo Mail on Android On Mon, Jun 7, 2021 at 5:38 PM, Mari Jansdotter <mjansdotter@yahoo.com> wrote: Thank you for doing all you can to stop Pacaso! I am not o.k. with Pacaso's violation of city ordinance and I support the city's legal fight. In addition to signing the petition and putting a No Pacaso sign outside my home, what else can we on the community do to help, please? 12-229 I finally afforded my dream home after moving several times the last 10 years, only to a year later have 4! of these Pacaso'time share' like vacation LLC/conunerci.ally owned houses popping up in my neighborhood. I'm devastated - this is supposed to be a residential areaH I am very worried about my family's safe & peaceful living situation, now that I'll be impacted by 4 of these houses (one across the street) - each with 8 groups of owners and/or their guests circulating in and out all year round. Many Pacaso have 4 bedrooms that easily accommodate 8+ people, and pool in the backyards with outdoor areas for gatherings/parties. It's a huge difference having your neighbor throwing an occasional party versus non-stop having a new group of people next door visiting for thier token time of vacation / partying. Pacaso houses also come with increased parking problems as these properties tend not have garages or driveways (often transformed into addl bedroom). Specifically would you mind looking into building code the one at 1242 Madrona / Oak? Looks like they're adding a guest house with vary narrow set back from the oak side neighbor. Is that an approved building? Maybe they're getting around that by making it a partial garage? Add to that, the 4 Pacaso houses are all in close proximity of RLS with kids walking / biking to and from school. What are the safety concerns that this is imposing with new people circulating in and out all year round and increased car traffic? Worst case scenario there will be a liability situation that will put a stop to Pacaso. Please, please stop Pacaso before we even get close to that. Respectfully, Mari Jansdotter Sent from Yahoo Mail on Android 12-230 PACASO = PARTY HOUSES! Debbie Polverino 5/11/2021 To the members of the City Council. In the recent Napa Register article, Austin Allison agrees that short term rentals are a problem, that commercial Timeshares are a problem- that's not what Pacaso is he said. Yet, Pacaso listed the Valley View Street "Pool House" as a 1/8 Timeshare Ownership property. After the city was notified by several concerned citizens and myself regarding "timeshares" listed for sale in residential zoned areas, Pacaso changed its online marketing from "1/8 Timeshare Ownership to 1/8 Shared Ownership. Owners who purchase still share the property in available time slots just like a timeshare. Living next door to a Pacaso home has been living next door to a full-time party house! The constant music with speakers blaring, loud conversations until 2 am and later, noise violations along with excessive vehicles parked on the street or in front of our homes. The additional noise of gardeners blowing dirt and leaves into our yard, Pool service, catering trucks, housekeeping scheduled more frequently. Open houses are held with statements made with, "this is a great place for pool parties and entertaining, it's a perfect place to bring friends and extended family." This home on Valley View Street was a weekend getaway home for the previous owners who had loud weekend parties. It was a constant nightmare and all the homes nearby complained. Now the property has been split up to 8 owners. The Saint Helena P.D. has already been to this home at least 3 times for noise violations after 10pm. There must be a way to stop these repeated violations and offenders. Pacaso's has written policies for its owners on their website that they must adhere to. No parking on the street, no parties, no noise after 9pm to 7am, no dogs over 80 pounds. Policies have been broken several times already from each group including the Pacaso's owners. According to Mr. Allison, Saint Helena is running a dishonest campaign against Pacaso. Pacaso claims discrimination of outside ownership which is not the case. As we all know we welcome all people the opportunity to live in our quiet small town. Pacaso selling an 1,100 square foot home which is smallest of any home on our street for $1.7M is dishonest in my opinion. This is what he says is affordable housing for second home buyers who are paying in full, plus maintenance fees? When commercial companies buy a dozen homes in Napa Valley and plans additional purchases to be split up to 8 shares it is not committed to the community or our quiet neighborhoods. Zoning is in place for a reason. Commercial companies operating in full time residential streets should adhere to the rules that are in place and only buy up in areas where other vacation homes are abundant and not a disruption. What happens should we decide to sell our home? How will people feel about buying next door to a home owned by 8 owners who don't know each other and all come at different time slots for as little as 2 days at a time? We will have to disclose this information. This put a negative mark on our property. This is something I want you to think about! Say NO to Pacaso! Thank you. 12-231 From: Amy Caldarola <amycal@comcast.net> To: Paul Dohring CC: Anna Chouteau; Lester Hardy; Eric Hall Sent: 5/23/2021 1:04:24 PM Subject: [External] Picaso Dear Council Members, This is Amy Caldarola here. I am very concerned about Picaso buying property in our residential neighborhoods under the guise of democratizing home ownership. This is not affordable housing. Picaso properties are time-shares and short-term rentals which violate municipal code provisions. The presence of these properties in residential neighborhoods is inappropriate and will degrade the quality of life. It has already done so with Picaso's property on Valley View; those neighbors are suffering with loud noise, music, and parties that go on to after midnight; even calling the police does not seem to stop them. I support the city in doing everything possible to defeat them. I also support a counter law suit against them if it makes legal sense. With that said, we are fighting for the soul of our community and this needs to be a number one priority. Picaso is in Napa, Sonoma, Healdsburg, and probably will move into Calistoga and Yountville. This is a fight worth fighting. It might be helpful for the affected counties and municipalities to join their resources together to oppose them. Please outline for me what the city is doing and what the plan is. Thank you. I really appreciate you taking the time to keep me informed on this very important and pressing issue. We must act now! Sincerely, Amy Caldarola 12-232 May 11, 2021 Good evening City Council members. My name is Clare Barr and I live in St. Helena. Tonight I would like to speak about the Pacaso Vacation Share homes. I listened carefully to the public comments of Pacaso Share owners made at our last City Council meeting. They sounded sincere in their desire to be a part of the St. Helena community. The problem is they have bought into a business model that will make that nearly impossible. To be a part of a real community means forming bonds with neighbors. How can that come about with a home next door that has possibly dozens of strangers coming and going, with visits no longer than 14 days at a time, a few times a year? And with the likelihood of visits gifted by other share owners, and a cleaning crew who appears before each arrival, the number swells. With the result that a Pacaso share owner, is viewed by their neighbors as only one in a sea of unfamiliar faces. And though the intentions of some of the share buyers might be good, can we say the same for all 7 of the remaining shareowners? One of whom might gift a weekend to his brother for a blowout bachelor party? Or as was the case in Napa, a single shareowner who conducted retreats in which close to a dozen visitors would come and go within one stay. That particular shareowner was charging her guests, which is a complication on an entirely different level. Pacaso would have us believe that their sharebuyers are families who simply want a quiet, lovely getaway. But in actuality, a Pacaso home is built for partying. Their own website says of one offering "This home takes entertaining to new heights". And yet another listing says that a 12-233 particular home "has been completely re -imagined to accommodate families, friends, and large groups". Another listing offers "year round fun and adventure". Now, none of us resent the visitor who wants to have fun. Indeed, our beautiful valley is an ideal place for celebration. And we all do that on occasion. But when you realize that every single visitor owning a Pacaso share has been wooed with the promise of "fun and adventure" within a house "built for entertaining", then you have the possibility of major partying with each and every visitor, all crammed into stays that last from 2-14 days. This is transient occupancy in our residential neighborhoods that cannot possibly be regulated under the Pacaso system. There is a reason why we have ordinances in place that designate where tourists and visitors can stay. It allows us to appreciate our visitors, giving them the space and accommodations in which to party and celebrate, while we ourselves can conduct our daily lives in the sanctuary of our residential neighborhoods. Which in turn, are places where we know our neighbors so well that we trust them with our keys, our pets, and even our children. With whom we share joy and sometimes sorrow, and whom are quick to lend a hand in times of crisis. And if we have learned anything in the last few years, it is that the ability to know and rely on our neighbors is the very thing that sustains our community through thick and thin. A vacation home with a parade of visitors coming and going, does not belong in our residential neighborhoods. Please Say No to Pacaso. Clare Barr St. Helena 12-234 From: Beth Gray <bgray14@gmail.com> To: Geoff Ellsworth Sent: 5/22/2021 3:01:13 PM Subject: [External] Pacaso Dear Mr. Mayor, I am writing to express my strong opposition against the infiltration of Pacaso and their timeshare strategy in the city of Saint Helena. As a full-time resident here in the city (and as your neighbor), I find it atrocious that the city has not been able to stop the infiltration of this community destroying business model. This business will do nothing but destroy our community. As an example, I witnessed the dumping of water from the pool into the creekbed from a home purchased by Pacaso right on the corner of Sylvaner/Reisling as they began to redevelop the home and expect to list it as fractional ownership. I.l.legal dumping of the pool water with disregard to any of the environmental consequences demonstrates their utter lack of care about the community. Similarly, hearing from the neighbors who live next to a Pacaso home on Valley View, I can only shake my head and sympathize with the poor neighbors having to deal with multiple cars showing up and loud music being played at all hours. One of the reasons I moved from San Francisco to Saint Helena was to enjoy the quiet sounds of nature, the beautiful outdoors - not to listen to vacationers who only want to party for the two weeks that they have their time in the home. Please protect our city from these timeshares. I understand the city is being sued. I hope that we can collectively put the necessary resources behind this lawsuit to stop Pacaso from any more timeshares in St. Helena. Respectfully, Beth Gray 12-235 Report to the City Council Regular City Council - 12 Apr 2022 Agenda Section: CONSENT ITEMS Subject: Consideration of Second Reading and Proposed Adoption of a Ordinance Adding Chapter 17.138 "Time Share Uses" and Sections 17.138.060 to Title 17, Zoning of the St. Helena Municipal Code, amending sections 17.48.030 (Central Business) and 17.52.030 (Service Commercial) and Deleting Section 17.112.130 of the St. Helena Municipal Code CEQA Exempt Determination: Prepared By: Ethan Walsh, City Attorney Reviewed By: April Mitts, Administrative Services Director Approved By: James C. McCann, Interim City Manager BACKGROUND The City Council held a public hearing on the proposed ordinance on March 22, 2022, and introduced the ordinance by title only and waived reading by a unanimous vote of the City Council. Staff recommends that the Council waive second reading and adopt the ordinance. The report below mirrors that provided to the Council at the March 22, 2022 meeting. Over the past two years, there has been significant discussion in the community regarding Section 17.112.130 of the City's Zoning Code, which prohibits the creation of a time-share project as a means of ownership of any single-family, two-family or multiple -family dwelling or any apartment house in the City (the "Time Share Ordinance"). The City Council discussed the Time Share Ordinance at its July 14, 2020 meeting in response to concerns raised regarding a real estate listing for a fractional or partial ownership interest in a residential home in the City. The prior City Attorney discussed this issue with the City, focusing on the question of the extent to which the City Council could regulate an ownership structure through the City's zoning authority, and noted the challenges of doing so. At the conclusion of the Council's discussion of this issue, Council directed the City 12-236 Attorney and staff to continue to research its options to address the concerns raised by members of the community in response to the listing of the home at issue. In the months following the July 2020 Council meeting, the company that had been marketing that original home, now known as Pacaso, began marketing other homes in the City, and the City received additional complaints from members of the community. Based on new information that was available to the City, primarily through Pacaso's marketing materials, the City Attorney's office concluded that the properties being marketed by Pacaso were not just fractional or partial ownership structures, but were also being marketed to be used as a time share project that would be prohibited under the City's ordinance, and informed Pacaso of that conclusion. Pacaso disagreed with the City Attorney's conclusion, and initiated a lawsuit in an effort to compel the City to retract its conclusion. That litigation is ongoing. When reviewing the Time Share Ordinance in this context, the City Attorney's office found that the substance of the Time Share Ordinance has not been updated since its adoption in 1982. The City Attorney's office concluded that the Time Share Ordinance would benefit from an update to refine the definitions to more directly address the impacts of time-share uses, to clarify the means used by the City to enforce the restrictions on time share uses, and to clarify how time share uses are treated in non-residential districts. City staff initially delayed initiating any changes to the Time Share Ordinance while the litigation was ongoing. However, due to the continued marketing of time share uses within the City, staff has decided to move forward with recommending the proposed updates to the City's ordinance. On March 1, 2022, the Planning Commission voted unanimously to recommend the City Council approve the proposed ordinance. DISCUSSION The Discussion section of the Staff Report is organized as follows: First, the section provides a brief explanation for the City's conclusion that the homes that have been marketed by Pacaso constitute time share projects. While the City's conclusion does not directly affect the changes to the Zoning Code set forth in the proposed ordinance, it is helpful to understand that the Time Share Ordinance, both in its original form and as proposed to be amended, is intended to protect against the impacts that these homes and similar uses could have on the City's housing supply and the character of the City's residential districts. Second, this section discusses the legal basis for the City's Time Share Ordinance, the reasons why the City prohibited time share uses in residential properties, and why those reasons continue to apply today. Third, this section outlines the changes made in the proposed ordinance and the reasons for the proposed changes. A.Current Time Share Ordinance and Application to Pacaso Homes Section 17.112.130 of the Zoning Code prohibits the creation of a time-share project as a means of ownership of any single-family, two-family or multiple family dwelling or apartment house within the City. A time-share project is defined in that section as any real property that is subject to a time-share program. A time-share program is in turn defined in part as an arrangement whereby the use, occupancy or possession of the 12-237 property circulates among purchasers according to a fixed or floating time schedule on a periodic basis for a specific period of time during any given year. Pacaso provides a significant amount of information on its website regarding the manner in which its homes are used by the purchasers of a Pacaso home. According to Pacaso's website, the single family residences marketed by Pacaso are held by a property -specific limited liability company ("LLC"), and each co-owner purchases a 1/8 share in the LLC. (Pacaso.com/learn) Each 1/8 share entitles the co-owner to 44 stay nights within any 365 day window. Stays can be from 2 to 14 nights in duration for each 1/8 share. Back-toback stays are not permitted. (Pacaso.com/faq/scheduling) Stays are booked on an app, with specific rules governing the number of "special dates" that each co-owner can book, and the number of stays that each owner can book during "peak seasons." (Id.) Each owner can book the residence to use themselves, or may allow guests to use the residence, whether or not the co-owner is present. (Id.) Between each stay, Pacaso conducts a thorough inspection and cleaning. ("5 reasons Pacaso is better than a timeshare." Pacaso.com/blog/better-than-resort-timeshare) The Pacaso model grants each 1/8 owner the right to use the property for a specific period of time (44 days in a year) in increments of 2-14 days. The use, occupancy and possession of the property circulates among the co -owners according to a floating time schedule that gives each co-owner exclusive rights to the property for a specific period of time each year. This use structure fits squarely in the City's definition of a time-share program, and the properties operated by Pacaso in this manner would therefore be timeshare projects under the existing Time Share Ordinance. B.Reasons for the Time Share Ordinance 1. The City's General Plan The City of St. Helena has long been defined by its rural, small town quality and agricultural character. In adopting the St. Helena General Plan Update 2040, the City noted that the defining, unifying goal of all the elements of the 1993 General Plan was: To protect the rural, small town quality and agricultural character of St. Helena. It is the General Plan's intent that the preservation of this small town character be the unifying philosophy that overlays all other stated goals and policies. (Genera I Plan 2040, p. 1-2.) While the 2040 General Plan acknowledges that this is no longer the sole, overriding focus of the General Plan, retaining the small town character of St. Helena remains a primary focus of the City's land use planning. (Id.) A key component of retaining the City's small town character is maintaining a balance between the economic benefits that arise from visitors who come to St. Helena for its wineries, restaurants and historic downtown, and maintaining its authentic small town quality of life for the City's residents. This theme is consistent throughout the City's General Plan, and maintaining this balance is key to the City's long term viability. The General Plan notes in its Introduction that "[t]he community stands out in the Valley for its unique, historic character and its ability to attract visitors while also supporting the needs 12-238 of its resident population." (General Plan p. 1-8.) The City has set goals to maintain that balance, striving to achieve an economy that "will meet the basic needs of residents, while balancing the benefits and impacts of visitors and provide better economic opportunities. (General Plan 1-15.) The City further seeks to "promote sustainable tourism practices that allow the City to enjoy the economic benefits of visitors to the region while maintaining the authentic small-town quality of life." (General Plan p. 3-9.) St. Helena is a renowned tourist destination, bringing visitors from throughout the world to its wineries, restaurants and downtown, but it is also a functioning City and community, with residents who contribute to its social fabric. Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance. The City has commercial districts, like the Service Commercial district and the Central Business district, that provide for uses that serve both visitors and the local community, such as restaurants, retail shops and winery tasting rooms, among others, along with lodging where those visitors can stay. (St. Helena Municipal Code §§17.48.030, 17.52.030.) The City also has residential districts that provide housing for those who live in the community, at varying densities in order to provide a diversity of housing types. 2. Use of Zoning to Preserve Residential Areas The use of zoning to preserve the character of the residential districts of a City has been common for over a century. In the seminal case of Euclid v. Ambler the United States Supreme Court upheld the validity of comprehensive zoning that would set aside residential districts "from which business and trade of every sort, including hotels and apartment houses, are excluded." (Euclid v. Ambler Co. 272 U.S. 365, 390.) The U.S. Supreme Court upheld the Village of Euclid's zoning ordinance in that instance, noting that the inclusion of non-residential uses in residential districts may have an increasingly deleterious impact on the residential area "until, finally, the residential character of the neighborhood and its desirability as a place of detached residences are utterly destroyed." (Id. at 394.) The California Court of Appeals followed Euclid and subsequent cases in upholding the City of Carmel-by-the-Sea's zoning restriction on short-term rentals. (Ewing v. City of Carmel -By -The -Sea (1991) 234 Cal.App.3d 1579.) In that case, the Court noted that the City's chief purpose in adopting the short-term rental restriction was "to provide an appropriately zoned land area within the City for permanently single-family residential uses and structures and to enhance and maintain the residential character of the City." (Id. at 1579.) In upholding Carmel's short-term rental restriction, the Court found that short-term rentals "undoubtedly affect the essential character of a neighborhood and the stability of a community. Short-term tenants have little interest in public agencies or in the welfare of the citizenry. They do not participate in local government, coach little league, or join the hospital guild. They do not lead a scout troop, volunteer at the library, or keep an eye on an elderly neighbor. Literally, they are here today and gone tomorrow —without engaging in the sort of activities that weld and strengthen a community." (Id. at 1591.) 12-239 3.Impacts of Time Share Uses on Residential Districts Like Carmel, the City of St. Helena strives to maintain the character of its residential areas in the face of intense demand for accommodations to serve visitors to St. Helena. The Time Share Ordinance is one of the means that the City has in place to ensure that it is able to maintain its existing and limited housing stock for use in long term residency, and to maintain the character of its residential zoning districts. When the City originally adopted the Time Share Ordinance in 1982, the City Council made specific findings based on the impact it foresaw if time share uses were to locate in the residential areas of the City. Those findings were as follows: 1. There is a critical shortage of affordable housing in the city for long-term occupancies (more than six months annually), and the availability of additional residential dwelling units is substantially restricted by the growth management system. 2. The conversion of residential dwelling units within the city to time-sharing projects eliminates residential dwelling units otherwise available for long-term occupancies (more than six months annually) in the city. 3. Time-sharing projects have the same character as commercial hotels, motels and other transient occupancy uses due to their transient nature and to the multiple shortterm (less than six months annually) occupancies by those participating in timesharing projects. 4. Such commercial or quasi -commercial like use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods. 5. The city council finds and determines that this section is necessary to protect the public health, safety and welfare of the citizens of the city. As discussed in more detail below, these findings continue to hold true in St. Helena, and continue to support the City's decision to restrict time-share uses in residential districts. i. Housing Shortages and Impacts of Time -Share Uses on Existing Housing Stock In adopting the current Time Share Ordinance, the City Council found that there was a critical shortage of affordable housing in the City for long-term occupancies. That continues to be the case, and is undoubtedly worse than was the case at the time the Time Share Ordinance was originally adopted. The most recent census data lists the median value of owner occupied homes in St. Helena at $1,112,100 for the period of 2015-2019, while the Zillow Home Value Index estimates medial home values in St. Helena to be approximately $1,870,000 as of February 2022. www.census.gov/quickfacts/sthelenacitycalifornia; zillow.com/home-values/.) In contrast, the median household income in St. Helena from 2015-2019 was $90,031, and the median income for a four person household in Napa County for 2021 is approximately 12-240 $109,200. (www.census.gov/quickfacts/sthelenacitycalifornia-, www.hcd.ca.gov/grantfunding/income-limits/state-and-federal-income- I i m its/d ocs/income-I im its-2021. pdf. ) At the time of adoption of the City's Housing Element in 2015, the income necessary to purchase a median priced single family home was nearly $200,000 per year, and prices have risen dramatically since then. (City of St. Helena Housing Element Update 2015-23, p. 3.) The cost of homes currently in St. Helena are well in excess of what median income residents of St. Helena can afford, as well as median income residents of Napa County generally. Further, as Erika Sklar observed in the St. Helena Housing Update Report that she prepared for the City in April 2018, "St. Helena has more local jobs than people in the labor force, demanding large numbers of commuters to fill local jobs. Workers commute daily into St. Helena, many because there is no local housing that is affordable at the incomes that they make. 36% of St. Helena households cannot afford market rents while 70% of St. Helena households cannot afford to purchase a home. Paramedics and preschool teachers cannot afford St. Helena's market rents. Teachers, registered nurses, winery and hospitality managers and non-profit directors cannot afford homeownership in St. Helena." (St. Helena Housing Update Report, p. 7 (April 2018).) The City has made and continues to make efforts to address the need for affordable housing in the City, including providing assistance for the Brenkle Court, Turley Flats and 963 Pope Street projects. The City has also ensured that new non-residential development will assist the City in providing adequate affordable housing, as evidenced by the significant contributions to affordable housing made by the Farmstead Lodging project through its development agreement with the City. These efforts, however, have highlighted the challenges of providing housing at all income levels, with the most significant challenge being a limited supply of existing housing stock in the City, and a limited supply of available land for new housing. Given the housing shortage already in existence, losing additional housing stock will only make this problem worse. The findings in the original Time Share Ordinance also note that the conversion of homes to time sharing projects would eliminate residential dwelling units that would otherwise be available for long term residential use. This continues to be true, as a home that is used for time share purposes will no longer be available for households to use as their long term residence. This threat to the City's existing housing stock is not insignificant. The publicity regarding Pacaso's rise as a company speaks to a pent up demand for homes that could be converted to time share use, reducing available housing stock for long term use. Pacaso's co-founder has indicated that "[t]here are tens of millions of families that aspire to own second homes but are unable to, due to reasons of cost." (Just Five Months Old, Zillow Co -founder's Pacaso Claims It's Already A Unicorn" Noah Kirsch, March 24, 2021 (www.forbes.com/sites/noahkirsch/2021 /03/24/just-five-months-old- zillowcofounders-pacaso-claims-its-alread-a-unicorn/.)) In discussing Pacaso's model, Dan Wenhold of the venture capital firm Fifth Wall said "[t]hey were taking a previously illiquid asset, which was a timeshare, and making it affordable for the masses, also making it attainable for folks who wanted to own a second home but previously weren't able to." ("Pacaso, the Proptech Startup Founds by Zillow Alums, Raises $125M Series 12-241 C" Sophia Kunthara (September 14, 2021) (news.crunchbase.com/news/proptech- startup-pacasoraises-125m-series-c.)) Creating a new market for these prospective buyers who otherwise would not buy second homes unquestionably increases demand for these homes by creating an incentive for timeshare companies to buy up residences to meet this market demand. Creating more demand, and reducing supply, will further ratchet up housing costs, exacerbating the already significant housing shortage in the C ity. ii. Impacts to Character of the City's Residential Districts The City Council additionally found as part of the adoption of the original Time Share Ordinance that time-sharing projects have the same character as commercial hotels, motels and other transient occupancy uses due to their transient nature and to the multiple short-term occupancies by those participating in time-sharing projects. The Council concluded that this commercial or quasi -commercial like use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods. This continues to be the case, as the nature of time share uses of residential property is different than the typical long term residential uses for which the residential districts of the City are intended. The complaints that have been made by some local residents regarding the Pacaso homes are illustrative of the distinctions between time share uses and long term residential uses. A sampling of the email complaints received by the City are included in Attachment No. 2 to this Staff Report. The complaints received center on concerns over more intense traffic and parking issues, outdoor parties and conversations going late into the evening, sometimes as late as 2 A.M. One neighbor complained of outdoor lighting shining into her daughter's room at night. They complained of traffic and inadequate parking for the visitors to these homes. Further, neighbors have noted that with each turnover from one stay to another, cleaning and landscaping crews come to clean the unit and prepare it for the next user. While this level of maintenance is appropriate for a commercial vacation property, it impacts the residential character of the surrounding area by adding parking and noise burdens in the neighborhood. Living next door to a home where the residents turnover every 2-14 days, and professional cleaning and landscaping crews come to the property between each visit is much more akin to living by a commercial lodging project than a residential home. This is not at all.surprising, given that these time share homes are used by people who are on vacation. While long term residents may have an occasional party at their home, the time share model means that these residences are constantly being used by people who are on vacation, hosting parties or celebrating special occasions. These activities by their nature are more intense than typical residential use of property. The intensity of this use is a significant reason that these uses can change the character of a residential neighborhood. Long term residents, whether owners or renters, will occasionally have guests, and will occasionally have parties, but these time-share homes are used exclusively by people who are coming to the City on a short term basis for vacation or leisure. People will naturally stay out later, entertain more and gather in larger 12-242 numbers while on vacation. That is the reason that these uses are more appropriate in non-residential areas that are intended to cater to the City's visitors and tourists. Time share uses can change the character of a residential neighborhood by having it serve not only as a residential area but also a visitor lodging area, and subjecting it to the impacts that come with that more intense land use. In their marketing materials, Pacaso cites this intensity of use as a benefit, indicating that having these units filled with visitors seven days a week will benefit the local economy, since these visitors will patronize local businesses. (pacaso.com/communities) However, as noted above, the City strives through its General Plan to achieve a balance between benefits to the local economy and maintaining the character of the City. The City seeks to achieve this balance by promoting "sustainable tourist practices that allow the City to enjoy the economic benefits of visitors to the region while maintaining the authentic smalltown quality of life, (General Plan p. 3-9) and striving to achieve a local economy that "will meet the basic needs of residents, while balancing the benefits and impacts of visitors." (General Plan p. 1-15.) Bringing more visitors into residential neighborhoods to improve the local economy does not help to achieve that balance. It instead tips the scales in favor of the local economy, at the expense of the residential character of these neighborhoods. The nature of the timeshare use itself can impact the residential character of the City's residential districts because it will ensure that the time share users can only use their property for a limited amount of time each year. In the case of Pacaso owners, each stay is limited to 2-14 days. As discussed above, in the Ewing v. City of Carmel -by -the -Sea case, the California Court of Appeal found that short term rentals would affect the essential character of a neighborhood and the stability of a community. The Court noted that "[s]hort term rentals have little interest in public agencies or in the welfare of the citizenry. They do not participate in local government, coach little league, or join the hospital guild. They do not lead a Scout troop, volunteer at the library, or keep an eye on an elderly neighbor. Literally they are here today and gone tomorrow —without engaging in the sort of activities that weld and strengthen a community." This same problem is present with time-share uses. Each co-owner is in the unit on a short-term basis, and without the time to participate in the types of activities or build the relationships that create the fabric of a community. At the April 28, 2021 council meeting several Pacaso co -owners spoke of their experiences in St. Helena. All of them spoke of their affection for the community and the traditions they had established, but these were centered on attending local events and visiting shops, restaurants and wineries. These types of transactional activities are all beneficial to the City's local economy and are what the City hopes to see from visitors to the City, but it is not the type of community involvement described in the Ewing case that binds and strengthens a residential community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its small town character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents who will engage in the community in the manner described by the Court in Ewing, to the betterment of the entire community. 12-243 C.Proposed Amendments to the Time Share Ordinance The proposed Ordinance would make certain changes to the City's Existing Time Share Ordinance, as described below. 15indings and Establishment of New Chapter The proposed Ordinance includes detailed recitals and findings describing the policy bases for the City's regulation of time share uses. The findings are consistent with the findings made as part of the original Time Share Ordinance, but more detail has been added. The policy bases for the proposed Ordinance are discussed in the sections above, and further discussion is not necessary here. The proposed Ordinance also relocates the restrictions on time share uses to its own chapter at Chapter 17.138, The Time Share Ordinance is currently located in Chapter 17.112, General Site Design and Development Standards. City staff believes that with the added level of detail in the Proposed Ordinance, these provisions merit being located in a separate chapter, and has changed the location of the Timeshare Ordinance accordingly. 2.Definitions The Proposed Ordinance amends the definitions that are used to define time share uses, with the new definitions set forth in Section 17.138.020. The new definitions are modeled on the definitions utilized by the state to regulate time-shares in the Vacation Ownership and Time -Share Act of 2004 (Bus. & Prof. Code §§11210-11288), but are modified somewhat to better apply in the land use regulation context. The new ordinance includes a number of definitions that work in concert to define a timeshare use. The ordinance defines a "time-share use" as the use of one or more accommodations, or any part thereof, as part of a time-share property pursuant to a timeshare plan. An "accommodation" is defined in this Chapter to include a range of residential units that could potentially be used for time-share purposes. The types of residential units that can be accommodations are listed at the beginning of Section 17.138.020 in the proposed ordinance. A "time-share plan" is defined in the ordinance, and generally includes any arrangement, plan, scheme or similar device whereby a purchase receives the right to exclusive use of the accommodation, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year. A "time-share property", in turn is defined as one or more accommodations that are subject to the same time-share plan together with any property rights that are appurtenant to the accommodations. A "time-share instrument", is the document or documents that create or govern the operation of the time-share plan. 12-244 Therefore a time-share use is the use of a residential property that fits within the definition of an "accommodation" under the ordinance, pursuant to a "time-share plan", which grants each owner of the time-share property exclusive use of the property for a certain period of time each year, but not the full year. It is important to note that not all properties with multiple owners or owned by business entities (such as LLCs) would constitute a time-share use under these definitions. The definitions focus on the manner in which the accommodation is used, not how it is owned. A time-share plan allows each owner exclusive use of the property for a specific period of time. This manner of use prevents the property from being used for long term residency, and leads to the continual cycling of visitors through the property and the more intense, constant vacation oriented use that the ordinance seeks to limit in residential districts of the City. A property that is owned by a group of friends or extended family members, whether through a separate business entity or otherwise, will not necessarily mandate that only one owner will be able to use the property at a time. The more formal arrangement found in time-share uses increases the intensity of use, in that each individual time-share owner cycles through the property, whereas families or friends are more likely to use the property together or in groups leading to less transition in the residential neighborhood. The more formal relationship, use of professional property managers and rights to exclusive use found in timeshare uses contributes to the commercial character of the property, with added traffic due to the more frequent turnover of visitors and more frequent cleaning and inspection between each user, which is common for a commercial vacation property, but not for a home owned by family or friends. 3-Enforcement The new ordinance additionally adopts a new enforcement structure for the City timeshare restrictions, modeled on the City's short-term rental ordinance. The ordinance prohibits both the use of accommodations for time-share use, and the advertisement of accommodations for time-share uses. This will better allow the City to prevent time-share uses in residential neighborhoods before they occur. The proposed Ordinance also outlines the process that will be used to enforce this new Chapter, again based on the City's existing short-term rental regulations. This approach has proved to be effective in enforcing the City's short-term rental regulations, and will help the City to take a more preventative approach to enforcing its time-share regulations as well. 4.Time Share Uses in Service Commercial and Central Business Districts Finally, while the City's existing Time Share Ordinance did prohibit time-share projects within certain types of residential dwelling units within the City, it does not make distinctions based on the various zoning districts of the City. Given that the primary concerns and impacts of this use arise from the high intensity use of property that negatively impacts the residential character of residential districts within the City, this use may not have the same impacts in commercial districts where visitors can be closer to 12-245 the amenities in the City that cater to visitors. The proposed new ordinance would allow time-share uses in the Service Commercial and Central Business Districts as conditional uses, provided that such time-share uses would be limited to accommodations in upper floors in conjunction with a mixed use project, would be required to provide at least one parking space for accommodations of two or fewer bedrooms, and at least two parking spaces for accommodations of three or more bedrooms, and would be subject to such other conditions imposed by the City has part of the conditional use permit process. As part of the application for a time-share use, the applicant would have to provide specific information including a management plan and specific information on the accommodations and any ancillary uses. The City would then review the application process in accordance with its normal process for review of conditional uses. This would allow the City to address potential impacts associated with this use, similar to the approach that the City uses with hotels and other lodging accommodations in these districts. Consistent with this change, the proposed ordinance updates the list of conditional uses in both the Service Commercial and Central Business Districts to include time share uses as regulated by the new Chapter 17.138. The Planning Commission held a public hearing to consider the proposed ordinance at its regular meeting of March 1, 2022. Following the public hearing, the Planning Commission unanimously recommended that the City Council adopt the proposed ordinance. City staff has made minor, non -substantive edits to the proposed ordinance that went to the Planning Commission to correct typographical errors, and to add the sections amending the list of conditional uses in the Service Commercial and Central Business Districts. FISCAL IMPACT None RECOMMENDED ACTION Staff recommends that the City Council conduct the second reading by title only and waive further reading and adopt the Ordinance Adding Chapter 17.138 "Time Share Uses" and Sections 17.138.010-17.138.060 to Title 17, Zoning, of the St. Helena Municipal Code, amending sections 17.48 (Central Business) and 17.52 (Service Commercial) and Deleting Section 17.112.130 of the St. Helena Municipal Code. ATTACHMENTS Attachment 1-St. Helena Time Share Ordinance -Final Attachment 2-Community email comments 12-246 CITY OF ST. HELENA ORDINANCE NO. ADDING CHAPTER 17.138 "TIME SHARE USES" AND SECTIONS 17.138.010 — 17.138.060 TO TITLE 17, ZONING, OF THE ST. HELENA MUNICIPAL CODE, AMENDING SECTIONS 17.48.030 AND 17.52.030 AND DELETING SECTION 17.112.130 OF THE ST. HELENA MUNICIPAL CODE WHEREAS, the City of St. Helena is a popular tourist destination, known for its scenic Napa Valley location, exceptional wineries and restaurants, historic Main Street and small town agricultural character; and WHEREAS, preserving the rural, small town quality and agricultural character of the City of St. Helena has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's 2040 General Plan; and WHEREAS, the City of St. Helena stands out in the Napa Valley for its ability to attract visitors while also supporting the needs of its resident population. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy; and WHEREAS, the City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses; and WHEREAS, the City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City of St. Helena; and WHEREAS, according to the U.S. Census Bureau, the current median household income in the City of St. Helena is $90,031, while the estimated value of owner - occupied housing units from 2015-2019 was approximately $1,112,100, with current real estate listings suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City; and WHEREAS, as noted in the St. Helena Housing Update Report prepared for the City in April 2018, "St. Helena has more local jobs than people in the labor force, demanding large numbers of commuters to fill local jobs. Workers commute daily into -1- 12-24 7 St. Helena, many because there is no local housing that is affordable at the incomes that they make. Thirty six percent (36%) of St. Helena households cannot afford market rents while seventy percent (70%) of St. Helena households cannot afford to purchase a home. Paramedics and preschool teachers cannot afford St. Helena's market rents. Teachers, registered nurses, winery and hospitality managers and nonprofit directors cannot afford homeownership in St. Helena"; and WHEREAS, the City has made significant efforts to address the need for housing at lower income levels, of which recent examples include providing assistance to local nonprofit Our Town St. Helena for the Brenkle Court development, a mutual self-help housing development providing homeownership opportunities to eight low income working families, as well as the acquisition of a home located at 963 Pope Street using a charitable sale strategy. The property at 963 Pope Street is being developed with an additional four units to provide a total of five new affordable rental units in the City; and WHEREAS, further, in connection with the recently approved Farmstead lodging project, the City negotiated with the developer to contribute one million dollars toward the purchase of property to be used for the development of not less than twenty units of housing that will be affordable to low and very low income households, and an additional two million two hundred thousand dollars to be used more generally toward the development of affordable housing in the City; and WHEREAS, the City additionally provided substantial financial assistance to the recently completed Turley Flats Affordable Housing development, which provides eight units of rental affordable housing in a three story building located at 1105 Pope Street; and WHEREAS, these efforts have helped to address the City's need for affordable housing, but have also highlighted the challenge of providing sufficient housing to meet demand, particularly at more affordable levels, due to the significant costs of acquiring housing or land for the development of housing in the City and the limited supply of such land; and WHEREAS, the conversion of existing residential units to uses other than long- term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community; and WHEREAS, the City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses; and 12-248 WHEREAS, to this end, in 1982 the City adopted Ordinance No. 82-07, which prohibited the creation of time-share projects as a means of ownership of any single- family, two-family or multiple -family dwelling or any apartment house within the City. This restriction was imposed because the conversion of residential dwelling units to time-sharing projects would eliminate residential dwelling units that would otherwise be available for long-term occupancies, and were inappropriate in residential areas because those uses have the same character as commercial hotels, motels and other transient occupancy uses, and would result in increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods; and WHEREAS, the City has historically not received complaints about time-sharing uses in residential neighborhoods. Commencing in 2020, however, the City began receiving complaints regarding single family homes in the City that were being sold and/or marketed as "fractional ownership" or "co -ownership" homes, wherein each buyer may acquire a one -eighth interest in a limited liability company that will own the home. Under the structure pursuant to which these dwelling units are marketed and sold, each owner gets a one -eighth share along with the right to use the home for one - eighth of each year indefinitely. During each owner's usage period, that owner has exclusive use of the entire house. All rentals are prohibited; only owners and their guests are permitted to use the house. Each owner pays regular assessments to fund the operating costs of the home and maintenance reserves; and WHEREAS, this arrangement, which provides that each purchaser is entitled to exclusive use of the property for a fixed number of days each year, is a "time-share plan" as defined in Business and Professions Code section 11212, and a "time share program" as defined in Section 17.112.130 of the City's Municipal Code; and WHEREAS, the City has received numerous complaints regarding these properties, including parking impacts from large numbers of people staying at these properties; excessive noise late into the evening due to frequent outdoor parties; traffic due to frequent visitor turnover; traffic, noise and parking concerns due to frequent visits from cleaning, landscape maintenance and pool cleaning services that come to the properties in between each stay to prepare the home for the next guest; and an inability to maintain lines of communication to set community expectations with the users of the unit, as visitors only frequent the homes for short term stays of 2 to 14 days; and WHEREAS, the complaints received by the City are reflective of the reasons that the City prohibited time-share projects within residential areas of the City. The time- share uses provide a short-term, high impact vacation oriented use of the property, where those that buy into the time-share use the home for entertaining and short term stays while visiting restaurants, wineries and other tourist oriented locations in St. Helena and the surrounding Napa Valley; and WHEREAS, this high impact use, combined with the frequent turnover and commercial management of these properties is not consistent with the residential districts in which they are located. It is commercial in nature, in that these time-share -3- 12-249 uses are structured as a short-term, tourist oriented, visitor serving use of the subject properties. The use of these properties as time-shares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City; and WHEREAS, expanded use of residential properties for time-share uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for time-share uses of residential properties; and WHEREAS, this encroachment of tourist oriented, visitor serving uses in residential neighborhoods will not only compromise the residential character of these areas, but will also further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City; and WHEREAS, the City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad authority to regulate the development and use of real property within its jurisdiction to promote the public welfare; and WHEREAS, pursuant to and in accordance with this authority, the City Council desires to reaffirm its restrictions on time-share uses in residential areas, and to update the language of the Zoning Code to provide consistency with the terminology used to define time-share uses in State law. Further, the City desires to provide greater clarity as to the zoning districts in which time-share uses are permitted as conditional uses, and the standards pursuant to which they will be reviewed in those zoning districts; and WHEREAS, the Planning Commission of the City of St. Helena held a duly noticed public hearing on March 1, 2022, as required by law to consider all the information presented by staff, and public testimony presented in writing and at the meeting; and WHEREAS, on March 1 2022, the Planning Commission of the City of St. Helena recommended that the City Council adopt this Ordinance amending the Municipal Code as described herein by a 5-0 vote; and WHEREAS, on March 22, 2022, the City Council held a duly noticed public hearing, accepting testimony from the public, and discussed the proposed amendments and staff's recommended approval of this Ordinance; and WHEREAS, the proposed zoning amendments are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the agricultural, small town character of the City of St. Helena; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply; and -4- 12-250 Now, therefore, the City Council of the City of St. Helena does hereby ordain as follows: SECTION 1: The above recitals are hereby incorporated as though set forth in this section. SECTION 2: Chapter 17.138 and sections 17.138.010 — 17.138.060 are hereby added to Title 17 of the St. Helena Municipal Code, to read as follows: "Chapter 17.138 TIME-SHARE USES 17.138.010 Purpose and Findings 17.138.020 Definitions 17.138.030 Time-share Uses Restricted to Service Commercial (SC) and Central Business (CB) Districts 17.138.040 Application Process and Development Standards 17.138.050 Violations, Enforcement and Civil Penalties 17.138.010 Purpose and Findings A. There is a critical shortage of permanent, long-term housing in the City of St. Helena. B. A limited supply of suitable vacant land, land values, and market demand for land for other uses, including but not limited to use of property for vineyards, have limited the construction of additional housing in the City of St. Helena. C. St. Helena is a popular tourist destination known for its scenic Napa Valley location, exceptional wineries and restaurants, historic Main Street and small town agricultural character. D. The City of St. Helena stands out in the Napa Valley for its ability to attract visitors while also supporting the needs of its resident population. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. E. Time-share uses are not an appropriate land use in the City's residential districts due to the multiple occupancy of time-share properties, the short-term, tourist oriented use of such property and commercial management of time-share facilities, all of which -5- 12-251 create increased traffic generation, excessive noise, disruption to residential communities through commercial -level maintenance of the time-share facilities, and therefore are appropriately confined to commercial zoning districts. F. Conversion of permanent housing to time-share facilities removes existing housing units from the City's existing stock and exacerbates an already severe housing shortage. G. It is therefore in the public interest to prohibit conversions of existing housing units into time-share facilities, as to do so eliminates needed housing stock by diverting those units to a tourist -oriented, commercial use. 17.138.020 Definitions For purposes of this Chapter, the following words and phrases shall have the meaning respectively ascribed to them by this Section: "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.160. "Building" shall have the meaning ascribed to it by Section 17.04.160. "Dwelling unit" shall have the meaning ascribed to it by Section 17.04.160. "Managing entity" means the person who undertakes the duties, responsibilities and obligations of the management of a time-share plan. "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. "Time-share instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a time-share plan and includes the declaration dedicating accommodations to the time-share plan. "Time-share interest" means the right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, regardless of whether or not such right is coupled with a property interest in the time-share property or a specified portion thereof. "Time-share plan" means any arrangement, plan, scheme, or similar device, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given ll� 12-252 year, on a recurring basis for more than one year, but not necessarily for consecutive years. "Time-share property" means one or more accommodations subject to the same time- share plan, together with any other property or rights to property appurtenant to those accommodations. "Time-share use" means the use of one or more accommodations or any part thereof, as a time-share property pursuant to a time-share plan. 17.138.030 Time-share Uses Restricted to Service Commercial (SC) and Central Business (CB) Districts Time-share uses are conditional uses within the City's Service Commercial (SC) District and Central Business (CB) District, subject to approval of a conditional use permit applied for and approved in conformance with this Chapter. Time-share uses are not permitted in all other Zoning Districts in the City. 17.138.040 Application Process and Development Standards A. Application Process. Approval of a conditional use permit for time-share uses in the Service Commercial District or Central Business District shall be required in accordance with the requirements of Chapter 17.168. In addition to the application requirements contained in Chapter 17.168, an application for a time-share use shall be accompanied by the following documents which shall be subject to the approval of the planning director: 1. Management Plan. A management plan shall describe the methods employed by the applicant to guarantee the future adequacy, stability, and continuity of a satisfactory level of management and maintenance of the time share use. 2. Application Requirements. In addition to any application requirements established by this section and any other applicable requirements of this code, the following information shall be submitted as part of any application to develop or establish a time-share use: a. Typical floor plans for each accommodation. b. The phasing of the construction of the accommodations on the time- share property, if applicable. c. A description of any ancillary uses which are proposed in conjunction with the time share use. d. A description of the method of management of the time share use and indication of the management entity for the time-share property. e. Any restrictions on the use or occupancy of the accommodations. -7- 12-253 f. Any other information or documentation the applicant, city staff or commission deems reasonably necessary to the consideration of the time-share use, including any required environmental documents. B. Development Standards and Operational Requirements. Notwithstanding any other provision of this chapter, the following conditions must be met by any time-share use in any conditionally permitted zone. Additional requirements may be attached to a conditional use permit or development agreement if found to be necessary to assure that the time-share use meets the intent of this chapter: 1. Time-share uses developed in the Service Commercial District or Central Business District shall be limited to accommodations in upper floors in conjunction with a mixed -use project. 2. No existing residential use in the Service Commercial or Central Business District shall be converted to a time-share use. 3. Development Standards. The time-share use shall comply with all development standards for the zone in which it is located. 4. Parking. Parking shall be provided as follows: a. For accommodations of two or fewer bedrooms, one parking space shall be provided for each accommodation. b. For accommodations of three or more bedrooms, two parking spaces shall be provided for each accommodation. 4. Modification or Waiver of Standards. The planning commission may modify or waive one or more of the regulations contained in this section if it determines that strict compliance is not necessary to achieve the purpose and intent of this section. 17.138.060 Violations, Enforcement and Civil Penalties A. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this chapter is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.20. B. Time-share use, and/or advertisement for time-share use, of an accommodation in violation of this chapter is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance. Any such nuisance may be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 1.12, except that the civil penalty for a violation shall be one thousand dollars ($1,000.00). Each day the violation occurs shall constitute a separate offense. 12-254 C. Any responsible person who violates this chapter shall be liable and responsible for a civil penalty of one thousand dollars ($1,000.00) per violation per day such violation occurs. The city may recover such civil penalty by either civil action or administrative citation. Such penalty shall be in addition to all other costs incurred by the city, including without limitation the city's staff time, investigation expenses and attorney's fees. 1. Where the city proceeds by civil action, the court shall have discretion to reduce the civil penalty based upon evidence presented by the responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the court should consider the purpose of this chapter to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the responsible person's enrichment or profit as a result of the violation of this chapter. In any such civil action the city also may abate and/or enjoin any violation of this chapter. 2. Where the city proceeds by administrative citation, the city shall provide the responsible person notice of the right to request an administrative hearing to challenge the citation and penalty, and the time for requesting that hearing. a. The responsible person shall have the right to request the administrative hearing within forty-five (45) days of the issuance of the administrative citation and imposition of the civil penalty. To request such a hearing, the responsible person shall notify the city clerk in writing within forty- five (45) days of the issuance of the citation. The appeal notification shall include all specific facts, circumstances and arguments upon which the appeal is based. b. The city manager is hereby authorized to designate a hearing officer to hear such appeal. The city hearing officer shall conduct a hearing on the appeal within ninety (90) days of the request for the hearing unless one of the parties requests a continuance for good cause. The hearing officer shall only consider those facts, circumstances or arguments that the property owner or responsible person has presented in the appeal notification. c. The hearing officer shall render a decision in writing within thirty (30) days of the conclusion of the hearing. The hearing officer shall have discretion to reduce the civil penalty based upon evidence presented by the property owner or responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the hearing officer should consider the purpose of this chapter to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the property owner's or responsible person's enrichment or profit as a result of the violation of this chapter. d. Any aggrieved party to the hearing officer's decision on the administrative appeal may obtain review of the decision by filing a petition for writ M 12-255 of mandate with the Napa County superior court in accordance with the timelines and provisions set forth in Government Code Section 53069.4. e. If, following an administrative hearing, appeal, or other final determination, the owner of the property is determined to be the responsible person for the civil penalty imposed by this section, such penalty, if unpaid within forty-five (45) days of the notice of the final determination, shall become a lien to be recorded against the property on which the violation occurred pursuant to Chapter 1.12. Such costs shall be collected in the same manner as county taxes, and thereafter the property upon which they are a lien shall be sold in the same manner as property now is sold for delinquent taxes. D. Any violation of this chapter may also be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 1.12, except that the civil penalty under Chapter 1.12 for a violation shall be one thousand dollars ($1,000.00). E. Each day the violation of this chapter occurs shall constitute a separate offense. F. The remedies under this chapter are cumulative and in addition to any and all other remedies available at law and equity." SECTION 3: Deletion of Section 17.112.130 Section 17.112.130 is hereby deleted in its entirety. SECTION 4: Amendment of Section 17.48.030 Section 17.48.030 is hereby amended to add the following text as a separate line immediately following "Theaters, movie and legitimate;", and immediately prior to "Tobacco/smoke shop, including the sale of tobacco, tobacco and/or nicotine products and equipment for smoking;": "Time share uses, pursuant to Sections 17.138.030 and 17.138.040;" SECTION 5: Amendment of Section 17.52.030 Section 17.52.030 is hereby amended to add the following text as a separate line immediately following "Theaters, movie and legitimate;", and immediately prior to "Tobacco/smoke shop, including the sale of tobacco, tobacco and/or nicotine products and equipment for smoking;": "Time share uses, pursuant to Sections 17.138.030 and 17.138.040;" SECTION 6: CEQA -10- 12-256 This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. SECTION 6: Effective Date This ordinance shall take effect 30 days after its final adoption, and a summary of this ordinance shall be published once with the names of the members of the Council voting for and against the ordinance in the St. Helena Star, a newspaper of general circulation published in the City of St. Helena. THE FOREGOING ORDINANCE was introduced at a City Council on the day of , 2022, meeting of the St. Helena City Council on the following vote: Mayor Ellsworth: Vice Mayor Dohring: Councilmember Chouteau: Councilmember Hardy: Councilmember Hall: APPROVED: Geoff Ellsworth, Mayor ATTEST: CITY OF ST. HELENA Cindy Tzafopoulos, City Clerk -11- regular meeting of the St. Helena and was adopted at a regular day of , 2022, by the 12-257 From: Mari Jansdotter <mjansdotter@yahoo.com> To: Anna Chouteau Sent: 6/8/2021 7:25:45 AM Subject: Re: [External] 1242 Madrona pictures Re: Pacaso Thank you, Anna, for your kind reply. I'm sorry you all have to go through this lawsuit by Pacaso and hope the judge find in your favor. I have a follow-up question. Do you know who I should address it to? The Pacas house building on Kearney across the street from us has installed lights under the roofline that are on all night and installed in such a way they shine straight into our house, especially my daughter's bedroom. Are there any ordinances that I could refer to that help me ask them to please cover / redirect those lights or at least turn them off after 10 p.m? Thank you! Best Mari 12-258 :' e � x +w .. �� Ah y � P r R � �'r. f i s �z,z M i f z � a f Y l �! i r- I . .. .. a .. 12-260 Sent from Yahoo Mail on Android On Tue, Jun 8, 2021 at 7:12 AM, Anna Chouteau <AChouteau@cityofsthelena.org> wrote: Hi Mari, Thank you for your email. I forwarded your email to City staff about the specific permitting questions. Our planning director is out of the office this week. We are defending ourselves in the lawsuit. Our City Attorney filed an anti-SLAPP motion that is now public information and the hearing will be coming up this summer. All my best, Anna Sent from my Wad On Jun 7, 2021, at 6:01 PM, Mari Jansdotter <mjansdotter@yahoo.com> wrote: To clarify, do they have permit allowing the new structure going up at 1242 Madrona? The rendering from original sales listing shows a trellis (see attached) but a structure looking like a live -on unit close to (and taller than) the Oak neighbour' fence is being built. See pictures from today <20210607_175202.jpg> <20210607_175219jpg> Sent from Yahoo Mail on Android On Mon, Jun 7, 2021 at 5:38 PM, Mari Jansdotter <mjansdotter@yahoo.com> wrote: Thank you for doing all you can to stop Pacaso! I am not o.k. with Pacaso's violation of city ordinance and I support the city's legal fight. In addition to signing the petition and putting a No Pacaso sign outside my home, what else can we on the community do to help, please? 12-261 I finally afforded my dream home after moving several times the last 10 years, only to a year later have 4! of these Pacaso 'time share' like vacation LLC/commercially owned houses popping up in my neighborhood. I'm devastated - this is supposed to be a residential area!! I am very worried about my family's safe & peaceful living situation, now that I'll be impacted by 4 of these houses (one across the street) - each with S groups of owners and/or their guests circulating in and out all year round. Many Pacaso have 4 bedrooms that easily accommodate S+ people, and pool in the backyards with outdoor areas for gatherings/parties. It's a huge difference having your neighbor throwing an occasional party versus non-stop having a new group of people next door visiting for thier token time of vacation / partying. Pacaso houses also come with increased parking problems as these properties tend not have garages or driveways (often transformed into addl bedroom). Specifically would you mind looking into building code the one at 1242 Madrona / Oak? Looks like they're adding a guest house with vary narrow set back from the oak side neighbor. Is that an approved building? Maybe they're getting around that by making it a partial garage? Add to that, the 4 Pacaso houses are all in close proximity of RLS with kids walking / biking to and from school. What are the safety concerns that this is imposing with new people circulating in and out all year round and increased car traffic? Worst case scenario there will be a liability situation that will put a stop to Pacaso. Please, please stop Pacaso before we even get close to that. Respectfully, Mari Jansdotter Sent from Yahoo Mail on Android 12-262 PACASO = PARTY HOUSES! Debbie Polverino 5/11/2021 To the members of the City Council. In the recent Napa Register article, Austin Allison agrees that short term rentals are a problem, that commercial Timeshares are a problem- that's not what Pacaso is he said. Yet, Pacaso listed the Valley View Street "Pool House" as a 1/8 Timeshare Ownership property. After the city was notified by several concerned citizens and myself regarding "timeshares" listed for sale in residential zoned areas, Pacaso changed its online marketing from "1/8 Timeshare Ownership to 1/8 Shared Ownership. Owners who purchase still share the property in available time slots just like a timeshare. Living next door to a Pacaso home has been living next door to a full-time party house! The constant music with speakers blaring, loud conversations until 2 am and later, noise violations along with excessive vehicles parked on the street or in front of our homes. The additional noise of gardeners blowing dirt and leaves into our yard, Pool service, catering trucks, housekeeping scheduled more frequently. Open houses are held with statements made with, "this is a great place for pool parties and entertaining, it's a perfect place to bring friends and extended family," This home on Valley View Street was a weekend getaway home for the previous owners who had loud weekend parties. It was a constant nightmare and all the homes nearby complained. Now the property has been split up to 8 owners. The Saint Helena P.D. has already been to this home at least 3 times for noise violations after 10pm. There must be a way to stop these repeated violations and offenders. Pacaso's has written policies for its owners on their website that they must adhere to. No parking on the street, no parties, no noise after 9pm to 7am, no dogs over 80 pounds. Policies have been broken several times already from each group including the Pacaso's owners. According to Mr. Allison, Saint Helena is running a dishonest campaign against Pacaso. Pacaso claims discrimination of outside ownership which is not the case. As we all know we welcome all people the opportunity to live in our quiet small town. Pacaso selling an 1,100 square foot home which is smallest of any home on our street for $1.7M is dishonest in my opinion. This is what he says is affordable housing for second home buyers who are paying in full, plus maintenance fees? When commercial companies buy a dozen homes in Napa Valley and plans additional purchases to be split up to 8 shares it is not committed to the community or our quiet neighborhoods. Zoning is in place for a reason. Commercial companies operating in full time residential streets should adhere to the rules that are in place and only buy up in areas where other vacation homes are abundant and not a disruption. What happens should we decide to sell our home? How will people feel about buying next door to a home owned by 8 owners who don't know each other and all come at different time slots for as little as 2 days at a time? We will have to disclose this information. This put a negative mark on our property. This is something I want you to think about! Say NO to Pacaso! Thank you. 12-263 From: Amy Caldarola <amycal@comcast.net> To: Paul Dohring CC: Anna Chouteau; Lester Hardy; Eric Hall Sent: 5/23/2021 1:04:24 PM Subject: [External] Picaso Dear Council Members, This is Amy Caldarola here. I am very concerned about Picaso buying property in our residential neighborhoods under the guise of democratizing home ownership. This is not affordable housing. Picaso properties are time-shares and short-term rentals which violate municipal code provisions. The presence of these properties in residential neighborhoods is inappropriate and will degrade the quality of life. It has already done so with Picaso's property on Valley View; those neighbors are suffering with loud noise, music, and parties that go on to after midnight; even calling the police does not seem to stop them. I support the city in doing everything possible to defeat them. I also support a counter law suit against them if it makes legal sense. With that said, we are fighting for the soul of our community and this needs to be a number one priority. Picaso is in Napa, Sonoma, Healdsburg, and probably will move into Calistoga and Yountville. This is a fight worth fighting. It might be helpful for the affected counties and municipalities to join their resources together to oppose them. Please outline for me what the city is doing and what the plan is. Thank you. I really appreciate you taking the time to keep me informed on this very important and pressing issue. We must act now! Sincerely, Amy Caldarola 12-264 May 11, 2021 Good evening City Council members. My name is Clare Barr and I live in St. Helena. Tonight I would like to speak about the Pacaso Vacation Share homes. listened carefully to the public comments of Pacaso Share owners made at our last City Council meeting. They sounded sincere in their desire to be a part of the St. Helena community. The problem is they have bought into a business model that will make that nearly impossible. To be a part of a real community means forming bonds with neighbors. How can that come about with a home next door that has possibly dozens of strangers coming and going, with visits no longer than 14 days at a time, a few times a year? And with the likelihood of visits gifted by other share owners, and a cleaning crew who appears before each arrival, the number swells. With the result that a Pacaso share owner, is viewed by their neighbors as only one in a sea of unfamiliar faces. And though the intentions of some of the share buyers might be good, can we say the same for all 7 of the remaining shareowners? One of whom might gift a weekend to his brother for a blowout bachelor party? Or as was the case in Napa, a single shareowner who conducted retreats in which close to a dozen visitors would come and go within one stay. That particular shareowner was charging her guests, which is a complication on an entirely different level. Pacaso would have us believe that their sharebuyers are families who simply want a quiet, lovely getaway. But in actuality, a Pacaso home is built for partying. Their own website says of one offering "This home takes entertaining to new heights". And yet another listing says that a 12-265 particular home "has been completely re -imagined to accommodate families, friends, and large groups". Another listing offers "year round fun and adventure". Now, none of us resent the visitor who wants to have fun. Indeed, our beautiful valley is an ideal place for celebration. And we all do that on occasion. But when you realize that every single visitor owning a Pacaso share has been wooed with the promise of "fun and adventure" within a house "built for entertaining", then you have the possibility of major partying with each and every visitor, all crammed into stays that last from 2-14 days. This is transient occupancy in our residential neighborhoods that cannot possibly be regulated under the Pacaso system. There is a reason why we have ordinances in place that designate where tourists and visitors can stay. It allows us to appreciate our visitors, giving them the space and accommodations in which to party and celebrate, while we ourselves can conduct our daily lives in the sanctuary of our residential neighborhoods. Which in turn, are places where we know our neighbors so well that we trust them with our keys, our pets, and even our children. With whom we share joy and sometimes sorrow, and whom are quick to lend a hand in times of crisis. And if we have learned anything in the last few years, it is that the ability to know and rely on our neighbors is the very thing that sustains our community through thick and thin. A vacation home with a parade of visitors coming and going, does not belong in our residential neighborhoods. Please Say No to Pacaso. Clare Barr St. Helena 12-266 From: Beth Gray <bgray14@gmail.com> To: Geoff Ellsworth Sent: 5/22/2021 3:01:13 PM Subject: [External] Pacaso Dear Mr. Mayor, I am writing to express my strong opposition against the infiltration of Pacaso and their timeshare strategy in the city of Saint Helena. As a full-time resident here in the city (and as your neighbor), I find it atrocious that the city has not been able to stop the infiltration of this community destroying business model. This business will do nothing but destroy our community. As an example, I witnessed the dumping of water from the pool into the creekbed from a home purchased by Pacaso right on the corner of Sylvaner/Reisling as they began to redevelop the home and expect to list it as fractional ownership. Illegal dumping of the pool water with disregard to any of the environmental consequences demonstrates their utter lack of care about the community. Similarly, hearing from the neighbors who live next to a Pacaso home on Valley View, I can only shake my head and sympathize with the poor neighbors having to deal with multiple cars showing up and loud music being played at all hours. One of the reasons I moved from San Francisco to Saint Helena was to enjoy the quiet sounds of nature, the beautiful outdoors - not to listen to vacationers who only want to party for the two weeks that they have their time in the home. Please protect our city from these timeshares. I understand the city is being sued. I hope that we can collectively put the necessary resources behind this lawsuit to stop Pacaso from any more timeshares in St. Helena. Respectfully, Beth Gray 12-267 CITY OF ST. HELENA ORDINANCE NO.2022-5 ADDING CHAPTER 17.138 "TIME SHARE USES" AND SECTIONS 17.138.010 — 17.138.060 TO TITLE 17, ZONING, OF THE ST. HELENA MUNICIPAL CODE, AMENDING SECTIONS 17.48.030 AND 17.52.030 AND DELETING SECTION 17.112.130 OF THE ST. HELENA MUNICIPAL CODE WHEREAS, the City of St. Helena is a popular tourist destination, known for its scenic Napa Valley location, exceptional wineries and restaurants, historic Main Street and small-town agricultural character; and WHEREAS, preserving the rural, small-town quality and agricultural character of the City of St. Helena has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's 2040 General Plan; and WHEREAS, the City of St. Helena stands out in the Napa Valley for its ability to attract visitors while also supporting the needs of its resident population. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy; and WHEREAS, the City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses; and WHEREAS, the City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City of St. Helena; and WHEREAS, according to the U.S. Census Bureau, the current median household income in the City of St. Helena is $90,031, while the estimated value of owner -occupied housing units from 2015-2019 was approximately $1,112,100, with current real estate listings suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City; and WHEREAS, as noted in the St. Helena Housing Update Report prepared for the City in April 2018, "St. Helena has more local jobs than people in the labor force, demanding large numbers of commuters to fill local jobs. Workers commute daily into St. Helena, many because there is no local housing that is affordable at the incomes that 12-268 they make. Thirty six percent (36%) of St. Helena households cannot afford market rents while seventy percent (70%) of St. Helena households cannot afford to purchase a home. Paramedics and preschool teachers cannot afford St. Helena's market rents. Teachers, registered nurses, winery and hospitality managers and nonprofit directors cannot afford homeownership in St. Helena"; and WHEREAS, the City has made significant efforts to address the need for housing at lower income levels, of which recent examples include providing assistance to local nonprofit Our Town St. Helena for the Brenkle Court development, a mutual self-help housing development providing homeownership opportunities to eight low income working families, as well as the acquisition of a home located at 963 Pope Street using a charitable sale strategy. The property at 963 Pope Street is being developed with an additional four units to provide a total of five new affordable rental units in the City; and WHEREAS, further, in connection with the recently approved Farmstead lodging project, the City negotiated with the developer to contribute one million dollars toward the purchase of property to be used for the development of not less than twenty units of housing that will be affordable to low and very low-income households, and an additional two million two hundred thousand dollars to be used more generally toward the development of affordable housing in the City; and WHEREAS, the City additionally provided substantial financial assistance to the recently completed Turley Flats Affordable Housing development, which provides eight units of rental affordable housing in a three story building located at 1105 Pope Street; and WHEREAS, these efforts have helped to address the City's need for affordable housing, but have also highlighted the challenge of providing sufficient housing to meet demand, particularly at more affordable levels, due to the significant costs of acquiring housing or land for the development of housing in the City and the limited supply of such land; and WHEREAS, the conversion of existing residential units to uses other than long- term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community; and WHEREAS, the City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses; and 12-269 WHEREAS, to this end, in 1982 the City adopted Ordinance No. 82-07, which prohibited the creation of time-share projects as a means of ownership of any single- family, two-family or multiple -family dwelling or any apartment house within the City. This restriction was imposed because the conversion of residential dwelling units to time- sharing projects would eliminate residential dwelling units that would otherwise be available for long-term occupancies, and were inappropriate in residential areas because those uses have the same character as commercial hotels, motels and other transient occupancy uses, and would result in increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods; and WHEREAS, the City has historically not received complaints about time-sharing uses in residential neighborhoods. Commencing in 2020, however, the City began receiving complaints regarding single family homes in the City that were being sold and/or marketed as "fractional ownership" or "co -ownership" homes, wherein each buyer may acquire a one -eighth interest in a limited liability company that will own the home. Under the structure pursuant to which these dwelling units are marketed and sold, each owner gets a one -eighth share along with the right to use the home for one -eighth of each year indefinitely. During each owner's usage period, that owner has exclusive use of the entire house. All rentals are prohibited; only owners and their guests are permitted to use the house. Each owner pays regular assessments to fund the operating costs of the home and maintenance reserves; and WHEREAS, this arrangement, which provides that each purchaser is entitled to exclusive use of the property for a fixed number of days each year, is a "time-share plan" as defined in Business and Professions Code section 11212, and a "time share program" as defined in Section 17.112.130 of the City's Municipal Code; and WHEREAS, the City has received numerous complaints regarding these properties, including parking impacts from large numbers of people staying at these properties; excessive noise late into the evening due to frequent outdoor parties; traffic due to frequent visitor turnover; traffic, noise and parking concerns due to frequent visits from cleaning, landscape maintenance and pool cleaning services that come to the properties in between each stay to prepare the home for the next guest; and an inability to maintain lines of communication to set community expectations with the users of the unit, as visitors only frequent the homes for short term stays of 2 to 14 days; and WHEREAS, the complaints received by the City are reflective of the reasons that the City prohibited time-share projects within residential areas of the City. The time-share uses provide a short-term, high impact vacation -oriented use of the property, where those that buy into the time-share use the home for entertaining and short term stays while visiting restaurants, wineries and other tourist -oriented locations in St. Helena and the surrounding Napa Valley; and WHEREAS, this high impact use, combined with the frequent turnover and commercial management of these properties is not consistent with the residential districts in which they are located. It is commercial in nature, in that these time-share uses are 12-270 structured as a short-term, tourist oriented, visitor serving use of the subject properties. The use of these properties as time-shares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more. appropriately located in commercial districts of the City; and WHEREAS, expanded use of residential properties for time-share uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for time-share uses of residential properties; and WHEREAS, this encroachment of tourist oriented, visitor serving uses in residential neighborhoods will not only compromise the residential character of these areas, but will also further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City; and WHEREAS, the City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad authority to regulate the development and use of real property within its jurisdiction to promote the public welfare; and WHEREAS, pursuant to and in accordance with this authority, the City Council desires to reaffirm its restrictions on time-share uses in residential areas, and to update the language of the Zoning Code to provide consistency with the terminology used to define time-share uses in State law. Further, the City desires to provide greater clarity as to the zoning districts in which time-share uses are permitted as conditional uses, and the standards pursuant to which they will be reviewed in those zoning districts; and WHEREAS, the Planning Commission of the City of St. Helena held a duly noticed public hearing on March 1, 2022, as required by law to consider all the information presented by staff, and public testimony presented in writing and at the meeting; and WHEREAS, on March 1, 2022, the Planning Commission of the City of St. Helena recommended that the City Council adopt this Ordinance amending the Municipal Code as described herein by a 5-0 vote; and WHEREAS, on March 22, 2022, the City Council held a duly noticed public hearing, accepting testimony from the public, and discussed the proposed amendments and staff's recommended approval of this Ordinance; and WHEREAS, the proposed zoning amendments are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the agricultural, small town character of the City of St. Helena; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply; and Now, therefore, the City Council of the City of St. Helena does hereby ordain as follows: 12-271 SECTION 1: The above recitals are hereby incorporated as though set forth in this section. SECTION 2: Chapter 17.138 and sections 17.138.010 — 17.138.060 are hereby added to Title 17 of the St. Helena Municipal Code, to read as follows: "Chapter 17.138 TIME-SHARE USES 17.138.010 Purpose and Findings 17.138.020 Definitions 17.138.030 Time-share Uses Restricted to Service Commercial (SC) and Central Business (CB) Districts 17.138.040 Application Process and Development Standards 17.138.050 Violations, Enforcement and Civil Penalties 17.138.010 Purpose and Findings A. There is a critical shortage of permanent, long-term housing in the City of St. Helena. B. A limited supply of suitable vacant land, land values, and market demand for land for other uses, including but not limited to use of property for vineyards, have limited the construction of additional housing in the City of St. Helena. C. St. Helena is a popular tourist destination known for its scenic Napa Valley location, exceptional wineries and restaurants, historic Main Street and small-town agricultural character. D. The City of St. Helena stands out in the Napa Valley for its ability to attract visitors while also supporting the needs of its resident population. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. E. Time-share uses are not an appropriate land use in the City's residential districts due to the multiple occupancy of time-share properties, the short-term, tourist -oriented use of such property and commercial management of time-share facilities, all of which create increased traffic generation, excessive noise, disruption to residential communities through commercial -level maintenance of the time-share facilities, and therefore are appropriately confined to commercial zoning districts. F. Conversion of permanent housing to time-share facilities removes existing housing units from the City's existing stock and exacerbates an already severe housing shortage. G. It is therefore in the public interest to prohibit conversions of existing housing units into time-share facilities, as to do so eliminates needed housing stock by diverting those units to a tourist -oriented, commercial use. 17.138.020 Definitions For purposes of this Chapter, the following words and phrases shall have the meaning respectively ascribed to them by this Section: "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, . hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single-family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.160. "Building" shall have the meaning ascribed to it by Section 17.04.160. "Dwelling unit" shall have the meaning ascribed to it by Section 17.04.160. "Managing entity" means the person who undertakes the duties, responsibilities and obligations of the management of a time-share plan. "Person" means a_natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. "Time-share instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a time-share plan and includes the declaration dedicating accommodations to the time-share plan. "Time-share interest" means the right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, regardless of whether or not such right is coupled with a property interest in the time-share property or a specified portion thereof. "Time-share plan" means any arrangement, plan, scheme, or similar device, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. - 12-273 "Time-share property" means one or more accommodations subject to the same time- share plan, together with any other property or rights to property appurtenant to those accommodations. "Time-share use" means the use of one or more accommodations or any part thereof, as a time-share property pursuant to a time-share plan. 17.138.030 Time-share Uses Restricted to Service Commercial (SC) and Central Business (CB) Districts Time-share uses are conditional uses within the City's Service Commercial (SC) District and Central Business (CB) District, subject to approval of a conditional use permit applied for and approved in conformance with this Chapter. Time-share uses are not permitted in all other Zoning Districts in the City. 17.138.040 Application Process and Development Standards A. Application Process. Approval of a conditional use permit for time-share uses in the Service Commercial District or Central Business District shall be required in accordance with the requirements of Chapter 17.168. In addition to the application requirements contained in Chapter 17.168, an application for a time-share use shall be accompanied by the following documents which shall be subject to the approval of the planning director: 1. Management Plan. A management plan shall describe the methods employed by the applicant to guarantee the future adequacy, stability, and continuity of a satisfactory level of management and maintenance of the time share use. 2. Application Requirements. In addition to any application requirements established by this section and any other applicable requirements of this code, the following information shall be submitted as part of any application to develop or establish a time-share use: a. Typical floor plans for each accommodation. b. The phasing of the construction of the accommodations on the time- share property, if applicable. c. A description of any ancillary uses which are proposed in conjunction with the time share use. d. A description of the method of management of the time share use and indication of the management entity for the time-share property. e. Any restrictions on the use or occupancy of the accommodations. 12-274 f. Any other information or documentation the applicant, city staff or commission deems reasonably necessary to the consideration of the time-share use, including any required environmental documents. B. Development Standards and Operational Requirements. Notwithstanding any other provision of this chapter, the following conditions must be met by any time-share use in any conditionally permitted zone. Additional requirements may be attached to a conditional use permit or development agreement if found to be necessary to assure that the time-share use meets the intent of this chapter: 1. Time-share uses developed in the Service Commercial District or Central Business District shall be limited to accommodations in upper floors in conjunction with a mixed -use project. 2. No existing residential use in the Service Commercial or Central Business District shall be converted to a time-share use. 3. Development Standards. The time-share use shall comply with all development standards for the zone in which it is located. 4. Parking. Parking shall be provided as follows: a. For accommodations of two or fewer bedrooms, one parking space shall be provided for each accommodation. b. For accommodations of three or more bedrooms, two parking spaces shall be provided for each accommodation. 4. Modification or Waiver of Standards. The planning commission may modify or waive one or more of the regulations contained in this section if it determines that strict compliance is not necessary to achieve the purpose and intent of this section. 17.138.060 Violations, Enforcement and Civil Penalties A. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this chapter is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.20. B. Time-share use, and/or advertisement for time-share use, of an accommodation in violation of this chapter is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance. Any such nuisance may be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 1.12, except that the civil penalty for a violation shall be one thousand dollars ($1,000.00). Each day the violation occurs shall constitute a separate offense. 12-275 C. Any responsible person who violates this chapter shall be liable and responsible for a civil penalty of one thousand dollars ($1,000.00) per violation per day such violation occurs. The city may recover such civil penalty by either civil action or administrative citation. Such penalty shall be in addition to all other costs incurred by the city, including without limitation the city's staff time, investigation expenses and attorney's fees. 1. Where the city proceeds by civil action, the court shall have discretion to reduce the civil penalty based upon evidence presented by the responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the court should consider the purpose of this chapter to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the responsible person's enrichment or profit as a result of the violation of this chapter. In any such civil action the city also may abate and/or enjoin any violation of this chapter. 2. Where the city proceeds by administrative citation, the city shall provide the responsible person notice of the right to request an administrative hearing to challenge the citation and penalty, and the time for requesting that hearing. a. The responsible person shall have the right to request the administrative hearing within forty-five (45) days of the issuance of the administrative citation and imposition of the civil penalty. To request such a hearing, the responsible person shall notify the city clerk in writing within forty-five (45) days of the issuance of the citation. The appeal notification shall include all specific facts, circumstances and arguments upon which the appeal is based. b. The city manager is hereby authorized to designate a hearing officer to hear such appeal. The city hearing officer shall conduct a hearing on the appeal within ninety (90) days of the request for the hearing unless one of the parties requests a continuance for good cause. The hearing officer shall only consider those facts, circumstances or arguments that the property owner or responsible person has presented in the appeal notification. c. The hearing officer shall render a decision in writing within thirty (30) days of the conclusion of the hearing. The hearing officer shall have discretion to reduce the civil penalty based upon evidence presented by the property owner or responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the hearing officer should consider the purpose of this chapter to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the property owner's or respohsible person's enrichment or profit as a result of tlio violation of this chapter. d. Any aggrieved party to the hearing officer's decision on the administrative appeal may obtain review of the decision by filing a petition for writ of mandate with the Napa County superior court in accordance with the timelines and provisions set forth in Government Code Section 53069.4. 12-276 e. If, following an administrative hearing, appeal, or other final determination, the owner of the property is determined to be the responsible person for the civil penalty imposed by this section, such penalty, if unpaid within forty-five (45) days of the notice of the final determination, shall become a lien to be recorded against the property on which the violation occurred pursuant to Chapter 1.12. Such costs shall be collected in the same manner as county taxes, and thereafter the property upon which they are a lien shall be sold in the same manner as property now is sold for delinquent taxes. D. Any violation of this chapter may also be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 1.12, except that the civil penalty under Chapter 1.12 for a violation shall be one thousand dollars ($1,000.00). E. Each day the violation of this chapter occurs shall constitute a separate offense. F. The remedies under this chapter are cumulative and in addition to any and all other remedies available at law and equity." SECTION 3: Deletion of Section 17.112.130 Section 17.112.130 is hereby deleted in its entirety. SECTION 4: Amendment of Section 17.48.030 Section 17.48.030 is hereby amended to add the following text as a separate line immediately following "Theaters, movie and legitimate;", and immediately prior to "Tobacco/smoke shop, including the sale of tobacco, tobacco and/or nicotine products and equipment for smoking;": "Time share uses, pursuant to Sections 17.138.030 and 17.138.040;" SECTION 5: Amendment of Section 17.52.030 Section 17.52.030 is hereby amended to add the following text as a separate line immediately following "Theaters, movie and legitimate;", and immediately prior to "Tobacco/smoke shop, including the sale of tobacco, tobacco and/or nicotine products and equipment for smoking;": "Time share uses, pursuant to Sections 17.138.030 and 17.138.040;" SECTION 6: CEQA This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of 12-277 this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. SECTION 6: Effective Date This ordinance shall take effect 30 days after its final adoption, and a summary of this ordinance shall be published once with the names of the members of the Council voting for and against the ordinance in the St. Helena Star, a newspaper of general circulation published in the City of St. Helena. THE FOREGOING ORDINANCE was introduced at a regular meeting of the St. Helena City Council on the 22"d day of March 2022, and was adopted at a regular meeting of the St. Helena City Council on the 121h day of April 2022, by the following vote: Mayor Geoff Ellsworth: Yes Vice Mayor Paul Dohring: Yes Council Member Anna Chouteau: Yes Council Member Lester Hardy: Yes Council Member Eric Hall: Yes APPROVED: Geoff Ellsworth, Mayor 1, CINDY TZAFOPOULOS, CITY CLERK of the City of St. Helena, California, do hereby certify that the foregoing Ord lnance was regularly introduced and placed upon its first reading at a regular meeting of the City Council on the 22"d day of March 2022. That thereafter said Ordinance was duly adopted and passed at a regular meeting of the City Council on the 12th day of April 2022, by the following vote: 12-278 Mayor Geoff Ellsworth: Yes. Vice Mayor Paul Dohring: Yes Council Member Anna Chouteau: Yes Council Member Lester Hardy: Yes Council Member Eric Hall: Yes ATTEST: c Cindy Tzaf oulos, C lerk ag ST �ft� Rig 12-279 Exhibit P Ordinance Proposed by Pacaso Adding Chapter 5.98 12-280 DRAFT ORDINANCE 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. 1 60) 1 4i1 �J( t�j_ tom' 12-7 12-281 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 without obtaining a Co -owned Property Management Permit from the City. 2 r( `l M=3_ `12-8 12-282 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 -awned 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 deemed abandoned. 3 12-9 12-283 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 -awned 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. F. An application for the reinstatement of a previously suspended Co -owned Housing 4 1l J 12-10 12-284 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 Co - owned Property Manager seeking to reinstate a Co -owned Housing Unit Permit that has 5 13 12-11 12-285 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 provisions of this Code or any state or federal law pertaining to noise, disorderly 12-12 12-286 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 receptions. 7 kl\j� 12-13 12-287 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.: a. Outside of the Co -owned Housing Unit; or y� LA 18��) t 12-14 12-288 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 nonowner 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 -awned 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) 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 9 12-15 12-289 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 (13)(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. 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 10 n 1 12-16 12-290 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. n 11 12-17 12-291 Exhibit Q September 13, 2022, City Council Agenda Item No. SS2 Fractional Homeownership Update https://ecros.newportbeachca govNVEB/DocView aspx?id=2833800&dbid-0&repo=CNB Fractional Homeownership Update - Correspondence https://ecros.newportbeachca govNVEB/DocView aspx?id=2833864&dbid-0&repo=CNB Fractional Homeownership Update - PowerPoint https:Hecros.newportbeachca aovNVEB/DocView aspx?id=2833866&dbid-0&repo=CNB 12-292 Exhibit R September 27, 2022, City Council Agenda Item No. 1 https://ecros.newportbeachca gov/WEB/DocView aspx?id=2835823&dbid =0&repo=CNB Correspondence https://ecros.newportbeachca gov/WEB/DocView aspx?id=2835861&dbid=O&repo=CNB 12-293 Exhibit S October 6, 2022, Planning Commission Agenda Item No. SS.2 https://ecros.newportbeachca gov/WEB/DocView aspx?id=2836766&dbid=0&repo CNB https:Hecros.newportbeachca gov/WEB/DocView aspx?id=2836767&dbid-0&repo CNB 12-294 Exhibit T October 20, 2022, Planning Commission Agenda Item No. 6 re IS 12-295 Exhibit U February 23, 2023, Planning Commission Agenda Item No. 6 https:Hecros.newportbeachca.gov/WEB/DocView aspx?id=2859668&dbid=0&repo=CNB Staff Presentation https:Hecros.newportbeachca.gov/WEB/DocView aspx?id=2859669&dbid=0&repo=CNB 12-296 Exhibit V March 14, 2023, City Council Agenda Item No.12 https://ecros.newportbeachca.gov/WEB/DocView aspx?id=2863026&dbid=0&repo=CNB Correspondence https:Hecros.newr)ortbeachca.gov/WEB/DocView aspx?id=2863125&dbid=0&repo=CNB https://ecros.newportbeachca.gov/WEB/DocView aspx?id=2863126&dbid=0&repo=CNB PowerPoint https://ecros.newportbeachca.gov/WEB/DocView aspx?id=2863131&dbid=0&repo=CNB Staff Memo https:Hecros.newportbeachca.gov/WEB/DocView aspx?id=2863127&dbid=0&repo=CNB Week in Review https://ecros.newportbeachca aov/WEB/DocView aspx?id=2863128&dbid-0&repo=CNB 12-297 EXHIBIT W ZONING CODE AMENDMENT NO. PA2022-0202 Section 1: The row entitled "Time Share Facilities" in Table 2-5 of Section 20.20.020 (Commercial Zoning Districts Land Uses and Permit Requirements) of the Newport Beach Municipal Code is amended to read as follows: Commercial Retail Zoning Districts Permit Requirements TABLE 2-5 P Permitted by Right ALLOWED USES AND PERMIT CUP Conditional Use Permit (Section 20.52.020) REQUIREMENTS MUP Minor Use Permit (Section 20.52.020) LTP Limited Term Permit (Section 20.52.040) — Not allowed Land Use See Part 7 of this title for land use definitions. CC CG CM CN CV CV-LV Specific Use See Chapter Regulations 20.12 for unlisted uses. Visitor Accommodations Time Shares �—� CUP — — CUP — Section 20.48.220 Section 2: The title of Section 20.48.220 (Time Share Facilities) of the Newport Beach Municipal Code is hereby amended to read as follows: 20.48.220 Time Share Uses. Section 3: The provisions set forth in Section 20.48.220 (Time Share Facilities) of the Newport Beach Municipal Code is amended in its entirety to read as follows. - Section 20.48.220 Time Share Uses. A. No time share use or time share unit shall be established or permitted in any zoning district except as authorized in this Code. Unless authorized by this Code, no person including, but not limited to, an owner of a time share unit, an agent, or a broker shall: 12-298 1. Develop or establish a timeshare use in the City; 2. Convert a property or unit in the City to a time share use or time share unit; 3. Advertise or cause to be printed, published, or disseminated in any way and through any medium, the availability for sale, in its entirety or a fraction thereof: (a) any property or unit in the City that is used for a time share use or as a time share unit; or (b) any entity where the ownership thereof, in whole or in part, entitles the owner thereof to use a property or unit in the City for a time share use; and/or 4. Manage a unit or property in the City that is being used for a time share use or as a time share unit. The subsection shall not apply to any time share use that was lawfully established prior to the effective date of Ordinance No. 2023- B. This subsection provides regulations for time share uses authorized in this Code. 1. Development Standards. a. Property Development Standards. A time share use shall comply with the standards for the zoning district in which it is located. b. Minimum Number of Units. Each time share property shall have a minimum of one hundred (100) time share units. Time share properties consisting of less than one hundred (100) units, but developed or converted in conjunction with a resort hotel complex of three hundred (300) or more units, shall be considered to be in compliance with this requirement. 2. Required Amenities. Time share uses shall be developed with substantial recreational amenities (e.g., golf courses, tennis courts, swimming pools, etc.). 3. Permit and Review Requirements. a. Plan Submittals. In addition to the application requirements in Section 20.52.020 (Conditional Use Permits and Minor Use Permits), an application for a time share use shall include the following documents: A sales plan shall address the times, areas and methods that will be used to sell the time share property. Factors to be defined in the plan shall include the location, length, and marketing methods that will be used, distinguishing on -site and off -site marketing and signage; and an estimate of the potential numbers of individuals and automobiles expected during various stages of the sales effort. The plan also shall describe measures that will be implemented to reduce traffic during peak hours. 12-299 An operating plan shall address the terms of the time share plan, the types of private unit and common amenities, and the general financing, maintenance, and management arrangements of the resort that benefit the unit owners. A management plan shall describe the methods employed by the applicant to guarantee the future adequacy, stability, and continuity of a satisfactory level of management and maintenance of a time share property. iv. A contingency plan shall address the actions to be taken by the applicant if the time share project is an economic failure or fails to sell fifty (50) percent of the time share intervals within two years of receiving a permit to occupy the first unit. b. Development Agreement. The City and the time share use operator shall enter into a development agreement in compliance with Chapter 15.45 (Development Agreements). c. Modification or Waiver. The review authority may modify or waive any of the standards contained in this section if strict compliance with the standards is determined to be unnecessary to achieve the purpose and intent of this section. Section 4: The definition of "Time Share Facility (Land Use)" within Section 20.70.020 (Definitions of Specialized Terms and Phrases) of the Newport Beach Municipal Code is amended to read as follows: Time Share (Land Use). See "Visitor accommodations." Section 5: The definition of "Visitor Serving Accommodations (Land Use)" within Section 20.70.020 (Definitions of Specialized Terms and Phrases) of the Newport Beach Municipal Code is amended to read as follows: Visitor Accommodations (Land Use) "Time share accommodation(s)" shall have a separate meaning from "visitor accommodation (s)." "Time share accommodation(s)" as used in the definition of "time share instrument," "time share interval," "time share property," and "time share use" shall mean any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other or structure constructed for residential use and occupancy, including, but not limited to, a single -unit dwelling, two -unit dwelling, multi -unit dwelling. 1. "Bed and breakfast inn" means a dwelling unit that offers guest rooms or suites for a fee for less than thirty (30) days, with incidental eating and drinking service provided from a single kitchen for guests only. 12-300 2. "Hotel' means an establishment that provides guest rooms or suites for a fee to transient guests for sleeping purposes. Access to units is primarily from interior lobbies, courts, or halls. Related accessory uses may include conference and meeting rooms, restaurants, bars, and recreational facilities. Guest rooms may or may not contain kitchen facilities for food preparation (i.e., refrigerators, sinks, stoves, and ovens). Hotels with kitchen facilities are commonly known as extended stay hotels. A hotel operates subject to taxation under Revenue and Taxation Code Section 7280. 3. "Motel' means an establishment that provides guest rooms for a fee to transient guests for sleeping purposes. Guest rooms do not contain kitchen facilities. A motel is distinguished from a hotel primarily by direct independent access to, and adjoining parking for, each guest room. A motel operates subject to taxation under Revenue and Taxation Code Section 7280. 4. "Recreational vehicle (RV) park" means a lot upon which two or more recreational vehicle sites are located, established, or maintained for occupancy for a rental fee by recreational vehicles of the general public as temporary living quarters for recreation or vacation purposes. 5. "Short-term lodging" means a dwelling unit that is rented or leased as a single housekeeping unit (see "Single housekeeping unit") for a period of less than thirty (30) days, subject to the requirements of Chapter 5.95 (Short Term Lodging Permits) and any additional standards required by the City Manager. 6. "Single room occupancy, residential hotels (SRO)" means buildings with six or more guest rooms without kitchen facilities in individual rooms, or kitchen facilities for the exclusive use of guests, and which are also the primary residences of the hotel guests. 7. "Time share instrument" means one or more documents, by whatever name denominated, creating a time share plan or governing the operation of a time share plan, and includes the declaration dedicating time share accommodations to the time share plan. 8. "Time share interval' means the period or periods of time when the purchaser in a time share plan is afforded the opportunity to use the time share accommodations of a time share plan. 9. "Time share plan" means any arrangement, plan, scheme, or similar device, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property, or any portion thereof, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A time share plan shall be deemed to exist whenever such recurring rights of exclusive use to the real property, or portion thereof, are created, regardless of whether 12-301 such exclusive rights of use are a result of a grant of ownership rights, possessory rights, membership rights, rights pursuant to contract, or ownership of a fractional interest or share in the real property, or portion thereof, and regardless of whether they are coupled with ownership of a real property interest such as freehold Interest or an estate for years in the property subject to the time share plan. 10. "Time share property" means one or more time share accommodations subject to the same time share instrument, together with any other property or rights to property appurtenant to those time share accommodations. 11. `Time share unit" means the time share property or portion of a time share property in which a time share interval exists and that is designated for separate use. 12. "Time share use" means the use of one or more time share accommodations or any part thereof, as a time share property. 12-302 EXHIBIT X FINDINGS OF CONSISTENCY WITH THE GENERAL PLAN IN SUPPORT OF ZONING CODE AMENDMENT NO. PA2022-0202 1. Neither Title 20 nor State Planning Law set for any required findings for either approval or denial of such amendments. Notwithstanding the foregoing, Zoning Code Amendment No. PA2022-0202 is consistent with the City's General Plan and would serve to implement the following goals and policies: Land Use Element Policy LU 2.6, which states, "Visitor Serving Uses Provide uses that serve visitors to Newport Beach's ocean, harbor, open spaces, and other recreational assets, while integrating them to protect neighborhoods and residents." The proposed amendment would continue to allow time share uses, which is a visitor serving use in some commercial zones, while clarifying that time share uses are not permitted in residential zones areas. This would prevent additional commercialization of the residential neighborhoods and protect them from impacts created by increased traffic and noise. Land Use Element Goal LU 4, which states, "Management of growth and change to protect and enhance the livability of neighborhoods and achieve distinct and economically vital business and employment districts, which are correlated with supporting infrastructure and public services and sustain Newport Beach's natural setting." Clarifying that the fractional ownership use of a home is a time shares is consistent with Pacaso's representations to the California Department of Real Estate that Pacaso is selling time share interests, this Zoning Code Amendment continues to allow the business within certain commercial zones. This clarification would also help preserve the long-term housing stock by eliminating the conversion of existing and new housing developments into time share uses, and further ensure that the commercial businesses would not encroach into residential areas and impact the livability of said neighborhoods. Housing Element Goal #4, which states, "Housing opportunities for as many renter - and owner -occupied households as possible in response to the market demand and RHNA obligations for housing in the City." Conversion of residential dwelling units into time shares removes the dwelling units from the market, thus making them no longer available for occupancy of full-time residences. The Zoning Code Amendment would serve to prevent single -unit residences from being taken off the market, thus protecting these housing opportunities for renters and owner -occupied households alike. Housing Element Goal #5, which states, "Preservation of the City's housing stock for extremely low-, very low-, low-, and moderate -income households." Removing market -rate dwelling units from the City's housing stock impacts the affordability of housing across all income levels. As fewer dwelling units become available for rent or sale, the price increases. These price increases reduce the opportunities to 12-303 provide affordable housing to extremely low-, very low-, low-, and moderate -income households. The proposed amendment would prevent conversion of single -unit residences into a visitor serving accommodation, thus preserving the number of units in the City's housing stock, which would help minimize increases to housing costs. 2. The operation of time share uses is increasing noise and traffic in residential neighborhoods. This is creating a change to the character of the neighborhoods in a manner that negatively impacts the public health, safety, and welfare. 3. As the number of time share uses increases in the City, the number of dwelling units for long-term occupancy can decrease. This decrease impacts the ability for the City to comply with the 6th and future cycle RHNA allocation. 4. A Local Coastal Program Amendment is also underway to ensure the regulations within the Coastal Zone are consistent with this amendment. 12-304 Attachment B Ordinance No. 2023-5: Adopting LCP Amendment and Authorizing Submittal to the California Coastal Commission 12-305 ORDINANCE NO. 2023- 5 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, APPROVING AND AUTHORIZING SUBMITTAL OF A LOCAL COASTAL PROGRAM AMENDMENT TO THE CALIFORNIA COASTAL COMMISSION AMENDING TITLE 21 (LOCAL COASTAL PROGRAM IMPLEMENTATION PLAN) OF THE NEWPORT BEACH MUNICIPAL CODE RELATED TO TIME SHARES (PA2022-0202) WHEREAS, Article XI Section 7 of the California Constitution authorizes cities to make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws; WHEREAS, California Government Code Section 65850 et seq. authorizes a city to adopt ordinances that regulate land uses as a valid use of its police powers; WHEREAS, Section 200 of the City of Newport Beach ("City") Charter vests the City Council with the authority to make and enforce all laws, rules, and regulations with respect to municipal affairs subject only to the restrictions and limitations contained in the Charter and the State Constitution, and the power to exercise, or act pursuant to any and all rights, powers and privileges, or procedures granted or prescribed by any law of the State of California; WHEREAS, in 1982, the City Council adopted Ordinance No. 82-14 which is attached hereto as Exhibit "A," and incorporated herein by reference prohibiting the development of time share projects within Newport Beach to protect against unique problems associated with transient occupancy; WHEREAS, in 1996, the City Council adopted Ordinance 96-7 which is attached hereto as Exhibit "B," and incorporated herein by reference providing a narrow exception to allow time share projects in commercial districts subject to a conditional use permit but continuing to prohibit the use of residential property for time shares; WHEREAS, the City is a popular tourist destination known for its beaches and temperate weather; WHEREAS, over the past three years, Newport Beach and cities that serve as tourist destinations, have experienced a wave of purchases of single -unit residences, which are then re -sold to persons purchasing fractional shares; 12-306 Ordinance No. 2023- Page 2 of 10 WHEREAS, for example, over the past 15 months, the number of fractional - owned residences has nearly tripled with at least 12 fractionally owned homes in Newport Beach; WHEREAS, under this new model, the ownership of the residence is usually divided into eight shares and sold to different persons with stays ranging from two to fourteen nights in duration with back-to-back stays prohibited resulting in frequent turnover of the properties' occupants and its commercial management; WHEREAS, a representative of a commercial management company who manages this type of use, Pacaso, Inc. ("Pacaso") has stated in correspondence to the California Department of Real Estate, which is attached hereto as Exhibit "C," and incorporated herein by reference, that Pacaso homes are sold as time share interests as defined in Business and Professions Code Section 11212(z), WHEREAS, fractionally owned homes create impacts on the City's housing supply and character of residential neighborhoods by converting dwelling units from a full-time owner -occupied residence to a frequent rotation of vacation stays of less than a month; WHEREAS, public testimony indicates that this change in the use of dwelling units results in an increase in traffic and noise in residential neighborhoods, as well a change to the fabric of the community due to the short-term nature of the stays; WHEREAS, with respect to the housing supply, Governor Gavin Newsom declared a housing crisis in the State of California and called for the development of 3.5 million new homes to be built by 2025, to meet the population's housing needs, WHEREAS, as a result, the State of California has adopted a number of housing bills such as Senate Bill Nos. 8, 9, 10, 35 and 330, and an aggressive Regional Housing Needs Assessment ("RHNA") for the 6th Cycle Housing Element covering the period 2021-2029 ("6th Cycle Housing Element"), WHEREAS, the City's RHNA for the 6th Cycle Housing Element is 4,845 new housing units, which units are intended to meet the housing needs of existing and future residents within the jurisdictional boundaries of Newport Beach; 12-307 Ordinance No. 2023- Page 3 of 10 WHEREAS, according to the 6t" Cycle Housing Element, which is attached hereto as Exhibit "D," and incorporated herein by reference, whereas the median home price in the State of California was $579,770 as of 2020, the median home value of single -unit homes and condominiums in Newport Beach was $2,407,454; WHEREAS, the fractional ownership of single -unit residences as a second home further exacerbates the housing supply in Newport Beach making it harder to meet housing demand; WHEREAS, in accordance with Ewing v. Carmel -by -the -Sea, (1991) 234 Cal. App. 3d 1579, which upheld the City of Carmel-by-the-Sea's right to impose zoning restrictions on short-term rentals, the Newport Beach City Council adopted Ordinance No. 92-13, which is attached hereto as Exhibit "E," and incorporated herein by reference on May 11, 1992, establishing regulations for the operation of short-term lodging units to mitigate the impact of this use on the residents of the City; WHEREAS, on May 11, 2004, the City Council adopted Ordinance No. 2004-6, which is attached hereto as Exhibit "1=," and incorporated herein by reference prohibiting the issuance of new short-term lodging permits after June 1, 2004, to any dwelling unit on a parcel zoned as a single -unit residence or designated for single-family residential use as part of a Planned Community Development Plan, Specific Area Plan or Planned Residential District; WHEREAS, in 2020 and 2021, the City Council adopted Ordinance Nos. 2020- 15, 2020-26, and 2021-28, which are attached hereto as Exhibits "G" — "I," and incorporated herein by reference amending the City's short-term lodging regulations based upon evidence and documentation attesting to the need to further regulate and control short-term lodging units in residential zones to ensure that, among other things, short-term lodging units are regulated in a way, to maintain harmony with surrounding uses; WHEREAS, due to the proliferation of short-term rentals and their impact on neighborhoods and long-term housing, Ordinance No. 2021-28 placed a cap of 1,550 on the number of short-term lodging permits allowed in the City, WHEREAS, fractionally owned homes are a time share and operate much like short-term lodgings in that they limit occupancy by owners of a fractional interest in a property to less than 30 consecutive days; 12-308 Ordinance No. 2023- Page 4 of 10 WHEREAS, Section 30500 of the California Public Resources Code requires each county and city to prepare a Local Coastal Program ("LCF) for that portion of the coastal zone within its jurisdiction; WHEREAS, in 2005, the City adopted the City of Newport Beach Local Coastal Program Coastal Land Use Plan as amended from time to time; WHEREAS, the California Coastal Commission effectively certified the City's Local Coastal Program Implementation Plan on January 13, 2017, and the City added Title 21 (Local Coastal Program Implementation Plan) ("Title 21") to the City of Newport Beach Municipal Code ("NBMC") whereby the City assumed coastal development permit - issuing authority on January 30, 2017; WHEREAS, on November 16, 2021, the City Council conducted a study session to address concerns raised by the public regarding impacts of fractional homeownership; WHEREAS, during this study session public testimony was given that these homes operate as short-term lodging with residents expressing displeasure with the impacts that these homes were causing including an increase in the noise and traffic in the residential neighborhood; WHEREAS, on September 13, 2022, the City Council conducted a second study session to discuss the fractional ownership uses a report on how other jurisdictions were addressing fractional ownership uses and was presented with a report, which is attached hereto as Exhibit "J," and incorporated herein by reference that 15 of the 22 jurisdictions surveyed classify fractional ownership as a time share; WHEREAS, additional public testimony included concerns about increases in traffic, noise, and trash, as well as fractional ownership uses having an adverse impact on the character of the existing residential neighborhoods consistent with the impacts identified by the cities of Carmel -by -the Sea, Hermosa Beach, Palm Desert, Sonoma and St. Helena whose ordinances and evidence in support of such ordinances are attached hereto and incorporated herein by reference as Exhibits "K" - "O"; 12-309 Ordinance No. 2023- Page 5 of 10 WHEREAS, on September 27, 2022, the City Council adopted Resolution 2022- 61, initiating code amendments to Title 20 (Planning and Zoning) ("Zoning Code Amendment No. PA2022-0202") and Title 21 (Local Coastal Program Implementation Plan) ("Local Coastal Program Amendment No. 2020-0202") of the NBMC and directed staff to work with the Planning Commission to develop regulations related to fractional ownership uses in the best manner that would protect the character of residential neighborhoods, WHEREAS, on October 6, 2022, the Planning Commission conducted a study session to discuss fractional ownership uses and receive public testimony; WHEREAS, public testimony included fractional owners in favor of allowing the use, and neighbors who expressed frustration with the increased impacts caused by the operation of fractional ownership homes; WHEREAS, at the conclusion of study session, the Planning Commission expressed the desire to form an ad -hoc committee to work closely with staff to formulate appropriate regulations to ensure that they were able to thoroughly investigate the appropriate approach to fractional ownership uses; WHEREAS, on October 20, 2022, the Planning Commission formed an Ad -Hoc Committee to evaluate potential amendments to Title 20 and Title 21 of the NBMC related to fractional ownership uses within the City; WHEREAS, the Ad -Hoc Committee met a total of seven times, during which the Committee discussed potential regulatory schemes with the Community Development Department, City Attorney's Office, representatives from Pacaso and several concerned citizens to ensure the Committee members had a full understanding of the issue; WHEREAS, during this process, Pacaso proposed an ordinance, which is attached hereto as Exhibit "P," and incorporated herein by reference, regulating, Pacaso- managed homes by way of a regulatory permit with a cap of 500 on the number of regulatory permits the City would be required to issue to such fractionally owned homes; 12-310 Ordinance No. 2023- Page 6 of 10 WHEREAS, on February 3, 2023, the Ad -Hoc Committee presented their findings to the Planning Commission with the Planning Commission making two recommendations to the City Council including the preferred recommendation which was to broaden the definition of time shares to include fractional ownership uses, and an alternative recommendation of creating a separate regulatory scheme to allow fractional ownership uses in all zones, except the Single -Unit Residential (R-1) Zoning Districts, WHEREAS, on March 14, 2023, the City Council considered the Planning Commission's recommendations and, after receiving further public testimony, the City Council directed staff to move forward with the Planning Commission's preferred option of broadening the definition of time share; WHEREAS, the Planning Commission held a public hearing on April 20, 2023, in the City Council Chambers, located at 100 Civic Center Drive, Newport Beach, California. A notice of time, place and purpose of the hearing was given in accordance with California Government Code Section 54950 et seq. ("Ralph M. Brown Act") and Chapter 21.62 (Public Hearings) of the NBMC. Evidence, both written and oral, was presented to, and considered by, the Planning Commission at this hearing; WHEREAS, at the conclusion of the hearing, the Planning Commission adopted Resolution No. PC2023-018 by a unanimous vote (6 ayes - 0 nays) recommending the City Council authorize submittal of the amendment to Title 21 of the NBMC to the California Coastal Commission; WHEREAS, pursuant to Title 14 of the California Code of Regulations ("CCR") Section 13515 (Public Participation), drafts of the Local Coastal Program Amendment were made available and a Notice of Availability was distributed at least six weeks prior to the final action date; WHEREAS, the City Council held a public hearing on May 9, 2023, in the City Council Chambers located at 100 Civic Center Drive, Newport Beach, California. Notice of time, place and purpose of the public hearing was given in accordance with the Ralph M. Brown Act, Chapter 21.62 (Public Hearings) of the NBMC, and 14 CCR Section 13515. Evidence, both written and oral, was presented to, and considered by, the City Council at this public hearing; and WHEREAS, the City Council and Planning Commission agenda item and supporting evidence, attached hereto as Exhibits "Q" — "V" and incorporated herein by reference. 12-311 Ordinance No. 2023- Page 7 of 10 NOW, THEREFORE, the Newport Beach City Council does hereby ordain as follows: Section 1: The City Council of the City of Newport Beach does hereby authorize City staff to submit the Local Coastal Program Amendment No. PA2022-0202 to the California Coastal Commission to amend Title 21 (Local Coastal Program Implementation Plan) of the Newport Beach Municipal Code related to time shares as set forth in Exhibit "W," which is attached hereto and incorporated herein by reference. This decision is made based upon the evidence in the record and is consistent with the General Plan and Coastal Land Use Plan Policies set forth in Exhibit "X," which is attached hereto and incorporated herein by reference. Section 2: The Local Coastal Program Amendment No. PA2022-0202 shall not become effective until approval by the California Coastal Commission and adoption, including any modifications suggested by the California Coastal Commission, by resolution and/or ordinance of the City Council of the City of Newport Beach. Findings that Local Coastal Program Amendment No. PA2022-0202 is de minimis are attached hereto as Exhibit "Y," and incorporated herein by reference. Section 3: The LCP, including this Local Coastal Program Amendment No. PA2022-0202, will be carried out in full conformity with the California Coastal Act. Section 4: The recitals provided in this ordinance are true and correct and are incorporated into the substantive part of this ordinance. 12-312 Ordinance No. 2023- Page 8 of 10 Section 5: The City Council of the City of Newport Beach finds the Local Coastal Program Amendment No. PA2022-0202 is not subject to environmental review under the California Environmental Quality Act ("CEQA") pursuant to Section 15060(c)(2) of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, which states that an activity is not subject to CEQA if the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment or will not have the potential for causing a significant effect on the environment. Time share uses are not permitted in residential zones, however, the City has seen a trend in the fractional use of residences wherein the property is usually divided into eight shares and sold to different persons with stays ranging from two to fourteen nights in duration with back- to-back stays prohibited resulting in frequent turnover of the properties' occupants and its commercial management. This Local Coastal Program Amendment will not result in a direct or indirect physical change to the environment nor does it have the potential for causing a significant effect on the environment since it would simply clarify definitions related to time share uses. This Local Coastal Program Amendment does not alter the manner in which time shares are regulated and therefore would not result in a physical change in the environment. Additionally, the Local Coastal Program Amendment is categorically exempt pursuant to Section 15308 because the ordinances involve regulatory actions to assure protection of the environment. Section 6: If any section, subsection, sentence, clause or phrase of this ordinance 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 ordinance. The City Council hereby declares that it would have passed this ordinance, and each section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases may be declared invalid or unconstitutional. Section 7: Except as expressly modified in this ordinance, all other sections, subsections, terms, clauses and phrases set forth in the Newport Beach Municipal Code shall remain unchanged and shall be in full force and effect. 12-313 Ordinance No. 2023- Page 9 of 10 Section 8: The Mayor shall sign, and the City Clerk shall attest to the passage of this ordinance. The City Clerk shall cause the ordinance, or a summary thereof, to be published pursuant to City Charter Section 414. This ordinance shall be effective thirty calendar days after its adoption and approval by the California Coastal Commission. This ordinance was introduced at a regular meeting of the City Council of the City of Newport Beach held on the 9th day of May, 2023, and adopted on the 23rd day of May, 2023, by the following vote, to wit: AYES: NAYS: ABSENT: ATTEST: LEILANI I. BROWN, CITY CLERK APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE AAROWC. HARP, C TY ATTORNEY Attachment(s): NOAH BLOM, MAYOR Exhibit A - July 26, 1982, City Council Meeting Minutes and Ordinance No. 82-14 Exhibit B - March 11, 1996, City Council Meeting Minutes and Ordinance No. 96-7 Exhibit C - Correspondence from Pacaso to the California Department of Real Estate 12-314 Ordinance No. 2023- Page 10 of 10 Exhibit D - 6th Cycle Housing Element Exhibit E - April 27, 1992, City Council Meeting Minutes and Ordinance No. 92-13 Exhibit F - April 27, 2004, City Council Agenda Item No. 3 Adopting Ordinance No. 2004-6 and Supporting Material Exhibit G - June 23, 2020, City Council Agenda Item No. 19 Adopting Ordinance No. 2020-15 and Supporting Material Exhibit H - October 13, 2020, City Council Agenda Item No. 18 Adopting Ordinance No. 2020-26 and Supporting Material Exhibit I - November 30, 2021, City Council Agenda Item No. 26 Adopting Ordinance No. 2021-28 and Supporting Material Exhibit J - Sage Crest Planning + Environmental Report Exhibit K - City of Carmel -by -the Sea Time Share Ordinance and Supporting Evidence Exhibit L - City of Hermosa Beach Time Share Ordinance and Supporting Evidence Exhibit M - City of Palm Desert Time Share Ordinance and Supporting Evidence Exhibit N - City of Sonoma Time Share Ordinance and Supporting Evidence Exhibit O - City of St. Helena Time Share Ordinance and Supporting Evidence Exhibit P - Ordinance Proposed by Pacaso Adding Chapter 5.98 Exhibit Q - September 13, 2022, City Council Agenda Item No. SS2 Exhibit R - September 27, 2022, City Council Agenda Item No. 1 Exhibit S - October 6, 2022, Planning Commission Agenda Item No. SS.2 Exhibit T - October 20, 2022, Planning Commission Agenda Item No. 6 Exhibit U - February 23, 2023, Planning Commission Agenda Item No. 6 Exhibit V - March 14, 2023, City Council Agenda Item No.12 Exhibit W - Local Coastal Program Amendment No. PA2022-0202 Exhibit X - Findings of Local Coastal Program Amendment No. PA2022-0202 Consistency with the General Plan and Coastal Land Use Plan Exhibit Y - Local Coastal Program Amendment No. PA2022-0202 De Minimis Findings 12-315 Exhibit A July 26, 1982, City Council Meeting Minutes and Ordinance No. 82-14 https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=21155&dbid=0&repo=CNB https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=35606&dbid=0&repo=CNB 12-316 Exhibit B March 11, 1996, City Council Meeting Minutes and Ordinance No. 96-7 https:Hecros. newportbeachca.gov[WEB/DocView.aspx?id=22280&dbid=0&repo=CN B https:Hecros. newportbeachca.gov/WEB/DocView.aspx?id=36439&dbid=0&repo=CN B 12-317 Exhibit C Correspondence from Pacaso to the California Department of Real Estate 12-318 Exhibit C From: Andy Sirkin <dasirkin@gmail.com> Sent: Saturday, July 24, 2021 10:19 AM To: Aiu, Joseph@DRE <Joseph.Aiu@dre.ca.gov> Cc: Bruce, David@DRE <David.Bruce@dre.ca.gov>; Neri, Chris@DRE <Chris,Neri@dre.ca.gov>; Patrick Abell <patrick@pacaso.com>; David J. Willbrand <david@pacaso.com> Subject: Re: Pacaso (DRE No. 121-0701-006) CAUTION: THIS EMAIL ORIGINATED OUTSIDE THE DEPARTMENT OF REAL ESTATE! DO NOT: click links or open attachments unless you know the content is safe. NEVER: provide credentials on websites via a clicked link in an Email. Dear Mr. Aiu. Yes, I confirm that Pacaso Homes are within that exemption. We sincerely appreciate your prompt response and attention. All the best, Andy Sirkin SirkinLaw APC +1-415-462-5925 (US) On Jul 24, 2021, at 5:37 PM, Aiu, Joseph@DRE <Joseph.Aiu e,dre.ca.gov> wrote: Dear Mr. Sirkin, Thank you for your email response and explanation dated 7/21/21. Based on your response and explanation, we understand that your clients, Pacaso Inc. and Pacaso Homes, are selling time-share interests as defined in B&P Code section 11212(z), but are exempt from needing to file for a time-share public report since they fall below the reporting threshold of 11 or more units. Please confirm. Thank you. Sincerely, Joseph Aiu Investigations & Compliance From: Andy Sirkin <dasirkin@gmail.com> Sent: Wednesday, July 21, 2021 2:28 AM To: Aiu, Joseph@DRE <Joseph.Aiu@dre.ca.gov> Cc: Bruce, David@DRE <David.Bruce@dre.ca.gov>; Neri, Chris@DRE 12-319 <Chris.Neri@dre.ca.gov>; Patrick Abell <patrick@pacaso.com>; David J. Willbrand <david@pacaso.com> Subject: Re: Pacaso (DRE No. 121-0701-006) CAUTION: THIS: EMAIL ORIGINATED OUTSIDETHE DEPARTMENT OF REAL ESTATE! DO NOT: click links or open attach ments.unless you know the.content is safe: NEVER: provide credentials on websites via a clicked link in an Email. Dear Mr. Aiu, I received an email late yesterday from David Bruce saying that, since an investigation has been initiated by the Department, all correspondence should be routed to you. He also mentioned that I was welcome to "cc" him on that correspondence, so I will continue to do SO. Although you may already have a basic understanding of Pacaso's business, I will begin with a brief explanation of the key elements. Pacaso only organizes group purchases of single- family residences. Each owner gets a 1/8th share along with the right to use the home for 1 /8th of each year indefinitely. During each owner's usage period, that owner has exclusive use of the entire house. All rentals are prohibited; only owners and their guests are permitted to use the house. Each owner pays regular assessments to fund the operating costs of the home and maintenance reserves. Once all eight ownership slots are filled, the eight owners own and control the house; Pacaso retains no ownership interest. B&P Code Section 11212(z) defines "Time -Share Plan" as any "arrangement ... whereby a purchaser, in exchange for consideration, receives ownership rights in or the right to use accommodations for a period of time less than a full year during any given year, on a recurring basis for more than one year." This description matches exactly the arrangement among owners of a Pacaso home. Specifically, each purchaser gets the right to use the home for 1/8th of each year on a recurring basis every year for as long as he/she is an owner. However, since each Pacaso offering involves only eight interests, each home is below the threshold for needing a Time -Share public report under Section I I211.5(b)(1). B&P Code Section I I004.5(g) provides that "time-share plans ... are not "subdivisions" or "subdivided lands" subject to this chapter." Based on this language, I had always assumed that Time -Share offerings, regardless of size, did not require a subdivision public report under B&P Code Section 11000 et seq.; rather, large Time -Share offerings (more than 10 interests) require a Time -Share public report, and small Time -Share offerings (10 or fewer interests) require no public report. Your communications suggest that Time -Share offerings too small to require a Time -Share public report instead need a subdivision public report. I am having difficulty understanding the logic of this position. As you may know, prior to 2004, California law required a Time - Share public report only for projects involving more than 12 interests. When the legislature enacted the Vacation Ownership and Time -Share Act Of 2004, it reduced the threshold from 12 to 10. This change shows that the legislature specifically considered the appropriate threshold for when a Time -Share offering needs a public report. The legislature did not choose nine, or eight, or six for the threshold; it specifically chose 10. The idea that Time -Share offerings too small to require a Time -Share public report instead need a subdivision public report seems contrary to this legislative intent. What meaning could the 10-share threshold in Section 11211.5(b)(1) have if an offering below the threshold still had to obtain a subdivision public report? Moreover, when the legislature enacted the Vacation Ownership and Time -Share Act Of 2004, the legislature could have said that Time -Share offerings require a subdivision public report under B&P Code Section 11000 et seq., and that the application for a Time -Share public report should be the same as the application for a subdivision public report. Instead, the legislature carefully specified the types of information it deemed appropriate for DRE to obtain and consider when "vetting" a proposed Time -Share offering. The application submittal for a Time -Share public report makes sense in the context of what a Time -Share offering is and what the purchasers buy. 12-320 If, as you suggest, Time -Share offerings too small to require a Time -Share public report instead need a subdivision public report, it would mean that the public report application for a small Time -Share offering would ignore the carefully -crafted specifics of the Time -Share law (which make perfect sense in the context of a Time -Share offering), and instead comply with the public report application requirements for a subdivision (which make no sense in the context of a Time -Share offering). To illustrate this point with just one of many examples, consider B&P Code Section 11234(c), under which a Time -Share public report requires "a description of the type of interest and usage rights the purchaser will receive" and "a representation about the percentage of useable time authorized for sale, and if that percentage is 100 percent, then a statement describing how adequate periods of time for maintenance and repair will be provided." This requirement is perfectly logical for a Time -Share public report, since the fairness and adequacy of the usage assignment structure is absolutely critical from a consumer protection standpoint. So, why would the subdivision public report you suggest is needed for a small Time -Share offering not require this critical information? Is this information suddenly less important if the offering involves 10 or fewer Time -Share interests? For all of these reasons, I respectfully suggest that Pacaso offerings do not require a Public Report. My assertion is based specifically on B&P Code Sections 11211.5(b)(1) and 11004.5(g), and on the legislative history and context of the Vacation Ownership and Time - Share Act Of 2004. To simplify your job when responding, you can ignore the other arguments made in my client's letter of July 9. Cordially, Andy Sirkin SirkinLaw APC +1-415-462-5925 (US) On Jul 17, 2021, at 1:28 AM, Aiu, Joseph@DRE <Joseph.Aiugdre.ca.gov> wrote: Dear Mr. Sirkin, Your request for an extension to the deadline imposed in my "Notice to show cause was taken under consideration and you are granted an extension until July 23, 2021. Please note the following. The Department of Real Estate (DRE), investigates violations of the Real Estate Law (Licensees), the Subdivided Lands Act (Subdividers), the Vacation Ownership and Time Share Act (Developers), and endeavors to safeguard the public interests in real estate matters. In your initial response, your letter alluded to 11001.[a](b)(2), 11004.5(g), 11212.5(b)(1), and Pacaso Homes purchases are resales. Please be aware that your marketing concept is also under consideration. Sincerely, Joseph Aiu Investigations and Compliance From: Andy Sirkin <dasirkin@gmail.com> Sent: Friday, July 16, 2021 3:04 PM To: Aiu, Joseph@DRE <Joseph.Aiu@dre.ca.gov> Cc: Bruce, David@DRE <David.Bruce @dre.ca.gov>; Neri, Chris@DRE <Chris.Neri@dre.ca.gov>; Patrick Abell <patrick@pacaso.com>; David J. Willbrand <david@pacaso.com> Subject: Pacaso (DRE No. 121-0701-006) 12-321 CAUTION: THIS EMAIL ORIGINATED OUTSIDE THE DEPARTMENT OF REAL.ESTATEI DO NOT: click links or open attachments unless you know the content is safe. NEVER: provide.creclentials on websites via. a clicked link in an Email. Our office has been engaged by Pacaso in connection with your inquiry. Over the past four days, I have been corresponding with David Bruce about my analysis of the situation and potential options to move forward in a manner that would be satisfactory to DRE. I had hoped to provide a formal response to your email by this afternoon in accordance with your deadline. However, I have not yet received Davids's response to my most recent email (sent late yesterday), and I would very much like to get that before responding to you. Might I ask your indulgence in getting a short extension so that I might complete my interchange with David? I will commit to keeping you advised on the progress of that exchange. Please be assured that resolving this matter to the satisfaction of DRE is Pacaso's highest priority. We are in no way interested in delaying a resolution; however, we want to make sure to proceed in the manner most likely to lead to a mutually acceptable outcome. Thank you in advance for your consideration. All the best, Andy Sirkin SirkinLaw APC +1-415-462-5925 (o) +1-415-350-6296 (m) ---------- Forwarded message --------- From: Aiu, Joseph@DRE <Joseph.Aiure.ca.gov> Date: Fri, Jul 9, 2021 at 11:42 AM Subject: RE: Pacaso response to DRE notice letter (DRE No. 121- 0701-006) To: Patrick Abell <patrick@ acaso.com> Cc: David Willbrand <david(cr�pacaso.com>, Charlie Tanner <charlie@,brokerzoo.com>, Aiu, Joseph@DRE <Josegh.Aiundre.ca. ov> Dear Mr. Abell, Thank you for your letter explaining the position of Paseo Homes as to its sales of "1/8th undivided interests in a residential homes.' The key phrase in our letter is the sale of undivided interest. Please refer to Section 11000.1 of the Code. Further, your letter appear to allude to the "Exemption" pursuant to Subsection 11000.1(b)(2), which requires satisfactory evidence presented to DRE —this has not been done. Hence, Section 11010 is applicable. Please respond by July 16, 2021 as to whether Pacaso Homes and its affiliates will comply with applying for a Public Report, since advertising the sales must have a Preliminary Public Report. Sincerely, Joseph Aiu Statewide Subdivisions Investigations & Compliance 12-322 (213) 576-6927 Direct (213) 576-6942 Fax Department of Real Estate 320 W. 4th Street, Suite 350 Los Angeles, CA 90013 j oseph.aiu(a,dre.ca.yo_v <image001.png> 12-323 Exhibit D 6th Cycle Housing Element https://ecros. newportbeachca.gov/WEB/DocView.aspx?id=2833796&dbid=0&repo=CN B 12-324 Exhibit E April 27, 1992, City Council Meeting Minutes and Ordinance No. 92-13 https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=21921 &dbid =0&repo=CNB https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=36004&dbid=0&repo=CNB 12-325 Exhibit F April 27, 2004, City Council Agenda Item No. 3 Adopting Ordinance No. 2004-6 and Supporting Material https://ecros.newportbeachca.,qov/WEB/DocView.aspx?id=68969&dbid=0&repo=CNB https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=36708&dbid=0&repo=CNB 12-326 Exhibit G June 23, 2020, City Council Agenda Item No. 19 Adopting Ordinance No. 2020-15 and Supporting Material https://ecros. newportbeachca.gov/WEB/DocView.aspx?id=2538440&dbid=0&repo=CN B Correspondence https:Hecros. newportbeachca.gov/WEB/DocView.aspx?id=2538635&d bid=0&repo=CN B Ad Hoc Committee Recommendations PowerPoint https://ecros. newportbeachca.gov/WEB/DocView.aspx?id=2538700&dbid=0&repo=CN B Corona del Mar Residents Association Short -Term Lodging Survey PowerPoint https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=2538702&dbid=0&repo=CNB Newport Island Community Association Survey Highlights PowerPoint https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=2538703&dbid=0&repo=CNB Ordinance No. 2020-15 https://ecros. newportbeachca.gov/WEB/DocView.aspx?id=2544635&dbid=0&repo=CNB 12-327 Exhibit H October 13, 2020, City Council Agenda Item No. 18 Adopting Ordinance No. 2020-26 and Supporting Material https://ecros. newportbeachca. gov/WEB/DocView.aspx?id=2605151 &dbid =0&repo=CNB Correspondence https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=2605188&dbid=0&repo=CNB Notice of Public Hearing https://ecros. newportbeachca.gov/WEB/DocView.aspx?id=2605206&dbid=0&repo=CN B Ordinance No. 2020-26 https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=2609797&dbid=0&repo=CNB 12-328 Exhibit I November 30, 2021, City Council Agenda Item No. 26 Adopting Ordinance No. 2021-28 and Supporting Material https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=2797314&dbid=0&repo=CNB Correspondence https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=2797686&dbid=0&repo=CNB Short Term Lodging LCP Amendments PowerPoint https://ecros.newportbeachca..qov/WEB/DocView.aspx?id=2797391 &dbid=0&repo=CNB Notice of Public Hearing https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=2797689&dbid=0&repo=CNB Ordinance No. 2021-28 https://ecros. newportbeachca.qov/WEB/DocView.aspx?id=2800356&dbid=0&repo=CN B 12-329 Exhibit J Sage Crest Planning + Environmental Report 12-330 Table of Contents EXECUTIVESUMMARY..................................................................................................................................1 BACKGROUND...............................................................................................................................................1 Known/Suspected Properties in Newport Beach.....................................................................................1 BENEFITS AND IMPACTS OF FRACTIONAL HOUSING.................................................................................... 2 FractionalHousing Benefits...................................................................................................................... 2 FractionalHousing Impacts....................................................................................................................... 3 COMMUNITYSURVEY................................................................................................................................... 4 Cityof Beverly Hills, CA............................................................................................................................. 5 Cityof Carlsbad, CA...................................................................................................................................5 Cityof Carmel by the Sea, CA.................................................................................................................... 5 Cityof Encinitas, CA..................................................................................................................................5 Cityof Fort Lauderdale, FL........................................................................................................................ 6 Cityof Hermosa Beach, CA....................................................................................................................... 6 Cityof Indian Wells, CA............................................................................................................................. 6 Countyof Monterey, CA........................................................................................................................... 6 Cityof Napa, CA............................................................................................................................. 6 Villageof North Haven, NY....................................................................................................................... 7 Cityof Oceanside, CA................................................................................................................................7 Cityof Pacific Grove, CA............................................................................................................................ 7 Cityof Palm Desert, CA............................................................................................................................. 7 Cityof Palm Springs, CA............................................................................................................................ 7 Cityof Park City, UT..................................................................................................................................8 Cityof Santa Barbara, CA.......................................................................................................................... 8 Cityof Santa Cruz, CA................................................................................................................................ 8 Cityof South Lake Tahoe, CA.................................................................................................................... 8 Cityof Sonoma, CA....................................................................................................................................9 Cityof St. Helena, CA................................................................................................................................ 9 Townof Truckee, CA................................................................................................................................. 9 Cityof Vail, CO........................................................................................................................................10 FRACTIONAL HOUSING SS2-5 12-332 APPENDICES................................................................................................................................................10 Appendix A — Pacaso Economic Impact Analysis, prepared by EBP........................................................A1 Appendix B — City of Beverly Hills Urgency Ordinance........................................................................... B1 Appendix C — City of Carlsbad Timeshare ordinance.............................................................................. C1 Appendix D — City of Carmel by the Sea Cease and Desist Order...........................................................D1 Appendix E — City of Hermosa Beach Planning Commission Resolution ................................................ E1 Appendix F — County of Monterey Cease and Desist Order................................................................... F1 Appendix G —Village of North Haven Code Amendment...................................................................... G1 Appendix H — City of Palm Desert Ordinance........................................................................................ H1 Appendix I — City of Palm Springs Cease and Desist Order......................................................................11 Appendix J — Park City Notice of Amendment ....................................................................................J1 Appendix K — City of Santa Cruz Ballot Initiative..................................................................................... K1 Appendix L — City of South Lake Tahoe Cease and Desist Order............................................................ L1 Appendix M — City of Sonoma Ordinance.............................................................................................. M1 Appendix N — City of St. Helena Ordinance........................................................................................... N1 Appendix O — Pacaso Inc. v. City of St. Helena....................................................................................... 01 Appendix P — Town of Truckee Ordinance.............................................................................................. P1 Cover Photo by Dex Ezekiel on Unsplash FRACTIONAL HOUSING r SS2-6 12-333 EXECUTIVE SUMMARY The City of Newport Beach (City) is beginning to see the rise of fractional homeownership of single-family houses. Fractional homeownership is when multiple owners purchase a property and split the allowed time at the property through a formal arrangement, as compared to multiple owners who occupy the residence full-time or have no formal arrangement for occupancy. In the fractional model, the allotted time for each owner is based on their percentage of ownership. In reviewing available data on fractional homeownership, there appears to be at least ten such properties within the City but there could be more. The City is receiving complaints from residents that these properties function similarly to short-term rental vacation homes and result in significant noise, traffic, and other impacts to residential neighborhoods. As a result of these concerns, the City asked Sagecrest Planning+Environmental (Sagecrest) to investigate how other jurisdictions are dealing with fractional housing and the companies that promote them. Based on this investigation, it appears that other communities are adopting moratoriums and pursuing operators of fractional housing companies through code enforcement actions. BACKGROUND Fractional homeownership (sometimes called co -ownership) is an emerging trend in real estate where ownership of properties is equally shared among multiple owners (typically between four and 12 owners). The amount of time the owner may spend at the property correlates to the fraction of ownership (e.g., a 1/8 share owner would be allotted 45 days per year). This time allotment is not typically used consecutively, but rather one or two weeks at a time. In addition to the cost to purchase their share of the home, the owners are responsible for their share of the maintenance, property management fees, HOA fees, cleaning costs, utilities, taxes, insurance, and payment into a reserve fund to cover long-term repairs, such as replacement of the roof. Fractional owners maintain an ownership interest, benefit from a change in property value due to appreciation and have the potential to generate income through short- term rentals, although the City would maintain authority on short-term rentals. It should also be noted that some fractional homeownership companies prohibit short-term rentals in their management agreement. Companies such as Pacaso, Sharetini, Ember, Equity Estates, and others facilitate the purchase of properties and provide the necessary maintenance, furnishments, property management, and cleaning services in exchange for a monthly fee. Many of these companies utilize ownership models that purchase and hold the properties under entities, such as limited liability companies, to avoid the need for a real estate transaction each time an owner sells their share. Alternatively, an ownership group could forego using a management company and self -govern the access to fractional housing. Known/Suspected Properties in Newport Beach Sagecrest reviewed the listings on various sites to identify properties in Newport Beach. Additionally, Sagecrest reviewed the City's database to find properties with mailing addresses that match the fractional home ownership companies. The following table lists the properties that are either known or suspected to be fractional ownership properties. FRACTIONAL HOUSING SS2-7 12-334 Property Address 117 25t' Street Source Listed on Pacaso 121 Emerald Avenue Listed on Pacaso 305 Grand Canal Listed on Pacaso _ 315 East Bay Avenue 506 West Oceanfront Listed on Ember Listed on Pacaso 1703 Plaza del Sur 2137 Miramar Drive Listed on www.compass.com 4 Listed on Ember 2628 Ocean Boulevard 3803 Marcus Avenue City database mailing address match to Pacaso City database mailing address match to Pacaso 4106 River Avenue Listed on Pacaso BENEFITS AND IMPACTS OF FRACTIONAL HOUSING Fractional Housing Benefits The primary benefit of fractional homeownership is to own a second home at a more affordable price. According to county records, the home at 506 W Oceanfront sold on March 14, 2022, for $6,800,000. A '/s share of this house is currently being offered on Pacaso for $1,098,000. According to Equity Estates, a vacation home investment firm, the benefits of fractional housing are:' • It's more affordable - Perhaps a $4M home is out of reach, but $1M is right in your wheelhouse. Fractional ownership lets you get the home you want in the most desirable location at the price you can afford. This goes for home upkeep and maintenance, too. By sharing the costs of upkeep, fractional ownership makes long-term ownership a much more realistic possibility. • The home will get some love - No home should sit vacant 48 weeks out of the year. By sharing the ownership, the home will be opened up at regular intervals. Opening and closing windows and doors, running the water, turning on the AC and heater, and using amenities like the hot tub and pool —all of these are essential to maintaining the home. It provides an opportunity to identify issues early on and preserve the home's long-term value. Peace of Mind - Fractional ownership also means sharing the burden of homeownership. Rather than a single point of failure (i.e., you), you essentially have a group that shares accountability, schedules maintenance, checks on the home, and divides the work and chores that would otherwise be left to a single owner. Another fractional housing company, Pacaso, claims that its model reduces demand in the housing market. Specifically, they state, "This demand on top of short supply has driven up home prices to unprecedented levels. Instead of eight second home buyers buying eight separate median -priced homes, which drives up prices even further, Pacaso consolidates those eight buyers into just one luxury home, which alleviates pressure at the median -priced tier."' To address concerns that they do not provide a benefit, Pacaso commissioned an economic impact analysis (Appendix A), which found that the average fractional ownership house generates an average of $48,390 in annual spending compared with the 1 https:Heciuityestatesfund.com/the-pros-and-cons-of-fractional-ownership, retrieved August 16, 2022 Z https://www.pacaso.com/bloe/economic-impact-study, retrieved August 16, 2022 FRACTIONAL HOUSING �(' (( / ( l Ili J`G1 `:j } f )1 !! t4 l j ( l all J SS2-8 12-335 average second home. The study further found that fractional housing generates an average of $3,780 additional revenue in local and state tax dollars over the average second home. Fractional Housing Impacts Notwithstanding the aforementioned benefits, many communities have received complaints from their residents that fractional housing creates adverse impacts on the neighborhoods in which they are located and the City as a whole. Jurisdictions that have taken a proactive approach to preventing fractional housing in their communities all have expressed concerns about the following: • Fractional housing adversely impacts the affordability of full-time homes in the community. As more homes are taken out of the primary housing market and converted to vacation homes, the available housing stock is reduced. Even though the fractional housing companies focus on the high -end market, any loss in available housing supply results in increase costs across the entire market. Due to the high turn -over of occupants, fractional housing could adversely impact long-term residents in the surrounding neighborhood. Given that vacations typically last for short periods of time, these properties would have similar impacts as short-term rentals, such as noise, loss of privacy, loss of community buy -in, and decline in property values. • The operation of the fractional homeownership companies within residential areas would result in the commercialization of residential neighborhoods. Several communities that Sagecrest spoke with noted that the operations of these companies would require a business license as they are establishing a commercial use. Sagecrest discussed concerns with fractional housing with a major opponent to fractional housing, Stop Pacaso Now'. This organization consists of volunteers who provide resources to residents to oppose fractional housing from being established in their community. This includes providing sample yard signs, sample letters, and volunteer coordination guidance. In discussing the effectiveness of their outreach, Stop Pacaso Now stated that they have had great success in communities in which residents have organized. Stop Pacaso Now has sponsored four petitions on change.org (Sonoma 4, Dry Creek Valleys, St. Helena', and a nationwide petition') against fractional housing with a total of 7,411 signatures. The Mitchell Hamline Law Journal of Public Policy and Practice published a journal article' that found that "The increasing commodification of single-family homes has had cascading effects on housing and on communities in general." Fractional housing is shared among various owners, as a result, an increase in 3 https://stoppacasonow.com/ 4 https://www.change.org/p/sonoma-county-planning-commission-pacaso-time-shares-don-t-belong-in-sonoma- neighborhoods, retrieved August 16, 2022 5 https://www.change.org/p/pacaso-time-shares-don-t-belong-in-dry-creek-valley-s-agricultural-zoning-and- farmlands, retrieved August 16, 2022 6 https://www.change.org/p/mderosa-cityofsthelena-org-gellsworth-cityofsthelena-org-stop-pacaso-from- commercializing-our-residential-neighborhoods, retrieved August 16, 2022 ' https://www.change.org/p/pacaso-stop-pacaso-s-takeover-of-housing, retrieved August 16, 2022 S Markuson, Christopher (2022) "A Timeshare By Any Other Name: Fractional Homeownership and the Challenges and Effects of Commodified Single -Family Homes," Mitchell Hamline Law Journal of Public Policy and Practice: Vol. 43: Iss. 2, Article 1. Available at: https://open.mitchelIhamIine.edu/policypractice/vol43/iss2/1 FRACTIONAL HOUSING J SS2-9 12-336 the number of units could decrease the demand for hotel rooms. This would likely result in a reduction in the amount of transient occupancy tax accrued by the City. C[]M M U N ITV SURVEY Sagecrest researched other communities that have fractional ownership properties to determine if there is a concern with these properties and how the community is addressing these concerns. A summary of the actions is contained in the table below, followed by a description of each community. 14� �°/ Notes (a) Code Amendment in Process (b) City Council issplit unwhether ornot fractional housing |satimeshare FRACTONALHOUS|NG ° ����� �� n�g������� � 332-10 12-337 City of Beverly Hills, CA On July 15, 2021, the City of Beverly Hills adopted an urgency ordinance establishing a 45-day moratorium on fractional ownerships of residential and commercial properties. In the staff report, the City expressed concerns that the properties would impact the residents in the surrounding neighborhood since they would operate as vacation rental homes. The City noted these properties would likely "experience high turnover rates of occupants, and result in impacts related to their operation such as noise, loss of privacy, loss of community buy -in, and decline in property values." In addition to these impacts, the City expressed concerns that converting homes to fractional housing would remove permanent housing from the housing market. Notwithstanding this prohibition, the moratorium does allow the City Council to approve a fractional ownership dwelling if they adopt a finding that "the fractional ownership of a property will not disturb the stability of a residential neighborhood or residential building and will not adversely impact future development, redevelopment, safety, and proper maintenance of the property" during a duly noticed public hearing. The moratorium was extended for ten months and 15 days on August 17, 2021 and extended again for a second year on June 14, 2022. The moratorium is now set to expire on July 14, 2023. The moratorium intends to allow the City staff time to study the issue and any potential impacts fractional housing may have on the health, safety, and welfare of those who live in surrounding homes and on the City as a whole. A copy of the urgency ordinance and staff report is included in Appendix B. City of Carlsbad, CA The City of Carlsbad noted that the use of fractional properties constitutes a timeshare. They have an existing timeshare ordinance (Appendix C), which they would enforce if they received a complaint. The City has not had an issue with operation of the fractional homes. City of Carmel by the Sea, CA The City is aware of fractional ownership companies and their assertation that they sell and manage properties, not timeshares. The City disagrees with this position and is of the opinion that any fractional housing has the same impacts on surrounding residential areas as short-term vacation rentals. Not only is it unlawful for any fractional ownership company to commence or carry on any kind of business in the City without first procuring a business license and pay the applicable business license tax, but any such business would be in violation of the City's prohibition of timeshares. The City noted that their regulations on transient commercial use of residential property have been previously adjudicated.' Carmel by the Sea has issued a cease -and -desist order (Appendix D), ordering Pacaso to stop all advertising and sale of fractional ownership of residential properties within the City and will proceed through its code enforcement authority to obtain compliance. City of Encinitas, CA The City is aware of the fractional ownership model and that other communities are working on regulations. Since Encinitas has not had any issues with fractional homeownership, they are not working on any code updates or taking enforcement actions. 9 Ewing v. City of Carmel -by -the -Sea (1991) 234 Cal.App.3d 1579 FRACTIONAL HOUSING ul N- Bms SS2-11 12-338 City of Fort Lauderdale, FL The City of Fort Lauderdale does not regulate fractional housing since they are considered transient lodging. Within the State of Florida, transient lodging is regulated by the State. Provided the fractional housing is within any zone which permits transient lodging, it would be allowed. City of Hermosa Beach, CA The City of Hermosa Beach classifies fractional housing as a timeshare. They are concerned that the operation of the fractional housing and timeshares could change the character of residential neighborhoods as the guest of the units may naturally stay out later, entertain more, and gather in larger numbers while on vacation. Currently, the Hermosa Beach Municipal Code does not regulate timeshares, but the City is processing a code amendment to prohibit timeshares in residential zones. If approved, the code amendment would allow timeshares in commercial zones with approval of a Conditional Use Permit. The Planning Commission conducted a public hearing on the code amendment on April 19, 2022, at which the Commission adopted a resolution (Appendix E) to recommend the City Council approve the code amendment. This amendment is currently scheduled for a public hearing before the Council on September 27, 2022. City of Indian Wells, CA The City of Indian wells does not currently regulate fractional housing but has received complaints from residents regarding impacts being created. The City Council discussed the matter on May 19, 2022, at which time the City Council was split if fractional housing constituents a timeshare or not. They expressed concerns about taking legal action on the fractional ownership companies due to the ongoing litigation in other jurisdictions. The City Council directed the City Attorney to return with options for them to consider on how to proceed. At this time, it is not known when this discussion will be taken back to the City Council. County of Monterey, CA Within areas of Monterey County that fall under the County's zoning jurisdiction, fractional ownerships are classified as timeshares. Pursuant to the Monterey County Municipal Code, timeshare projects are only allowed in zones where a hotel, motel, or similar visitor accommodation use would be permitted, and in such cases a Use Permit or a Coastal Development Permit would be required. Monterey County is aware of certain homes advertised as fractional housing that are located in the Carmel Highlands and the Del Monte Forest. Both areas are within the County's zoning jurisdiction and are within residential zones. Monterey County has issued a cease -and -desist order (Appendix F), ordering Pacaso to stop all advertising and sale of fractional ownership of residential properties within these areas and will proceed through its code enforcement authority to obtain compliance. City of Napa, CA The City of Napa does not have an ordinance regulating fractional ownership citywide but does have a Master Development Plan (MDP) for the Stanly Ranch area. This MDP requires fractional ownership properties to pay a transient oriented tax for stays more than 14 days, but research indicates that no fractional ownership property has paid the TOT. In 2021, the City Council conducted a hearing to discuss the matter, during which residents complained of not wanting their neighborhoods to turn into a business venture for the wealthy. There has been no further discussion regarding fractional ownership. FRACTIONAL HOUSING SS2-12 12-339 Village of North Haven, NY The Board of Trustees of the Village of North Haven enacted a prohibition on fractional ownership, timesharing, and interval uses in single-family homes in January 2022 (Appendix G). The Board found that the needs of transients are adverse to the interest that protect and preserve single-family homes. Furthermore, the prohibition was deemed necessary to prevent the unwarranted commercialization of residential areas. In a discussion with the Town staff, the ordinance would be enforced through code enforcement if they receive a complaint, but they were unable to confirm if action had been taken on any existing units. City of Oceanside, CA The City of Oceanside is not aware of any specific issues surrounding single-family homes used as fractional ownerships. The City does allow fractional ownership in their Downtown District as it pertains to traditional timeshare listings, provided a Conditional Use Permit is approved for the use. Given that most of these fractional ownership listings resemble short-term rental models, staff would consider fractional housing has short-term rentals in single-family homes, which would require the issuance of a short-term rental permit. City of Pacific Grove, CA Currently the City of Pacific Grove prohibits timeshares throughout the City. The City Council accepted public comment on fractional housing and timeshares on May 18, 2022, at the conclusion of which the Council directed staff to review the City's current timeshare ordinance and recommend•changes to better effectuate the City's prohibition of timeshare projects, including fractional housing. The City anticipates having the draft ordinance to their Planning Commission in October 2022 and to the City Council by the end of year. City of Palm Desert, CA In November 2021, the City Council discussed the emergence of fractional ownership businesses within the City. In the Staff Report, the City Attorney opined that the fractional homeownership "model fits within that definition of "time- share plan" as co -owners receive ownership rights to use a property for less than a year on a recurring basis" (Appendix H). The City only allows timeshares in the Planned Residential, General Commercial, and Planned Commercial Resort zones. On May 12, 2022, the City Council adopted an ordinance updating the timeshare provisions of the Palm Desert Municipal Code. The updates include expanding the definition of timeshare that includes the shared use of any property, where the owners have the right of occupancy for less than full year during any given year. The ordinance also established enforcement procedures for violations of the timeshare ordinance. City of Palm Springs, CA The City of Palm Springs regulates where timeshares can be located within the City and taxes occupancy of timeshares. Timeshares are only permitted in zoning districts where hotel uses are permitted and with approval of a Conditional Use Permit. Notably, timeshares are not permitted in single-family zones. Furthermore, the City's business license ordinance requires any party that is transacting any business within the City to first procure a business license and pay the applicable business license tax. Although the fractional ownership companies claim that they only purchase and sell luxury homes, and therefore they do not impact the availability of affordable housing. However, the City believes the basic laws of supply and demand dictate that every home that is made unavailable to a full-time resident, FRACTIONAL HOUSING `y D BF: fj �i SS2-13 12-340 whether "luxury" or not, necessarily reduces the supply of homes, and therefore reduces the affordability of housing in the City. In addition to the loss of housing, fractional ownership companies who involve multiple investors will result in their guests rotating the occupancy of the dwelling throughout the year. Although the fractional owners are not technically renters, the City believes the neighbors can expect the property to have many of the same secondary impacts that are caused by vacation rentals. The City of Palm Springs has issued a cease -and -desist order (Appendix 1), ordering Pacaso to stop all advertising and sale of fractional ownership of residential properties within the City and will proceed through its code enforcement authority to obtain compliance. City of Park City, UT Park City, Utah allows fractional ownership in single-family homes provided the ownership obtains approval of a Conditional Use Permit. The areas in which the City allows fractional ownership are identified in the City's General Plan and consists of areas that support the resort economy. These are the same areas that allow timeshares and private residential clubs. The fractional ownership properties must comply with specific prohibitions such as on -street parking, nightly rentals, the outdoor display of goods and merchandise, and signage. Additionally, the fractional housing must obtain approval of a management plan that outlines a satisfactory level of management and maintenance of the fractional housing. The City is currently preparing a code amendment which would prohibit fractional ownership in most single-family zones. The amendments would allow fractional housing in zones where timeshares and private residential clubs are currently permitted. The amendment would also require a business license for fractional ownerships, submittal of a management plan, and prohibition of nightly rentals, on -street parking, outdoor display of goods, signs, and commercial uses (Appendix J). On August 30, 2022, the Planning Commission and City Council are scheduled to conduct a joint work session on the proposed amendments. City of Santa Barbara, CA The City of Santa Barbara does not have any regulation for fractional ownership. The City has received complaints regarding fractional housing in single-family residential area. The Planning Commission and City Council have conducted hearings on the matter but have not given staff direction for future research to regulate these ownerships. City of Santa Cruz, CA Even with fractional homes being offered within city limits, City staff was not aware of this type of ownership model. The City does not currently regulate fractional ownership or timeshares. Notwithstanding this, the City Council has placed a ballot initiative on the November election to establish a tax on residential properties that are occupied less than 120-days a year (Appendix K). City of South Lake Tahoe, CA The City stated that a property sale or deed that results ownership rights in or the right to use accommodations for a period of time less than full year during any given year is considered timeshare. Even though timeshares ten or fewer units are not subject to the Vacation Ownership and Timeshare Act of 200410, they are still subject to local authority. In fact, Section 11280(b) of the Business and Professions 11 California Business and Professions Code §§1121-11288 FRACTIONAL HOUSING 31 SS2-14 12-341 Code expressly preserves the authority of local jurisdictions to regulate timeshares through "zoning, subdivision, or building code or other real estate use law, ordinance, or regulation." South Lake Tahoe has issued a cease -and -desist order (Appendix L), ordering Pacaso to stop all advertising and sale of fractional ownership of residential properties within the City until such time they comply with the City's timeshare ordinance. City of Sonoma, CA On January 19th, 2022, the Sonoma City Council voted unanimously to adopt an urgency ordinance to prohibit timeshares and fractional housing. The Council adopted the urgency ordinance due to concerns that these uses threaten to reduce the housing supply in the City by turning long-term housing in the City into vacation rentals and reducing the affordable housing stock in the City. Furthermore, there are concerns that timeshare and fractional housing interest uses increase traffic and noise impacts as they have the same character as commercial hotels, motels, and other transient occupancy uses making them inappropriate for residential zones. On June 15, 2022, the Sonoma City Council adopted an ordinance (Appendix M) to amend the code to prohibit all timeshares and fractional housing in the City. City of St. Helena, CA Within St. Helena, timeshares are only permitted in Service Commercial District and Central Business District. The City Council recently updated the timeshare ordinance to specifically prohibit co -ownership of residential properties (Appendix N). The ordinance updated the definition of a timeshare to broaden its applicability to incorporate fractional housing and limits timeshares uses to their Service Commercial and Central Business District zone. The ordinance also bolsters the City's enforcement authority by including a specific prohibition on timeshare uses in most zones, but also outlines the enforcement process and mechanisms. The enforcement provision was modeled after the City's short-term rental ordinance to which they note has been very effective. It is important to note that Pacaso filed a lawsuit against the City in federal court11 (Appendix 0). Pacaso seeks to stop the City from enforcing their timeshare ordinance against Pacaso and other fractional ownership properties because they feel the timeshare ordinance is invalid and enforcement of said ordinance violates the fractional homeowners and Pacaso's due process protection afforded by the 141n amendment to the U.S. Constitution. Pacaso had also claimed that the City's enforcement actions constituted an intentional interference with prospective economic advantage; however, the Court rejected this portion of the claim. The lawsuit remains pending. Town of Truckee, CA In May 2022 the Town of Truckee adopted a general zoning code cleanup ordinance (Appendix P). Among the various amendments included in the ordinance, the Town Council approved changes to the Town's timeshare uses. This includes outlining the application process, development standards and enforcement and violation protocols for time-share uses; as well as clarifying that timeshare properties are only allowed within existing legal nonconforming single-family residences in the CG (General Commercial) and CN (Neighborhood Commercial) zones. 11 Pacaso Inc. v. City of St. Helena, 21-cv-02493-WHO (N.D. Cal. Jul. 15, 2021) FRACTIONAL HOUSING SS2-15 12-342 City of Vail, CO The City does not have regulations regarding fractional ownership. Explaining the concerns of the business model, the City Attorney would agree it resembles a timeshare model but does not see how any City ordinance would be able to regulate it since it is the ownership of a property rather than a use in a portion of a building. APPENDICES FRACTIONAL HOUSING ' 1f- �1 yw"; ���'� `P— SS2-16 Appendix A— Pacaso Economic Impact Analysis, prepared by EBP FRACTIONAL HOUSING t IN, "Y yci�,�, rt n e a c n u, 12-344 Exhibit K City of Carmel -by -the Sea Time Share Ordinance and Supporting Evidence 12-345 4/27/23, 9:01 AM Coversheet CITY OF CARMEL-BY-THE-SEA CITY COUNCIL Staff Report February 7, 2023 PUBLIC HEARINGS TO: Honorable Mayor and City Council Members SUBMITTED BY: Brandon Swanson, Community Planning & Building Director APPROVED BY: Chip Rerig, City Administrator Consider Ordinance No. 2022-007 (first reading) amending Carmel Municipal Code (CMC) Sections SUBJECT: 17.14.040, 17.28.010, and 17.70.020, to prohibit timeshare and fractional interest uses, as well as advertising and sale thereof, in a manner fully in conformity with the California Coastal Act (CA Section 30510) - Continued from December 6, 2022, and January 10, 2023 REuOMMENDATiON: 1. Request the City Attorney to read the title of Ordinance 2022-007. 2. Waive further reading and introduce draft ordinance 2022-007 amending Carmel municipal code (CMC) sections 17.14.040, 17.28.010, and 17.70.020, to prohibit timeshare and fractional interest uses, as well as advertising and sale thereof, in a manner fully in conformity with the California Coastal Act (CA section 30510). IsACIBCROMNDISDMMARY. EXECUTIVE SUMMARY The Carmel -by -the -Sea Municipal Code prohibits timeshares. The proposed ordinance confirms the existing prohibition of time shares, and adds new prohibitions with respect to advertisement and sale of timeshares and fractional interest ownerships. The City's Planning Commission has recommended adoption of these amendments, with an additional recommendation for Council to have a policy level discussion in the future about whether or not timeshares should continue to be prohibited in the Village. BACKGROUND Existing provisions of the Carmel -by -the -Sea Municipal Code prohibit timeshare uses. Specifically, timeshares are prohibited in all zoning districts of the City, and are defined in Section 17.28.010 to include any land use that is a "timeshare project", "time share program," or "time share occupancy." These are defined in Section 17.70.020 as follows: Time -Share Occupancy. An occupancy related to the situation wherein a purchaser receives the right or entitlement in perpetuity, for life, or for a term of years or other extended term, to the recurrent, exclusive use or occupancy of a lot, parcel, unit, room(s), hotel or portion thereof, or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy periods into which the time-share project which is involved has been divided. The right or entitlement to occupancy may attach in advance to a specific lot, parcel, unit, room(s) or portion of a hotel, or segment of real property, or may involve designation or selection of the same at a future time or times. Time -Share Program. Any arrangement for a project whereby the use, occupancy, or possession of real property has been made subject to a time-share estate, use, or occupancy, whereby such use, occupancy, or possession circulates among purchasers of the time-share intervals according to a fixed or floating time schedule on a periodic basis for a specific period of time during any given year, but not necessarily for consecutive years. Time -Share Project. A project in which a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel, unit, or segment of real property, annually or on some other periodic basis, for a period of time that has been or will be allotted for the use or occupancy periods into which the project has been divided. As a result of recent enforcement efforts related to timeshares, City staff have reviewed the existing city code provisions and recommend that they be revised to confirm the existing prohibition, and additionally, that new prohibitions be added with respect to advertisement and sale of timeshares and fractional interest ownerships, which are treated identically under the existing City code. On October 12th, 2022, the Planning Commission was presented these draft amendments, and received testimony from the public. Following discussion, the Commission approved a resolution recommending that the City Council adopt the ordinance as drafted by staff. The Commission also crafted an additional recital recommending that Council have a policy discussion in the near future to explore whether or not timeshares should still be prohibited in the City of Carmel -by -the -Sea. This additional recommendation arose from deliberations during the hearing, in which the Commissioners discussed the number of vacant homes in the Village and whether https:Hcarmel.novusagenda.com/agendapublic/Coversheet. aspx? ltemlD=4958&Meeting I D=1340 1 /2 12-346 CINFINQ MGI1IITi Coversheet a form of timeshare use could present a solution to filling them. The Commission's additional recommendation is for Council to hold a separate hearing in the near future to have a policy level discussion and decide whether or not to refer an item back to the Planning Commission to remove or modify the prohibition on timeshares in Carmel -by -the -Sea. STAFF ANALYSIS The changes proposed by the ordinance include: Section 17.70.020 is modified to simplify the City's existing definitions with respect to timeshares. The City's existing definitions include definitions of time-share estate, time-share use, time-share occupancy, and time-share property, which are based on similar definitions in state law (the Vacation Ownership and Time -Share Act of 2004, as set forth in Business and Professions Code section 11210 et seq.). However, the existing definitions with respect to timeshares in 17.70.020 are multiple and reference each other, and introduce unnecessary complexity into the City's zoning regulations. While not a substantive change in the scope of the City's regulations, the proposed ordinance would simplify definitions to prohibit the use of real property under a "time-share plan." The definition of "time-share plan" would mean "any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right to use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years." The code would specify that a time share plan exists "whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are a result of a grant of ownership rights, possessory rights, membership rights, rights pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time-share plan." The code would be revised to make clear that a prohibited timeshare is created whenever any right is established for exclusive use of the property that is periodic on a recurring basis, regardless'of the form. The definition of "timeshare plan" would now specifically mention that fractional ownership is one way a timeshare can be created, which is also not a substantive change. "Time-share use" and "fractional interest use" are defined to mean exactly same thing, so that it is clear to all potential violators that there is no difference between a fractional interest use and a timeshare use. • 17.14.040, prohibiting timeshares in commercial zones, is modified to use the updated definitions. • 17.28.010.A, prohibiting timeshares in all city zoning districts, is updated to use the updated definitions. Additional subsections are added to this section to make advertisement of timeshares subject to criminal penalties as well as the City's administrative civil penalty process. The code also specifies that each day a violation occurs is a separate offense, for purposes of deterring violations by increasing the visibility of potential consequences. While the existing municipal code prohibits fractionalized interest ownership, as a timeshare is created based on the allocation of exclusive rights of use to real property, the proposed code amendments would clarify the prohibition and strengthen enforcement efforts. Additionally, the proposed ordinance would expressly prohibit the advertisement and sale of timeshares and fractional interest uses this would allow for proactive enforcement by the City against those involved in the creation, advertisement, and sale of such prohibited land uses, rather than just the purchaser or owner of a timeshare or fractional interest use. FISCAL. IMPACT: The staff time associated with processing this ordinance amendment is captured in the FY2022/2023 Community Planning and Building Budget PRIOR CITY C0i„tiICIL. CTI`'73M None. ATT,AC.i-11s9ti«N S: Attachment 1) PC Resolution 2022-036-PC Recommending Approval Attachment 2) Draft Ord. 2022-007 REDLINE Attachment 3) Draft Ord. 2022.007 CLEAN https://carmel.novusagenda.com/agendapublic/CoverSheet.aspx?ltemlD=4958&MeetingID=1340 2/2 12-347 CITY OF CARM EL-BY-TH E-SEA PLANNING COMMISSION RESOLUTION NO.2022-036-PC A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA RECOMMENDING CITY COUNCIL ADOPT ORDINANCE AMENDING MUNICIPAL CODE SECTIONS 17.14.040, 17.28.010, AND 17.70.020, TO PROHIBIT TIMESHARE AND FRACTIONAL INTEREST USES, AS WELL AS ADVERTISING AND SALE THEREOF WHEREAS, existing provisions of the Carmel -by -the -Sea Municipal Code prohibit timeshare uses. Specifically, timeshares are prohibited in all zoning districts of the City, and regulated by Sections 17.28.010, 17.70.020 and 17.14.040; and WHEREAS, as a result of enforcement efforts, City staff have reviewed the existing city code provisions and recommend that they be revised to confirm the existing prohibition, and additionally, that new prohibitions be added with respect to advertisement and sale of timeshares and fractional interest ownerships, which are treated identically under the existing City code; and WHEREAS, notice of a public hearing of the Planning Commission was published on September 30th, 2022 in compliance with State law (California Government Code 65091); and WHEREAS, on October 12, 2022, the Planning Commission held a public hearing to consider draft Ordinance 2022-007 amending regulations pertaining to timeshares and receive public testimony, including without limitation, information provided to the Planning Commission by City staff and through public testimony; and WHEREAS, the Planning Commission found that the draft Ordinance 2022-007 was consistent with the City's General Plan, Local Coastal Plan, and all other relevant City and State codes and regulations. WHEREAS, the California Environmental Quality Act (California Public Resources Code §§ 21000, et seq., "CEQA"), together with State Guidelines (14 California Code Regulations §§ 15000, et seq., the "CEQA Guidelines") and City Environmental Regulations (CMC 17.60) require the review of certain projects for environmental impacts and preparation of environmental documents; and WHEREAS, the Planning Commission finds that pursuant to CEQA regulations, the project will have no impact on the environment and is not considered a project requiring compliance with the California Environmental Quality Act (Section 21065 of the California Public Resources Code); and WHEREAS, the facts set forth in the recitals are true and correct and are incorporated herein by reference. 12-348 NOW, THEREFORE, BE IT RESOLVED, THAT THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA DOES HEREBY recommend the City Council amend municipal code sections 17.14.040, 17.28.010, and 17.70.020, to prohibit timeshare and fractional interest uses, as well as advertising and sale thereof and adopt the Update in a manner fully in conformity with the Coastal Act (CA Section 30510). BE IT FURTHER RESOLVED, THAT THE PLANNING COMMISSION OF THE CITY OF CARMEL- BY-THE-SEA DOES ALSO recommend the City Council hold a separate hearing in the near future to have a policy level discussion and decide whether or not to refer an item back to the Planning Commission to remove or modify the prohibition on timeshares in Carmel -by -the -Sea. PASSED, APPROVED, AND ADOPTED BY THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA this 12th day of October, 2022, by the following vote: AYES: Delves, Allen, Bolton, LePage, Locke NOES: ABSENT: ABSTAIN: APPROVED: ATTEST: Michael LePage, Chair Leah Young, Planning Commission Secretary 12-349 CITY OF CARMEL-BY-THE-SEA CITY COUNCIL ORDINANCE NO. 2022-007 AN ORDINANCE AMENDING THE CARMEL-BY-THE-SEA MUNICIPAL CODE TO PROHIBIT TIMESHARE AND FRACTIONAL INTEREST USES, AS WELL AS ADVERTISING AND SALE THEREOF IN A MANNER FULLY IN CONFORMITY WITH THE COASTAL ACT (CA PUBLIC RESOURCES CODE SECTION 30510 ET SEQ.) WHEREAS, timeshares involve the division of the exclusive rights to use, possess, and occupy any real property between multiple persons, pursuant to a fixed or floating time schedule; and WHEREAS, since at least 1988, the City of Carmel -by -the -Sea has prohibited the establishment of timeshares within the City; and WHEREAS, the Housing Element of the City's General Plan specifically recognizes that the City seeks to protect the stability of residential neighborhoods by promoting year-round occupancy, and to avoid depletion of residents and associated impacts on the community, City services, Goal G3-4 of the City's Housing Element specifically requires the enforcement of the prohibitions on short-term, transient rentals and timeshares in residential dwellings; and WHEREAS, the Planning Commission of the City of Carmel-bv-the-Sea reviewed the ordinance, and on October 12, 2022, determined the ordinance was consistent with the City's General Plan, Local Coastal Plan, and all other relevant City and State codes and regulations, and having reviewed the Planning Commission's recommendations and the relevant provisions of the General Plan, the City Council finds that the ordinance is consistent with the City's General Plan; and WHEREAS, recent increases in the development and sale of fractional interest ownerships have made it appropriate for the City to revisit its municipal code to clarify that fractional interest ownerships are prohibited timeshares and to also expressly prohibit the advertising and sale of prohibited timeshares and fractional interest uses. WHEREAS, notice of the public hearing was published on November 25, 2022 in compliance with State law (California Government Code 65091), indicating the date and time of the public hearing; and WHEREAS, on December 6, 2022, the City Council opened the a public hearing to receive public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony, and continued the hearing to a date certain of January 10, 2023; and WHEREAS, on January 10, 2023, the City Council re -convened the public hearing to receive further public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony; and OAK 44875-3304-4012 v2 12-350 WHEREAS, this decision is made based upon evidence presented to the City Council at its December 6, 2022 and January 10, 2023 hearings including, without limitation, the staff report submitted by the Community Planning and Building Department and public testimony; and WHEREAS, the City Council did hear and consider all said reports, recommendations, attachments and testimony herein above set forth and used their independent judgement to evaluate the ordinance; and WHEREAS, the proposed amendments are in full conformity with the City's Local Coastal Plan and the California Coastal Act (GA Public Resources Code Section 30510 et Ste) NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DOES ORDAIN AS FOLLOWS: SECTION 1. CEQA Review. The City Council exercises its independent judgment and finds that this ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to the State CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, Sections. 15060(c)(2), because the proposed ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment; 15061(b)(3) because the proposed ordinance is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment; and 15308 because the proposed ordinance involves regulatory actions to assure protection of the environment. Therefore, the adoption of this ordinance is exempt from CEQA and no further environmental review is necessary. SECTION 2. Amendment to the CIVIC. 1. Subsection A of Section 17.14.040 is amended and restated as follows: 17.14.040 Additional Use Regulations. A. All Uses. 1. No new structure or modification to an existing structure shall be permitted nor shall any business license be issued that would allow the creation of publicly accessible retail space occupying fewer than 200 square feet or more than 5,000 square feet unless approved through a use permit and pursuant to the adoption of findings per CIVIC 17.64.200, Retail Space of Less Than 200 Square Feet or Greater Than 5,000 Square Feet. 2. No timeshare uses or fractional interest uses shall be established or permitted in any zone. 3. Except in restaurants, not more than five persons in any one individually licensed business shall be engaged in the production, repair or manufacturing of goods. 4. No use shall be permitted and no process, equipment, or materials shall be employed which is found by the Planning Director or by the Planning Commission to be OAK #4875-3304-4012 v2 12-351 objectionable to persons residing or working in the vicinity by reason of odor, fumes, noise, vibration, illumination, glare, unsightliness, dust, cinders, dirt, refuse, water - carried wastes or heavy truck traffic, or involve any hazard of fire or explosion. 2. Section 17.28.010 is amended and restated as follows: 17.28.010 Timeshare and Fractional Interest Uses. A. Timeshare uses and fractional interest uses are prohibited uses within all of the zoning districts within the City. B. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.16 (General Penalty). C. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is subject to administrative fines and/or penalties as set forth in Chapter 18.04 (Municipal Code and Ordinance Enforcement). D. Each day a violation of this section occurs shall constitute a separate offense, and the remedies under this section are cumulative and in addition to any and all other remedies available at law and equity. 3. "Time -Share Definitions" of Section 17.70.020 is amended to repeal the definitions of "Time -Share Estate," "Time -Share Occupancy," "Time -Share Program," "Time -Share Project," and "Vacation -Time Sharing Project," and restated to enact the definitions of "Time -Share Plan," "Time -Share Use" and "Fractional Interest Use" to read as follows: 17.70.020 Definitions. The words, terms, and phrases defined in this chapter shall, for all purposes connected with this title, be construed as having the meanings respectively set forth in this chapter. Time -Share Definitions. "Time -Share Plan" means any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right -to -use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A timeshare plan shall be deemed to exist whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are OAK #4875-3304-4012 Q 12-352 a result of a grant of ownership rights, possessory rights, membership rights, rights pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time-share plan. "Time -Share Use" and "Fractional Interest Use" means the use of real property or any part thereof, pursuant to a timeshare plan. SECTION 3. Severability. If any section, subsection, phrase, or clause of this ordinance is for any reason held to be unconstitutional, such a decision shall not affect the validity of the remaining portions of this ordinance. The City Council hereby declares that it would have passed this Ordinance and each section, subsection, phrase, or clause thereof irrespective of the fact that any one or more sections, subsections, phrases, or clauses be declared unconstitutional. SECTION 4. Publication. The City Clerk shall publish or post this ordinance in the manner required by law. SECTION 5. Effective Date. This ordinance shall be effective 30 days after its adoption and after approval by the California Coastal Commission. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE- SEA this XX day of XX 2022, by the following vote: AYES: NOES: ABSENT: ABSTAIN: APPROVE: ATTEST: Dave Potter, Mayor Nova Romero, MMC, City Clerk OAK #4875-3304-4012 v2 12-353 CITY OF CARMEL-BY-THE-SEA CITY COUNCIL ORDINANCE NO. 2022-007 AN ORDINANCE AMENDING THE CARMEL-BY-THE-SEA MUNICIPAL CODE TO PROHIBIT TIMESHARE AND FRACTIONAL INTEREST USES, AS WELL AS ADVERTISING AND SALE THEREOF IN A MANNER FULLY IN CONFORMITY WITH THE COASTAL ACT (PUBLIC RESOURCES CODE SECTION 30510 ET SEQ.) WHEREAS, timeshares involve the division of the exclusive rights to use, possess, and occupy any real property between multiple persons, pursuant to a fixed or floating time schedule; and WHEREAS, since at least 1988, the City of Carmel -by -the -Sea has prohibited the establishment of timeshares within the City; and WHEREAS, the Housing Element of the City's General Plan specifically recognizes that the City seeks to protect the stability of residential neighborhoods by promoting year-round occupancy, and to avoid depletion of residents and associated impacts on the community, City services, Goal G3-4 of the City's Housing Element specifically requires the enforcement of the prohibitions on short-term, transient rentals and timeshares in residential dwellings; and WHEREAS, the Planning Commission of the City of Carmel -by -the -Sea reviewed the ordinance, and on October 12, 2022, determined the ordinance was consistent with the City's General Plan, Local Coastal Plan, and all other relevant City and State codes and regulations, and having reviewed the Planning Commission's recommendations and the relevant provisions of the General Plan, the City Council finds that the ordinance is consistent with the City's General Plan; and WHEREAS, recent increases in the development and sale of fractional interest ownerships have made it appropriate for the City to revisit its municipal code to clarify that fractional interest ownerships are prohibited timeshares and to also expressly prohibit the advertising and sale of prohibited timeshares and fractional interest uses. WHEREAS, notice of the public hearing was published on November 25, 2022 in compliance with State law (California Government Code 65091), indicating the date and time of the public hearing; and WHEREAS, on December 6, 2022, the City Council opened the public hearing to receive public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony, and continued the hearing to a date certain of January 10, 2023; and WHEREAS, on January 10, 2023, the City Council re -convened the public hearing to receive further public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony; and OAK #4875-3304-4012 v2 12-354 WHEREAS, this decision is made based upon evidence presented to the City Council at its December 6, 2022 and January 10, 2023 hearings including, without limitation, the staff report submitted by the Community Planning and Building Department and public testimony; and WHEREAS, the City Council did hear and consider all said reports, recommendations, attachments and testimony herein above set forth and used their independent judgement to evaluate the ordinance; and WHEREAS, the proposed amendments are in full conformity with the City's Local Coastal Plan and the California Coastal Act (Public Resources Code Section 30510 et seq.) NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DOES ORDAIN AS FOLLOWS: SECTION 1. CEQA Review. The City Council exercises its independent judgment and finds that this ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to the State CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, Sections. 15060(c)(2), because the proposed ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment; 15061(b)(3) because the proposed ordinance is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment; and 15308 because the proposed ordinance involves regulatory actions to assure protection of the environment. Therefore, the adoption of this ordinance is exempt from CEQA and no further environmental review is necessary. SECTION 2. Amendment to the CIVIC. 1. Subsection A of Section 17.14.040 is amended and restated as follows: 17.14.040 Additional Use Regulations. A. All Uses. 1. No new structure or modification to an existing structure shall be permitted nor shall any business license be issued that would allow the creation of publicly accessible retail space occupying fewer than 200 square feet or more than 5,000 square feet unless approved through a use permit and pursuant to the adoption of findings per CIVIC 17.64.200, Retail Space of Less Than 200 Square Feet or Greater Than 5,000 Square Feet. 2. No timeshare uses or fractional interest uses shall be established or permitted in any zone. 3. Except in restaurants, not more than five persons in any one individually licensed business shall be engaged in the production, repair or manufacturing of goods. 4. No use shall be permitted and no process, equipment, or materials shall be employed which is found by the Planning Director or by the Planning Commission to be objectionable to persons residing or working in the vicinity by reason of odor, fumes, OAK 94875-3304-4012 v2 12-355 noise, vibration, illumination, glare, unsightliness, dust, cinders, dirt, refuse, water - carried wastes or heavy truck traffic, or involve any hazard of fire or explosion. 2. Section 17.28.010 is amended and restated as follows: 17.28.010 Timeshare and Fractional Interest Uses. A. Timeshare uses and fractional interest uses are prohibited uses within all of the zoning districts within the City. B. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.16 (General Penalty). C. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is subject to administrative fines and/or penalties as set forth in Chapter 18.04 (Municipal Code and Ordinance Enforcement). D. Each day a violation of this section occurs shall constitute a separate offense, and the remedies under this section are cumulative and in addition to any and all other remedies available at law and equity. 3. "Time -Share Definitions" of Section 17.70.020 is amended to repeal the definitions of "Time -Share Estate," "Time -Share Occupancy," "Time -Share Program," "Time -Share Project," and "Vacation -Time Sharing Project," and restated to enact the definitions of "Time -Share Plan," "Time -Share Use" and "Fractional Interest Use" to read as follows: 17.70.020 Definitions. The words, terms, and phrases defined in this chapter shall, for all purposes connected with this title, be construed as having the meanings respectively set forth in this chapter. Time -Share Definitions. "Time -Share Plan" means any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right -to -use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A timeshare plan shall be deemed to exist whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are a result of a grant of ownership rights, possessory rights, membership rights, rights OAK 44875-3304-4012 v2 12-356 pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time-share plan. "Time -Share Use" and "Fractional Interest Use" means the use of real property or any part thereof, pursuant to a timeshare plan. SECTION 3. Severability. If any section, subsection, phrase, or clause of this ordinance is for any reason held to be unconstitutional, such a decision shall not affect the validity of the remaining portions of this ordinance. The City Council hereby declares that it would have passed this Ordinance and each section, subsection, phrase, or clause thereof irrespective of the fact that any one or more sections, subsections, phrases, or clauses be declared unconstitutional. SECTION 4. Publication. The City Clerk shall publish or post this ordinance in the manner required by law. SECTION 5. Effective Date. This ordinance shall be effective 30 days after its adoption and after approval by the California Coastal Commission. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE- SEA this XX day of XX 2022, by the following vote: AYES: NOES: ABSENT: ABSTAIN: APPROVE: ATTEST: Dave Potter, Mayor Nova Romero, MMC, City Clerk OAK #4875-3304-4012 Q 12-357 4/27/23, 9:03 AM Coversheet CITY OF CARMEL-BY-THE-SEA CITY COUNCIL Staff Report March 7, 2023 ORDERS OF BUSINESS TO: Honorable Mayor and City Council Members SUBMITTED BY. Brandon Swanson, Community Planning & Building Director APPROVED BY: Chip Rerig, City Administrator Second Reading and Adoption of Ordinance No. 2022-007 -Amending Carmel Municipal Code (CMC) SUBJECT: Sections 17.14.040, 17.28.010, and 17.70.020, to prohibit timeshare and fractional interest uses, as well as advertising and sale thereof, in a manner fully in conformity with the California Coastal Act (CA Section 30510) RECO?4MENDA T IOiN: 1. Request the City Attorney to read the title of Ordinance 2022-007. 2. Waive further reading and ADOPT ordinance 2022-007 amending Carmel municipal code (CMC) sections 17.14.040, 17.28.010, and 17.70.020, to prohibit timeshare and fractional interest uses, as well as advertising and sale thereof, in a manner fully in conformity with the California Coastal Act (CA section 30510). SAC'KGROUINID/ SUMIt1ARY: EXECUTIVE SUMMARY The Carmel -by -the -Sea Municipal Code prohibits timeshares. The proposed ordinance confirms the existing prohibition of time shares, and adds new prohibitions with respect to advertisement and sale of timeshares and fractional interest ownerships. The City's Planning Commission has recommended adoption of these amendments, with an additional recommendation for Council to have a policy level discussion in the future about whether or not timeshares should continue to be prohibited in the Village. BACKGROUND Existing provisions of the Carmel -by -the -Sea Municipal Code prohibit timeshare uses. Specifically, timeshares are prohibited in all zoning districts of the City, and are defined in Section 17.28.010 to include any land use that is a "timeshare project", "time share program," or "time share occupancy." These are defined in Section 17.70.020 as follows: Time -Share Occupancy. An occupancy related to the situation wherein a purchaser receives the right or entitlement in perpetuity, for life, or for a term of years or other extended term, to the recurrent, exclusive use or occupancy of a lot, parcel, unit, room(s), hotel or portion thereof, or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy periods into which the time-share project which is involved has been divided. The right or entitlement to occupancy may attach in advance to a specific lot, parcel, unit, room(s) or portion of a hotel, or segment of real property, or may involve designation or selection of the same at a future time or times. Time -Share Program. Any arrangement for a project whereby the use, occupancy, or possession of real property has been made subject to a time-share estate, use, or occupancy, whereby such use, occupancy, or possession circulates among purchasers of the time-share intervals according to a fixed or floating time schedule on a periodic basis for a specific period of time during any given year, but not necessarily for consecutive years. Time -Share Project. A project in which a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel, unit, or segment of real property, annually or on some other periodic basis, for a period of time that has been or will be allotted for the use or occupancy periods into which the project has been divided. As a result of recent enforcement efforts related to timeshares, City staff have reviewed the existing city code provisions and recommend that they be revised to confirm the existing prohibition, and additionally, that new prohibitions be added with respect to advertisement and sale of timeshares and fractional interest ownerships, which are treated identically under the existing City code. On October 12th, 2022, the Planning Commission was presented these draft amendments, and received testimony from the public. Following discussion, the Commission approved a resolution recommending that the City Council adopt the ordinance as drafted by staff. The Commission also crafted an additional recital recommending that Council have a policy discussion in the near future to explore whether or not timeshares should still be prohibited in the City of Carmel -by -the -Sea. This additional recommendation arose from deliberations during the hearing, in which the Commissioners discussed the number of vacant homes in the Village and whether https://carmel. novusagenda.com/agendapublic/CoverSheet.aspx?lteml D=5020&MeetingID=1341 112 12-358 4/27/23, 9:03 AM Coversheet a form of timeshare use could present a solution to filling them. The Commission's additional recommendation is for Council to hold a separate hearing in the near future to have a policy level discussion and decide whether or not to refer an item back to the Planning Commission to remove or modify the prohibition on timeshares in Carmel -by -the -Sea. STAFF ANALYSIS The changes proposed by the ordinance include: • Section 17.70.020 is modified to simplify the City's existing definitions with respect to timeshares. The City's existing definitions include definitions of time-share estate, time-share use, time-share occupancy, and time-share property, which are based on similar definitions in state law (the Vacation Ownership and Time -Share Act of 2004, as set forth in Business and Professions Code section 11210 et seq.). However, the existing definitions with respect to timeshares in 17.70.020 are multiple and reference each other, and introduce unnecessary complexity into the City's zoning regulations. While not a substantive change in the scope of the City's regulations, the proposed ordinance would simplify definitions to prohibit the use of real property under a "time-share plan." • The definition of "time-share plan" would mean "any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right to use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years." • The code would specify that a time share plan exists "whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are a result of a grant of ownership rights, possessory rights, membership rights, rights pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time-share plan." • The code -would be revised to make clear that a prohibited timeshare is created whenever any right is established for exclusive use of the property that is periodic on a recurring basis, regardless of the form. The definition of "timeshare plan" would now specifically mention that fractional ownership is one way a timeshare can be created, which is also not a substantive change. "Time-share use" and "fractional interest use" are defined to mean exactly same thing, so that it is clear to all potential violators that there is no difference between a fractional interest use and a timeshare use. • 17.14.040, prohibiting timeshares in commercial zones, is modified to use the updated definitions. • 17.28.010.A, prohibiting timeshares in all city zoning districts, is updated to use the updated definitions. Additional subsections are added to this section to make advertisement of timeshares subject to criminal penalties as well as the City's administrative civil penalty process. The code also specifies that each day a violation occurs is a separate offense, for purposes of deterring violations by increasing the visibility of potential consequences. While the existing municipal code prohibits fractionalized interest ownership, as a timeshare is created based on the allocation of exclusive rights of use to real property, the proposed code amendments would clarify the prohibition and strengthen enforcement efforts. Additionally, the proposed ordinance would expressly prohibit the advertisement and sale of timeshares and fractional interest uses; this would allow for proactive enforcement by the City against those involved in the creation, advertisement, and sale of such prohibited land uses, rather than just the purchaser or owner of a timeshare or fractional interest use. During the February 7, 2023 discussion on this item, the City Council directed staff to inquire with appropriate Monterey County offices about the tax implications of a Limited Liability Corporation (LLC) owning and disposing of fractional ownership interests. Monterey County Counsel advised that reassessment of fractional ownership real property interests in an LLC does not occur until transfer of 50 percent or more of said interests occurs. Reporting of such is incumbent on the LLC filing appropriate documentation with the Internal Revenue Service which, in turn, relays such information to a state's real property taxing authority (a County in the case of the State of California). 'I3C'AI_ IN!PA CT: The staff time associated with processing this ordinance amendment is captured in the FY202212023 Community Planning and Building Budget. RiOR U'`f COI3NCILACTIOW Ordinance 2022-007 was introduced (first reading) on February 7, 2023 at a Regular City Council Meeting ATTACHtillENTS Attachment 1) PC Resolution 2022-036-PC Recommending Approval Attachment 2) Draft Ord. 2022-007 REDLINE Attachment 3) Draft Ord. 2022.007 CLEAN https://carmel.novusagenda.com/agendapublic/CoverSheet.aspx?ItemID=5020&MeetingID=1341 2/2 12-359 CITY OF CARMEL-BY-THE-SEA PLANNING COMMISSION RESOLUTION NO.2022-036-PC A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA RECOMMENDING CITY COUNCIL ADOPT ORDINANCE AMENDING MUNICIPAL CODE SECTIONS 17.14.040, 17.28.010, AND 17.70.020, TO PROHIBIT TIMESHARE AND FRACTIONAL INTEREST USES, AS WELL AS ADVERTISING AND SALE THEREOF WHEREAS, existing provisions of the Carmel -by -the -Sea Municipal Code prohibit timeshare uses. Specifically, timeshares are prohibited in all zoning districts of the City, and regulated by Sections 17.28.010, 17.70.020 and 17.14.040; and WHEREAS, as a result of enforcement efforts, City staff have reviewed the existing city code provisions and recommend that they be revised to confirm the existing prohibition, and additionally, that new prohibitions be added with respect to advertisement and sale of timeshares and fractional interest ownerships, which are treated identically under the existing City code; and WHEREAS, notice of a public hearing of the Planning Commission was published on September 30th, 2022 in compliance with State law (California Government Code 65091); and WHEREAS, on October 12, 2022, the Planning Commission held a public hearing to consider draft Ordinance 2022-007 amending regulations pertaining to timeshares and receive public testimony, including without limitation, information provided to the Planning Commission by City staff and through public testimony; and WHEREAS, the Planning Commission found that the draft Ordinance 2022-007 was consistent with the City's General Plan, Local Coastal Plan, and all other relevant City and State codes and regulations. WHEREAS, the California Environmental Quality Act (California Public Resources Code §§ 21000, et seq., "CEQA"), together with State Guidelines (14 California Code Regulations §§ 15000, et seq., the "CEQA Guidelines") and City Environmental Regulations (CMC 17.60) require the review of certain projects for environmental impacts and preparation of environmental documents; and WHEREAS, the Planning Commission finds that pursuant to CEQA regulations, the project will have no impact on the environment and is not considered a project requiring compliance with the California Environmental Quality Act (Section 21065 of the California Public Resources Code); and WHEREAS, the facts set forth in the recitals are true and correct and are incorporated herein by reference. 12-360 NOW, THEREFORE, BE IT RESOLVED, THAT THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA DOES HEREBY recommend the City Council amend municipal code sections 17.14.040, 17.28.010, and 17.70.020, to prohibit timeshare and fractional interest uses, as well as advertising and sale thereof and adopt the Update in a manner fully in conformity with the Coastal Act (CA Section 30510). BE IT FURTHER RESOLVED, THAT THE PLANNING COMMISSION OF THE CITY OF CARMEL- BY-THE-SEA DOES ALSO recommend the City Council hold a separate hearing in the near future to have a policy level discussion and decide whether or not to refer an item back to the Planning Commission to remove or modify the prohibition on timeshares in Carmel -by -the -Sea. PASSED, APPROVED, AND ADOPTED BY THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA this 12th day of October, 2022, by the following vote: AYES: Delves, Allen, Bolton, LePage, Locke NOES: ABSENT: ABSTAIN: APPROVED: ATTEST: Michael LePage, Chair Leah Young, Planning Commission Secretary 12-361 CITY OF CARMEL-BY-THE-SEA CITY COUNCIL ORDINANCE NO. 2022-007 AN ORDINANCE AMENDING THE CARMEL-BY-THE-SEA MUNICIPAL CODE TO PROHIBIT TIMESHARE AND FRACTIONAL INTEREST USES, AS WELL AS ADVERTISING AND SALE THEREOF IN A MANNER FULLY IN CONFORMITY WITH THE COASTAL ACT (CA PUBLIC RESOURCES CODE SECTION 30610 ET SEQ.) WHEREAS, timeshares involve the division of the exclusive rights to use, possess, and occupy any real property between multiple persons, pursuant to a fixed or floating time schedule; and WHEREAS, since at least 1988, the City of Carmel -by -the -Sea has prohibited the establishment of timeshares within the City; and WHEREAS, the Housing Element of the City's General Plan specifically recognizes that the City seeks to protect the stability of residential neighborhoods by promoting year-round occupancy, and to avoid depletion of residents and associated impacts on the community, City services, Goal G3-4 of the City's Housing Element specifically requires the enforcement of the prohibitions on short-term, transient rentals and timeshares in residential dwellings; and WHEREAS, the Planning Commission of the City of Carmel -by -the -Sea reviewed the ordinance. and on October 12. 2022. determined the ordinance was consistent with the Citv's and having reviewed the Planning Commission's recommendations and the relevant provisions of the General Plan, the City Council finds that the ordinance is consistent with the City's General Plan; and WHEREAS, recent increases in the development and sale of fractional interest ownerships have made it appropriate for the City to revisit its municipal code to clarify that fractional interest ownerships are prohibited timeshares and to also expressly prohibit the advertising and sale of prohibited timeshares and fractional interest uses. WHEREAS, notice of the public hearing was published on November 25, 2022 in compliance with State law (California Government Code 65091), indicating the date and time of the public hearing; and WHEREAS, on December 6, 2022, the City Council opened the a public hearing to receive public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony, and continued the hearing to a date certain of January 10, 2023; and _WHEREAS, on January 10, 2023, the City Council re -convened the public hearing to receive further public testimony regarding the draft ordinance including without limitation, information provided by City staff and public testimony; and OAK #4875-3304-4012 Q 12-362 WHEREAS, this decision is made based upon evidence presented to the City Council at its December 6, 2022 and January 10, 2023 hearings including, without limitation, the staff report submitted by the Community Planning and Building Department and public testimony; and WHEREAS, the City Council did hear and consider all said reports, recommendations, attachments and testimony herein above set forth and used their independent judgement to evaluate the ordinance; and WHEREAS, the proposed amendments are in full conformity with the City's Local Coastal Plan and the California Coastal Act (CA Public Resources Code Section 30510 et se . NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DOES ORDAIN AS FOLLOWS: SECTION 1. CEQA Review. The City Council exercises its independent judgment and finds that this ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to the State CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, Sections. 15060(c)(2), because the proposed ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment; 15061(b)(3) because the proposed ordinance is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment; and 15308 because the proposed ordinance involves regulatory actions to assure protection of the environment. Therefore, the adoption of this ordinance is exempt from CEQA and no further environmental review is necessary. SECTION 2. Amendment to the CIVIC. 1. Subsection A of Section 17.14.040 is amended and restated as follows: 17.14.040 Additional Use Regulations. A. All Uses. 1. No new structure or modification to an existing structure shall be permitted nor shall any business license be issued that would allow the creation of publicly accessible retail space occupying fewer than 200 square feet or more than 5,000 square feet unless approved through a use permit and pursuant to the adoption of findings per CIVIC 17.64.200, Retail Space of Less Than 200 Square Feet or Greater Than 5,000 Square Feet. 2. No timeshare uses or fractional interest uses shall be established or permitted in any zone. 3. Except in restaurants, not more than five persons in any one individually licensed business shall be engaged in the production, repair or manufacturing of goods. 4. No use shall be permitted and no process, equipment, or materials shall be employed which is found by the Planning Director or by the Planning Commission to be OAK #4875-3304-4012 v2 12-363 objectionable to persons residing or working in the vicinity by reason of odor, fumes, noise, vibration, illumination, glare, unsightliness, dust, cinders, dirt, refuse, water - carried wastes or heavy truck traffic, or involve any hazard of fire or explosion. 2. Section 17.28.010 is amended and restated as follows: 17.28.010 Timeshare and Fractional Interest Uses. A. Timeshare uses and fractional interest uses are prohibited uses within all of the zoning districts within the City. B. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.16 (General Penalty). C. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is subject to administrative fines and/or penalties as set forth in Chapter 18.04 (Municipal Code and Ordinance Enforcement). D. Each day a violation of this section occurs shall constitute a separate offense, and the remedies under this section are cumulative and in addition to any and all other remedies available at law and equity. 3. "Time -Share Definitions" of Section 17.70.020 is amended to repeal the definitions of "Time -Share Estate," "Time -Share Occupancy," "Time -Share Program," "Time -Share Project," and "Vacation -Time Sharing Project," and restated to enact the definitions of "Time -Share Plan," "Time -Share Use" and "Fractional Interest Use" to read as follows: 17.70.020 Definitions. The words, terms, and phrases defined in this chapter shall, for all purposes connected with this title, be construed as having the meanings respectively set forth in this chapter. Time -Share Definitions. "Time -Share Plan" means any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right -to -use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A timeshare plan shall be deemed to exist whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are OAK #4875-3304-4012 v2 12-364 a result of a grant of ownership rights, possessory rights, membership rights, rights pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time-share plan. "Time -Share Use" and "Fractional Interest Use" means the use of real property or any part thereof, pursuant to a timeshare plan. SECTION 3. Severability. If any section, subsection, phrase, or clause of this ordinance is for any reason held to be unconstitutional, such a decision shall not affect the validity of the remaining portions of this ordinance. The City Council hereby declares that it would have passed this Ordinance and each section, subsection, phrase, or clause thereof irrespective of the fact that any one or more sections, subsections, phrases, or clauses be declared unconstitutional. SECTION 4. Publication. The City Clerk shall publish or post this ordinance in the manner required by law. SECTION 5. Effective Date. This ordinance shall be effective 30 days after its adoption and after approval by the California Coastal Commission. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE- SEA this XX day of XX 2022, by the following vote: AYES: NOES: ABSENT: ABSTAIN: APPROVE: ATTEST: Dave Potter, Mayor Nova Romero, MMC, City Clerk OAK #4875-3304-4012 Q 12-365 CITY OF CARMEL-BY-THE-SEA CITY COUNCIL ORDINANCE NO. 2022-007 AN ORDINANCE AMENDING THE CARMEL-BY-THE-SEA MUNICIPAL CODE TO PROHIBIT TIMESHARE AND FRACTIONAL INTEREST USES, AS WELL AS ADVERTISING AND SALE THEREOF IN A MANNER FULLY IN CONFORMITY WITH THE COASTAL ACT (PUBLIC RESOURCES CODE SECTION 30510 ET SEQ.) WHEREAS, timeshares involve the division of the exclusive rights to use, possess, and occupy any real property between multiple persons, pursuant to a fixed or floating time schedule; and WHEREAS, since at least 1988, the City of Carmel -by -the -Sea has prohibited the establishment of timeshares within the City; and WHEREAS, the Housing Element of the City's General Plan specifically recognizes that the City seeks to protect the stability of residential neighborhoods by promoting year-round occupancy, and to avoid depletion of residents and associated impacts on the community, City services, Goal G3-4 of the City's Housing Element specifically requires the enforcement of the prohibitions on short-term, transient rentals and timeshares in residential dwellings; and WHEREAS, the Planning Commission of the City of Carmel -by -the -Sea reviewed the ordinance, and on October 12, 2022, determined the ordinance was consistent with the City's General Plan, Local Coastal Plan, and all other relevant City and State codes and regulations, and having reviewed the Planning Commission's recommendations and the relevant provisions of the General Plan, the City Council finds that the ordinance is consistent with the City's General Plan; and WHEREAS, recent increases in the development and sale of fractional interest ownerships have made it appropriate for the City to revisit its municipal code to clarify that fractional interest ownerships are prohibited timeshares and to also expressly prohibit the advertising and sale of prohibited timeshares and fractional interest uses. WHEREAS, notice of the public hearing was published on November 25, 2022 in compliance with State law (California Government Code 65091), indicating the date and time of the public hearing; and WHEREAS, on December 6, 2022, the City Council opened the public hearing to receive public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony, and continued the hearing to a date certain of January 10, 2023; and WHEREAS, on January 10, 2023, the City Council re -convened the public hearing to receive further public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony; and OAK 44875-3304-4012 v2 12-366 WHEREAS, this decision is made based upon evidence presented to the City Council at its December 6, 2022 and January 10, 2023 hearings including, without limitation, the staff report submitted by the Community Planning and Building Department and public testimony; and WHEREAS, the City Council did hear and consider all said reports, recommendations, attachments and testimony herein above set forth and used their independent judgement to evaluate the ordinance; and WHEREAS, the proposed amendments are in full conformity with the City's Local Coastal Plan and the California Coastal Act (Public Resources Code Section 30510 et seq.) NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DOES ORDAIN AS FOLLOWS: SECTION 1. CEQA Review. The City Council exercises its independent judgment and finds that this ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to the State CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, Sections. 15060(c)(2), because the proposed ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment; 15061(b)(3) because the proposed ordinance is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment; and 15308 because the proposed ordinance involves regulatory actions to assure protection of the environment. Therefore, the adoption of this ordinance is exempt from CEQA and no further environmental review is necessary. SECTION 2. Amendment to the CIVIC. 1. Subsection A of Section 17.14.040 is amended and restated as follows: 17.14.040 Additional Use Regulations. A. All Uses. 1. No new structure or modification to an existing structure shall be permitted nor shall any business license be issued that would allow the creation of publicly accessible retail space occupying fewer than 200 square feet or more than 5,000 square feet unless approved through a use permit and pursuant to the adoption of findings per CIVIC 17.64.200, Retail Space of Less Than 200 Square Feet or Greater Than 5,000 Square Feet. 2. No timeshare uses or fractional interest uses shall be established or permitted in any zone. 3. Except in restaurants, not more than five persons in any one individually licensed business shall be engaged in the production, repair or manufacturing of goods. 4. No use shall be permitted and no process, equipment, or materials shall be employed which is found by the Planning Director or by the Planning Commission to be objectionable to persons residing or working in the vicinity by reason of odor, fumes, OAK #4875-3304-4012 Q 12-367 noise, vibration, illumination, glare, unsightliness, dust, cinders, dirt, refuse, water - carried wastes or heavy truck traffic, or involve any hazard of fire or explosion. 2. Section 17.28.010 is amended and restated as follows: 17.28.010 Timeshare and Fractional Interest Uses. A. Timeshare uses and fractional interest uses are prohibited uses within all of the zoning districts within the City. B. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.16 (General Penalty). C. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is subject to administrative fines and/or penalties as set forth in Chapter 18.04 (Municipal Code and Ordinance Enforcement). D. Each day a violation of this section occurs shall constitute a separate offense, and the remedies under this section are cumulative and in addition to any and all other remedies available at law and equity. 3. "Time -Share Definitions" of Section 17.70.020 is amended to repeal the definitions of "Time -Share Estate," "Time -Share Occupancy," "Time -Share Program," "Time -Share Project," and "Vacation -Time Sharing Project," and restated to enact the definitions of "Time -Share Plan," "Time -Share Use" and "Fractional Interest Use" to read as follows: 17.70.020 Definitions. The words, terms, and phrases defined in this chapter shall, for all purposes connected with this title, be construed as having the meanings respectively set forth in this chapter. Time -Share Definitions. "Time -Share Plan" means any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right -to -use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A timeshare plan shall be deemed to exist whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are a result of a grant of ownership rights, possessory rights, membership rights, rights OAK #4875-3304-4012 v2 12-368 pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time-share plan. "Time -Share Use" and "Fractional Interest Use" means the use of real property or any part thereof, pursuant to a timeshare plan. SECTION 3. Severability. If any section, subsection, phrase, or clause of this ordinance is for any reason held to be unconstitutional, such a decision shall not affect the validity of the remaining portions of this ordinance. The City Council hereby declares that it would have passed this Ordinance and each section, subsection, phrase, or clause thereof irrespective of the fact that any one or more sections, subsections, phrases, or clauses be declared unconstitutional. SECTION 4. Publication. The City Clerk shall publish or post this ordinance in the manner required by law. SECTION 5. Effective Date. This ordinance shall be effective 30 days after its adoption and after approval by the California Coastal Commission. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE- SEA this XX day of XX 2022, by the following vote: AYES: NOES: ABSENT: ABSTAIN: APPROVE: ATTEST: Dave Potter, Mayor Nova Romero, MMC, City Clerk OAK 44875-3304-4012 Q 12-369 Exhibit L City of Hermosa Beach Time Share Ordinance and Supporting Evidence 12-370 4/27/23, 9:17 AM City of Hermosa Beach - File #: REPORT 22-0586 Sign In CITY OF HERMOSA BEACH Legislation Calendar City Council Departments People l® I�� 1©Share) t®RSS; jt3 Alerts,! Details 11 PDF Staff Report File #: REPORT 22-0586 Version: 1 Name: Type: Action Item Status: Public Hearing File created: 9/19/2022 In control: City Council On agenda: 9/28/2022 Final action: INTRODUCTION OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND Title: AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (Community Development Director Jeannie Naughton) Attachments: 1. 1. SUPPLEMENTAL Draft Ordinance, 2. 2. Resolution P.C. 22-07. 3. 3. Link to April 19, 2022 Planning Commission Staff Report, 4. SUPPLEMENTAL Email from Scott Hayes Re Item 13. c., 5. SUPPLEMENTAL eComments for Item 13. c Staff Report Text Honorable Mayor and Members of the Hermosa Beach City Council Regular Meeting of September 28, 2022 Title INTRODUCTION OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMITAND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITYACT (Community Development Director Jeannie Naughton) Body Recommended Action: Recommendation Staff recommends City Council consider waiving full reading and introduce by title only an Ordinance of the City of Hermosa Beach, California, amending Chapter 17.40 (Conditional Use Permit and Other Permit Standards) to add Section 17.40.230 (Timeshare Uses) to Title 17 (Zoning) and amending Section 17.26.030 to permit timeshare uses in specified commercial zones pursuant to a Conditional Use Permit and determining that the project is exempt from the California Environmental Quality Act (Attachment 1). Body Executive Summary_ The City of Hermosa Beach Municipal Code (HBMC) does not currently include regulations governing the use of timeshares within the City, nor any regulations that would explicitly address these emerging businesses offering "fractional ownership" of a property in a way that operates like a timeshare. If left unregulated, these types of uses in the residential zones could limit the City's existing housing stock for use as long-term residency and impair the overall character of the City's residential areas. The proposed draft ordinance (Attachment 1) would permit timeshare uses in the C-1 and G-2 commercial zones within the City pursuant to a Conditional Use Permit (CUP), and prohibit the use in all other zones within the City. Background: The City of Hermosa Beach is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents, those who work in the City, and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance. The City has commercial zones, ineluding the G 1 and G 2 eeffiffieffiial zenes, that provide for uses that serve both visitors and the local community. These commercial uses include: restaurants; retail shops; and visitor -serving hotels and motels. The City also has residential zones, at varying densities, that provide a diversity of housing types for those who live in the community. The City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. At its April 18, 2022 meeting, the Planning Commission reviewed and recommended approval of the proposed ordinance to permit timeshare uses in specified commercial zones pursuant to a Conditional Use Permit by adopting Resolution P.C. 22-07 (Attachment 2). Past Planning Commission Actions https://hermosabeach.legistar.com/LegislationDetaii.aspx?ID=5850234&GUID=EEC63C4B-88FE-48DO-8735-DD895DF161 B5 1/3 12-371 4/27/23, 9:17 AM City of Hermosa Beach - File #: REPORT 22-0586 Meeting Date IDescription April 18, 2022 IPlanning Commission reviewed the proposed ordinance and ado ted Resolution P.C. 22-07 City Housing The most recent U.S. Census data lists the median value of owner -occupied homes in Hermosa Beach as $1,542,900 for the 2015-2019 period, while the Zillow Home Value Index estimates median home values in Hermosa Beach to be approximately $2,174,879 as of January 31, 2022. According to the Zillow Home Value Index, home values in the City have gone up 10.1 percent over the past year. In contrast, the median household income in Hermosa Beach from 2015-2019 was $136,702, and the median income for a four -person household in Los Angeles County for 2021 was approximately $80,000. The cost of homes currently in Hermosa Beach are in excess of what median income residents of Hermosa Beach can afford, and certainly over the median income residents of Los Angeles County generally. The conversion of homes in the City's residential neighborhoods to these timeshare -like uses would eliminate residential dwelling units that would otherwise be available for long-term residential use, thereby further exacerbating the lack of long-term available housing in the City. A home that is used for timeshare purposes would no longer be available for households to use as their long-term residence. Impacts to Character of the City's Residential Districts Timesharing projects have the same character as commercial hotels, motels, and other transient occupancy uses due to the multiple short- term occupancies by those participating in timesharing projects. For this reason, the activity is better suited in commercial or quasi - commercial zones. The use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods. The intensity of the activity is a significant reason why these uses can change the character of a residential neighborhood. Long-term residents, whether owners or renters, occasionally have guests and parties, but timeshare homes are used exclusively by people who are coming to the City on a short-term basis -most likely for vacation or leisure, increasing the likelihood of frequent gatherings and parties generating noise in excess of what the neighborhood normally generates. Timeshare owners and visitors will most likely stay out later, entertain more, and gather in larger numbers while on vacation. Timeshare uses can change the character of a residential neighborhood by having it serve not only as a residential area, but also a visitor lodging area and subjecting the neighborhood to the impacts that come with the more intense land use. Further, the nature of the timeshare use itself can impact the residential character of the City's residential zones because they ensure that the timeshare users can only use their property for a limited amount of time each year. Each co-owner is in the unit on a short-term basis, so they do not have the time to participate in activities or build the relationships that create the fabric of a community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents. Emerging Businesses Recently, certain businesses have emerged which purport to sell "co -ownership" shares in residential property. These businesses, as staff understands the business model, start by purchasing homes or entering contracts to purchase homes in tourist destinations in desirable locations like Hermosa Beach. These businesses then form a limited liability company ("LLC"), which owns title to the residential home. The "co -owners" each purchase a one -eighth share and are entitled to use the residential property for a certain number of days per year according to their share of ownership in the LLC. The one -eighth interest entitles the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special day" (Fourth of July, Thanksgiving, Christmas, etc.). The stays are reserved on an app, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, the business continues to manage the homes, including providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners of the LLC. The Ordinance The City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. The purpose of any ordinance should be to ensure that the City is able to maintain its existing and limited housing stock for use in long-term residency, and to maintain the character of its residential zones. Completely banning "fractional ownership," joint tenancies, or ownership by business entities such as LLC is not advisable. There are numerous properties in the City's residential zones currently owned by numerous owners or by LLCs. Thus, the ordinance is geared toward the specific impacts of the at -issue uses -timeshare -like uses organized and run by third parties for a fee. The proposed ordinance (Attachment 1) does not target or single out any business or ownership structure. The proposed ordinance allows for these types of timeshare uses in the City's C-1 and-G-2-zones, subject to a Conditions Use Permit. Timeshare uses would be prohibited in all other zones. In order to avoid an over -inclusive ordinance that prohibits joint tenancies or other type of ownership structure that do not have the same deleterious impacts, the proposed ordinance focuses on the actual use of the property, as compared to the ownership structure, and in pertinent regulates this "timeshare use" subject to a "timeshare plan." Timeshare plan is defined as: https:Hhermosabeach.legistar.com/LegislationDetaii.aspx?ID=5850234&GUID=EEC63C4B-88FE-48DO-8735-DD895DF161 B5 2/3 12-372 4/27123, 9:17 AM City of Hermosa Beach - File #: REPORT 22-0586 "Any arrangement, plan, scheme, or similar device, facilitated, offered, or organized by a third -party non -purchaser, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby purchasers, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years." At its April 18, 2022 meeting, the Planning Commission reviewed and recommended approval of the proposed ordinance by adopting Resolution P.C. 22-07 (Attachment 2). Environmental Determination: The proposed ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in the C-1 andG2 commercial zones within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. General Plan Consistency_ The proposed text amendment has been evaluated for consistency with the City's General Plan. Relevant Policies are listed below: Land Use and Design Element Goal 1. Create a sustainable urban form and land use patterns that support a robust economy and high quality of life for residents. Policies: • 1.5 Balance resident and visitor needs. Ensure land uses and business provide for the needs of residents as well as visitors. • 1.7 Compatibility of uses. Ensure the placements of new uses does not create or exacerbate nuisances between different types of land uses. Goal 2. Neighborhoods provide for diverse needs of residents of all ages and abilities and are organized to support healthy and active lifestyles. Policies: • 2.4 Single density neighborhoods. Preserve and maintain the Hermosa Hills, Eastside, Valley, North End and Hermosa View neighborhoods as predominantly single-family residential neighborhoods • 2.5 Neighborhood preservation. Preserve and enhance the quality of residential neighborhoods by avoiding or abating the intrusion of disruptive, nonconforming buildings and uses. Fiscal Impact- There is no fiscal impact associated with the recommended action. Attachments: 1. Draft Ordinance 2. Resolution P.C. 22-07 3. Link to April 19, 2022 Planning Commission Staff Report Respectfully Submitted by: Patrick Donegan, Assistant City Attorney Concur: Jeannie Naughton, Community Development Director Noted for Fiscal Impact: Viki Copeland, Finance Director Legal Review: Patrick Donegan, Assistant City Attorney Approved: Suja Lowenthal, City Manager Staff Report Updated on 9/27/2022 - See Track Changes https://hermosabeach.legistar.com/LegislationDetaii.aspx?ID=5850234&GUID=EEC63C4B-88FE-48DO-8735-DD895DF161 B5 3/3 12-373 ORDINANCE NO. AN ORDINANCE OF THE CITY OF HERMOSA BEACH. AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT. The City of Council of the City of Hermosa Beach does hereby ordain as follows: Section 1. Findings. A. The City of Hermosa Beach ("City") is a scenic beachfront city, known for its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. B. Preserving the City's costal resource and the quality and character of the City has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's current General Plan. C. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. D. The City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses. E. The City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City. F. According to the U.S. Census Bureau, the current median household income in the City is $136,702, while the estimated value of owner -occupied housing units from 2015-2019 was approximately $1,542,900 with current real estate listings 12-374 suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City. G. The conversion of existing residential units to uses other than long-term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community. H. The City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses. The high impact use associated with timeshares, combined with the frequent turnover and commercial management involved in timeshare properties is not consistent with the purpose and nature of residential districts in the City. Rather, they are commercial in nature, in that these timeshare uses are structured as a short-term, tourist oriented, visitor serving use of the subject properties. The use of properties as timeshares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City. J. The use of residential properties for timeshare uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for timeshare uses of residential properties. K. This encroachment of tourist oriented, visitor serving uses in residential neighborhoods is likely to compromise the character of residential areas within the City, and further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City. L. The City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad authority to regulate the development and use of real property within its jurisdiction to promote the public welfare. M. Pursuant to and in accordance with this authority, the City Council desires to prohibit timeshare uses in residential areas, and only allow them in the C-1 commercial zone within the City, pursuant to a conditional use permit. 12-375 N. The City's Planning Commission held a duly noticed public hearing on April 19, 2022, as required by law to consider all the information presented by staff, and public testimony presented in writing and at the meeting. O. On April 19, 2022, the City's Planning Commission recommended that the City Council adopt this Ordinance amending the City's Municipal Code as described herein. P. On September 28, 2022, the City Council held a duly noticed public hearing, accepting testimony from the public, and discussed the proposed amendments and staffs recommended approval of this Ordinance. Q. The proposed zoning amendments are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the character of the City; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply. Section 2. The above recitals are hereby incorporated as though set forth in this section. Section 3. Section 17.40.230 (Time Share Uses) is hereby added to Chapter 17.40 (Conditional Use Permit and Other Permit Standards) of Title 17 (Zoning) of the City of Hermosa Beach Municipal Code, to read as follows: Section 17.40.230 Timeshare Uses A. Purpose and Findings. There is a critical shortage of permanent, long-term housing in the City of Hermosa Beach ("City"). A limited supply of suitable vacant land, land values, and market demand for land for other uses, have limited the construction of additional housing in the City. The City is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. Timeshare uses are not an appropriate land use in the City's residential zones due to the multiple occupancy of timeshare properties, the short-term, tourist oriented use of such property and commercial management of timeshare facilities, all of which create increased traffic generation, excessive noise, disruption to residential communities through commercial -level maintenance of the timeshare facilities, and therefore are appropriately confined to commercial zones. 12-376 Conversion of permanent housing to timeshare facilities removes existing housing units from the City's existing stock and exacerbates an already severe housing shortage. It is therefore in the public interest to prohibit conversions of existing housing units into timeshare facilities, as to do so eliminates needed housing stock by diverting those units to a tourist -oriented, commercial use. B. Definitions. For purposes of this Section, the following words and phrases shall have the meaning respectively ascribed to them by this Section: "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.040. "Building" shall have the meaning ascribed to it by Section 17.04.040. "Dwelling unit" shall have the meaning ascribed to it by Section 17.04.040. "Managing entity" means the person who undertakes the duties, responsibilities and obligations of the management of a timeshare plan. "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. "Timeshare instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a timeshare plan and includes the declaration dedicating accommodations to the timeshare plan. "Timeshare interest" means the right to exclusively occupy a timeshare property for a period of time on a recurring basis pursuant to a timeshare plan, regardless of whether or not such right is coupled with a property interest in the timeshare property or a specified portion thereof. "Timeshare plan" means any arrangement, plan, scheme, or similar device, facilitated, offered, or organized by a third -party non -purchaser, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby purchasers, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. "Timeshare property" means one or more accommodations subject to the same timeshare instrument, together with any other property or rights to property appurtenant to those accommodations. 12-377 "Timeshare use" means the use of one or more accommodations or any part thereof, as a timeshare property pursuant to a timeshare plan. C. Timeshare Uses Restricted to C-1 Commercial Zone. Timeshare uses are conditional uses within the City's C-1 Commercial Zone, subject to approval of a conditional use permit applied for and approved in conformance with this Section. Timeshare uses are not permitted in any other Zones in the City. D. Application Process and Development Standards. A. Application Process. Approval of a conditional use permit for timeshare uses in the C-1 Commercial Zone within the City shall be required in accordance with the requirements of Chapter 17.40. In addition to the requirements contained in Chapter 17.40, an application for a timeshare use shall be accompanied by the following documents which shall be subject to the approval of the Community Development Director: 1. Management Plan. A management plan shall describe the methods employed by the applicant to guarantee the future adequacy, stability, and continuity of a satisfactory level of management and maintenance of the time share use. 2. Application Requirements. In addition to any application requirements established by this section and any other applicable requirements of this code, the following information shall be submitted as part of any application to develop or establish a timeshare use: a. Typical floor plans for each accommodation. b. The phasing of the construction of the accommodations on the timeshare property, if applicable. C. A description of any ancillary uses which are proposed in conjunction with the time share use. d. A description of the method of management of the time share use and indication of the management entity for the time-share property. e. Any restrictions on the use or occupancy of the accommodations. f. Any other information or documentation the applicant, City staff or commission deems reasonably necessary to the consideration of the timeshare use, including any required environmental documents. B. Development Standards and Operational Requirements. Notwithstanding any other provision of this Section, the following conditions must be met by any timeshare use in any conditionally permitted zone. Additional requirements may be attached to a 12-378 conditional use permit or development agreement if found to be necessary to assure that the timeshare use meets the intent of this Section: 1. Timeshare uses developed in the C-1 Commercial Zone within the City shall be limited to accommodations in upper floors in conjunction with a mixed -use project. 2. No existing residential use in the C-1 Commercial Zone within the City shall be converted to a timeshare use. 3. Development Standards. The timeshare use shall comply with all development standards for the zone in which it is located. 4. Parking. Parking shall be provided as follows: a. For accommodations of two or fewer bedrooms, one parking space shall be provided for each accommodation. b. For accommodations of three or more bedrooms, two parking spaces shall be provided for each accommodation. 5. Modification or Waiver of Standards. The Planning Commission may modify or waive one or more of the regulations contained in this Section if it determines that strict compliance is not necessary to achieve the purpose and intent of this Section. E. Violations, Enforcement and Civil Penalties. 1. Any responsible person, including but not limited to an owner of a timeshare interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this Section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this Section. Such violation shall be punishable pursuant to Section 1.04.020 of the City of Hermosa Beach Municipal Code. 2. Timeshare use, and/or advertisement for timeshare use, of an accommodation in violation of this Section is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance. Any such nuisance may be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 8.28 except that the civil penalty for a violation shall be one thousand dollars ($1,000.00). Each day the violation occurs shall constitute a separate offense 3. Any responsible person who violates this Section shall be liable and responsible for a civil penalty of one thousand dollars ($1,000.00) per violation per day such violation occurs. The City may recover such civil penalty by either civil action or administrative citation. Such penalty shall be in addition to all other costs incurred by the City, including without limitation the City's staff time, investigation expenses and attorney's fees. 12-379 a. Where the City proceeds by civil action, the court shall have discretion to reduce the civil penalty based upon evidence presented by the responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the court should consider the purpose of this Section to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the responsible person's enrichment or profit as a result of the violation of this Section. In any such civil action the City also may abate and/or enjoin any violation of this Section. b. Where the City proceeds by administrative citation, the City shall provide the responsible person notice of the right to request an administrative hearing to challenge the citation and penalty, and the time for requesting that hearing. The responsible person shall have the right to request the administrative hearing within forty-five (45) days of the issuance of the administrative citation and imposition of the civil penalty. To request such a hearing, the responsible person shall notify the City clerk in writing within forty-five (45) days of the issuance of the citation. The appeal notification shall include all specific facts, circumstances and arguments upon which the appeal is based. ii. The City Manager is hereby authorized to designate a hearing officer to hear such appeal. The City hearing officer shall conduct a hearing on the appeal within ninety (90) days of the request for the hearing unless one of the parties requests a continuance for good cause. The hearing officer shall only consider those facts, circumstances or arguments that the property owner or responsible person has presented in the appeal notification. iii. The hearing officer shall render a decision in writing within thirty (30) days of the conclusion of the hearing. The hearing officer shall have discretion to reduce the civil penalty based upon evidence presented by the property owner or responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the hearing officer should consider the purpose of this Section to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the property owner's or responsible person's enrichment or profit as a result of the violation of this Section. iv. Any aggrieved party to the hearing officer's decision on the administrative appeal may obtain review of the decision by filing a petition for writ of mandate with the Los Angeles County Superior 12-380 Court in accordance with the timelines and provisions set forth in Government Code Section 53069.4. v. If, following an administrative hearing, appeal, or other final determination, the owner of the property is determined to be the responsible person for the civil penalty imposed by this section, such penalty, if unpaid within forty-five (45) days of the notice of the final determination, shall become a lien to be recorded against the property on which the violation occurred pursuant to Chapter 8.28. Such costs shall be collected in the same manner as county taxes, and thereafter the property upon which they are a lien shall be sold in the same manner as property now is sold for delinquent taxes 4. Any violation of this Section may also be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 8.28 except that the civil penalty under Chapter 8.28 for a violation shall be one thousand dollars ($1,000.00). Each day the violation of this Section occurs shall constitute a separate offense. The remedies under this Section are cumulative and in addition to any and all other remedies available at law and equity. Section 3. Section 17.26.030 of Chapter 17.26 (C1, C2 and C3 Commercial Zones) of Title 17 (Zoning) is amended to add the following entry to the chart of land use regulations USES I C1 C2 C3 See Section Timeshares I U 17.40.230 Section 4. CEQA. This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in the C-1 commercial zone within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. Section 5. Effective Date. Pursuant to California Government Code section 36937, this Ordinance shall take effect thirty (30) days after its final passage. Section 6. Certification. The City Clerk is directed to certify the passage and adoption of this Ordinance; cause it to be entered into the City's book of original ordinances; make a note of the passage and adoption in the records of this meeting; and, 12-381 within fifteen (15) days after the passage and adoption of this Ordinance, cause it to be published or posted in accordance with California law. PASSED, APPROVED and ADOPTED this 28th day of September, 2022. VOTE: AYES: NOES: ABSTAIN: ABSENT: Michael Detoy, Mayor PRESIDENT of the City Council and MAYOR of the City of Hermosa Beach, CA ATTEST: Myra Maravilla City Clerk APPROVED AS TO FORM: Michael Jenkins City Attorney 12-382 12-383 RESOLUTION P.C. 22-07 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF HERMOSA BEACH RECOMMENDING CITY COUNCIL APPROVAL OF TEXT AMENDMENTS TO THE CITY OF HERMOSA BEACH MUNICIPAL CODE AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT. The Planning Commission of the City of Hermosa Beach does hereby resolve as follows; SECTION 1. Findings. A. The Planning Commission held a duly noticed public hearing on April 19, 2022 to consider a text amendments to the City of Hermosa Beach Municipal Code, Title 17 (Zoning), as described in the proposed ordinance attached as Exhibit A. B. The City of Hermosa Beach.("City") is a scenic beachfront city, known for its many diverse restaurants, local retailers and popular commercial areas like its downtown area and Pier Avenue, C. Preserving the City's costal resource and the quality and character of the City has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's current General Plan. D. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. E. The City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses. F. The City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City. 12-384 G. According to the U.S. Census Bureau, the current median household income in the City is $136,702, while the estimated value of owner -occupied housing units from 2015-2019 was approximately $1,542,900 with current real estate listings suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City. H. The conversion of existing residential units to uses other than long-term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community. I. The City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses. J. This high impact use associated with timeshares, combined with the frequent turnover and commercial management involved in timeshare properties is not consistent with the purpose and nature of residential districts in the City. Rather, they are commercial in nature, in that these timeshare uses are structured as a short- term, tourist oriented, visitor serving use of the subject properties. The use of properties as timeshares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City. K. The use of residential properties for timeshare uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for timeshare uses of residential properties. L. This encroachment of tourist oriented, visitor serving uses in residential neighborhoods is likely to compromise the character of residential areas within the City, and further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City. M. The City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad authority to regulate the development and use of real property within its jurisdiction to promote the public welfare. N. Pursuant to and in accordance with this authority, the Planning Commission desires to prohibit timeshare uses in residential areas, and certain commercial zones and to 12-385 update the language of the Zoning Code to provide consistency with the terminology used to define timeshare uses in State law. Further, the City desires to provide greater clarity as to the zones which timeshare uses are permitted as conditional uses, and the standards pursuant to which they will be reviewed in those zones. O. On April 19, 2022, the Planning Commission held a duly -noticed public hearing and considered the staff report, recommendations by staff, and public testimony concerning the proposed ordinance. SECTION 2. This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in specified zones within the City pursuant to a conditional use permit, and prohibits them in all other zones, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. SECTION 3. The Planning Commission finds that the proposed amendments to the Municipal Code to permit timeshares in specified zones within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the character of the City; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply. SECTION 4. Based on the entire record before the Planning Commission, and all written and oral evidence presented, the Planning Commission hereby finds that the proposed ordinance is consistent with the City's adopted General Plan and does not conflict with any of the General Plan's goals or policies. SECTION 5. The Planning Commission hereby recommends that the City Council adopt the attached proposed ordinance entitled, "AN ORDINANCE OF THE CITY OF HERMOSA BEACH. AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING 12-386 THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT. I HEREBY CERTIFY that the foregoing recommendation to the City Council was duly and regularly approved by the Planning Commission of the City of Hermosa Beach at a regular meeting of said Planning Commission held on April 19, 2022, by the following roll call vote: VOTE: AYES: 5 - Chair Pedersen, Vice Chair Izant, Commissioner Saemann, Commissioner Hoffman, and Commissioner Rice NOES: None ABSTAIN: None ABSENT: None CERTIFICATION I hereby certify that the foregoing Resolution P.C. 22-07 is a true and complete record of the action taken by the Planning Commission of the City of Hermosa Beach, California, at its regular meeting of April 19, 2022. Dave Pedersen, Chairperson -7 %Z Date Ang a Crespi, Secretary 12-387 4/27/23, 9:22 AM City of Hermosa Beach - File #: REPORT 22-0249 Sign In it�r ff CITY OF HERMOSA BEACH Legislation Calendar City Council Departments People I® its l©Share l®R55 !!Alerts; Details PDF Staff Report File #: REPORT 22-0249 Version: 1 Name: Type: Action Item Status: Passed File created: 4/14/2022 In control: Planning Commission On agenda: 4/19/2022 Final action: 4/19/2022 TA 22-01 ZONE TEXT AMENDMENT TO AMEND THE HERMOSA BEACH MUNICIPAL CODE CHAPTER 17.40 TO ADD SECTION 17.40.230 AND Title: AMEND SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES AND DETERMINE THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRINMENTAL QUALITY ACT (CEQA) Attachments: 1. 1. Draft Resolution 22-07 Timeshare Ordinance, 2. 2. Hermosa Beach Draft Ordinance Staff Report Text Honorable Chairman and Members of the Hermosa Beach Planning Commission Regular Meeting of April 19, 2022 Title TA 22-01 ZONE TEXT AMENDMENT TO AMEND THE HERMOSA BEACH MUNICIPAL CODE CHAPTER 17.40 TO ADD SECTION 17.40.230 AND AMEND SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES AND DETERMINE THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRINMENTAL QUALITY ACT (CEQA) Recommendation Recommended Action: Staff recommends the Planning Commission adopt Resolution No. 22-07 (Attachment 1) recommending that the City Council approve Zone Text Amendment TA 22-01, thereby amending Chapter 17.40 to add section 17.40.230 and amend section 17.26.030 to permit timeshare uses in specified commercial zones and determine that the project is exempt from the California Environmental Quality Act (CEQA). Body Background: The City of Hermosa Beach ("City") does not currently have regulations in place governing the use of timeshares within the City, nor any regulations that would explicitly address these emerging businesses offering "fractional ownership" of a property in a way that operates like a timeshare. These types of uses in the City's residential zone could limit the City's existing housing stock for use as a long-term residency and impair the character of the City's residential zones. At its March 15, 2022 meeting, the Planning Commission directed staff to bring forward a zone text amendment addressing these types of uses. Analysis: The City is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers, and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents, those who work in the City, and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance. The City has commercial zones including the C-1 and C-2 commercial zones that provide for uses that serve both visitors and the local community such as: restaurants; retail shops; and visitor serving hotels. The City also has residential zones that provide housing for those who live in the community, at varying densities in order to provide a diversity of housing types. City Housing The most recent census "data lists the median value of owner -occupied homes in Hermosa Beach as $1,542,900 for the period of 2015- 2019, while the Zillow Home Value Index estimates medial home values in Hermosa Beach to be approximately $2,174,879 as of January 31, 2022. According to the Zillow Home Value Index, homes values in the City have gone up 10.1 percent over the past year. In contrast, the median household income in Hermosa Beach from 2015-2019 was $136,702, and the median income for a four -person household in Los Angeles County for 2021 is approximately $80,000. The cost of homes currently in Hermosa Beach are more than what median income residents of Hermosa Beach can afford, and certainly over the median income residents of Los Angeles County generally. https:Hhermosabeach.legistar.com/LegislationDetail.aspx?I D=5557241 &GU I D=80A64A8C-E51 A-4C26-B2D2-3046537C93D5 1 /3 12-388 4/27/23, 9:22 AM City of Hermosa Beach - File #: REPORT 22-0249 The conversion of homes in the City's residential neighborhoods to these timeshare -like uses would eliminate residential dwelling units that would otherwise be available for long-term residential use, thereby further exacerbating the lack of long-term available housing in the City. A home that is used for timeshare purposes would no longer be available for households to use as their long-term residence. Impacts to Character of the City's Residential Districts Timesharing projects have the same character as commercial hotels, motels, and other transient occupancy uses due to their transient nature and to the multiple short-term occupancies by those participating in timesharing projects. This use is better suited in commercial or quasi -commercial zones and is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods. The intensity of this use is a significant reason that these uses can change the character of a residential neighborhood. Long-term residents, whether owners or renters, occasionally have guests or parties, but these timeshare homes are used exclusively by people who are coming to the City on a short-term basis - most likely for vacation or leisure. As a result, those users may naturally stay out later, entertain more, and gather in larger numbers while on vacation. Timeshare uses can change the character of a residential neighborhood by having it serve not only as a residential area, but also a visitor lodging area, and subjecting it to the impacts that come with that more intense land use. Further, the nature of the timeshare use itself can impact the residential character of the City's residential zones because it would ensure that the time share users can only use their property for a limited amount of time each year. Each co-owner is in the unit on a short-term basis, and without the time to participate in the types of activities or build the relationships that create the fabric of a community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents. Emerging Businesses Recently, certain businesses have emerged which purport to sell "co -ownership" shares in residential property. These businesses, as staff understands the business model, start by purchasing homes or entering into contracts to purchase homes in tourist destinations in desirable locations like the City. These businesses then form a limited liability company ("LLC"), which owns title to the residential home. The "co - owners" each purchase a one -eighth share and are entitled to use the residential property for a certain number of days per year according to their share of ownership in the LLC. The one -eighth interest entitles the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special day" (Fourth of July, Thanksgiving, Christmas, etc.). The stays are reserved on a mobile application, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, the business continues to manage the homes, including providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners of the LLC. Time Share Ordinance As mentioned above, the City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. The purpose of any ordinance should be to ensure that it the City is able to maintain its existing and limited housing stock for use in long term residency and to maintain the character of its residential zones. Completely banning "fractional ownership," joint tenancies, or ownership by business entities such as LLC is not advisable. There are numerous properties in the City's residential zones currently owned by numerous owners or by LLCs. Thus, any ordinance should be geared toward the specific impacts of the at -issue uses - timeshare like uses organized and ran by third parties for a fee. The proposed ordinance (Attachment 2) does not target or single out any business or ownership structure. Environmental Determination: The proposed ordinance is not subject to CEQA because the adoptions of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in C-1 and C-2 commercial zones within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. General Plan Consistency_ The proposed text amendment has been evaluated for consistency with the City's General Plan and is consistent with the following Goals and Policies of Plan Hermosa: Land Use and Design Element Goal 1 Create a sustainable urban form and land use patterns that support a robust economy and high quality of life for residents. Policies: • 1.5 Balance resident and visitor needs. Ensure land uses and business provide for the needs of residents as well as visitors. • 1.7 Compatibility of uses. Ensure the placements of new uses does not create or exacerbate nuisances between different types of land uses. Goal 2 Neighborhoods provide for diverse needs of residents of all ages and abilities, and are organized to support healthy and active lifestyles. Policies: • 2.4 Single density neighborhoods. Preserve and maintain the Hermosa Hills, Eastside, Valley, North End and Hermosa View neighborhoods as predominantly single-family residential neighborhoods https://hermosabeach.legistar.com/LegislationDetail.aspx?ID=5557241&GUID=80A64A8C-E51A-4C26-B2D2-3046537C93D5 2/3 12-389 4/27/23, 9:22 AM City of Hermosa Beach - File #: REPORT 22-0249 • 2.5 Neighborhood preservation. Preserve and enhance the quality of residential neighborhoods by avoiding or abating the intrusion of disruptive, nonconforming buildings and uses. Attachments: 1. Draft Resolution 22-07 Timeshare Ordinance 2. Hermosa Beach Draft Ordinance Respectfully Submitted by: Carlos Luis, Senior Planner Legal Review: Patrick Donegan, Deputy City Attorney Approved: Angela Crespi, Interim Community Development Director https://hermosabeach.legistar.com/Leg is lationDetail.aspx?ID=5557241&GUID=80A64A8C-E51A-4C26-B2D2-3046537C93D5 3/3 12-390 From: Scott Hayes Sent: Tuesday, September 27, 2022 3:19 PM To: City Council <citycouncil@hermosabeach.gov>; Suja Lowenthal <suja@hermosabeach.gov>; Ann Yang <anny@hermosabeach.gov> Cc: Jeannie Naughton <jaughton@hermosabeach.gov>; DG_PlanningCommission <DG_PlanningCommission@hermosabeach.gov>; Patrick Donegan <Patrick.Donegan @bbklaw.com> <Patrick. Donegan @b bklaw.com>; racheisaccount@hotmail.com Subject: Agenda Item XII I, c (Report 22-0586) - Timeshares Mayor, Mayor Pro Tem, and Councilmembers. am writing to express my strong opposition Council Agenda Item XIII, c (Report 22-0586). Inadequate Noticing First, I believe that the residents adjacent to C-1 Zones should have been directly noticed about this potential change to the zoning code. As stated in the staff report, timesharing projects have increased "likelihood of frequent gatherings and parties generating noise in excess of what the neighborhood normally generates." Since staff acknowledges that there will be neighborhood impacts as a result of the proposed timeshare projects, I feel that the City should have gone over and above the minimum legal public noticing requirements. I respectfully request that this item be continued until such time that the neighbors are properly noticed. If this item is not continued please consider the following argument against the proposed zoning changes. Section 17.40.230, A of the proposed ordinance states 'Timeshare uses are not an appropriate land use in the City's residential zones due to the multiple occupancy of timeshare properties, the short- term, tourist oriented use of such property and commercial management of timeshare facilities, all of which create increased traffic generation, excessive noise, disruption to residential communities." What the ordinance fails to recognize is that those exact same concerns also make timeshares unsuitable for the C-1 Neighborhood Commercial Zone. Timeshares are Hotels Timeshares are almost always vacation properties. As such, they are essentially hotels which is a disruptive use when adjacent to a residential neighborhood. Our municipal code does not allow hotels in the C-1 zone and timeshares should be excluded as well. Municipal Code Section 17.26.020, B,1 specifically states that the purpose of the C-1 Neighborhood Commercial Zone is "to provide sites for a mix of small local businesses appropriate for, and serving the daily needs of 12-391 nearby residential neighborhoods; while establishing land use regulations that prevent significant adverse effects on abutting residential uses." I do not see how a timeshare serves the daily needs of nearby residential neighborhoods but I can easily see how these neighborhoods would suffer significant adverse effects from timeshares. Timeshares are STVRs People generally stay at timeshares for 1-2 weeks. As a result, they have nearly the same impact on neighborhoods as short term vacation rentals. Hermosa Beach only allows STVRs on commercially zoned parcels with non -conforming residential uses. Why are timeshares being treated any differently? Timeshares will have the same traffic and noise impacts as STVRs so they should be restricted to the same areas. Additionally, there is no language in the ordinance to prohibit utilizing the timeshare as a short term vacation rental. If timeshares are approved, it will only be a matter of time before we start seeing the timeshare units showing up on Airbnb and VRBO. Timeshares Take Potential Housing Stock The ordinance states that timeshares must be built above commercial space as part of a mixed use project. Why wouldn't we require that the upper floors of mixed use developments be residential space to help the City meet its housing goals? Allowing this space to be used as timeshare vacation homes makes no sense. I would much prefer to have new neighbors contributing to the community that having to deal with new transient residents every week or 2. Enforcement Challenges The City is currently unable to do anything about the quality of life issues brought about by the MANY illegal short term vacation rentals in Hermosa Beach. I am concerned that timeshares will just add to the number of quality of life issues that the City will not be able to enforce. I happen to live nearby some of these illegal STVRs and no matter how frequently I report them to the City, new renters keep showing up. A quick search of Airbnb shows that there are dozens of STVRs that are advertising for stays of less than 30 days. If the stay is increased to 30 days the number grows to over 100. The City is just not able to do anything to contain these issues and I am worried that the City will not be able to do anything about the potential problems with timeshares. Potential Solutions I believe that there are a few different ways that Council should deal with this issue: 1. Allow timeshares in locations where hotels are permitted. If timeshares are strictly considered a residential use this may not be possible until the zoning code is changed to allow residential in mixed use projects in C-2 and C-3. The Beach House is a form of timeshare but nobody minds it because it is in the C-2 zone. I think that it is worth waiting for the zoning code update to properly deal with the timeshare issue. 2. Define timeshares in the municipal code as hotels or motels. This would allow them in zones where hotel use is allowed. 3. Allow timeshares at commercially zoned parcels with non -conforming residential uses similar to legal STVRs. 4. Prohibit timeshares anywhere in Hermosa Beach. 12-392 Please do not allow timeshares to further degrade our neighborhoods the way that STVRs already have. Thank you for your consideration. Scott Hayes N. Hermosa Beach, CA 90254 12-393 City Council Adjourned Regular Hybrid Meeting (Closed Session - 5:00 PM Open Session - 6:00 PM 09-28-22 17:00 Agenda Name c) REPORT 22-0586 INTRODUCTION OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (Community Development Director Jeannie Naughton) Comments Support Oppose neutral Sentiments for All Agenda Items The following graphs display sentiments for comments that have location data. Only locations of users who have commented will be shown. Overall Sentiment N Support(0 %) opposo(l 001%) Noutral(D'.6} No Responso(0%) Agenda Item: eiornments for c) REPORT 22-0586 INTRODUCTION! OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL. USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (Community Development Director Jeannie Naughton) Overall Sentiment Support(oB%) apposo(l 00 %) Neutral(0%) No Responso(WQ Scott Hayes Location: Submitted At: 3:30pm 09-27-22 I am writing to express my strong opposition to Agenda Item XIII, c 12-394 First, I believe that the residents adjacent to C-1 Zones should have been directly noticed about this potential change to the zoning code. As stated in the staff report, timesharing projects have increased "likelihood of frequent gatherings and parties generating noise in excess of what the neighborhood normally generates" Since staff acknowledges that there will be neighborhood impacts as a result of the proposed timeshare projects, I feel that the City should have gone over and above the minimum legal public noticing requirements. I respectfully request that this item be continued until such time that the neighbors are properly noticed. If this item is not continued please consider the following argument against the proposed zoning changes. Section 17.40.230, A of the proposed ordinance states "Timeshare uses are not an appropriate land use in the City's residential zones due to the multiple occupancy of timeshare properties, the short-term, tourist oriented use of such property and commercial management of timeshare facilities, all of which create increased traffic generation, excessive noise, disruption to residential communities." What the ordinance fails to recognize is that those exact same concerns also make timeshares unsuitable for the C-1 Neighborhood Commercial Zone. Timeshares are almost always vacation properties. As such, they are essentially hotels which is a disruptive use when adjacent to a residential neighborhood. Our municipal code does not allow hotels in the C-1 zone and timeshares should be excluded as well. Municipal Code Section 17.26.020, B, 1 specifically states that the purpose of the C-1 Neighborhood Commercial Zone is "to provide sites for a mix of small local businesses appropriate for, and serving the daily needs of nearby residential neighborhoods; while establishing land use regulations that prevent significant adverse effects on abutting residential uses." I do not see how a timeshare serves the daily needs of nearby residential neighborhoods but I can easily see how these neighborhoods would suffer significant adverse effects from timeshares. People generally stay at timeshares for 1-2 weeks. As a result, they have nearly the same impact on neighborhoods as short term vacation rentals. Hermosa Beach only allows STVRs on commercially zoned parcels with non -conforming residential uses. Why are timeshares being treated any differently? Timeshares will have the same traffic and noise impacts as STVRs so they should be restricted to the same areas. Additionally, there is no language in the ordinance to prohibit utilizing the timeshare as a short term vacation rental. If timeshares are approved, it will only be a matter of time before we start seeing the timeshare units showing up on Airbnb and VRBO. The ordinance states that timeshares must be built above commercial space as part of a mixed use project. Why wouldn't we require that the upper floors of mixed use developments be residential space to help the City meet its housing goals? Allowing this space to be used as timeshare vacation homes makes no sense. I would much prefer to have new neighbors contributing to the community that having to deal with new transient residents every week or 2. The City is currently unable to do anything about the quality of life issues brought about by the MANY illegal short term vacation rentals in Hermosa Beach. I am concerned that timeshares will just add to the number of quality of life issues that the City will not be able to enforce. I happen to live nearby some of these illegal STVRs and no matter how frequently I report them to the City, new renters keep showing up. A quick search of Airbnb shows that there are dozens of STVRs that are advertising for stays of less than 30 days. If the stay is increased to 30 days the number grows to over 100. The City is just not able to do anything to contain these issues and I am worried that the City will not be able to do anything about the potential problems with timeshares. I believe that there are a few different ways that Council should deal with this issue: 1. Allow timeshares in locations where hotels are permitted. If timeshares are strictly considered a residential use this may not be possible until the zoning code is changed to allow residential in mixed use projects in C-2 and C- 3. 1 think that it is worth waiting for the zoning code update to properly deal with the timeshare issue. 2. Define timeshares in the municipal code as hotels or motels. This would allow them in zones where hotel use is allowed. 3. Allow timeshares at commercially zoned parcels with non -conforming residential uses similar to legal STVRs. 4. Prohibit timeshares anywhere in Hermosa Beach. 12-395 Please do not allow timeshares to further degrade our neighborhoods the way that STVRs already have. Rachel Hayes Location: 90254-5103, Hermosa Beach Submitted At: 8:55am 09-27-22 While I am glad to see that the city is being proactive to prevent timeshare ownership of properties in the residential areas, I am not happy with the request to change the use of properties in zone C1 which is directly adjacent to residential properties. For the same reason that you don't want one in your neighborhood, we don't want one in our neighborhood. Please note that timeshares do not operate the way it was sold to the planning commission. Timeshare salesmen are very good sales people, and they have sold you a pack of lies. Think about what they are selling you. Eight families sharing one house. Eight families would get one week every other month. Who do you know who has six weeks of vacation time? And how many people want to use all six of those weeks to go to the same location? The eight families they are selling you on are "investors" in a property who will get their money back by renting the unit through the timeshare system. The way timeshares work is owners either buy a designated week at one resort/location or they buy points which they can use to book a week at any of the timeshare's properties (owned or negotiated). People who own the same week can trade that week into the timeshare pool of units for a week at any other of the timeshare's properties. The timeshare companies pool their resources with other timeshare companies in order to offer more flexibility, as it helps generate more sales. So, what you think will be the same eight families using the unit, will end up becoming a short term rental with new tenants every single week. I belong to a timeshare and they use AirBnB as a selling point — seems they are getting into the business of subleasing out AirBnB's to their owners for points. The sales people will actually say "You don't have to stay at one of our resorts, we have contracts with AirBnBs all over. You can use your points to book one of those properties". Avoidance of Taxes: Because allegedly only 'time share owners' will be using the unit, there will be no short term tax paid to the city for this unit. Timeshare fees are called maintenance fees (not rent), so technically they would not be subject to the short term tax like hotels or even AirBnBs. Short Term Rentals kill neighborhoods. There is an illegal short term rental across the street from us. Every single new tenant drives the wrong way down the one-way alley. Every single one.... They don't care about our neighborhood. Sometimes they park a car in the alley blocking access to our garage. When I call the city, I am told the city will not tow. So the city is protecting the short term renters at the expense of the residents? If the city cannot help us now, imagine what it will be like when there are several places with new tenants every single week (unmanaged tenants). C1 zone: I live next to a bar. I have no problems with the bar. They have a CUP and they follow their CUP, so we have lived in harmony. The bar has a paid staff member on site to manage the property. This timeshare Oust another name for short term rental) will not have a staff member present to manage the property. I would rather have a pot dispensary next to me than another short term rental. At least the pot dispensary will have staff on site, and it will have specific hours of operation. And the City will have the ability to correct any unwanted behaviors with the pot dispensary operators. How can the city correct behavior of tenants who change over every single week. With a timeshare owned property, once you open pandora's box, you will not be able to fix it. Please say no to timeshare properties in our city. Please say no to timeshare properties in Zone C1 as it is too close to residential properties. For the same reason that you don't want one in your neighborhood, we don't want one in our neighborhood. Rachel Hayes, resident 122 1st Street, Hermosa Beach, CA 12-396 4/27/23, 9:29 AM City of Hermosa Beach - File #: REPORT 22-0643 Sign In CITY OF 3 HERMOSA BEACH Legislation Calendar City Council Departments People f®i (mil ip Share; I®RSS IS3 Alerts; Details PDF Staff Report File #: REPORT 22-0643 Version: 1 Name: Type: Action Item Status: Consent Calendar File created: 10/4/2022 In control: City Council On agenda: 10/11/2022 Final action: ADOPTION OF AN ORDINANCE OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT Title: AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT (Community Development Director Jeannie Naughton) Attachments: 1. 1. Draft Ordinance, 2. 2. PC Resolution 22-07. 3. 3. Link to April 19, 2022 Planning Commission Staff Report, 4. 4. Link to September 28,, 2022 City Council Staff Report Staff Report Text Honorable Mayor and Members of the Hermosa Beach City Council Regular Meeting of October 11, 2022 Title ADOPTION OF AN ORDINANCE OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT (Community Development Director Jeannie Naughton) Body Recommended Action: Recommendation Staff recommends City Council: 1. Waive full second reading and adopt by title an Ordinance of the City of Hermosa Beach, California, amending Chapter 17.40 (Conditional Use Permit and Other Permit Standards) to add Section 17.40.230 (Timeshare Uses) to Title 17 (Zoning) and amending Section 17.26.030 to permit timeshare uses in specified commercial zones pursuant to a Conditional Use Permit (Attachment 1); and 2. Direct staff to print and publish the summary ordinance in a newspaper of general circulation within 15 days following adoption and post it on the City's bulletin for 30 days. Body Executive Summary_ The City of Hermosa Beach Municipal Code (HBMC) does not currently include regulations governing the use of timeshares within the City, nor any regulations that would explicitly address these emerging businesses offering "fractional ownership" of a property in a way that operates like a timeshare. If left unregulated, these types of uses in the residential zones could limit the City's existing housing stock for use as long-term residency and impair the overall character of the City's residential areas. At its September 28, 2022 meeting, City Council held a public hearing and introduced and waived first reading of the ordinance with amendments to modify the authorized zone from the originally proposed C-1 (Neighborhood Commercial Zone) to the C-2 (Downtown Commercial Zone). Council further directed staff to incorporate the discussion into future Housing Element and Zoning Code update processes. The revised ordinance (Attachment 1) would permit timeshare uses in the C-2 Downtown Commercial Zone within the City pursuant to a Conditional Use Permit (CUP) and prohibit the use in all other zones within the City. Background: The City of Hermosa Beach is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents, those who work in the City, and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance. The City has commercial zones, that provide for uses that serve both visitors and the local community. These commercial uses include: restaurants; retail shops; and visitor -serving hotels and motels. The City also has residential zones, at varying densities, that provide a diversity of housing types for those who live in the community. The City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. At its April 18, 2022 meeting, the Planning Commission reviewed and recommended https://hermosabeach.legistar.com/LegislationDetaii.aspx?ID=5866947&GUID=1 F32BD8F-48D8-4AE4-BC2A-F6EDOAB1146B 1/4 12-397 4/27/23, 9:29 AM City of Hermosa Beach - File #: REPORT 22-0643 approval of the proposed ordinance to permit timeshare uses in specified commercial zones pursuant to a Conditional Use Permit by adopting Resolution P.C. 22-07 (Attachment 2). At its September 28, 2022 meeting, City Council received a staff presentation of the draft ordinance. Following the public hearing, City Council introduced and waived first reading of the ordinance with the following amendments: Section 2 was revised to replace all references of C-1 (Neighborhood Commercial Zone) with C-2 (Downtown Commercial Zone); and Section 3 was revised to shift the "U" from the C-1 column, to the C-2 column, indicating that timeshare uses would be permitted pursuant to a Conditional Use Permit in the C- 2 (Downtown Commercial Zone) and prohibit the use in the C-1 (Neighborhood Commercial Zone). City Council further directed staff to incorporate this discussion into future Housing Element and Zoning Code update processes. Date Past Planning Commission and City Council Actions Resolution P.C. 22-07 nance septemoer zu, zuzz aty councii Introoucea ano waiveo nrst reawng oT an Ordinance with amendments to replace all references of C-1 (Neighborhood Commercial Zone) with C-2 (Downtown Commercial Zone) in Section 2; and Section 3 was amended o shift the "U" from the C-1 column, to the C-2 column, indicating that timeshare uses would be permitted with a Conditional Use Permit in the C-2 (Downtown Commercial one and not permitted in the C-1 (Neighborhood Commercial Zone). City Council further directed staff to incorporate this discussion into future Housing Element and Zoning Code update processes. ty Housing The most recent U.S. Census data lists the median value of owner -occupied homes in Hermosa Beach as $1,542,9000) for the 2015-2019 period, while the Zillow Home Value Index estimates median home values in Hermosa Beach to be approximately $2,174,879(2) as of January 31, 2022. According to the Zillow Home Value Index, home values in the City have gone up 10.1 percent over the past year(3). In contrast, the median household income in Hermosa Beach from 2015-2019 was $136,702(4), and the median income for a four -person household in Los Angeles County for 2021 was approximately $80,000(5). The cost of homes currently in Hermosa Beach are in excess of what median income residents of Hermosa Beach can afford, and certainly over the median income residents of Los Angeles County generally. The conversion of homes in the City's residential neighborhoods to these timeshare -like uses would eliminate residential dwelling units that would otherwise be available for long-term residential use, thereby further exacerbating the lack of long-term available housing in the City. A home that is used for timeshare purposes would no longer be available for households to use as their long-term residence. Impacts to Character of the City's Residential Districts Timesharing projects have the same character as commercial hotels, motels, and other transient occupancy uses due to the multiple short- term occupancies by those participating in timesharing projects. For this reason, the activity is better suited in commercial or quasi - commercial zones. The use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods. The intensity of the activity is a significant reason why these uses can change the character of a residential neighborhood. Long-term residents, whether owners or renters, occasionally have guests and parties, but timeshare homes are used exclusively by people who are coming to the City on a short-term basis -most likely for vacation or leisure, increasing the likelihood of frequent gatherings and parties generating noise in excess of what the neighborhood normally generates. https:/hmmw.census. aov/ouiduacts/fact/tablcLn1rmoabeachcit r�califorLiia/HSD_3t0219. ht)p_[[wvnv,_,-illow,cnm hrrmo5a b ic_h.ca(ndmc-valur�l. htws' Avvosv tiAow.com/hermasa-beach-ro/home-values . ' https://amoi,census.eov/auickfacts, /fact/table/he rmosa be achohcalifornia/H5Q410119. ' httos://wvav;.tied.ca.eov/erants-fundin¢fincome-limits/state-and-federal-income-limits/docslincome-limits-2021.odf Timeshare owners and visitors will most likely stay out later, entertain more, and gather in larger numbers while on vacation. Timeshare uses can change the character of a residential neighborhood by having it serve not only as a residential area, but also a visitor lodging area and subjecting the neighborhood to the impacts that come with the more intense land use. https://hermosabeach.legistar.com/Leg is lationDetail.aspx?ID=5866947&GUID=1 F32BD8F-48D8-4AE4-BC2A-F6EDOAB1146B 2/4 12-398 4/27/23. 9:29 AM City of Hermosa Beach - File #: REPORT 22-0643 Further, the nature of the timeshare use itself can impact the residential character of the City's residential zones because they ensure that the timeshare users can only use their property for a limited amount of time each year. Each co-owner is in the unit on a short-term basis, so they do not have the time to participate in activities or build the relationships that create the fabric of a community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents. Emerging Businesses Recently, certain businesses have emerged which purport to sell "co -ownership" shares in residential property(6). These businesses, as staff understands the business model, start by purchasing homes or entering contracts to purchase homes in tourist destinations in desirable locations like Hermosa Beach. These businesses then form a limited liability company ("LLC"), which owns title to the residential home. The "co -owners" each purchase a one -eighth share and are entitled to use the residential property for a certain number of days per year according to their share of ownership in the LLC. The one -eighth interest entitles the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special day" (Fourth of July, Thanksgiving, Christmas, etc.). The stays are reserved on an app, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, the business continues to manage the homes, including providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners of the LLC. The Ordinance The City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. The purpose of any ordinance should be to ensure that it the City is able to maintain its existing and limited housing stock for use in long-term residency, and to maintain the character of its residential zones. These types of businesses are merely used as an example. The Ordinance Is not directed at any Individual business or businesses; but rather regulate the specific use. Completely banning "fractional ownership," joint tenancies, or ownership by business entities such as LLC is not advisable. There are numerous properties in the City's residential zones currently owned by numerous owners or by LLCs. Thus, the ordinance is geared toward the specific impacts of the at -issue uses -timeshare like uses organized and run by third parties for a fee. The proposed ordinance (Attachment 1) does not target or single out any business or ownership structure. As revised, the ordinance allows for these types of timeshare uses in the City's C-2 Downtown Commercial zone, subject to a Conditions Use Permit. Timeshare uses would be prohibited in all other zones. In order to avoid an over -inclusive ordinance that prohibits joint tenancies or other type of ownership structure that do not have the same deleterious impacts, the proposed ordinance focuses on the actual use of the property, as compared to the ownership structure, and in pertinent regulates this "timeshare use" subject to a "timeshare plan." Timeshare plan is defined as: "Any arrangement, plan, scheme, or similar device, facilitated, offered, or organized by a third -party non -purchaser, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby purchasers, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. " Environmental Determination: The proposed ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in C-2 Downtown Commercial zone within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. General Plan Consistency_ https://hermosabeach.legistar.com/LegislationDetaii.aspx?I D=5866947&GU I D=1 F32BD8 F-48D8-4AE4-BC2A-F6EDOAB 1146B 3/4 12-399 4/27/23, 9:29 AM City of Hermosa Beach - File #: REPORT 22-0643 This report and associated recommendation have been evaluated for their consistency with the City's General Plan. Relevant Policies are listed below: Land Use and Design Element Goal 1. Create a sustainable urban form and land use patterns that support a robust economy and high quality of life for residents. Policies: • 1.5 Balance resident and visitor needs. Ensure land uses and business provide for the needs of residents as well as visitors. • 1.7 Compatibility of uses. Ensure the placements of new uses does not create or exacerbate nuisances between different types of land uses. Goal 2. Neighborhoods provide for diverse needs of residents of all ages and abilities and are organized to support healthy and active lifestyles. Policies: • 2.4 Single density neighborhoods. Preserve and maintain the Hermosa Hills, Eastside, Valley, North End and Hermosa View neighborhoods as predominantly single-family residential neighborhoods • 2.5 Neighborhood preservation. Preserve and enhance the quality of residential neighborhoods by avoiding or abating the intrusion of disruptive, nonconforming buildings and uses. Fiscal Impact- There is no fiscal impact associated with the recommended action. Attachments: 1. Draft Ordinance 2. PC Resolution 22-07 3. Link to April 19, 2022 Planning Commission Staff Report 4. Link to September 28, 2022 City Council Staff Report Respectfully Submitted by: Patrick Donegan, Assistant City Attorney Concur: Jeannie Naughton, Community Development Director Noted for Fiscal Impact: Viki Copeland, Finance Director Legal Review: Patrick Donegan, Assistant City Attorney Approved: Suja Lowenthal, City Manager https://hermosabeach.legistar.com/LegislationDetaii.aspx?ID=5866947&GUID=1 F32BD8F-48D8-4AE4-BC2A-F6EDOAB1146B 4/4 12-400 CITY OF HERMOSA BEACH ORDINANCE NO. XX AN ORDINANCE OF THE CITY OF HERMOSA BEACH. AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT. THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH DOES HEREBY ORDAIN AS FOLLOWS: Section 1. Findings. A. The City of Hermosa Beach ("City") is a scenic beachfront city, known for its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. B. Preserving the City's costal resource and the quality and character of the City has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's current General Plan. C. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. D. The City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses. E. The City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City. 12-401 F. According to the U.S. Census Bureau, the current median household income in the City is $136,702, while the estimated value of owner - occupied housing units from 2015-2019 was approximately $1,542,900 with current real estate listings suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City. G. The conversion of existing residential units to uses other than long-term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community. H. The City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses. I. The high impact use associated with timeshares, combined with the frequent turnover and commercial management involved in timeshare properties is not consistent with the purpose and nature of residential districts in the City. Rather, they are commercial in nature, in that these timeshare uses are structured as a short-term, tourist oriented, visitor serving use of the subject properties. The use of properties as timeshares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City. J. The use of residential properties for timeshare uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for timeshare uses of residential properties. K. This encroachment of tourist oriented, visitor serving uses in residential neighborhoods is likely to compromise the character of residential areas within the City, and further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City. L. The City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad 12-402 authority to regulate the development and use of real property within its jurisdiction to promote the public welfare. M. Pursuant to and in accordance with this authority, the City Council desires to prohibit timeshare uses in residential areas, and only allow them in the C- 2 commercial zone within the City, pursuant to a conditional use permit. N. The City's Planning Commission held a duly noticed public hearing on April 19, 2022, as required by law to consider all the information presented by staff, and public testimony presented in writing and at the meeting. O. On April 19, 2022, the City's Planning Commission recommended that the City Council adopt this Ordinance amending the City's Municipal Code as described herein. P. On September 28, 2022, the City Council held a duly noticed public hearing, accepting testimony from the public, and discussed the proposed amendments and staff's recommended approval of this Ordinance and adopted on first reading the Ordinance. Q. On October 11, 2022, the Ordinance was brought back for a second reading and adopted by the City Council. R. The proposed zoning amendments are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the character of the City; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply. Section 2. The above recitals are hereby incorporated as though set forth in this section. Section 3. Section 17.40.230 (Time Share Uses) is hereby added to Chapter 17.40 (Conditional Use Permit and Other Permit Standards) of Title 17 (Zoning) of the City of Hermosa Beach Municipal Code, to read as follows: Section 17.40.230 Timeshare Uses A. Purpose and Findings. There is a critical shortage of permanent, long-term housing in the City of Hermosa Beach ("City"). A limited supply of suitable vacant land, land values, 12-403 and market demand for land for other uses, have limited the construction of additional housing in the City. The City is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. Timeshare uses are not an appropriate land use in the City's residential zones due to the multiple occupancy of timeshare properties, the short-term, tourist oriented use of such property and commercial management of timeshare facilities, all of which create increased traffic generation, excessive noise, disruption to residential communities through commercial -level maintenance of the timeshare facilities, and therefore are appropriately confined to commercial zones. Conversion of permanent housing to timeshare facilities removes existing housing units from the City's existing stock and exacerbates an already severe housing shortage. It is therefore in the public interest to prohibit conversions of existing housing units into timeshare facilities, as to do so eliminates needed housing stock by diverting those units to a tourist -oriented, commercial use. B. Definitions. For purposes of this Section, the following words and phrases shall have the meaning respectively ascribed to them by this Section: "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single-family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.040. "Building" shall have the meaning ascribed to it by Section 17.04.040. "Dwelling unit" shall have the meaning ascribed to it by Section 17.04.040. "Managing entity" means the person who undertakes the duties, responsibilities and obligations of the management of a timeshare plan. "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. 12-404 "Timeshare instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a timeshare plan and includes the declaration dedicating accommodations to the timeshare plan. "Timeshare interest" means the right to exclusively occupy a timeshare property for a period of time on a recurring basis pursuant to a timeshare plan, regardless of whether or not such right is coupled with a property interest in the timeshare property or a specified portion thereof. "Timeshare plan" means any arrangement, plan, scheme, or similar device, facilitated, offered, or organized by a third -party non -purchaser, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby purchasers, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. "Timeshare property" means one or more accommodations subject to the same timeshare instrument, together with any other property or rights to property appurtenant to those accommodations. "Timeshare use" means the use of one or more accommodations or any part thereof, as a timeshare property pursuant to a timeshare plan. C. Timeshare Uses Restricted to C-2 Downtown Commercial Zone. Timeshare uses are conditional uses within the City's C-2 Downtown Commercial Zone, subject to approval of a conditional use permit applied for and approved in conformance with this Section. Timeshare uses are not permitted in any other Zones in the City. D. Application Process and Development Standards. A. Application Process. Approval of a conditional use permit for timeshare uses in the C-2 Downtown Commercial Zone within the City shall be required in accordance with the requirements of Chapter 17.40. In addition to the requirements contained in Chapter 17.40, an application for a timeshare use shall be accompanied by the following documents which shall be subject to the approval of the Community Development Director: l . Management Plan. A management plan shall describe the methods employed by the applicant to guarantee the future adequacy, stability, and 12-405 continuity of a satisfactory level of management and maintenance of the time share use. 2. Application Requirements. In addition to any application requirements established by this section and any other applicable requirements of this code, the following information shall be submitted as part of any application to develop or establish a timeshare use: a. Typical floor plans for each accommodation. b. The phasing of the construction of the accommodations on the timeshare property, if applicable. C. A description of any ancillary uses which are proposed in conjunction with the time share use. d. A description of the method of management of the time share use and indication of the management entity for the time-share property. e. Any restrictions on the use or occupancy of the accommodations. f. Any other information or documentation the applicant, City staff or commission deems reasonably necessary to the consideration of the timeshare use, including any required environmental documents. B. Development Standards and Operational Requirements. Notwithstanding any other provision of this Section, the following conditions must be met by any timeshare use in any conditionally permitted zone. Additional requirements may be attached to a conditional use permit or development agreement if found to be necessary to assure that the timeshare use meets the intent of this Section: 1. Timeshare uses developed in the C-2 Downtown Commercial Zone within the City shall be limited to accommodations in upper floors in conjunction with a mixed -use project. 2. No existing residential use in the C-2 Downtown Commercial Zone within the City shall be converted to a timeshare use. 3. Development Standards. The timeshare use shall comply with all development standards for the zone in which it is located. 4. Parking. Parking shall be provided as follows: 12-406 a. For accommodations of two or fewer bedrooms, one parking space shall be provided for each accommodation. b. For accommodations of three or more bedrooms, two parking spaces shall be provided for each accommodation. 5. Modification or Waiver of Standards. The Planning Commission may modify or waive one or more of the regulations contained in this Section if it determines that strict compliance is not necessary to achieve the purpose and intent of this Section. E. Violations, Enforcement and Civil Penalties. 1. Any responsible person, including but not limited to an owner of a timeshare interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this Section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this Section. Such violation shall be punishable pursuant to Section 1.04.020 of the City of Hermosa Beach Municipal Code. 2. Timeshare use, and/or advertisement for timeshare use, of an accommodation in violation of this Section is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance. Any such nuisance may be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 8.28 except that the civil penalty for a violation shall be one thousand dollars ($1,000.00). Each day the violation occurs shall constitute a separate offense 3. Any responsible person who violates this Section shall be liable and responsible for a civil penalty of one thousand dollars ($1,000.00) per violation per day such violation occurs. The City may recover such civil penalty by either civil action or administrative citation. Such penalty shall be in addition to all other costs incurred by the City, including without limitation the City's staff time, investigation expenses and attorney's fees. a. Where the City proceeds by civil action, the court shall have discretion to reduce the civil penalty based upon evidence presented by the responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the court should consider the purpose of this Section to prevent and deter violations and whether the reduction 12-407 of civil penalties will frustrate that purpose by resulting in the responsible person's enrichment or profit as a result of the violation of this Section. In any such civil action the City also may abate and/or enjoin any violation of this Section. b. Where the City proceeds by administrative citation, the City shall provide the responsible person notice of the right to request an administrative hearing to challenge the citation and penalty, and the time for requesting that hearing. The responsible person shall have the right to request the administrative hearing within forty-five (45) days of the issuance of the administrative citation and imposition of the civil penalty. To request such a hearing, the responsible person shall notify the City clerk in writing within forty-five (45) days of the issuance of the citation. The appeal notification shall include all specific facts, circumstances and arguments upon which the appeal is based. ii. The City Manager is hereby authorized to designate a hearing officer to hear such appeal. The City hearing officer shall conduct a hearing on the appeal within ninety (90) days of the request for the hearing unless one of the parties requests a continuance for good cause. The hearing officer shall only consider those facts, circumstances or arguments that the property owner or responsible person has presented in the appeal notification. iii. The hearing officer shall render a decision in writing within thirty (30) days of the conclusion of the hearing. The hearing officer shall have discretion to reduce the civil penalty based upon evidence presented by the property owner or responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the hearing officer should consider the purpose of this Section to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the property owner's or responsible person's enrichment or profit as a result of the violation of this Section. iv. Any aggrieved party to the hearing officer's decision on the administrative appeal may obtain review of the decision by filing a petition forwrit of mandate with the Los Angeles County 12-408 Superior Court in accordance with the timelines and provisions set forth in Government Code Section 53069.4. v. If, following an administrative hearing, appeal, or other final determination, the owner of the property is determined to be the responsible person for the civil penalty imposed by this section, such penalty, if unpaid within forty-five (45) days of the notice of the final determination, shall become a lien to be recorded against the property on which the violation occurred pursuant to Chapter 8.28. Such costs shall be collected in the some manner as county taxes, and thereafter the property upon which they are a lien shall be sold in the same manner as property now is sold for delinquent taxes 4. Any violation of this Section may also be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 8.28 except that the civil penalty under Chapter 8.28 for a violation shall be one thousand dollars ($1,000.00). Each day the violation of this Section occurs shall constitute a separate offense. The remedies under this Section are cumulative and in addition to any and all other remedies available at law and equity. Section 3. Section 17.26.030 of Chapter 17.26 (C1, C2 and C3 Commercial Zones) of Title 17 (Zoning) is amended to add the following entry to the chart of land use regulations USES C1 C2 C3 See Section Timeshares I I U 17.40.230 Section 4. CEQA. This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c) (2) and 15060(c) (3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in the C-2 Downtown Commercial zone within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b) (3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. 12-409 Section 5. Effective Date. Pursuant to California Government Code section 36937, this Ordinance shall take effect thirty (30) days after its final passage. Section 6. Certification. The City Clerk is directed to certify the passage and adoption of this Ordinance; cause it to be entered into the City's book of original ordinances; make a note of the passage and adoption in the records of this meeting; and, within fifteen (15) days after the passage and adoption of this Ordinance, cause it to be published or posted in accordance with California law. PASSED, APPROVED and ADOPTED this 1 1 th day of October, 2022. Michael Detoy, Mayor PRESIDENT of the City Council and MAYOR of the City of Hermosa Beach, CA ATTEST: Myra Maravilla City Clerk APPROVED AS TO FORM: Michael Jenkins City Attorney 12-410 RESOLUTION P.C. 22-07 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF HERMOSA BEACH RECOMMENDING CITY COUNCIL APPROVAL OF TEXT AMENDMENTS TO THE CITY OF HERMOSA BEACH MUNICIPAL CODE AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT. The Planning Commission of the City of Hermosa Beach does hereby resolve as follows: SECTION 1. Findings. A. The Planning Commission held a duly noticed public hearing on April 19, 2022 to consider a text .amendments to the City of Hermosa Beach Municipal Code, Title 17 (Zoning), as described in the proposed ordinance attached as Exhibit A. B. The City of Hermosa Beach ("City") is a scenic beachfront city, known for its many diverse restaurants, local retailers and popular commercial areas like its downtown area and Pier Avenue. C. Preserving the City's costal resource and the quality and character of the City has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's current General Plan. D. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. E. The City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses. F. The City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City. 12-411 G. According to the U.S. Census Bureau, the current median household income in the City is $136,702, while the estimated value of owner -occupied housing units from 2015-2019 was approximately $1,542,900 with current real estate 'listings suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City. H. The conversion of existing residential units to uses other than long-term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community. I. The City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses. J. This high impact use associated with timeshares, combined with the frequent turnover and commercial management involved in timeshare properties is not consistent with the purpose and nature of residential districts in the City. Rather, they are commercial in nature, in that these timeshare uses are structured as a short- term, tourist oriented, visitor serving use of the subject properties. The use of properties as timeshares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City. K. The use of residential properties for timeshare uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for timeshare uses of residential properties. L. This encroachment of tourist oriented, visitor serving uses in residential neighborhoods is likely to compromise the character of residential areas within the City, and further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City. M. The City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad authority to regulate the development and use of real property within its jurisdiction to promote the public welfare. N. Pursuant to and in accordance with this authority, the Planning Commission desires to prohibit timeshare uses in residential areas, and certain commercial zones and to 12-412 update the language of the Zoning Code to provide consistency with the terminology used to define timeshare uses in State law. Further, the City desires to provide greater clarity as to the zones which timeshare uses are permitted as conditional uses, and the standards pursuant to which they will be reviewed in those zones. O. On April 19, 2022, the Planning Commission held a duly -noticed public hearing and considered the staff report, recommendations by staff, and public testimony concerning the proposed ordinance. SECTION 2. This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in specified zones within the City pursuant to a conditional use permit, and prohibits them in all other zones, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover,,under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. SECTION 3. The Planning Commission finds that the proposed amendments to the Municipal Code to permit timeshares in specified zones within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the character of the City; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply. SECTION 4. Based on the entire record before the Planning Commission, and all written and oral evidence presented, the Planning Commission hereby finds that the proposed ordinance is consistent with the City's adopted General Plan and does not conflict with any of the General Plan's goals or policies. SECTION 5. The Planning Commission hereby recommends that the City Council adopt the attached proposed ordinance entitled, "AN ORDINANCE OF THE CITY OF HERMOSA BEACH. AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING 12-413 THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT. I HEREBY CERTIFY that the foregoing recommendation to the City Council was duly and regularly approved by the Planning Commission of the City of Hermosa Beach at a regular meeting of said Planning Commission held on April 19, 2022, by the following roll call vote: VOTE: AYES: 5 - Chair Pedersen, Vice Chair Izant, Commissioner Saemann, Commissioner Hoffman, and Commissioner Rice NOES: None ABSTAIN: None ABSENT: None CERTIFICATION I hereby certify that the foregoing Resolution P.C. 22-07 is a true and complete record of the action taken by the Planning Commission of the City of Hermosa Beach, California, at its regular meeting of April 19, 2022. Dave Pedersen, Chairperson -7. /Z Date *Anggapi, Secretary 12-414 4/27/23, 9:30 AM City of Hermosa Beach - File #: REPORT 22-0249 Sign In CITY OF f= HERMOSA BEACH Legislation Calendar City Council Departments People 1® 12 I©Share:i®.RSS I$>Alerts_ Details PDF Staff Report File #: REPORT 22-0249 Version: 1 Name: Type: Action Item Status: Passed File created: 4/14/2022 In control: Planning Commission On agenda: 4/19/2022 Final action: 4/19/2022 TA 22-01 ZONE TEXT AMENDMENT TO AMEND THE HERMOSA BEACH MUNICIPAL CODE CHAPTER IZ40 TO ADD SECTION 17.40.230 AND Title: AMEND SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES AND DETERMINE THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRINMENTAL QUALITY ACT (CEQA) Attachments: 1. 1. Draft Resolution 22-07 Timeshare Ordinance, 2. 2. Hermosa Beach Draft Ordinance Staff Report Text Honorable Chairman and Members of the Hermosa Beach Planning Commission Regular Meeting of April 19, 2022 Title TA 22-01 ZONE TEXT AMENDMENT TO AMEND THE HERMOSA BEACH MUNICIPAL CODE CHAPTER 17.40 TO ADD SECTION 17.40.230 AND AMEND SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES AND DETERMINE THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRINMENTAL QUALITY ACT (CEQA) Recommendation Recommended Action: Staff recommends the Planning Commission adopt Resolution No. 22-07 (Attachment 1) recommending that the City Council approve Zone Text Amendment TA 22-01, thereby amending Chapter 17.40 to add section 17.40.230 and amend section 17.26.030 to permit timeshare uses in specified commercial zones and determine that the project is exempt from the California Environmental Quality Act (CEQA). Body Background: The City of Hermosa Beach ("City") does not currently have regulations in place governing the use of timeshares within the City, nor any regulations that would explicitly address these emerging businesses offering "fractional ownership" of a property in a way that operates like a timeshare. These types of uses in the City's residential zone could limit the City's existing housing stock for use as a long-term residency and impair the character of the City's residential zones. At its March 15, 2022 meeting, the Planning Commission directed staff to bring forward a zone text amendment addressing these types of uses. Analysis: The City is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers, and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents, those who work in the City, and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance. The City has commercial zones including the C-1 and C-2 commercial zones that provide for uses that serve both visitors and the local community such as: restaurants; retail shops; and visitor serving hotels. The City also has residential zones that provide housing for those who live in the community, at varying densities in order to provide a diversity of housing types. city Housing The most recent census data lists the median value of owner -occupied homes in Hermosa Beach as $1,542,900 for the period of 2015- 2019, while the Zillow Home Value Index estimates medial home values in Hermosa Beach to be approximately $2,174,879 as of January 31, 2022. According to the Zillow Home Value Index, homes values in the City have gone up 10.1 percent over the past year. In contrast, the median household income in Hermosa Beach from 2015-2019 was $136,702, and the median income for a four -person household in Los Angeles County for 2021 is approximately $80,000. The cost of homes currently in Hermosa Beach are more than what median income residents of Hermosa Beach can afford, and certainly over the median income residents of Los Angeles County generally. https://hermosabeach.legistar.com/LegislationDetail.aspx?ID=5557241 &GUID=80A64A8C-E51A-4C26-B2D2-3046537C93D5 1/3 12-415 4/27/23, 9:30 AM City of Hermosa Beach - File #: REPORT 22-0249 The conversion of homes in the City's residential neighborhoods to these timeshare -like uses would eliminate residential dwelling units that would otherwise be available for long-term residential use, thereby further exacerbating the lack of long-term available housing in the City. A home that is used for timeshare purposes would no longer be available for households to use as their long-term residence. Impacts to Character of the City's Residential Districts Timesharing projects have the same character as commercial hotels, motels, and other transient occupancy uses due to their transient nature and to the multiple short-term occupancies by those participating in timesharing projects. This use is better suited in commercial or quasi -commercial zones and is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods. The intensity of this use is a significant reason that these uses can change the character of a residential neighborhood. Long-term residents, whether owners or renters, occasionally have guests or parties, but these timeshare homes are used exclusively by people who are coming to the City on a short-term basis - most likely for vacation or leisure. As a result, those users may naturally stay out later, entertain more, and gather in larger numbers while on vacation. Timeshare uses can change the character of a residential neighborhood by having it serve not only as a residential area, but also a visitor lodging area, and subjecting it to the impacts that come with that more intense land use. Further, the nature of the timeshare use itself can impact the residential character of the City's residential zones because it would ensure that the time share users can only use their property for a limited amount of time each year. Each co-owner is in the unit on a short-term basis, and without the time to participate in the types of activities or build the relationships that create the fabric of a community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents. Emerging Businesses Recently, certain businesses have emerged which purport to sell "co -ownership" shares in residential property. These businesses, as staff understands the business model, start by purchasing homes or entering into contracts to purchase homes in tourist destinations in desirable locations like the City. These businesses then form a limited liability company ("LLC"), which owns title to the residential home. The "co - owners" each purchase a one -eighth share and are entitled to use the residential property for a certain number of days per year according to their share of ownership in the LLC. The one -eighth interest entitles the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special day" (Fourth of July, Thanksgiving, Christmas, etc.). The stays are reserved on a mobile application, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, the business continues to manage the homes, including providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners of the LLC. Time Share Ordinance As mentioned above, the City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. The purpose of any ordinance should be to ensure that it the City is able to maintain its existing and limited housing stock for use in long term residency and to maintain the character of its residential zones. Completely banning "fractional ownership," joint tenancies, or ownership by business entities such as LLC is not advisable. There are numerous properties in the City's residential zones currently owned by numerous owners or by LLCs. Thus, any ordinance should be geared toward the specific impacts of the at -issue uses - timeshare like uses organized and ran by third parties for a fee. The proposed ordinance (Attachment 2) does not target or single out any business or ownership structure. Environmental Determination: The proposed ordinance is not subject to CEQA because the adoptions of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in C-1 and C-2 commercial zones within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. General Plan Consistency_ The proposed text amendment has been evaluated for consistency with the City's General Plan and is consistent with the following Goals and Policies of Plan Hermosa: Land Use and Design Element Goal 1 Create a sustainable urban form and land use patterns that support a robust economy and high quality of life for residents. Policies: • 1.5 Balance resident and visitor needs. Ensure land uses and business provide for the needs of residents as well as visitors. • 1.7 Compatibility of uses. Ensure the placements of new uses does not create or exacerbate nuisances between different types of land uses. Goal 2 Neighborhoods provide for diverse needs of residents of all ages and abilities, and are organized to support healthy and active lifestyles. Policies: • 2.4 Single density neighborhoods. Preserve and maintain the Hermosa Hills, Eastside, Valley, North End and Hermosa View neighborhoods as predominantly single-family residential neighborhoods https://hermosabeach.legistar.com/Legislation Detail. aspx?ID=5557241&GUID=80A64A8C-E51A-4C26-B2D2-3046537C93D5 2/3 12-416 4/27/23, 9:30 AM City of Hermosa Beach - File #: REPORT 22-0249 • 2.5 Neighborhood preservation. Preserve and enhance the quality of residential neighborhoods by avoiding or abating the intrusion of disruptive, nonconforming buildings and uses. Attachments: 1. Draft Resolution 22-07 Timeshare Ordinance 2. Hermosa Beach Draft Ordinance Respectfully Submitted by: Carlos Luis, Senior Planner Legal Review: Patrick Donegan, Deputy City Attorney Approved: Angela Crespi, Interim Community Development Director https:Hhermosabeach.legistar.com/LegislationDetail.aspx?ID=5557241 &GUID=80A64A8C-E51A-4C26-B2D2-3046537C93D5 3/3 12-417 4/27/23, 9:31 AM City of Hermosa Beach - File #: REPORT 22-0586 „y CITY OF HERMOSA BEACH Legislation Calendar City Council Departments People l®'!®I I©Sharei �® RSS IS3 Alerts,? Details File #: REPORT 22-0586 Version: 1 Name: Type: Action Item Status: Public Hearing File created: 9/19/2022 ' In control: C iiiii Council On agenda: 9/28/2022 Final action: INTRODUCTION OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND Title: AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (Community Development Director Jeannie Naughton) Attachments: 1. 1. SUPPLEMENTAL Draft Ordinance. 2. 2. Resolution P.C. 22-07, 3. 3. Link to April 19, 2022 Planning Commission Staff Report 4. SUPPLEMENTAL Email from Scott Hayes Re Item 13. c .. 5. SUPPLEMENTAL eComments for Item 13. c Staff Report Text Honorable Mayor and Members of the Hermosa Beach City Council Regular Meeting of September 28, 2022 Title INTRODUCTION OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMITAND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (Community Development Director Jeannie Naughton) Body Recommended Action: Recommendation Staff recommends City Council consider waiving full reading and introduce by title only an Ordinance of the City of Hermosa Beach, California, amending Chapter 17.40 (Conditional Use Permit and Othor Permit Standards) to add Section 17.40.230 (Timeshare Uses) to Title 17 (Zoning) and amending Section 17.26.030 to permit timeshare uses in specified commercial zones pursuant to a Conditional Use Permit and determining that the project is exempt from the California Environmental Quality Act (Attachment 1). Body Executive Summary_ The City of Hermosa Beach Municipal Code (HBMC) does not currently include regulations governing the use of timeshares within the City, nor any regulations that would explicitly address these emerging businesses offering "fractional ownership" of a property in a way that operates like a timeshare. If left unregulated, these types of uses in the residential zones could limit the City's existing housing stock for use as long-term residency and impair the overall character of the City's residential areas. The proposed draft ordinance (Attachment 1) would permit timeshare uses in the C-1 and G 2 ommercial zones within the City pursuant to a Conditional Use Permit (CUP), and prohibit the use in all other zones within the City. Background: The City of Hermosa Beach is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents, those who work in the City, and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance. The City has commercial zones, ineluding the G 1 and G 2 eemmefeial zenes, that provide for uses that serve both visitors and the local community. These commercial uses include: restaurants; retail shops; and visitor -serving hotels and motels. The City also has residential zones, at varying densities, that provide a diversity of housing types for those who live in the community. The City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. At its April 18, 2022 meeting, the Planning Commission reviewed and recommended approval of the proposed ordinance to permit timeshare uses in specified commercial zones pursuant to a Conditional Use Permit by adopting Resolution P.C. 22-07 (Attachment 2). Past Planning Commission Actions https://hermosabeach.legistar.com/LegislationDetail.aspx?ID=5850234&GUID=EEC63C4B-88FE-48DO-8735-DD895DF161 B5 1/3 12-418 4/27/23, 9:31 AM City of Hermosa Beach - File #: REPORT 22-0586 Meeting Date Description April 18, 2022 Planning Commission reviewed the proposed ordinance and dopted Resolution P.C. 22-07 City Housing The most recent U.S. Census data lists the median value of owner -occupied homes in Hermosa Beach as $1,542,900 for the 2015-2019 period, while the Zillow Home Value Index estimates median home values in Hermosa Beach to be approximately $2,174,879 as of January 31, 2022. According to the Zillow Home Value Index, home values in the City have gone up 10.1 percent over the past year. In contrast, the median household income in Hermosa Beach from 2015-2019 was $136,702, and the median income for a four -person household in Los Angeles County for 2021 was approximately $80,000. The cost of homes currently in Hermosa Beach are in excess of what median income residents of Hermosa Beach can afford, and certainly over the median income residents of Los Angeles County generally. The conversion of homes in the City's residential neighborhoods to these timeshare -like uses would eliminate residential dwelling units that would otherwise be available for long-term residential use, thereby further exacerbating the lack of long-term available housing in the City. A home that is used for timeshare purposes would no longer be available for households to use as their long-term residence. Impacts to Character of the Citv's Residential Districts Timesharing projects have the same character as commercial hotels, motels, and other transient occupancy uses due to the multiple short- term occupancies by those participating in timesharing projects. For this reason, the activity is better suited in commercial or quasi - commercial zones. The use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods. The intensity of the activity is a significant reason why these uses can change the character of a residential neighborhood. Long-term residents, whether owners or renters, occasionally have guests and parties, but timeshare homes are used exclusively by people who are coming to the City on a short-term basis -most likely for vacation or leisure, increasing the likelihood of frequent gatherings and parties generating noise in excess of what the neighborhood normally generates. Timeshare owners and visitors will most likely stay out later, entertain more, and gather in larger numbers while on vacation. Timeshare uses can change the character of a residential neighborhood by having it serve not only as a residential area, but also a visitor lodging area and subjecting the neighborhood to the impacts that come with the more intense land use. Further, the nature of the timeshare use itself can impact the residential character of the City's residential zones because they ensure that the timeshare users can only use their property for a limited amount of time each year. Each co-owner is in the unit on a short-term basis, so they do not have the time to participate in activities or build the relationships that create the fabric of a community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents. Emerging Businesses Recently, certain businesses have emerged which purport to sell "co -ownership" shares in residential property. These businesses, as staff understands the business model, start by purchasing homes or entering contracts to purchase homes in tourist destinations in desirable locations like Hermosa Beach. These businesses then form a limited liability company ("LLC"), which owns title to the residential home. The "co -owners" each purchase a one -eighth share and are entitled to use the residential property for a certain number of days per year according to their share of ownership in the LLC. The one -eighth interest entitles the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special day" (Fourth of July, Thanksgiving, Christmas, etc.). The stays are reserved on an app, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, the business continues to manage the homes, including providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners of the LLC. The Ordinance The City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. The purpose of any ordinance should be to ensure that the City is able to maintain its existing and limited housing stock for use in long-term residency, and to maintain the character of its residential zones. Completely banning "fractional ownership," joint tenancies, or ownership by business entities such as LLC is not advisable. There are numerous properties in the City's residential zones currently owned by numerous owners or by LLCs. Thus, the ordinance is geared toward the specific impacts of the at -issue uses -timeshare -like uses organized and run by third parties for a fee. The proposed ordinance (Attachment 1) does not target or single out any business or ownership structure. The proposed ordinance allows for these types of timeshare uses in the City's C-1 erg-G2-zones, subject to a Conditions Use Permit. Timeshare uses would be prohibited in all other zones. In order to avoid an over -inclusive ordinance that prohibits joint tenancies or other type of ownership structure that do not have the same deleterious impacts, the proposed ordinance focuses on the actual use of the property, as compared to the ownership structure, and in pertinent regulates this "timeshare use" subject to a "timeshare plan." Timeshare plan is defined as: https://hermosabeach.legistar.com/LegislationDetail.aspx?ID=5850234&GUID=EEC63C4B-88FE-48DO-8735-DD895DFl6l B5 2/3 12-419 4/27/23, 9:31 AM City of Hermosa Beach - File #: REPORT 22-0586 "Any arrangement, plan, scheme, or similar device, facilitated, offered, or organized by a third -party non -purchaser, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement or by any other means, whereby purchasers, in exchange for consideration, 'receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. " At its April 18, 2022 meeting, the Planning Commission reviewed and recommended approval of the proposed ordinance by adopting Resolution P.C. 22-07 (Attachment 2). Environmental Determination: The proposed ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in the C-1 and2 commercial zones within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. General Plan Consistency_ The proposed text amendment has been evaluated for consistency with the City's General Plan. Relevant Policies are listed below: Land Use and Design Element Goal 1. Create a sustainable urban form and land use patterns that support a robust economy and high quality of life for residents. Policies: • 1.5 Balance resident and visitor needs. Ensure land uses and business provide for the needs of residents as well as visitors. • 1.7 Compatibility of uses. Ensure the placements of new uses does not create or exacerbate nuisances between different types of land uses. Goal 2. Neighborhoods provide for diverse needs of residents of all ages and abilities and are organized to support healthy and active lifestyles. Policies: • 2.4 Single density neighborhoods. Preserve and maintain the Hermosa Hills, Eastside, Valley, North End and Hermosa View neighborhoods as predominantly single-family residential neighborhoods • 2.5 Neighborhood preservation. Preserve and enhance the quality of residential neighborhoods by avoiding or abating the intrusion of disruptive, nonconforming buildings and uses. Fiscal Impact: There is no fiscal impact associated with the recommended action. Attachments: 1. Draft Ordinance 2. Resolution P.C. 22-07 3. Link to April 19, 2022 Planning Commission Staff Report Respectfully Submitted by: Patrick Donegan, Assistant City Attorney Concur: Jeannie Naughton, Community Development Director Noted for Fiscal Impact: Viki Copeland, Finance Director Legal Review: Patrick Donegan, Assistant City Attorney Approved: Suja Lowenthal, City Manager Staff Report Updated on 9/27/2022 - See Track Changes https://hermosabeach.legistar.com/Leg is lationDetail.aspx?ID=5850234&GUID=EEC63C4B-88FE-48DO-8735-DD895DF161 B5 3/3 12-420 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81BED8558E CITY OF HERMOSA BEACH ORDINANCE NO. 22-1453 AN ORDINANCE OF THE CITY OF HERMOSA BEACH. AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT. THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH DOES HEREBY ORDAIN AS FOLLOWS: Section 1. Findings. A. The City of Hermosa Beach ("City") is a scenic beachfront city, known for its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. B. Preserving the City's costal resource and the quality and character of the City has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's current General Plan. C. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. D. The City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses. E. The City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City. Page 1 of 10 #22-1453 12-421 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81BED8558E F. According to the U.S. Census Bureau, the current median household income in the City is $136,702, while the estimated value of owner - occupied housing units from 2015-2019 was approximately $1,542,900 with current real estate listings suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City. G. The conversion of existing residential units to uses other than long-term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community. H. The City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses. I. The high impact use associated with timeshares, combined with the frequent turnover and commercial management involved in timeshare properties is not consistent with the purpose and nature of residential districts in the City. Rather, they are commercial in nature, in that these timeshare uses are structured as a short-term, tourist oriented, visitor serving use of the subject properties. The use of properties as timeshares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City. J. The use of residential properties for timeshare uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for timeshare uses of residential properties. K. This encroachment of tourist oriented, visitor serving uses in residential neighborhoods is likely to compromise the character of residential areas within the City, and further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City. L. The City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad Page 2 of 10 #22-1453 12-422 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81BED8558E authority to regulate the development and use of real property within its jurisdiction to promote the public welfare. M. Pursuant to and in accordance with this authority, the City Council desires to prohibit timeshare uses in residential areas, and only allow them in the C- 2 commercial zone within the City, pursuant to a conditional use permit. N. The City's Planning Commission held a duly noticed public hearing on April 19, 2022, as required by law to consider all the information presented by staff, and public testimony presented in writing and at the meeting. O. On April 19, 2022, the City's Planning Commission recommended that the City Council adopt this Ordinance amending the City's Municipal Code as described herein. P. On September 28, 2022, the City Council held a duly noticed public hearing, accepting testimony from the public, and discussed the proposed amendments and staff's recommended approval of this Ordinance and adopted on first reading the Ordinance. Q. On October 11, 2022, the Ordinance was brought back for a second reading and adopted by the City Council. R. The proposed zoning amendments are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the character of the City; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply. Section 2. The above recitals are hereby incorporated as though set forth in this section. Section 3. Section 17.40.230 (Time Share Uses) is hereby added to Chapter 17.40 (Conditional Use Permit and Other Permit Standards) of Title 17 (Zoning) of the City of Hermosa Beach Municipal Code, to read as follows: Section 17.40.230 Timeshare Uses A. Purpose and Findings. There is a critical shortage of permanent, long-term housing in the City of Hermosa Beach ("City"). A limited supply of suitable vacant land, land values, Page 3 of 10 # 22-1453 12-423 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81BED8558E and market demand for land for other uses, have limited the construction of additional housing in the City. The City is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. Timeshare uses are not an appropriate land use in the City's residential zones due to the multiple occupancy of timeshare properties, the short-term, tourist oriented use of such property and commercial management of timeshare facilities, all of which create increased traffic generation, excessive noise, disruption to residential communities through commercial -level maintenance of the timeshare facilities, and therefore are appropriately confined to commercial zones. Conversion of permanent housing to timeshare facilities removes existing housing units from the City's existing stock and exacerbates an already severe housing shortage. It is therefore in the public interest to prohibit conversions of existing housing units into timeshare facilities, as to do so eliminates needed housing stock by diverting those units to a tourist -oriented, commercial use. B. Definitions. For purposes of this Section, the following words and phrases shall have the meaning respectively ascribed to them by this Section: "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for \ residential use and occupancy, including but not limited to a single-family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.040. "Building" shall have the meaning ascribed to it by Section 17.04.040. "Dwelling unit" shall have the meaning ascribed to it by Section 17.04.040. "Managing entity" means the person who undertakes the duties, responsibilities and obligations of the management of a timeshare plan. "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. Page 4 of 10 #22-1453 12-424 DocuSign Envelope ID: A341`7110-E406-434D-A977-DC81BED8558E "Timeshare instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a timeshare plan and includes the declaration dedicating accommodations to the timeshare plan. "Timeshare interest" means the right to exclusively occupy a timeshare property for a period of time on a recurring basis pursuant to a timeshare plan, regardless of whether or not such right is coupled with a property interest in the timeshare property or a specified portion thereof. "Timeshare plan" means any arrangement, plan, scheme, or similar device, facilitated, offered, or organized by a third -party non -purchaser, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby purchasers, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, fora period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. "Timeshare property" means one or more accommodations subject to the same timeshare instrument, together with any other property or rights to property appurtenant to those accommodations. "Timeshare use" means the use of one or more accommodations or any part thereof, as a timeshare property pursuant to a timeshare plan. C. Timeshare Uses Restricted to C-2 Downtown Commercial Zone. Timeshare uses are conditional uses within the City's C-2 Downtown Commercial Zone, subject to approval of a conditional use permit applied for and approved in conformance with this Section. Timeshare uses are not permitted in any other Zones in the City. D. Application Process and Development Standards. A. Application Process. Approval of a conditional use permit for timeshare uses in the C-2 Downtown Commercial Zone within the City shall be required in accordance with the requirements of Chapter 17.40. In addition to the requirements contained in Chapter 17.40, an application for a timeshare use shall be accompanied by the following documents which shall be subject to the approval of the Community Development Director: 1. Management Plan. A management plan shall describe the methods employed by the applicant to guarantee the future adequacy, stability, and Page 5 of 10 #22-1453 12-425 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81BED8558E continuity of a satisfactory level of management and maintenance of the time share use. 2. Application Requirements. In addition to any application requirements established by this section and any other applicable requirements of this code, the following information shall be submitted as part of any application to develop or establish a timeshare use: a. Typical floor plans for each accommodation. b. The phasing of the construction of the accommodations on the timeshare property, if applicable. C. A description of any ancillary uses which are proposed in conjunction with the time share use. d. A description of the method of management of the time share use and indication of the management entity for the time-share property. e. Any restrictions on the use or occupancy of the accommodations. f. Any other information or documentation the applicant, City staff or commission deems reasonably necessary to the consideration of the timeshare use, including any required environmental documents. B. Development Standards and Operational Requirements. Notwithstanding any other provision of this Section, the following conditions must be met by any timeshare use in any conditionally permitted zone. Additional requirements may be attached to a conditional use permit or development agreement if found to be necessary to assure that the timeshare use meets the intent of this Section: 1. Timeshare uses developed in the C-2 Downtown Commercial Zone within the City shall be limited to accommodations in upper floors in conjunction with a mixed -use project. 2. No existing residential use in the C-2 Downtown Commercial Zone within the City shall be converted to a timeshare use. 3. Development Standards. The timeshare use shall comply with all development standards for the zone in which it is located. 4. Parking. Parking shall be provided as follows: Page 6 of 10 # 22-1453 12-426 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81 BED8558E a. For accommodations of two or fewer bedrooms, one parking space shall be provided for each accommodation. b. For accommodations of three or more bedrooms, two parking spaces shall be provided for each accommodation. 5. Modification or Waiver of Standards. The Planning Commission may modify or waive one or more of the regulations contained in this Section if it determines that strict compliance is not necessary to achieve the purpose and intent of this Section. E. Violations, Enforcement and Civil Penalties. 1. Any responsible person, including but not limited to an owner of a timeshare interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this Section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this Section. Such violation shall be punishable pursuant to Section 1.04.020 of the City of Hermosa Beach Municipal Code. 2. Timeshare use, and/or advertisement for timeshare use, of an accommodation in violation of this Section is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance. Any such nuisance may be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 8.28 except that the civil penalty for a violation shall be one thousand dollars ($1,000.00). Each day the violation occurs shall constitute a separate offense 3. Any responsible person who violates this Section shall be liable and responsible for a civil penalty of one thousand dollars ($1,000.00) per violation per day such violation occurs. The City may recover such civil penalty by either civil action or administrative citation. Such penalty shall be in addition to all other costs incurred by the City, including without limitation the City's staff time, investigation expenses and attorney's fees. a. Where the City proceeds by civil action, the court shall have discretion to reduce the civil penalty based upon evidence presented by the responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the court should consider the purpose of this Section to prevent and deter violations and whether the reduction Page 7 of 10 # 22-1453 12-427 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81BED8558E of civil penalties will frustrate that purpose by resulting in the responsible person's enrichment or profit as a result of the violation of this Section. In any such civil action the City also may abate and/or enjoin any violation of this Section. b. Where the City proceeds by administrative citation, the City shall provide the responsible person notice of the right to request an administrative hearing to challenge the citation and penalty, and the time for requesting that hearing. The responsible person shall have the right to request the administrative hearing within forty-five (45) days of the issuance of the administrative citation and imposition of the civil penalty. To request such a hearing, the responsible person shall notify the City clerk in writing within forty-five (45) days of the issuance of the citation. The appeal notification shall include all specific facts, circumstances and arguments upon which the appeal is based. ii. The City Manager is hereby authorized to designate a hearing officer to hear such appeal. The City hearing officer shall conduct a hearing on the appeal within ninety (90) days of the request for the hearing unless one of the parties requests a continuance for good cause. The hearing officer shall only consider those facts, circumstances or arguments that the property owner or responsible person has presented in the appeal notification. iii. The hearing officer shall render a decision in writing within thirty (30) days of the conclusion of the hearing. The hearing officer shall have discretion to reduce the civil penalty based upon evidence presented by the property owner or responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the hearing officer should consider the purpose of this Section to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the property owner's or responsible person's enrichment or profit as a result of the violation of this Section. iv. Any aggrieved party to the hearing officer's decision on the administrative appeal may obtain review of the decision by filing a petition for writ of mandate with the Los Angeles County Page 8 of 10 #22-1453 12-428 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81 BED8558E Superior Court in accordance with the timelines and provisions set forth in Government Code Section 53069.4. v. If, following an administrative hearing, appeal, or other final determination, the owner of the property is determined to be the responsible person for the civil penalty imposed by this section, such penalty, if unpaid within forty-five (45) days of the notice of the final determination, shall become a lien to be recorded against the property on which the violation occurred pursuant to Chapter 8.28. Such costs shall be collected in the same manner as county taxes, and thereafter the property upon which they are a lien shall be sold in the same manner as property now is sold for delinquent taxes 4. Any violation of this Section may also be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 8.28 except that the civil penalty under Chapter 8.28 for a violation shall be one thousand dollars ($1,000.00). Each day the violation of this Section occurs shall constitute a separate offense. The remedies under this Section are cumulative and in addition to any and all other remedies available at law and equity. Section 3. Section 17.26.030 of Chapter 17.26 (C 1, C2 and C3 Commercial Zones) of Title 17 (Zoning) is amended to add the following entry to the chart of land use regulations USES I C 1 C2 C3 See Section Timeshares I U 17.40.230 Section 4. CEQA. This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c) (2) and 15060(c) (3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in the C-2 Downtown Commercial zone within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b) (3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. Page 9 of 10 #22-1453 12-429 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81 BED8558E Section 5. Effective Date. Pursuant to California Government Code section 36937, this Ordinance shall take effect thirty (30) days after its final passage. Section 6. Certification. The City Clerk is directed to certify the passage and adoption of this Ordinance; cause it to be entered into the City's book of original ordinances; make a note of the passage and adoption in the records of this meeting; and, within fifteen (15) days after the passage and adoption of this Ordinance, cause it to be published or posted in accordance with California law. PASSED, APPROVED and ADOPTED this 11 th day of October, 2022. AYES: Councilmembers Campbell, Massey, Mayor Pro Tem Jackson, and Mayor Detoy NOES: None. ABSTAIN: None. ABSENT: None Mayor Raymond A. Jackson PRESIDENT of the City Council and MAYOR of the City of Hermosa Beach, CA ATTEST: APPROVED AS TO FORM: PatYU V61440L Myra Maravilla Patrick Donegan City Clerk City Attorney Page 10 of 10 # 22-1453 12-430 DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81BED8558E State of California ) County of Los Angeles ) ss City of Hermosa Beach ) December 27, 2022 Certification of Council Action ORDINANCE NO. 22-1453 AN ORDINANCE OF THE CITY OF HERMOSA BEACH. AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT. I, Myra Maravilla, City Clerk of the City of Hermosa Beach, California, do hereby certify that the above and foregoing Ordinance No. 22-1453 was duly approved and adopted by the City Council of said City at its adjourned regular meeting thereof held via hybrid on the 1 Ith day of October 2022 and passed by the following vote: AYES: Mayor Detoy, Mayor Pro Tern Jackson, Councilmembers Campbell, Armato, and Massey NOES: None ABSTAIN: None ABSENT: None I Myra Maravilla, MPA, CMC City Clerk 12-431 Exhibit M City of Palm Desert Time Share Ordinance and Supporting Evidence 12-432 CITY OF PALM DESERT DEPARTMENT OF DEVELOPMENT SERVICES CITY COUNCIL STAFF REPORT MEETING DATE: April 28, 2022 PREPARED BY: Rosie Lua, Principal Planner REQUEST: Consideration of approval to the City Council for Zoning Ordinance Amendment to modify Palm Desert Municipal Code Section 25.34.060 regarding Time -Share Projects. Recommendation Waive further reading and pass to second reading City Council Ordinance No. approving Zoning Ordinance Amendment 22-0001 to modify Palm Desert Municipal Code Section 25.34.060 regarding Time -Share Projects. Planning Commission Recommendation On January 18, 2022, the Planning Commission considered the Zoning Ordinance Amendment (ZOA) 22-0001 to modify Palm Desert Municipal Code Section 25.34.060 regarding Time -Share Projects. Planning Commission approved Resolution No. 2805 recommending to the City Council approval by vote 5-0. City Council Meetings On February 24, 2022, the City Council opened the public hearing and approved a request from staff to continue to the meeting of March 24, 2022. On March 24, 2022, another continuance of the public hearing was granted to April 28, 2022, allowing staff to meet with the City's Short Term Rental (STR) Subcommittee and time for staff to make appropriate changes to the zoning ordinance. Strategic Plan Land Use, Housing & Open Space — Priority 5: "Utilize progressive land use policies and standards to support ongoing and future needs." Background Analysis On November 18, 2021, the City Attorney presented a memo to City Council addressing the Pacaso business model purchasing property in tourist destinations like the City of Palm Desert targeting the second or vacation home market. Founded in 2020, the Pacaso owns title to the residential home by forming a limited liability company ("LLC"), then markets "co - ownership" interests in the homes to up to eight individuals for a certain number of days per 12-433 April 28, 2022 —Staff Report Case No. ZOA 22-0001 Time -Share Uses - Pacaso Page 2 of 4 year as specified in their share of ownership in the LLC. The one -eighth interest entitles the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special day" (Fourth of July, Thanksgiving, Christmas, etc.). The stays are reserved through a mobile application, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, a Pacaso manages the homes, providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners of the LLC. The City Attorney opined that the Pacaso business formation is a "timeshare" as defined in the Business and Profession Code Section 11212(z) and regulated by Section 25.34.060 (Time -Share Projects) of the Palm Desert Municipal Code (PDMC). The Pacaso's are not regulated by the state law since there are less than ten co -owners, the minimum number of co -owners required to be regulated by state law. The PDMC permits timeshare projects in planned residential zones, general commercial zone, or the planned commercial resort zone and includes a requirement for a resort hotel having 500 or more rooms and an 18-hole golf course of not less than 6,400 yards, and then only if and when a conditional use permit has been obtained from the Commission in accordance with Section 25.72.050 (Conditional Use Permit) of the code. The Pacaso type of business formation would not be permitted to operate in a single-family residential property and operate as a timeshare use since the use does not meet all the criteria of the PDMC. The purpose of this ordinance is to ensure that the City is able to maintain its existing and limited housing stock for use in long term residency, and to maintain the character of its residential zones. The conversion of homes in the city to timesharing projects would eliminate residential dwelling units that would otherwise be available for long-term residential use, thereby further exacerbating the lack of long-term available housing in the City. To Staff's knowledge, Pacaso has facilitated the purchase of and management of at least one (1) single family home and currently advertising three (3) homes for one -eighth purchase within the City of Palm Desert. No other Pacaso type entities are known to have ownership of homes within the City. Discussion Staff has studied the timeshare ordinance amendment and its intended regulations including a consultation with the Short -Term Rental (STR) subcommittee to discuss the proposed amendment and the Pacaso type business formations. The Pacaso's are not regulated by the Short -Term Rental Ordinance of the city since the business operations do not allow short term rentals as part of their structure. In addition, the subcommittee discussed the City's intent to regulate arrangements of multiple parties and its direct impact on the housing stock. In the formation of this ordinance, it is not the City's intent to regulate arrangements whereby multiple parties join in directly purchasing full ownership of an accommodation and thereafter agree upon arrangements for their shared use. For example, the city is not regulating ownership between family or friends who chose to purchase a ,property, form an LLC, and the manage the rental or upkeep through a management company so long as a fractional ownership structure is not formed. 12-434 April 28, 2022 —Staff Report Case No. ZOA 22-0001 Time -Share Uses - Pacaso Page 3 of 4 The proposed ordinance amendment to Section 25.34.060 (Time -Share Project) includes a more robust definition, to refer to current California law, and to provide a broader scope to include Pacaso types of business formations. In addition, it includes a section for violations, enforcement, and civil penalties to regulate such proposed business operations. It should be noted that the ordinance in this staff report differs from the Planning Commission's recommendation, Resolution No. 2805 which was revised to provide further clarifications on the intent of the ordinance as stated in the discussion above. General Plan The General Plan promotes goals and policies to protect and enhance community value in neighborhoods and its surroundings. Land Use and Community Character Policy 1.1 (Scale of development) promotes the City's corridors to use design techniques to a moderate height and use and ensure compatible fit with surrounding development. Therefore, the proposed amendment to the timeshare ordinance supports the City's goal in meeting the intent of the General Plan. Public Input Public noticing was conducted in accordance with State law. A public hearing notice was published on February 11, 2022, in The Desert Sun. The public hearing was opened on February 11, 2022, continued to March 24, 2022, and further continued to April 28, 2022. Staff has received a half dozen phone calls from the public concerning Pacaso co - ownership within their neighborhoods and inquiring if Short-term Rental Ordinances would apply. On March 10, staff received a phone call from Marcus Schwab, a resident that lives on Bel Air Road expressing concern of business formations functioning like timeshares that affects the character of his neighborhood. Not knowing who their neighbors are was expressed as a real concern. Mr. Schwab identified the property as 72870 Bel Air Rd which is being advertised on eXp Realty's website, a home selling in his neighborhood that he says is priced high which can result in pricing out qualified homebuyers. Other residents have expressed concerned of properties on 72694 Skyward Way and 72985 Somera Rd being advertised as timeshare ownership. These particular properties are listed in the Pacaso website as well as other realtor websites including Trulia, Zillow, Redfin, etc. The properties mentioned above have all been confirmed to be associated with Pacaso. However, since the ownership of these properties includes eight owners (1/8 ownership), it is difficult to track if any property has been sold full or partial ownership. Environmental Review The adoption of this ordinance has been analyzed for compliance with the California Environmental Quality Act (CEQA) pursuant to CEQA (Pub. Resources Code, § 21000 et seq.) ("CEQA") and the State CEQA Guidelines (Cal. Code Regs., tit. 14, § 15000 et seq.) it has been determined that the amendments do not meet the definition of a project because the amendments do not have the potential to cause either a direct physical change or a 12-435 April 28, 2022 —Staff Report Case No. ZOA 22-0001 Time -Share Uses - Pacaso Page 4 of 4 reasonably foreseeable indirect physical change in the environment. The proposed amendments are consistent with the General Plan goals of ensuring the quality of life for the community. Because the amendment is not a project under CEQA, they are not subject to further environmental review. Findings of Approval Findings can be made in support of the amendment and in accordance with the City's Municipal Code. Findings in support of this ZOA are contained in the Ordinance No. attached to this staff report. LEGAL REVIEW DEPT. REVIEW FINANCIAL REVIEW ASSISTANT CITY MANAGER Ma. f�&v Abvawerz N/A .Andy Firestine Robert W. Hargreaves Martin Alvarez, Dir. of Veronica Chavez Andy Firestine City Attorney Development Services Director of Finance Assistant City Manager City Manager L. Todd Hileman: L. -rock{ Wtevuavv ATTACHMENTS: 1. Draft City Council Ordinance No. 2. Exhibit A —Ordinance 3. Planning Commission Resolution No. 2805 4. Planning Commission Draft Minutes of January 18, 2022 5. City Council Public Hearing Notice 6. City Council Memo dated November 18, 2021 7. Public Comments 12-436 ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING PALM DESERT MUNICIPAL CODE, CHAPTER 25, MODIFYING SECTION 25.34.60 REGARDING TIME-SHARE PROJECTS CASE NO: ZOA 22-0001 WHEREAS, the Planning Commission of the City of Palm Desert, California, did on the 18th day of January 2022, hold a duly noticed public hearing to consider the request by the City of Palm Desert for approval of the above -noted, and adopted Resolution No. 2805, recommending that the City Council adopt the Zoning Ordinance Amendment (ZOA) for said projects regulating the time-share projects; and WHEREAS, the Zoning Ordinance Amendment (ZOA) modifies the Palm Desert Municipal Code (PDMC) Section 25.34.60 (Time -Share Projects) and implements a requirement for time share uses; and WHEREAS, the City Council of the City of Palm Desert, did on the 24th day of February 2022, hold a duly noticed public hearing to, the City Council opened the public hearing and approved staff's request to continue to the 24th of March 2022. On the 24th of March 2022, another continuance of the public hearing was granted to the 28th of April 2022. On the 28th of April 222, the City Council considered the request by the City of Palm Desert for approval of a ZOA determined that the time-share process is consistent with the City's General Plan, and WHEREAS, at said public hearing, upon hearing and considering all testimony and arguments, if any, of all interested persons desiring to be heard, said City Council did find the following facts and reasons exist to approve said request: SECTION 1. Adoption of Recitals. The City Council hereby adopts the foregoing recitals as its findings in support of the following regulations and further finds that the following regulations are beneficial and appropriate to protect the health, safety, and welfare of the residents and businesses of Palm Desert within the City limits. A. The City of Palm Desert, California ("City") is a municipal corporation, duly organized under the constitution and laws of the State of California; and B. The Planning and Zoning Law authorizes cities to establish by ordinance the regulations for land use and development. SECTION 2. Amendment. The City Council of the City of Palm Desert, California, approve, and adopt the PDMC amendment to Section 25.34.60 (Time -Share Projects) as shown in Exhibit A, which is attached hereto and incorporated herewith. SECTION 3. Severability. If any section, subsection, subdivision, paragraph, sentence, clause, or phrase in this ordinance or any part thereof is for any reason held to be unconstitutional or invalid or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this ordinance or any 12-437 ORDINANCE NO. part thereof. The City Council hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause, or phrase thereof irrespective of the fact that one (1) or more subsections, subdivisions, paragraphs, sentences, clauses, or phrases be declared unconstitutional, invalid, or ineffective. SECTION 4. Publication. The City Clerk of the City of Palm Desert, California, is hereby directed to publish this ordinance in The Desert Sun, a newspaper of general circulation, published and circulated in the City of Palm Desert, California, and shall be in full force and in effect thirty (30) days after its adoption. PASSED, APPROVED, AND ADOPTED by the City Council of the City of Palm Desert, California, at its regular meeting held on the 28th day of April 2022, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: ATTEST: ANTHONY J. MEJIA, CITY CLERK CITY OF PALM DESERT, CALIFORNIA 2 JAN C. HARNIK, MAYOR 12-438 "EXHIBIT A" ZONING ORDINANCE AMENDMENT SECTION 1. Amendment to Palm Desert Municipal Code. Palm Desert Municipal Code section 25.34.060 is hereby amended as follows: "25.34.060 Time -Share Proje Uses A. Purpose. The purpose of the special use regulations for time-share pre}ests uses is to establish special location and site development standards. B. Definitions. 1. "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.160. 2. "Developer" means person, who at any point in time, owns, or has an option or contract to acquire eleven or more time-share interests for purposes of sale in the ordinary course of business if the time-share interests were acquired or are to be acquired from the original recipient of a public report for the time-share plan, or from a person who succeeded to the interest of the original recipient in eleven or more time-share interests in a time-share plan. 3. "Owner" means owner of a time-share interest. 4. "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. 5. "Time-share instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a time-share plan and includes the declaration dedicating accommodations to the time-share plan. 6. "Time-share interest" means and includes either of the following: (i) A "time-share estate," which is the right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, coupled with a freehold estate or an estate for years with a future interest in a time-share property or a specified portion thereof. (ii) A "time-share use," which is the right to exclusively occupy a time-share property for a period of time on a recurring basis asis pursuant to a time-share plan, which right is neither coupled with a freehold interest, nor coupled with an estate for years with a future interest, in a time-share property. 7. "Time-share plan" means any arrangement, plan, scheme, or similar device, whether by membership agreement, sale, lease, deed, license, right to use agreement or 12-439 by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive nears. "Timeshare Plan" does not include arrangements whereby multiple parties join in directly purchasing full ownership of an accommodation and thereafter agree upon arrangements for their shared use. 8. "Time-share property" means one or more accommodations subject to the same time-share instrument, together with any other property or rights to property appurtenant to those accommodations. 9._ "Time-share use" means the use of one or more accommodations or any part thereof, as a time-share property pursuant to a time-share plan. C. Permitted zones. A time-share prejest use shall be permitted only in a planned residential zone, a general commercial zone, or a planned commercial resort zone. Any time- share prejeet use shall be developed in conjunction with a resort hotel having 500 or more rooms and an 18-hole golf course of not less than 6,400 yards, and then only if and when a conditional use permit has been obtained from the Commission in accordance with Section 25.72.050 (Conditional Use Permit) of this code. D. Application submittal requirements. In addition to standard application submittal requirements, an applicant for a conditional use permit approval involving a time- share prejest use shall submit in the application at least the following information- 1 . Copies of documents and information required pursuant to Article 12.2 of the California dmiRistrativio Code of Regulations, Sections :2219 2809.1, 2809.2, and 2809.3 wherein the requirements for a " I + 1, properly completed" application for a final subdivision public report are enumerated, excluding those documents so enumerated which are subject to the approval of the City and therefore otherwise available to the City. In the event such documents and information have not been filed with the California Department of Real Estate at the time an applicant applies for a conditional use permit, the applicant shall furnish such documents and information upon the submission of such documents and information to the Department of Real Estate, but in no event later than the issuance of the conditional use permit. 2. In the event an existing condominium project is proposed to be converted to a whole or partial time-share prejest use, a verified description or statement of the number and percentage of the current condominium owners desiring or consenting to the proposed conversion of some or all of the units to a time-share basis shall be submitted. Also, in such instance there shall be submitted to the Commission prior to or during the hearing process, a verified statement of the number and percentage of owners who have received notification, either personally or by receipted certified US mail. 3. In the case of a new mixed project (i.e., time-sharing condominium/rental), a description of the means proposed to be employed to disclose the number and location of all time-share is accommodations within the prejeet time-share use shall be submitted. 12-440 4. Description of time periods, types of u4its accommodations, and which nits accommodations are in the time-share program (if less than all), and the length of time each of the flits accommodations are committed to the time-share pregraR; plan shall be submitted. D. E. Requirements. Notwithstanding any other provisions of this chapter, the following requirements must be met by any time-share ideyelepmeRt use in any permitted zone: 1. The time-share prejest use must be composed of "time-share estates" interests as defined in Galifnrni.a B sin000 al l d Drnf000inno Ge de Contipn 11 Q02 5 2. All maintenance agreements and conditions, covenants, and restrictions must be approved by the City. 3. The minimum time-share 4se interest exclusive occupancy period shall be for one week (seven days). 4. PFejeGt spense Developer of the time-share plan shall post a maintenance bond, letter of credit, or cash deposit to ensure the maintenance of any landscaping along the perimeter of the prGjest time-share use abutting any public right-of-way. The amount of the bond, letter of credit, or cash deposit shall be equal to 25 percent of the annual budget of the time-share use owner's association having the duty to maintain the exterior of the time- share property prejest which is for such landscaping expenses. The bond, letter of credit, or cash deposit shall run to the City and shall remain in place for life of the prejest time-share plan. 5. With respect to a time-share prejest use, all interests created therein shall be subject to a public facilities impact mitigation fee of $150 per week share. With respect to each week share in a time-share pr-sjest-use, a public facilities impact fee payable under this section shall be paid on the first day of the first calendar month following the sale and conveyance of such week share by the spansor developer of a time-share project plan to an individual consumer (excluding bulk sales from one epenser developer to another, in which case the successor spense developer shall have the obligation to pay the public facilities impact fee described herein upon the sale and conveyance of a week share to a consumer). On the first day of each calendar month, or less frequently if required by the Council, a speeser developer of a time-share prejest plan shall also submit a written report to the City which specifies the number of week shares in the time-share ^,)jest plan which have been sold and conveyed in the preceding calendar month. F. Minimum number of units. The minimum number of units in a time-share project shall be 50. G. Development standards. Time-share projects uses shall be designed to conform to the standards for hotel developments in the event the time-share prejest use is located in a planned commercial resort or general commercial zone. The time-share prejest use must comply with all development standards of the zone in which it is located. With respect to time-share prejeets uses developed within a planned residential zone, the density of the time-share PFGjaet uses shall not exceed the density permitted in such zone for 12-441 residential projects; with respect to time-share PrGj8Gt.S uses developed in a general commercial zone or a planned commercial resort zone, the density of the time-share pr-ejest uses shall not exceed the density permitted in such zone for general commercial or planned commercial projects. In determining the density of a time-share pFsject use, upon the request of an applicant, the Director shall have the authority to transfer the density permitted in other similarly zoned property owned by an applicant to the time-share npFejeGt use. H. Violations, Enforcement and Civil Penalties 1. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.12 (General Penalty). 2. Any responsible person, including by not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this section is subiect to administrative fines as set forth in Chapter 8.81 (Administrative Citations). Any person issued an administrative citation pursuant to this section shall for each separate violation be subject to: (1) an administrative fine in an amount not to exceed one thousand dollars ($1,000) for the first citation; (2) an administrative fine in an amount not to exceed three thousand dollars ($3,000) for a second citation issued for the same offense within a twelve-month period of the date of the first offense; and (3) a fine in an amount not to exceed five thousand dollars ($5,000). 3. Time-share use, and/or advertisement for time-share use, of an accommodation in violation of this section is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance and may be abated pursuant to Chapter 8.20 (Public Nuisances), Chapter 9.24 (Noise Control), and Chapter 9.25 (Multiple Responses to Loud or Unruly Parties, Gatherings or Other Similar Events.) 4. Each day the violation of this chapter occurs shall constitute a separate offense. 5. The remedies under this section are cumulative and in addition to any and all other remedies available at law and equity." 12-442 PLANNING COMMISSION RESOLUTION NO.2805 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF PALM DESERT, CALIFORNIA, RECOMMENDING APPROVAL OF A ZONING ORDINANCE AMENDMENT TO MODIFY PALM DESERT MUNICIPAL CODE SECTION 25.34.60 REGARDING TIMESHARE PROJECTS CASE NO: ZOA 22-000.1 WHEREAS, the Planning Commission of the. City of Palm Desert, California, did on the 181h day of January 2022, hold a duly noticed public hearing to consider the request by the City of Palm Desert for approval of the above -noted; and WHEREAS, the Zoning Ordinance Amendment (ZOA) modifies the Palm Desert Municipal Code (PDMC) Section 25.34.60 (Timeshare Projects) to update the ordinance to clarify definitions and add enforcement options; and WHEREAS, the Planning Commission of the City of Palm Desert, in reviewing all the facts and any testimony given, adopts the following as its Findings in recommended approval of the ZOA to the City Council: SECTION 1. Findings. The Planning Commission of the City of Palm Desert hereby finds that: A. The City of Palm Desert, California ("City") is a municipal corporation, duly organized under the constitution and laws of the State of California; and B. The Planning and Zoning Law authorizes cities to establish by ordinance the regulations for land use and development, SECTION 2. Amendment. The Planning Commission of the City of Palm Desert recommends that the City Council of the City of Palm Desert, California, approve and adopt the PDMC amendment to Section 25.34.60 (Timeshare Projects) as shown in Exhibit A, which is attached hereto and incorporated herewith. SECTION 3. Severability. If any section, subsection, subdivision, paragraph, sentence, clause, or phrase in this ordinance or any part thereof is for any reason held to be unconstitutional or invalid or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this ordinance or any part thereof. The Planning Commission hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause, or phrase thereof irrespective of the fact that one (1) or more subsections, subdivisions, paragraphs, sentences, clauses, or phrases be declared unconstitutional, invalid, or ineffective. SECTION 4. CEQA. The City Council finds that adoption of this ordinance is not a "project," as defined in the California Environmental Quality Act (CEQA) because it does not have a potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and concerns general policy and procedure making. 12-443 PLANNING COMMISSION RESOLUTION NO. 2805 PASSED, APPROVED, AND ADOPTED by the Planning Commission of the City of Palm Desert, California, at its regular meeting held on the 18th day of January 2022, by the following vote, to wit: AYES: DE LUNA, GREENWOOD, GREGORY, HOLT, and PRADETTO NOES: NONE ABSENT: NONE ABSTAIN: NONE J"EENWQODTCHAIR ATTEST: MARTIN ALVAREZ, SECRETARY PALM DESERT PLANNING COMMISSION 1 12-444 r- CITY OF PALM DESERT PALM DESERT PLANNING COMMISSION MINUTES TUESDAY, JANUARY 18, 2022 — 6:00 P.M. ZOOM VIRTUAL MEETING I. CALL TO ORDER Chair John Greenwood called the meeting to order at 6:01 p.m. II. ROLL CALL Present: Chair John Greenwood Vice -Chair Nancy DeLuna Commissioner Ron Gregory Commissioner Lindsay Holt Commissioner Joseph Pradetto Also Present: Craig Hayes, Assistant City Attorney Martin Alvarez, Director of Development Services Eric Ceja, Deputy Director of Development Services/Economic Development Rosie Lua, Principal Planner Jessica Gonzales, Senior Management Analyst Monica O'Reilly, Management Specialist II III. PLEDGE OF ALLEGIANCE Vice -Chair Nancy DeLuna led the Pledge of Allegiance. IV. SUMMARY OF COUNCIL ACTIONS Director of Development Services Martin Alvarez summarized pertinent City Council actions from the meeting of January 13, 2022. V. ORAL COMMUNICATIONS None 12-445 MINUTES PALM DESERT PLANNING COMMISSION JANUARY 18, 2021 VI. CONSENT CALENDAR A. MINUTES of the Regular Planning Commission meeting of December 21, 2021. Rec: Approve as presented. Upon a motion by Vice -Chair DeLuna, seconded by Commissioner Holt, and a 5-0 vote of the Planning Commission, the Consent Calendar was approved as presented (AYES: DeLuna, Greenwood, Gregory, Holt, and Pradetto; NOES: None). VII. CONSENT ITEMS HELD OVER None Vill. NEW BUSINESS None IX. CONTINUED BUSINESS None X. PUBLIC HEARINGS A. REQUEST FOR CONSIDERATION to adopt a Notice of Exemption in accordance with the California Environmental Quality Act (CEQA) and approval of a Precise Plan (PP) and a Conditional Use Permit (CUP) to demolish the former Pizza Hut building and construct a new 7,500-square-foot retail and restaurant building located at 72310 Highway 111. Case No. PP/CUP 20-0002 (Nadel Architects, Inc, Los Angeles, California, Applicant). Note, the staff report(s) and Zoom video of the meeting are available on the City's website. Click on the following link to access: www.planning-corn mission - information -center. Vice -Chair DeLuna disclosed that she works for a company that is involved with a property in the Housing Element; therefore, she recused herself. Ms. Nicole Criste, Terra Nova Planning, the City's consultant, Palm Desert, California, presented a PowerPoint presentation regarding the Housing Element update. She recommended that the Planning Commission continue this item to February 1, 2022, to allow staff to work with the Department of Housing and Community Development to finalize details of the Housing Element. She also recommended opening the public hearing, taking public testimony, and leaving the public hearing open to the February 1 meeting. Chair Greenwood declared the public hearing open and invited public testimony FAVORING or OPPOSING this matter. 2 12-446 MINUTES PALM DESERT PLANNING COMMISSION JANUARY 18, 2021 Ms. Liliana Figueroa and Mr. Mark Stein, with CPMC Realty, Palm Desert, California, voiced their concern with the designation for affordable housing units on their client's site. Commissioner Pradetto moved to, by Minute Motion, leaving the public hearing open and continuing Case No. GPA 21-0002 to February 1, 2022. The motion was seconded by Commissioner Gregory and carried by a 4-0 vote (AYES: Greenwood, Gregory, Holt, and Pradetto; NOES: None; ABSENT: DeLuna. B. REQUEST FOR CONSIDERATION of a recommendation to the City Council for approval of a Zoning Ordinance Amendment to modify Palm Desert Municipal Code Section 25.34,060 regarding Timeshare Projects. Case No. ZOA 22-0001 (City of Palm Desert, Palm Desert California, Applicant). Principle Planner Rosie Lua gave a PowerPoint presentation reviewing the staff report in detail and recommended approval to the City Council. At this point, staff and the City Attorney responded to questions asked by the Planning Commission. Chair Greenwood declared the public hearing open and invited public testimony FAVORING or OPPOSING this matter. With no testimony offered, Chair Greenwood declared the public hearing closed. The Planning Commission concurred with the direction that the City is taking regarding timeshare projects. Commissioner Pradetto moved to waive further reading and adopt Planning Commission Resolution No. 2805, recommending approval to the City Council for Case No. ZOA 22-0001. The motion was seconded by Vice -Chair DeLuna and carried by a 5-0 vote (AYES: DeLuna, Greenwood, Gregory, Holt, and Pradetto; NOES: None). XI. MISCELLANEOUS None XII. COMMITTEE MEETING UPDATES A. CULTURAL ARTS COMMITTEE Commissioner Holt mentioned that she shared the San Pablo Corridor Art Plan and the details for the meeting scheduled on Monday, January 24 at 11:30 a.m. to discuss the plan. 3 12-44 7 MINUTES PALM DESERT PLANNING COMMISSION JANUARY 18, 2021 B. PARKS & RECREATION COMMISSION Mr. Alvarez stated that the Planning staff presented a concept plan for a park on Gerald Ford Drive and near Interstate 10. Staff hoped that the City would develop the park in two to three years. Chair Greenwood asked for the status of the Portola Avenue interchange. Mr. Alvarez responded that currently, the project is not feasible due to needing additional funding. Staff would discuss funding during the budget process and the City Council. XIII. REPORTS AND REMARKS None XIV. ADJOURNMENT With the Planning Commission concurrence, Chair Greenwood adjourned the meeting at 7:19 p.m. ATTEST: MARTIN ALVAREZ, SECRETARY HN REEN O D, CH 1 MONK 'REILLY, REC DING SECRETARY CI 12-448 CITY OF P 0 1 M 0ESFRT 73-510 FROD WARING DmvR PALM DRs RRT, CAMPORNIA 92z60-2579 M. 760 346—o6zi inf.0d1yofpa1mdcsc g CITY OF PALM DESERT LEGAL NOTICE NOTICE OF A PUBLIC HEARING BEFORE THE CITY COUNCIL OF THE CITY OF PALM DESERT TO CONSIDER APPROVAL FOR A ZONING ORDINANCE AMENDMENT TO MODIFY THE PALM DESERT MUNICIPAL CODE SECTION 25.34.060 (TIME-SHARE PROJECTS) The City of Palm Desert City Council (City), in its capacity as the Lead Agency, finds that this Ordinance 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, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly; it prevents changes in the environment pending the completion of the contemplated study of impacts. Project Location/Description: Project Location: City wide Project Description: Zoning Ordinance Amendment to update the Time Share Project ordinance (Chapter 25.34.60) to consider a regulatory response to the Pacaso type businesses related to "co -ownership" shares in residential properties operating within the City. Recommendation: City Council to approve the first reading of the Time -Share uses and its regulations and pass to second reading in accordance to CEQA Guidelines. Public Hearing: The public hearing will be held before the City Council on February 24, 2022, at4:00 p.m. via Zoom. The hearing will be conducted in accordance with the City's emergency protocols for social distancing. Options for remote participation will be listed on the Posted Agenda for the meeting at: https://www.cityofpalmdesert.org/our-city/mayor-and-city-council- /city -council -meeting -information -center. Comment Period: The public comment period for this project is from February 14, 2022 to February 24, 2022. Public Review: The plans and related documents are available for public review Monday through Thursday from 8:00 a.m. to 5:00 p.m. by contacting the project planner, Rosie Lua, Principal Planner. Please submit written comments to the Planning/Land Development Division. If any group challenges the action in court, issues raised may be limited to only those issues raised at the public hearing described in this notice or in written correspondence at, or prior to the City Council hearing. All comments and any questions should be directed to: Rosie Lua, Principal Planner City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 (760) 346-0611, Extension 480 riva@cityofpalmdesert.org PUBLISH: DESERT SUN NIAMH M. ORTEGA, DEPUTY CITY CLERK FEBRUARY 10, 2022 PALM DESERT CITY COUNCIL 12-449 STAFF REPORT CITY OF PALM DESERT MEETING DATE: November 18, 2021 PREPARED BY: Robert Hargreaves, City Attorney, Best Best & Krieger LLP REQUEST: Update on Timeshare Ordinance Recommendation By Minute Motion, request the Planning Commission to review of the timeshare ordinance and provide City Council with any recommended amendments. Background Analysis INTRODUCTION Recently, the City has become aware that a new business model, "Pacaso", that features "co -ownership" shares in residential properties, has begun operating within the City. Given the nature of its use of residential property, it is my opinion that it is a timeshare use, as defined by California law and regulated by Section 25.34.060 of the Municipal Code. The Palm Desert timeshare ordinance (Municipal Code Section 25.34.060) has not been updated since 2013. As a preliminary matter in considering regulatory responses to the Pacaso-type businesses, we are recommending that Section 25.34.060 be updated to provide a more robust definition, to refer to current California law, and to provide a broader scope of potential regulation, should the city decide to pursue it. DISCUSSION Pacaso is a corporation that sells "co -ownership" shares in residential property. The company started by purchasing homes in tourist destinations in California, though they are rapidly expanding throughout the United States and internationally. Pacaso's business model is as follows: Pacaso will purchase or enter into a contract to purchase single family homes, then markets "co -ownership" interests in the homes to up to eight individuals. Pacaso then forms a limited liability company ("LLC"), which owns title to the residential home. The "co -owners" each purchase a one -eighth share, and are entitled to use the residential property for a certain number of days per year according to their share of ownership in the LLC. The one -eighth interest entitles the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special 12-450 November 18, 2021 - Staff Report Update of Timeshare Ordinance Page 2 of 4 day" (Fourth of July, Thanksgiving, Christmas, etc.). The stays are reserved on an app, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, Pacaso continues to manage the homes, including providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners. It is our understanding that there is currently at least one property in Palm Desert that is being marketed by Pacaso. Section 11212(z) of the Business and Profession Code defines the following significant terms: "Time-share plan" means any arrangement, plan, scheme, or similar device, other than an exchange program, whether by membership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby a purchaser, in exchange for consideration, receives ownership rights in or the right to use accommodations for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A time-share plan may be either of the following: (1) A "single site time-share plan" that is the right to use accommodations at a single time-share property. (2) A "multisite time-share plan" that includes either of the following: (A) A "specific timeshare interest" that is the right to use accommodations at a specific time-share property together with use rights in accommodations at one or more other component sites created by or acquired through the time-share plan's reservation system. (B) A "nonspecific time-share interest" that is the right to use accommodations at more than one component site created by or acquired through the time-share plan's reservation system, but including no specific right to use any particular accommodations. It is clear that the Pacaso model fits within that definition of "time-share plan" as co -owners receive ownership rights to use a property for less than a year on a recurring basis. Pacaso is not currently regulated by the State, as it does not meet the State's ten -share threshold for regulation. Palm Desert Section 25.34.060 does not dwell on the definition of "time-share" and provides: "The time-share project must be composed of "time-share estates" as defined in California Business and Professions Code Section 11003.5 [now section 1121 ]." Nor does the ordinance provide any specific enforcement provisions. 12-451 November 18, 2021 - Staff Report Update of Timeshare Ordinance Page 3 of 4 In the attached draft ordinance, the definition of time-share is more elaborate, and is consistent with current California statutes. It also provides enforcement options against persons that own, manage, or market illegal time-shares. At this point, the draft ordinance is before the council for discussion and direction. If the council directs that the update proceed, the ordinance will be put before the planning commission for consideration and recommendation, before it is brought back to the city council for adoption. 12-452 November 18, 2021 - Staff Report Update of Timeshare Ordinance Page 4 of 4 Fiscal Analysis There is no direct fiscal impact associated with this item. LEGAL REVIEW DEPT. REVIEW FINANCIAL REVIEW ASSISTANT CITY MANAGER RWH N/A N/A Andy Firestine Robert W. Hargreaves Janet M. Moore Andy Firestine City Attorney Director of Finance Assistant City Manager City Manager L. Todd Hileman: L-. T00I0( f4teKQ Ilk, ATTACHMENTS: , Draft ordinance 12-453 ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING PALM DESERT MUNICIPAL CODE SECTION 25.34.060 REGARDING TIME-SHARE PROJECTS THE CITY COUNCIL OF THE CITY OF PALM DESERT DOES ORDAIN AS FOLLOWS: SECTION 1. Amendment to Palm Desert Municipal Code. Palm Desert Municipal Code section 25.34.060 is hereby amended as follows: "25.34.060 Time -Share grams -Uses A. Purpose. The purpose of the special use regulations for time-share projects uses is to establish special location and site development standards. B. Definitions. 1. "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.160. 2. "Developer" means person, who at any point in time, owns, or has an option or contract to acquire eleven or more time-share interests for purposes of sale in the ordinary course of business if the time-share interests were acquired or are to be acquired from the original recipient of a public report for the time-share plan, or from a person who succeeded to the interest of the original recipient in eleven or more time-share interests in a time-share plan. 3. "Owner" means owner of a time-share interest. 4. "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. 5. "Time-share instrument" means one or more documents, by whatever name denominated, creating or governingthe operation of a time-share plan and includes the declaration dedicating accommodations to the time-share plan. 6. "Time-share interest" means and includes either of the following: (i) A "time-share estate," which is the right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, coupled with a freehold estate or an estate for years with a future interest in a time-share property o�pecified portion thereof. 12-454 (ii) A "time-share use-" which is the right to exclusive) o�y a time-share property for a period of time on a recurring basis pursuant to a time-share plan which right is neither coupled with a freehold interest, nor coupled with an estate for years with a future interest in a time-share property_ 7. "Time-share plan" means any arrangement, plan, scheme, or similar device whether by membership agreement, sale, lease, deed, license right to use agreement or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during pLny given year, on a recurring basis for more than one year, but not necessarily for consecutive years. 8. "Time-share property" means one or more accommodations subject to the same time-share instrument, together with an other or rights to property appurtenant to those accommodations. 9. "Time-share use" means the use of one or more accommodations or any part thereof, as a time-share property pursuant to a time-share plan. C. Permitted zones. A time-share pr-E feet use shall be permitted only in a planned residential zone, a general commercial zone, or a planned commercial resort zone. Any time- share prejeet use shall be developed in conjunction with a resort hotel having 500 or more rooms and an 18-hole golf course of not less than 6,400 yards, and then only if and when a conditional use permit has been obtained from the Commission in accordance with Section 25.72.050 (Conditional Use Permit) of this code. Q D. Application submittal requirements. In addition to standard application submittal requirements, an applicant for a conditional use permit approval involving a time-share pr-ejeet use shall submit in the application at least the following information: 1. Copies of documents and information required pursuant to Article 12.2 of the California A a, inistfat:..o Code of Regulations, Sections MO 2809.1, 2809.2, and 2809.3 wherein the requirements for a ""'•�'� properly completed" application for a final subdivision public report are enumerated, excluding those documents so enumerated which are subject to the approval of the City and therefore otherwise available to the City. In the event such documents and information have not been filed with the California Department of Real Estate at the time an applicant applies for a conditional use permit, the applicant shall furnish such documents and information upon the submission of such documents and information to the Department of Real Estate, but in no event later than the issuance of the conditional use permit. 2. In the event an existing condominium project is proposed to be converted to a whole or partial time-share pr-ejeet use, a verified description or statement of the number and percentage of the current condominium owners desiring or consenting to the proposed conversion of some or all of the units to a time-share basis shall be submitted. Also, in such instance there shall be submitted to the Commission prior to or during the hearing process, a verified statement of the number and percentage of owners who have received notification, either personally or by receipted certified US mail. 12-455 3. In the case of a new mixed project (i.e., time-sharing condominium/rental)-, a description of the means proposed to be employed to disclose the number and location of all time-share ;its accommodations within the prejeet time-share use shall be submitted. 4. Description of time periods, types of }xis accommodations, and which Uffits accommodations are in the time-share program (if less than all), and the length of time each of the up&& accommodations are committed to the time-share pr-egfafn plan shall be submitted. D. E. Requirements. Notwithstanding any other provisions of this chapter, the following requirements must be met by any time-share develepment use in any permitted zone: 1. The time-share prejeet use must be composed of --`time-share estates" interests -as defined in —And Pr-efessiens Cede Seefien 11003.5. 2. All maintenance agreements and conditions, covenants, and restrictions must be approved by the City. 3. The minimum time-share we interest exclusive occupancyperiod shall be for one week (seven days). 4. grejeet spenser Developer of the time-share plan shall post a maintenance bond, letter of credit, or cash deposit to ensure the maintenance of any landscaping along the perimeter of the prejeet time-share use abutting any public right-of-way. The amount of the bond, letter of credit, or cash deposit shall be equal to 25 percent of the annual budget of the time-share use owner's association having the duty to maintain the exterior of the time-share property preje4 which is for such landscaping expenses. The bond, letter of credit, or cash deposit shall run to the City and shall remain in place for life of the prejee time-share plan. 5. With respect to a time-share prejeet use, all interests created therein shall be subject to a public facilities impact mitigation fee of $150 per week share. With respect to each week share in a time-share prejeEt-use, a public facilities impact fee payable under this section shall be paid on the first day of the first calendar month following the sale and conveyance of such week share by the sponsor developer of a time-share prejee plan to an individual consumer (excluding bulk sales from one speaser developer to another, in which case the successor spexser developer shall have the obligation to pay the public facilities impact fee described herein upon the sale and conveyance of a week share to a consumer). On the first day of each calendar month, or less frequently if required by the Council, a sponsor- developer of a time- share prejeet plan shall also submit a written report to the City which specifies the number of week shares in the time-share prejeet plan which have been sold and conveyed in the preceding calendar month. EL F. Minimum number of units. The minimum number of units in a time-share project shall be 50. li G. Development standards. Time-share prejeets uses shall be designed to conform to the standards for hotel developments in the event the time-share prejeet use is located in a planned commercial resort or general commercial zone. The time-share prejeet use must comply with all development standards of the zone in which it is located. With respect to time-share 12-456 pr-ejests uses developed within a planned residential zone, the density of the time-share prejest uses shall not exceed the density permitted in such zone for residential projects; with respect to time-share prejests uses developed in a general commercial zone or a planned commercial resort zone, the density of the time-share prejeet uses shall not exceed the density permitted in such zone for general commercial or planned commercial projects. In determining the density of a time-share pr-ejeet use, upon the request of an applicant, the Director shall have the authority to transfer the density permitted in other similarly zoned property owned by an applicant to the time-share prejest use. H. Violations, Enforcement and Civil Penalties 1. Any responsible person, including but not limited to an owner of a -time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this section is guil . of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chanter. Such violation shall be punishable pursuant to Chapter 1.12 (General Penalty) 2. Any responsible person, including by not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised or disseminated in any way and through sny medium, the availability for sale or use of an accommodation in violation of this section is subject to administrative fines as set forth in Chapter 8.81 (Administrative Citations). AM person issued an administrative citation pursuant to this section shall for each separate violation be subject to: (1) an administrative fine in an amount not to exceed one thousand dollars ($1,000) for the first citation; (2) an administrative fine in an amount not to exceed three thousand dollars ($3,000) for a second citation issued for the same offense within a twelve-month period of the date of the first offense; and (3) a fine in an amount not to exceed five thousand dollars ( 5,000). 3. Time-share use, and/or advertisement for time-share use, of an accommodation in violation of this section is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance and may be abated pursuant to Chapter 8.20 (Public Nuisances), Chapter 9.24 (Noise Control), and Chapter 9.25 (Multiple Responses to Loud or Unruly Parties, Gatherings or Other Similar Events.) 4. Each day the violation of this chapter occurs shall constitute a separate offense. 5. The remedies under this section are cumulative and in addition to any and all other remedies available at law and equity." SECTION 2. Severability. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this Ordinance, or any part thereof, is for any reason held to be unconstitutional, such decision shall not affect the validity of the remaining portion of this Ordinance or any part thereof. The City Council hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause or phrase thereof, irrespective of the fact that any one or more section, subsection, subdivision, paragraph, sentence, clause or phrase 12-457 be declared unconstitutional. If for any reason any portion of this Ordinance is found to be invalid by a court of competent jurisdiction, the balance of this Ordinance shall not be affected. SECTION 3. Certification and Publication. The City Clerk of the City of Palm Desert shall certify to the adoption of this Ordinance and cause publication to occur in a newspaper of general circulation and published and circulated in the City in a manner permitted under California Government Code Section 36933. SECTION 4. CEQA. The City Council finds that adoption of this Ordinance is not a "project," as defined in the California Environmental Quality Act because it does not have a potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and concerns general policy and procedure making. PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of the City of Palm Desert on the day of , 2021, by the following vote. AYES: NOES: ABSTAIN: ABSENT: Kathleen Kelly, Mayor ATTEST: Norma Alley, City Clerk APPROVED AS TO FORM: Robert Hargreaves, City Attorney 12-458 From: Kevin Swartz To: Rosie Lua Subject: FW: Latest Pacaso Report Date: Monday, April 11, 2022 7:56:25 AM FYI. Kevin Swartz Associate Planner Ph:760.346.0611 Direct:760.776.6485 kswartz@cityofpalmdesert.org From: Kathleen Kelly <kkelly@cityofpalmdesert.org> Sent: Friday, April 8, 2022 7:04 AM To: Robert Hargreaves <Robert.Hargreaves@bbklaw.com>; Kevin Swartz <kswartz@cityofpalmdesert.org> Subject: Latest Pacaso Report From Ellen Kane: Looks like Picasso bought the house at the corner of Somera and Alamo. If you google the address with Picasso after it is on their webpage and is showing as "available now". Think it just closed escrow because the for sale sign is down. That makes three Picasso's in my immediate area now (Bel Air, Skyward & Somera). Would really love neighbors not 1/8 ownerships (timeshares?) 12-459 73-5 Lo FRED WARING DRIVE PALM DESERT, CALIFORNIA 92260-2578 TEL: 760 346-o6z z info bcityofpalmdesert.org NOTICE OF CONTINUED PUBLIC HEARING NOTICE IS HEREBY GIVEN that the following Public Hearing was continued from the City Council meeting of March 24, 2022 to the City Council meeting of April 28, 2022: Ordinance No. 1378 to approve Zoning Ordinance Amendment 22-0001 to modify Palm Desert Municipal Code Section 25.34.060 renardina the Time - Share Projects (Continued from February 24, 2022) NOTICE IS FURTHER GIVEN that the City Council meeting of April 28, 2022 will take place virtually at 3:00 p.m. at cityofpaimdesert.org/zoom. All interested persons are invited to attend said Public Hearing. DATED this 28th day of March, 2022. NIAMH M. ORTE Deputy City Clerk �� Ilipil00M II(TLIIOIAI(I 12-460 STAFF REPORT CITY OF PALM DESERT MEETING DATE: May 12, 2022 PREPARED BY: Niamh Ortega, Deputy City Clerk APPROVING AUTHORITY: City Council REQUEST: Second reading and adoption of Ordinance No. 1378 to approve Zoning Ordinance Amendment 22-0001 to modify Palm Desert Municipal Code Section 25.34.060 regarding Time -Share Projects. Recommendation: Waive the second reading of the ordinance text in its entirety and read by title only; and adopt Ordinance No. 1378 entitled, "AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING PALM DESERT MUNICIPAL CODE, CHAPTER 25, MODIFYING SECTION 25.34.60 REGARDING TIME-SHARE PROJECTS, CASE NO. ZOA 22- 0001." Background/Analysis: On April 28, 2022, the City Council introduced Ordinance No. 1378 for first reading, as noted below: Motion by Councilmember Kelly, second by Councilmember Quintanilla, carried 3-1-1 (with Mayor Pro Tem Jonathan voting no and Councilmember Nestande recused), to waive further reading and pass to second reading Ordinance No. 1378 approving Zoning Ordinance Amendment 22-0001 to modify Palm Desert Municipal Code Section 25.34.60 regarding Time - Share Projects. This report provides for the City Council to waive further reading and adopt the ordinance. The ordinance shall be effective 30 days from adoption. Financial Impact: There is no direct financial impact associated with this item. Attachments: 1. Ordinance No. 1378 12-461 MEETING DATE �" :_ U ' Uu✓O� 3 CONTINUED TO fg PASSES TO 2ND READING ORDINANCE NO.1378 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING PALM DESERT MUNICIPAL CODE, CHAPTER 25, MODIFYING SECTION 25.34.60 REGARDING TIME-SHARE PROJECTS CASE NO: ZOA 22-0001 WHEREAS, the Planning Commission of the City of Palm Desert, California, did on the 18th day of January 2022, hold a duly noticed public hearing to consider the request by the City of Palm Desert for approval of the above -noted, and adopted Resolution No. 2805, recommending that the City Council adopt the Zoning Ordinance Amendment (ZOA) for said projects regulating the time-share projects; and WHEREAS, the Zoning Ordinance Amendment (ZOA) modifies the Palm Desert Municipal Code (PDMC) Section 25.34.60 (Time -Share Projects) and implements a requirement for time share uses; and WHEREAS, the City Council of the City of Palm Desert, did on the 24th day of February 2022, hold a duly noticed public hearing to, the City Council opened the public hearing and approved staff's request to continue to the 241h of March 2022. On the 24th of March 2022, another continuance of the public hearing was granted to the 28th of April 2022. On the 2$1h of April 222, the City Council considered the request by the City of Palm Desert for approval of a ZOA determined that the time-share process is consistent with the City's General Plan; and WHEREAS, at said public hearing, upon hearing and considering all testimony and arguments, if any, of all interested persons desiring to be heard, said City Council did find the following facts and reasons exist to approve said request: SECTION 1. Adoption of Recitals. The City Council hereby adopts the foregoing recitals as its findings in support of the following regulations and further finds that the following regulations are beneficial and appropriate to protect the health, safety, and welfare of the residents and businesses of Palm Desert within the City limits. A. The City of Palm Desert, California ("City") is a municipal corporation, duly organized under the constitution and laws of the State of California; and B. The Planning and Zoning Law authorizes cities to establish by ordinance the regulations for land use and development. SECTION 2. Amendment. The City Council of the City of Palm Desert, California, approve, and adopt the PDMC amendment to Section 25.34.60 (Time -Share Projects) as shown in Exhibit A, which is attached hereto and incorporated herewith. SECTION 3. Severability. If any section, subsection, subdivision, paragraph, sentence, clause, or phrase in this ordinance or any part thereof is for any reason held to be 12-462 1 ORDINANCE NO.1378 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING PALM DESERT MUNICIPAL CODE, CHAPTER 25, MODIFYING SECTION 25.34.60 REGARDING TIME-SHARE PROJECTS CASE NO: ZOA 22-0001 WHEREAS, the Planning Commission of the City of Palm Desert, California, did on the 18th day of January 2022, hold a duly noticed public hearing to consider the request by the City of Palm Desert for approval of the above -noted, and adopted Resolution No. 2805, recommending that the City Council adopt the Zoning Ordinance Amendment (ZOA) for said projects regulating the time-share projects; and WHEREAS, the Zoning Ordinance Amendment (ZOA) modifies the Palm Desert Municipal Code (PDMC) Section 25.34.60 (Time -Share Projects) and implements a requirement for time share uses; and WHEREAS, the City Council of the City of Palm Desert, did on the 24th day of February 2022, hold a duly noticed public hearing to, the City Council opened the public hearing and approved staffs request to continue to the 24th of March 2022. On the 24th of March 2022, another continuance of the public hearing was granted to the 28th of April 2022. On the 28th of April 222, the City Council considered the request by the City of Palm Desert for approval of a ZOA determined that the time-share process is consistent with the City's General Plan; and WHEREAS, at said public hearing, upon hearing and considering all testimony and arguments, if any, of all interested persons desiring to be heard, said City Council did find the following facts and reasons exist to approve said request, SECTION 1. Adoption of Recitals. The City Council hereby adopts the foregoing recitals as its findings in support of the following regulations and furtherfinds that the following regulations are beneficial and appropriate to protect the health, safety, and welfare of the residents and businesses of Palm Desert within the City limits. A. The City of Palm Desert, California ("City") is a municipal corporation, duly organized under the constitution and laws of the State of California; and B. The Planning and Zoning Law authorizes cities to establish by ordinance the regulations for land use and development. SECTION 2. Amendment. The City Council of the City of Palm Desert, California, approve, and adopt the PDMC amendment to Section 25.34.60 (Time -Share Projects) as shown in Exhibit A, which is attached hereto and incorporated herewith. SECTION 3. Severability. If any section, subsection, subdivision, paragraph, sentence, clause, or phrase in this ordinance or any part thereof is for any reason held to be 12-463 ORDINANCE NO. 1378 unconstitutional or invalid or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this ordinance or any part thereof. The City Council hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause, or phrase thereof irrespective of the fact that one (1) or more subsections, subdivisions, paragraphs, sentences, clauses, or phrases be declared unconstitutional, invalid, or ineffective. SECTION 4. Publication. The City Clerk of the City of Palm Desert, California, is hereby directed to publish this ordinance in The Desert Sun, a newspaper of general circulation, published and circulated in the City of Palm Desert, California, and shall be in full force and in effect thirty (30) days after its adoption. PASSED, APPROVED, AND ADOPTED by the City Council of the City of Palm Desert, California, at its regular meeting held on the 12th day of May 2022, by the following vote, to wit: 0 AYES: KELLY, QUINTANILLA AND HARNIK NOES: JONATHAN ABSENT: NESTANDE ABSTAIN: NONE J C. HA IK,'MAYOR 7-L- IONY J. M I CLERK' OF PALM ESERT CALIFORNIA 2 12-464 ORDINANCE NO. 1378 "EXHIBIT A" ' ZONING ORDINANCE AMENDMENT SECTION 1. Amendment to Palm Desert, Municipal Code. Palm Desert Municipal Code section 25.34.060 is hereby amended as follows: 25.34.060 Time -Share Uses A. Purpose. The purpose of the special use regulations for time-share uses is to establish special location and site development standards. B. Definitions. 1. "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.160. 2. "Developer" means person, who at any point in time, owns, or has an option or contract to acquire eleven or more time-share interests for purposes of sale in the ordinary course of business if the time-share interests were acquired or are to be acquired from the original recipient of a public report for the time-share plan, or from a person who succeeded to the interest of the original recipient in eleven or more time-share interests in a time-share plan. 3. "Owner" means owner of a time-share interest. 4. "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. 5. "Time-share instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a time-share plan and includes the declaration dedicating accommodations to the time-share plan. 6. "Time-share interest" means and includes either of the following: 0) A "time-share estate," which is the right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, coupled with a freehold estate or an estate for years with a future interest in a time-share property or a specified portion thereof. (ii) A "time-share use," which is the, right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, which right is neither coupled with a freehold interest, nor coupled with an estate for years with a future interest, in a time-share property. 7. "Time-share plan" means any arrangement, plan, scheme, or similar device, whether by membership agreement, sale, lease, deed, license, right to use agreement, or 'i..Jity of a t :. ... t . f. ., 12-465 ORDINANCE NO. 1378 by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. "Timeshare Plan" does not include arrangements whereby multiple parties join in directly purchasing full ownership of an accommodation and thereafter agree upon arrangements for their shared use. 8. "Time-share property" means one or more accommodations subject to the same time-share instrument, together with any other property or rights to property appurtenant to those accommodations. 9. "Time-share use" means the use of one or more accommodations or any part thereof, as a time-share property pursuant to a time-share plan. C. Permitted zones. A time-share use shall be permitted only in a planned residential zone, a general commercial zone, or a planned commercial resort zone. Any time- share use shall be developed in conjunction with a resort hotel having 500 or more rooms and an 18-hole golf course of not less than 6,400 yards, and then only if and when a conditional use permit has been obtained from the Commission in accordance with Section 25.72.050 (Conditional Use Permit) of this code. D. Application submittal requirements. In addition to standard application submittal requirements, an applicant for a conditional use permit approval involving a time- share use shall submit in the application at least the following information: 1. Copies of documents and information required pursuant to Article 12.2 of the California Code of Regulations, Sections 2809.1, 2809.2, and 2809.3 wherein the requirements for a "properly completed" application for a final subdivision public report are enumerated, excluding those documents so enumerated which are subject to the approval of the City and therefore otherwise available to the City. In the event such documents and information have not been filed with the California Department of Real Estate at the time an applicant applies for a conditional use permit, the applicant shall furnish such documents and information upon the submission of such documents and information to the Department of Real Estate, but in no event later than the issuance of the conditional use permit. 2. In the event an existing condominium project is proposed to be converted to a whole or partial time-share use, a verified description or statement of the number and percentage of the current condominium owners desiring or consenting to the proposed conversion of some or all of the units to a time-share basis shall be submitted. Also, in such instance there shall be submitted to the Commission prior to or during the hearing process, a verified statement of the number and percentage of owners who have received notification, either personally or by receipted certified US mail. 3. In the case of a new mixed project (i.e., time-sharing condominium/rental), a description of the means proposed to be employed to disclose the number and location of all time-share accommodations within the time-share use shall be submitted. ' ,..` a. :, j,.,G ',�. ..�....r�r tn.., �..A�� Document 12-466 ORDINANCE NO. 1378 4. Description of time periods, types of accommodations, and which accommodations are in the time-share program (if less than all), and the length of time each of the accommodations are committed to the time-share plan shall be submitted. E. Requirements. Notwithstanding any other provisions of this chapter, the following requirements must be met by any time-share use in any permitted zone: The time-share use must be composed of time-share interests. 2. All maintenance agreements and conditions, covenants, and restrictions must be approved by the City. 3. The minimum time-share interest exclusive occupancy period shall be for one week (seven days). 4. Developer of the time-share plan shall post a maintenance bond, letter of credit, or cash deposit to ensure the maintenance of any landscaping along the perimeter of the time-share use abutting any public right-of-way. The amount of the bond, letter of credit, or cash deposit shall be equal to 25 percent of the annual budget of the time-share use owner's association having the duty to maintain the exterior of the time-share property which is for such landscaping expenses. The bond, letter of credit, or cash deposit shall run to the City and shall remain in place for life of the time-share plan. 5. With respect to a time-share use, all interests created therein shall be subject to a public facilities impact mitigation fee of $150 per week share. With respect to each week share in a time-share use, a public facilities impact fee payable under this section shall be paid on the first day of the first calendar month following the sale and conveyance of such week share by the developer of a time-share plan to an individual consumer (excluding bulk sales from one developer to another, in which case the successor developer shall have the obligation to pay the public facilities impact fee described herein upon the sale and conveyance of a week share to a consumer). On the first day of each calendar month, or less frequently if required by the Council, a developer of a time-share plan shall also submit a written report to the City which specifies the number of week shares in the time-share plan which have been sold and conveyed in the preceding calendar month. F. Minimum number of units. The minimum number of units in a time-share project shall be 50. G. Development standards. Time-share uses shall be designed to conform to the standards for hotel developments in the event the time-share use is located in a planned commercial resort or general commercial zone. The time-share use must comply with all development standards of the zone in which it is located. With respect to time-share uses developed within a planned residential zone, the density of the time-share uses shall not exceed the density permitted in such zone for residential projects; with respect to time-share uses developed in a general commercial zone or a planned commercial resort zone, the density of the time-share uses shall not exceed the density permitted in such zone for general commercial or planned commercial projects. In determining the density of a time-share use, upon the request of an applicant, the Director shall have the authority to transfer the density permitted in other similarly zoned property owned by an applicant to the time-share use. 12-467 ORDINANCE NO. 1378 H. Violations, Enforcement and Civil Penalties 1. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.12 (General Penalty). 2. Any responsible person, including by not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this section is subject to administrative fines as set forth in Chapter 8.81 (Administrative Citations). Any person issued an administrative citation pursuant to this section shall for each separate violation be subject to: (1) an administrative fine in an amount not to exceed one thousand dollars ($1,000) for the first citation; (2) an administrative fine in an amount not to exceed three thousand dollars ($3,000) for a second citation issued for the same offense within a twelve-month period of the date of the first offense; and (3) a fine in an amount not to exceed five thousand dollars ($5,000). 3. Time-share use, and/or advertisement for time-share use, of an accommodation in violation of this section is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance and may be abated pursuant to Chapter 8.20 (Public Nuisances), Chapter 9.24 (Noise Control), and Chapter 9.25 (Multiple Responses to Loud or Unruly Parties, Gatherings or Other Similar Events). 4. Each day the violation of this chapter occurs shall constitute a separate offense. 5. The remedies under this section are cumulative and in addition to any and all other remedies available at law and equity. 1 12-468 MMpill Ll1 City of Sonoma Time Share Ordinance and Supporting Evidence 12-469 } gcitrCity of Sonoma 4 Agenda Item Summary 4, 1= Meeting: City Council - 01 Jun 2022 Department Planning and Community Services Agenda Item Title Staff Contact David A. Storer, AICP, Director Kristina Tierney, Associate Planner Discussion, Consideration, and Possible Action to Introduce an Ordinance Amending the Sonoma Municipal Code Title 19, Section 19.10.050 (Allowable Land Uses and Permit Requirements) and Adding Title 19, Section 19.50.140 (Time-shares) to the City of Sonoma Municipal Code and Finding this Action Exempt from Further Environmental Review Under the General Rule in California Environmental Quality Act (CEQA) Guidelines Section 15061(b)(3) That CEQA Only Applies to Projects that Have the Potential for Causing a Significant Effect on the Environment Summary On January 19, 2022, the Sonoma City Council unanimously adopted an Urgency Ordinance governing the use of properties as time-shares. Previously, the Municipal Code did not contain any regulation governing the use of properties as time-shares which meant that as a non - enumerated use, time-shares were prohibited throughout the City. However, due to the rise in fractional home ownership, the City Council directed staff to address potential ambiguity regarding whether fractional home ownership uses constitutes a prohibited time-share or an allowed residential use. The Urgency Ordinance was presented to the Planning Commission on January 13th, 2022, for comment and direction to staff, and the Planning Commission unanimously recommended approval to City Council. The Urgency Ordinance added Section 19.50.140 — Timeshares into Title 19 and was effective on January 19, 2022. On February 10, 2022, staff presented a draft Regular Ordinance to the Planning Commission for review. The Planning Commission unanimously recommended that the City Council introduce and adopt the attached ordinance. The ordinance is tentatively scheduled to be introduced on June 1, 2022, and could be adopted on June 15, 2022, to supersede the Urgency Ordinance; however, the Urgency Ordinance would be in effect until a regular ordinance becomes effective. The regular ordinance would go into effect 30 days after adoption - July 15, 2022. Recommended Council Action Introduce an Ordinance Amending the Sonoma Municipal Code Title 19, Section 19.10.050 (Allowable' land uses and permit requirements) and Adding Title 19, Section 19.50.140 (Time- shares) to the City of Sonoma Municipal Code. Alternative Actions Council discretion. Financial Impact None. 12-470 Environmental Review Status ® Environmental Impact Report ® Approved/Certified ® Negative Declaration 17 No Action Required 2 Exempt r7 Action Requested F Not Applicable Attachments PUBLIC COMMENT ATTACHMENT Timeshare Regular Ordinance 12-471 CITY 4 Pp INV • '�LIFOR�� PUBLIC COMMENT TO THE CITY COUNCIL OR ONE OF THE CITY'S COMMISSIONS Any Public Correspondence Received by the City Regarding an Item that Will be Considered at a Public Meeting by the City Council or One of Its Commissions Can be Found on the City 's CivicWeb Portal at the Following Link. It is Updated as New Correspondence is Received. https://sonomacitV.civicweb.net/filepro/documents STAFF CONTACTS: City Council City Clerk (707) 933-2216 Planning, DRHP, CSEC Planning (707) 933-2204 12-472 City of *Dooms ORDINANCE # - 2022 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SONOMA AMENDING SONOMA MUNICIPAL CODE TITLE 19, SECTION 19.10.060 (ALLOWABLE LAND USES AND PERMIT REQUIREMENTS) AND AMENDING TITLE 19, SECTION 19.60.140 (TIME-SHARES) TO THE CITY OF SONOMA MUNICIPAL CODE WHEREAS, time share and fractional interest uses have been and currently are prohibited as uses not specifically enumerated in the Sonoma development code; and WHEREAS, the City has recently become aware of time-share companies or fractional interest companies wishing to operate in the City; and WHEREAS, a severe housing crisis exists in the state with the demand for housing outpacing the supply; and WHEREAS, the City of Sonoma is particularly experiencing a housing emergency due to its relative isolation, limited housing supply, and desirable location; and WHEREAS, time-share or fractional interest uses threaten to reduce the housing supply in the City by turning long-term housing in the City into vacation rentals and reducing the affordable housing stock in the City; and WHEREAS, time-share and fractional interest uses increase traffic and noise impacts and have the same character as commercial hotels, motels, and other transient occupancy uses due to their transient nature making them inappropriate for residential zones; and WHEREAS, the development of time-share or fractional interest uses in Commercial and Mixed Use zones (which also have a "residential component" requirement) will reduce the City's ability to collect valuable property tax, sales tax, or Transient Occupancy Tax; and WHEREAS, by allowing time-share or fractional interest uses in the City, market pressure will incentivize property owners to convert their existing commercial, hotel or residential uses, thereby reducing revenue to the City in the form of commercial property taxes, sales tax, Transient Occupancy Tax, and valuable existing housing stock; and WHEREAS, allowing time-share or fractional interest uses in the Commercial and Mixed Use zones reduces the availability of suitable lands to provide housing units to meet the City's Regional Housing Needs Allocation for the 5th and 61h Cycles; and WHEREAS, by allowing times -share or fractional interest uses in the City, developers of those uses will seek to convert underutilized commercial uses (in Commercial and Mixed Use zones), thereby reducing the City's ability to identify those sites as potential Housing Opportunity sites in the development of the City's 6th Cycle Housing Element; and WHEREAS, on January 19, 2022 the City Council adopted an Urgency Ordinance pursuant to Government Code Sections 36934 and 36937 to make express the City's existing prohibition on time-share and fractional ownership uses in all zones in the City; and 276349.3 12-473 WHEREAS, the City Council desires to adopt a non -urgency ordinance to supersede the urgency ordinance to ensure the City's municipal code addresses the impact that time-share and fractional ownership uses have and could have on the City's housing supply; and WHEREAS, on February 10, 2022, the Planning Commission reviewed and discussed potential changes to the Sonoma Municipal Code to address time-share and fractional ownership uses and unanimously recommended that the item be continued to March 10, 2022; and WHEREAS, on March 10, 2022, the Planning Commission held a public hearing to review and discuss potential changes to the Sonoma Municipal Code to address time-share and fractional ownership uses and unanimously recommended that the City Council introduce the attached ordinance; and WHEREAS, the City Council found this action to be exempt from the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.) ("CEQA") and the State CEQA Guidelines (Cal. Code Regs., tit. 14, § 15000 et seq.) pursuant to CEQA Guidelines section 15061(b) (3) prior to taking action; and WHEREAS, on June 1, 2022, the City Council considered amendments to the Sonoma Municipal Code, consistent with the applicable policies of the Sonoma General Plan, at a public hearing; and WHEREAS, the proposed amendments to the Sonoma Municipal Code are consistent with State Law. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SONOMA DOES ORDAIN AS FOLLOWS: SECTION 1. RECITALS. The above set forth recitals and findings are true and correct and incorporated herein by reference, as if set forth herein in full. SECTION 2. FINDINGS FOR DEVELOPMENT CODE AMENDMENTS. Pursuant to Section 19.86.070(B) of the Sonoma Municipal Code, the proposed amendments of the development code under this ordinance: A. Are consistent with the goals, policies, and actions of the General Plan because the amendments the amendments promote and preserve the use of property for vital housing; B. Would not be detrimental to the public interest, health, safety, convenience, or welfare of the city for the reasons described in the recitals above; C. Comply with the provisions of the California Environmental Quality Act (CEQA) as described in Section 4 below; and D. Are internally consistent with other applicable provisions of this development code because the amendments merely codify the existing prohibition on time-share and fractional ownership uses under the City's permissive zoning regime. 276349.3 12-4 74 SECTION 3. MUNICIPAL CODE AMENDMENTS. A. Tables 2-1, 2-2, 2-3 and 2-4 set forth in Sonoma Municipal Code section 19.10.050 are amended to read as set forth in Exhibit "A". B. Section 19.50.140 of the Sonoma Municipal Code is amended to read as follows: 19.60.140 Time -Shares. This section sets forth requirements for the establishment and operation of time-share uses. A. Definitions. 1. "Accommodation" means any dwelling unit, multifamily dwelling, apartment, condominium or cooperative unit, cabin, lodge, hotel or motel room, or other private or commercial structure containing toilet facilities therein that is designed and available, pursuant to applicable law, for use and occupancy as a residence by one or more individuals. 2. "Management entity" means the person who undertakes the duties, responsibilities, and obligations of the management of a time-share plan. 3. "Owner" means owner of a time-share interest. 4. "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. 5. "Time-share instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a time-share plan and includes the declaration dedicating accommodations to the time-share plan. 6. "Time-share interest' means and includes either of the following: a. The right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, coupled with a freehold estate or an estate for years with a future interest in a time-share property or a specified portion thereof. b. The right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, which right is neither coupled with a freehold interest, nor coupled with an estate for years with a future interest, in a time-share property or a specified portion thereof. 7. "Time-share plan" means any arrangement, plan, scheme, or similar device, whether by membership agreement, sale, lease, deed, license, right to use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. 276349.3 12-475 8. "Time-share property" means one or more accommodations subject to the same time-share instrument, together with any other property or rights to property appurtenant to those accommodations. 9. "Time-share use" and "fractional interest use" means the use of one or more accommodations or any part thereof, as a time-share property pursuant to a time-share plan. B. Permitted zones. None. Time share uses and fractional interest uses are prohibited throughout the City of Sonoma C. Violations, Enforcement and Civil Penalties 1. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.12 (General Penalty). 2. Any responsible person, including by not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this section is subject to administrative fines and/or penalties as set forth in Chapter 1.28 (Administrative Citations). 3. Time-share use, fractional interest use and/or advertisement for time-share use and/or fractional ownership use, of an accommodation in violation of this section is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance and may be abated pursuant to Chapter 1.12 (General Penalty), Chapter 1.30 (Administrative Notice and Order Proceedings), Chapter 9.56 (Noise), and any other relevant provision of this code as it may be amended from time to time. 4. Each day a violation of this chapter occurs shall constitute a separate offense. 5. The remedies under this section are cumulative and in addition to any and all other remedies available at law and equity. SECTION 4. CEQA. This Ordinance has been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines, and the environmental regulations of the city. City Planning Staff has determined that the adoption and implementation of the Ordinance is exempt from further environmental review under the general rule in California Environmental Quality Act (CEQA) Guidelines Section 15061(b)(3) that CEQA only applies to projects that have the potential for causing a significant effect on theenvironment. As a text amendment and addition without any physical project being approved, it can be seen with certainty that there is no possibility that the Ordinance will have a significant effect on the environment. The 276349.3 12-476 proposed Ordinance is therefore exempt from the provisions of CEQA because it does not involve a commitment to any specific project that may result in a potentially significant physical impact on the environment. The City Council concurs in these findings and adopts them as its own. The City Council, therefore, directs that a Notice of Exemption be filed with the County Clerk of the County of Sonoma in accordance with CEQA Guidelines. SECTION 5. SEVERABILITY. If any section, subsection, subdivision, sentence, clause, phrase, or portion of this Ordinance for any reason is held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have adopted this Ordinance, and each section, subsection, subdivision, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, subdivisions, sentences, clauses, phrases, or portions thereof be declared invalid or unconstitutional. SECTION 6. EFFECTIVE DATE. This ordinance shall take effect thirty (30) days after passage thereof. SECTION 7. PUBLICATION. This ordinance shall be published in accordance with the provisions of Government Code section 36933, subdivision (c)(1). SECTION 8. THIS ORDINANCE PREVAILS WHERE THERE IS CONFLICT. To the extent that this Ordinance conflicts with any other provision in the Sonoma Municipal Code or city ordinance (urgency or otherwise), policy or regulation, this Ordinance will control. APPROVED: Jack Ding, Mayor ATTEST: Rebekah Barr, MMC, City Clerk 276349.3 12-477 I HEREBY CERTIFY the foregoing ordinance was duly adopted at a Regular Meeting of the City Council of the City of Sonoma held on the , 2022 by the following vote: AYES: NOES: ABSENT: ABSTAIN: Rebekah Barr, MMC, City Clerk 276349.3 12-478 *.tiR.cLr;, City of Sonoma Agenda Item Summary Meeting: City Council - 15 Jun 2022 Department Planning and Community Services Agenda Item Title Staff Contact Kristina Tierney, Associate Planner David A. Storer, AICP, Director Discussion, Consideration, and Possible Action to Adopt an Ordinance Amending the Sonoma Municipal Code Title 19, Section 19.10.050 (Allowable Land Uses and Permit Requirements) and Adding Title 19, Section 19.50.140 (Time-shares) to the City of Sonoma Municipal Code and Finding this Action Exempt from Further Environmental Review Under the General Rule in California Environmental Quality Act (CEQA) Guidelines Section 15061(b)(3) That CEQA Only Applies to Projects that Have the Potential for Causing a Significant Effect on the Environment Summary The attached regular ordinance prohibits timeshares and fractional interest uses in the City of Sonoma and was introduced unanimously on June 1, 2022. Upon its effective date on July 15, 2022, it repeals and replaces the Urgency Ordinance currently in place. Recommended Council Action Adopt an Ordinance Amending the Sonoma Municipal Code Title 19, Section 19.10.050 (Allowable land uses and permit requirements) and Adding Title 19, Section 19.50.140 (Time- shares) to the City of Sonoma Municipal Code. Alternative Actions Council discretion. Financial Impact None. Environmental Review Status ❑ Environmental Impact Report ❑ Approved/Certified ❑ Negative Declaration ® No Action Required 2 Exempt ® Action Requested ❑ Not Applicable Attachments PUBLIC COMMENT ATTACHMENT Timeshare Regular Ordinance Exhibit A Alignment with Council Goals: 12-4 79 Not Applicable Compliance with Climate Action 2020 Target Goals: 594 n/a 12-480 CIT PUBLIC COMMENT TO THE CITY COUNCIL OR ONE OF THE CITY'S COMMISSIONS Any Public Correspondence Received by the City Regarding an Item that Will be Considered at a Public Meeting by the City Council or One of Its Commissions Can be Found on the City's CivicWeb Portal at the Following Link. It is Updated as New Correspondence is Received. https://sonomacitv.civicweb.net/filepro/documents STAFF CONTACTS: City Council City Clerk (707) 933-2216 Planning, DRHP, CSEC Planning (707) 933-2204 12-481 Citp of &onoma AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SONOMA AMENDING SONOMA MUNICIPAL CODE TITLE 19, SECTION 19.10.060 (ALLOWABLE LAND USES AND PERMIT REQUIREMENTS) AND AMENDING TITLE 19, SECTION 19.60.140 (TIME-SHARES) TO THE CITY OF SONOMA MUNICIPAL CODE WHEREAS, time share and fractional interest uses have been and currently are prohibited as uses not specifically enumerated in the Sonoma development code; and WHEREAS, the City has recently become aware of time-share companies or fractional interest companies wishing to operate in the City; and WHEREAS, a severe housing crisis exists in the state with the demand for housing outpacing the supply; and WHEREAS, the City of Sonoma is particularly experiencing a housing emergency due to its relative isolation, limited housing supply, and desirable location; and WHEREAS, time-share or fractional interest uses threaten to reduce the housing supply in the City by turning long-term housing in the City into vacation rentals and reducing the affordable housing stock in the City; and WHEREAS, time-share and fractional interest uses increase traffic and noise impacts and have the same character as commercial hotels, motels, and other transient occupancy uses due to their transient nature making them inappropriate for residential zones; and WHEREAS, the development of time-share or fractional interest uses in Commercial and Mixed Use zones (which also have a "residential component" requirement) will reduce the City's ability to collect valuable property tax, sales tax, or Transient Occupancy Tax; and WHEREAS, by allowing time-share or fractional interest uses in the City, market pressure will incentivize property owners to convert their existing commercial, hotel or residential uses, thereby reducing revenue to the City in the form of commercial property taxes, sales tax, Transient Occupancy Tax, and valuable existing housing stock; and WHEREAS, allowing time-share or fractional interest uses in the Commercial and Mixed Use zones reduces the availability of suitable lands to provide housing units to meet the City's Regional Housing Needs Allocation for the 5th and 6th Cycles; and WHEREAS, by allowing times -share or fractional interest uses in the City, developers of those uses will seek to convert underutilized commercial uses (in Commercial and Mixed Use zones), thereby reducing the City's ability to identify those sites as potential Housing Opportunity sites in the development of the City's 6th Cycle Housing Element; and WHEREAS, on January 19, 2022 the City Council adopted an Urgency Ordinance pursuant to Government Code Sections 36934 and 36937 to make express the City's existing prohibition on time-share and fractional ownership uses in all zones in the City; and 276349.3 12-482 WHEREAS, the City Council desires to adopt a non -urgency ordinance to supersede the urgency ordinance to ensure the City's municipal code addresses the impact that time-share and fractional ownership uses have and could have on the City's housing supply; and WHEREAS, on February 10, 2022, the Planning Commission reviewed and discussed potential changes to the Sonoma Municipal Code to address time-share and fractional ownership uses and unanimously recommended that the item be continued to March 10, 2022; and WHEREAS, on March 10, 2022, the Planning Commission held a public hearing to review and discuss potential changes to the Sonoma Municipal Code to address time-share and fractional ownership uses and unanimously recommended that the City Council introduce the attached ordinance; and WHEREAS, the City Council found this action to be exempt from the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.) ("CEQA") and the State CEQA Guidelines (Cal. Code Regs., tit. 14, § 15000 et seq.) pursuant to CEQA Guidelines section 15061(b) (3) prior to taking action; and WHEREAS, on June 1, 2022, the City Council considered amendments to the Sonoma Municipal Code, consistent with the applicable policies of the Sonoma General Plan, at a public hearing; and WHEREAS, the proposed amendments to the Sonoma Municipal Code are consistent with State Law. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SONOMA DOES ORDAIN AS FOLLOWS: SECTION 1. RECITALS. The above set forth recitals and findings are true and correct and incorporated herein by reference, as if set forth herein in full. SECTION 2. FINDINGS FOR DEVELOPMENT CODE AMENDMENTS. Pursuant to Section 19.86.070(B) of the Sonoma Municipal Code, the proposed amendments of the development code under this ordinance: A. Are consistent with the goals, policies, and actions of the General Plan because the amendments the amendments promote and preserve the use of property for vital housing; B. Would not be detrimental to the public interest, health, safety, convenience, or welfare of the city for the reasons described in the recitals above; C. Comply with the provisions of the California Environmental Quality Act (CEQA) as described in Section 4 below; and D. Are internally consistent with other applicable provisions of this development code because the amendments merely codify the existing prohibition on time-share and fractional ownership uses under the City's permissive zoning regime. 276349.3 12-483 SECTION 3. MUNICIPAL CODE AMENDMENTS. A. Tables 2-1, 2-2, 2-3 and 2-4 set forth in Sonoma Municipal Code section 19.10.050 are amended to read as set forth in Exhibit "A". B. Section 19.50.140 of the Sonoma Municipal Code is amended to read as follows: 19.60.140 Time -Shares. This section sets forth requirements for the establishment and operation of time-share uses. A. Definitions. 1. "Accommodation" means any dwelling unit, multifamily dwelling, apartment, condominium or cooperative unit, cabin, lodge, hotel or motel room, or other private or commercial structure containing toilet facilities therein that is designed and available, pursuant to applicable law, for use and occupancy as a residence by one or more individuals. 2. "Management entity" means the person who undertakes the duties, responsibilities, and obligations of the management of a time-share plan. 3. "Owner" means owner of a time-share interest. 4. "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. 5. "Time-share instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a time-share plan and includes the declaration dedicating accommodations to the time-share plan. 6. "Time-share interest' means and includes either of the following: a. The right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, coupled with a freehold estate or an estate for years with a future interest in a time-share property or a specified portion thereof. b. The right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, which right is neither coupled with a freehold interest, nor coupled with an estate for years with a future interest, in a time-share property or a specified portion thereof. 7. "Time-share plan" means any arrangement, plan, scheme, or similar device, whether by membership agreement, sale, lease, deed, license, right to use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. 276349.3 12-484 8. "Time-share property" means one or more accommodations subject to the same time-share instrument, together with any other property or rights to property appurtenant to those accommodations. 9. "Time-share use" and "fractional interest use" means the use of one or more accommodations or any part thereof, as a time-share property pursuant to a time-share plan. B. Permitted zones. None. Time share uses and fractional interest uses are prohibited throughout the City of Sonoma C. Violations, Enforcement and Civil Penalties 1. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.12 (General Penalty). 2. Any responsible person, including by not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this section is subject to administrative fines and/or penalties as set forth in Chapter 1.28 (Administrative Citations). 3. Time-share use, fractional interest use and/or advertisement for time-share use and/or fractional ownership use, of an accommodation in violation of this section is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance and may be abated pursuant to Chapter 1.12 (General Penalty), Chapter 1.30 (Administrative Notice and Order Proceedings), Chapter 9.56 (Noise), and any other relevant provision of this code as it may be amended from time to time 4. Each day a violation of this chapter occurs shall constitute a separate offense. 5. The remedies under this section are cumulative and in addition to any and all other remedies available at law and equity. SECTION 4. CEQA. This Ordinance has been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines, and the environmental regulations of the city. City Planning Staff has determined that the adoption and implementation of the Ordinance is exempt from further environmental review under the general rule in California Environmental Quality Act (CEQA) Guidelines Section 15061(b)(3) that CEQA only applies to projects that have the potential for causing a significant effect on theenvironment. As a text amendment and addition without any physical project being approved, it can be seen with certainty that there is no possibility that the Ordinance will have a significant effect on the environment. The 276349.3 12-485 proposed Ordinance is therefore exempt from the provisions of CEQA because it does not involve a commitment to any specific project that may result in a potentially significant physical impact on the environment. The City Council concurs in these findings and adopts them as its own. The City Council, therefore, directs that a Notice of Exemption be filed with the County Clerk of the County of Sonoma in accordance with CEQA Guidelines. SECTION 6. SEVERABILITY. If any section, subsection, subdivision, sentence, clause, phrase, or portion of this Ordinance for any reason is held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have adopted this Ordinance, and each section, subsection, subdivision, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, subdivisions, sentences, clauses, phrases, or portions thereof be declared invalid or unconstitutional. SECTION 6. EFFECTIVE DATE. This ordinance shall take effect thirty (30) days after passage thereof. SECTION 7. PUBLICATION. This ordinance shall be published in accordance with the provisions of Government Code section 36933, subdivision (c)(1). SECTION 8. THIS ORDINANCE PREVAILS WHERE THERE IS CONFLICT. To the extent that this Ordinance conflicts with any other provision in the Sonoma Municipal Code or city ordinance (urgency or otherwise), policy or regulation, this Ordinance will control. APPROVED: Jack Ding, Mayor ATTEST: Rebekah Barr, MMC, City Clerk 276349.3 12-486 I HEREBY CERTIFY the foregoing ordinance was duly adopted at a Regular Meeting of the City Council of the City of Sonoma held on the , 2022 by the following vote: AYES: NOES: ABSENT: ABSTAIN: Rebekah Barr, MMC, City Clerk 276349.3 12-487 EXHIBIT A Amendments to "Zones and Allowable Uses" (Title 19, Section 19.10.050) of the Sonoma Municipal Code. A. Table 2-1 (Residential Uses and Permit Requirements) is hereby amended as follows: Allowed Uses and Permit Permit Required by District P Use permitted Requirements for Residential (2) ; ' UP Use Permit Districts (1) required L License required — Use not allowed Land Use (1) R- R-R R-L R-S R-M R-H R-O R-P Specific HS Use Regulation s AGRICULTURE, RESOURCE AND OPEN SPACE USES Animal Keeping P P UP — — — — — Chapter 8.08 SMC Crop Production P P UP - — — — and Horticulture Produce Stands P P UP — — — — — SMC for On -Site 19.50.070 Production MANUFACTURING AND PROCESSING USES Existing Uses — — — — — — — — SMC 19.82.020 RECREATION, EDUCATION AND PUBLIC ASSEMBLY USES Equestrian UP UP - - - - - - Facilities Parks and P P P P P P P — Playgrounds Religious — — UP UP UP UP — — Facilities Schools — Public — — UP UP UP UP — and Private RESIDENTIAL USES (2) Ord. Title 19 SMC 2022 Page 1 of 14 12-488 Duplex — — UP P P UP UP — Emergency — — — — UP UP UP — SMC Shelters 19.50.033 Home P P P P P P P P SMC Occupation 19.50.035 Live/Work — — — — UP — — — Facilities Mobile Home — — — — — — UP SMC Park 19.50.035 Multi -family — — — UP P P P — Dwelling (Four or fewer units) Multi -family — — — UP UP UP P — Dwelling (Five or more units) Personal Indoor P P P P P P P P SMC Cannabis 19.50.032. Cultivation (4) A Personal Outdoor P P P P P P P P SMC Cannabis 19.50.032. Cultivation (4) B (Prohibited if multifamily dwelling or mobile home) Residential P P P P P P P P Accessory Structures Residential Care — - P P P — — — Homes, Six or fewer clients Residential Care — - — — UP — — — Homes, Seven or more clients Single -Family P P P P P UP — — SMC Dwellings 19.50.035 Accessory P P P P P P P P SMC Dwelling Units 19.50.090 Accessory P P P P P P P P SMC Dwelling Units, 19.50.090 Junior Ord. Title 19 SMC 2022 Page 2 of 14 12-489 Supportive P P P/UP P/UP P/UP P/UP — — Housing (3) Transitional P P P/UP P/UP P/UP P/UP — — Housing (3) RETAIL TRADE AND SERVICES Art, Antique, — — — UP — — — — Collectible and Gift Sales Artisan Shops — — — UP — — — — Bed and UP UP UP — — — — — SMC Breakfast Inns 19.50.030 (B&Bs) Child Day Care — UP UP UP UP UP UP — Center Child Day Care: — UP UP UP UP UP — — Small Family Day Care Home Child Day Care: — — UP UP UP UP UP — Large Family Day Care Home General Retail — — — UP — — — — Governmental — UP UP UP UP UP UP and Public Facilities Libraries and — — — UP — — — — Museums Medical Services — — — UP UP — — - - Extended Care Offices, — - — UP — — — — Professional and Administrative Personal — — — UP — — — — Services Restaurant — — — UP — — — — Senior — — — — UP — — — Residential Care Facilities Telecommunicati See Chapter 5.32 SMC, Telecommunications Facility and Antenna ons Facilities, Criteria Commercial Time-shares — — — — — _ _ _ SMC Ord. Title 19 SMC 2022 Page 3of14 12-490 19.50.14 0 SPECIAL PURPOSE USES Public Utility — — — — — — — — Facilities Public Utility P P P P P P P P Equipment Notes: 1. See SMC 19.10.050(C) regarding uses not listed. See Division VIII for definitions of the listed land uses. 2. New residential developments subject to the City's Growth Management Ordinance (SMC 19.94). 3. Supportive and Transitional Housing shall be subject to those restrictions that apply to other residential dwellings of the same type in the same zone. For example, such housing structured as single-family is permitted in the R-HS, R-R, RL and RS residential zones, whereas Supportive and Transitional housing structured as multi -family is limited to the RM and RH residential zones and the Mixed -Use Zone. 4. Personal cultivation of cannabis (Indoor and Outdoor) only allowable in conjunction with residential use subject to SMC 19.50.032. B. Table 2-2 (Commercial Uses and Permit Requirements) is amended as follows: Allowed Uses and Permit Permit Required by District P Use permitted Requirements for Commercial (2) UP Use Permit required Zoning Districts (1) L License required — Use not allowed Land Use C CG Specific Use Regulations MANUFACTURING AND PROCESSING USES Artisans/Craft Product UP UP Manufacturing Food and Beverage UP UP Manufacturing Furniture/Fixtures UP UP Manufacturing, Cabinet Shops Recycling Facilities — Reverse UP P Vending Machines Recycling Facilities — Small UP UP Collection Facilities Research and Development UP — (R&D) Ord. Title 19 SMC 2022 Page 4 of 14 12-491 Warehousing, Wholesaling7 and Distribution UP RECREATION, EDUCATION, and PUBLIC ASSEMBLY USES Clubs, Lodges and Private Meeting Halls — UP Community Centers UP UP Health/Fitness Facilities P UP Indoor Amusement/Entertainment Facilities UP UP Libraries and Museums P P Nightclubs and Bars UP UP, Outdoor Commercial Recreation UP UP Religious Facilities P — Schools — Specialized Education and Training UP UP Studios for Art, Dance, Music, Photography, Etc. P UP Theaters and Auditoriums UP UP RESIDENTIAL USES (4) Emergency Shelters UP UP SMC 19.50.033 Live/Work Facilities UP UP SMC 19.50.050 Multi -family Dwelling (Four or fewer units) UP UP Multi -family Dwelling (Five or more units) UP UP Personal] , ndoor Cannabis Cultivation (7) P P SMC 19.50.032.A Personal Outdoor Cannabis Cultivation (7) P P SMC 19.50.032.E (Prohibited if multifamily dwelling or mobile home) Single Room Occupancy Housing UP — Supportive Housing ' UP UP Transitional Housing UP UP RETAIL TRADE (3) Accessory Retail Uses P P Adult Business UP — Ord. Title 19 SMC 2022 Page 5 of 14 12-492 Art, Antique, Collectible and Gift Sales P P Artisan Shops P UP Auto and Vehicle Sales/Rental UP — Building Material Stores UP UP Commercial Cannabis Activities (8): SMC Chapter 5.36 Manufacturing UP — Non -store front retail UP — Store -front retail UP — Testing laboratory UP — Drive -In and Drive Through Sales UP — Furniture, Furnishings and Equipment Stores P P General Retail P P Grocery Store P P Music Venue L L SMC Chapter 5.34 Outdoor Retail Sales and Activities UP ` UP Plant Nurseries and Garden Supply Stores P P Restaurant UP UP Second Hand Stores P P Shopping Center UP UP Special Event Venue (6) UP UP Wine Tasting Facilities/Wine Bars WTUP WTUP SMC 19.50.120 Tap Rooms UP UP SMC 19.50.130 SERVICES Banks and Financial Services P P Bed and Breakfast Inns (B&Bs) UP UP SMC 19.50.030 Business Support Services P UP Child Day Care Facilities P P Drive -In and Drive -Through Services UP — Equipment Rental UP — Governmental and Public Facilities P P Ord. Title 19 SMC 2022 Page 6 of 14 12-493 Hotel or Motel UP UP Medical Services - Clinics, Offices, Laboratories UP UP Medical Services - Hospitals UP UP Mortuaries and Funeral Homes UP — Offices, Professional and Administrative P UP Personal Services P P Storage - Outdoor UP — Storage - Personal Storage Facility (Mini -Storage) UP — Telecommunications Facilities, Commercial See Chapter 5.32 SMC, Telecommunications Facility and Antenna Criteria Time-shares — — SMC 19.50.140 Auto Parts Sales P — Vacation Rental — — SMC 19.50.110 Vehicle Services, Car Washes UP — Vehicle Services, Repair and Maintenance UP — Vehicle Services, Service Station UP — SMC 19.50.100 Repair Services, for Consumer Products P UP SPECIAL CIRCUMSTANCES COMMERCIAL DEVELOPMENT Commercial Development, Large UP UP Chapter 5.34 SMC Development Adjacent to a Residential Zone (4) UP UP Formula Business, Small P/UP (5) P SMC 19.50.035 Formula Business, Large UP UP SMC 19.50.035 Formula Restaurant, Large UP/- (6) UP SMC 19.50.035 Shopping Center, Reconfiguration UP UP SPECIAL PURPOSE USES Public Utility Facilities — — Public Utility Equipment P P Notes: Ord. Title 19 SMC 2022 Page 7 of 14 12-494 1. See SMC 19.10.050(C) regarding uses not listed. See Division VIII for definitions of the listed land uses. 2. New residential developments subject to the City's Growth Management Ordinance (SMC 19.94). 3. Supportive and Transitional Housing shall be subject to those restrictions that apply to other residential dwellings of the same type in the same zone. For example, such housing structured as single-family is permitted in the R-HS, R-R, RL and RS residential zones, whereas Supportive and Transitional housing structured as multi -family is limited to the RM and RH residential zones and the Mixed -Use Zone. 4. Defined as new commercial construction or an addition to an existing commercial building, having an area of 1,000 square feet or greater. 5. Use Permit required within the historic overlay zone 6. Prohibited in /P Plaza Retail District. See SMC 19.50.035. 7. Personal cultivation of cannabis (indoor and outdoor) only allowable in conjunction with residential use subject to SMC 19.50.032. 8. No commercial cannabis activity may occur in these zoninq districts unless and until a C. Table 2-3 (Mixed Uses and Permit Requirements) is amended as follows: Allowed Uses and Permit Permit Required by District P Use permitted Requirements for Mixed Use (2) UP Use Permit required Zoning Districts (1) L License required — Use not allowed Land Use MR Specific Use Regulations MANUFACTURING AND PROCESSING USES (3) Artisans/Craft Product UP Manufacturing Food and Beverage UP Manufacturing Furniture/Fixtures - UP Manufacturing, Cabinet , Shops; Change in Existing UP SMC 19.82.020 Nonconforming Uses Recycling Facilities — Small — Collection Facilities Research and Development UP (R&D) Warehousing, Wholesaling and Distribution RECREATION, EDUCATION AND PUBLIC ASSEMBLY USES (3) Clubs, Lodges, and Private UP Meeting Halls Community Centers UP Ord. Title 19 SMC 2022 Page 8 of 14 12-495 Health/Fitness Facilities UP Indoor Amusement/Entertainment Facilities UP Libraries and Museums UP Outdoor Commercial Recreation — Religious Facilities UP Schools — Specialized Education and Training UP Studios for Art, Dance, Music, Photography, Etc. UP Theaters and Auditoriums UP RESIDENTIAL USES (4) Emergency Shelters UP SMC 19.50.033 Live/Work Facilities UP SMC 19.50.050 Multi -family Dwelling (Four or fewer units) P Multi -family Dwelling (Five or more units) UP Personal Indoor Cannabis Cultivation (7) P SMC 19.50.032.A Personal Outdoor Cannabis Cultivation (7) P SMC 19.50.032.E (Prohibited if multifamily dwelling or mobile home) Residential Care Homes, Seven or more clients - UP Single -Family Dwellings, P (5) Supportive Housing, four or fewer units P Supportive Housing, five or more units UP Transitional Housing, four or. fewer units P Transitional Housing, five or more units UP RETAIL TRADE (3) Accessory Retail Uses UP Art, Antique, Collectible and Gift Sales UP Artisan Shops UP Ord. Title 19 SMC 2022 Page 9 of 14 12-496 Auto and Vehicle Sales/Rental — Building Material Stores — Commercial Cannabis Activities (8): Manufacturing UP SMC Chapter 5.36 Non -store front retail UP SMC Chapter 5.36 Testing laboratory UP SMC Chapter 5.36 Drive -In and Drive -Through Sales UP Farmers Market UP Fueling Station UP Furniture, Furnishings and Equipment Stores UP General Retail UP Grocery Store UP Music Venue L Chapter 5.34 SMC Outdoor Retail Sales and Activities UP Plant Nurseries and Garden Supply Stores UP Restaurant UP Second Hand Stores UP Shopping Center UP Special Event Venue (6), UP Wine Tasting Facilities/\/Vine Bars WTUP SMC 19.50.120 Tap Rooms UP SMC 19.50.130 SERVICES (3). Auto Parts Sales UP Banks and Financial Services` UP Bed and Breakfast Inns (B&Bs) UP Business Support Services UP Child Day Care Facilities UP Drive -In and Drive -Through Facilities UP Equipment Rental UP Governmental and Public Facilities UP 10 Ord. Title 19 SMC 2022 Page 10 of 14 12-497 Hotel or Motel UP Medical Services — Clinics, UP Offices, Laboratories Medical Services — Hospitals — Mortuaries and Funeral UP Homes Offices, Professional and UP Administrative Personal Services UP Storage — Outdoor — SMC 19.40.100(D) Storage — Personal Storage — Facility (Mini -Storage) Telecommunications See Chapter 5.32 SMC, Telecommunications Facility and Facilities, Commercial Antenna Criteria SMC Time-shares _ 19.50.140 Vacation Rental — SMC 19.50.110 Vehicle Services, Repair and UP Maintenance Vehicle Services, Service — SMC 19.50.100 Stations Repair Services for UP Consumer Products SPECIAL CIRCUMSTANCES COMMERCIAL DEVELOPMENT Formula Business, Small UP SMC 19.50.035 Formula Business, Large UP SMC 19.50.035 Formula Restaurant, Large UP SMC 19.50.035 SPECIAL PURPOSE USES Public Utility Facilities — Public Utility Equipment P Notes: 1. See SMC 19.10.050(C) regarding uses not listed. See Division VIII for definitions of the listed land uses. 2. New development in the Mixed -Use zone shall include a residential component unless waived by the planning commission through use permit review (see SMC 19.10.020(C)). 3. Uses within these categories are allowed only if the planning commission finds that the use will not result in the encroachment of incompatible commercial uses within an established residential area. 4. New residential developments subject to the city's growth management ordinance. 5. Limited to a single residence on an existing lot of record; otherwise, use permit approval is required. 6. On sites of one acre in size or larger. 7. Personal cultivation of cannabis (indoor and outdoor) only allowable in conjunction with residential use subject to SMC 19.50.032. 11 Ord. Title 19 SMC 2022 Page 11 of 14 12-498 8. No commercial cannabis activity may occur in these zoning districts unless and until a commercial cannabis business permit has been issued for that activity under Chapter 5.36. D. Table 2-4 (Special Purpose Uses and Permit Requirements) is hereby amended as follows: Allowed Uses and Permit Requirements for Special Purpose Zoning Districts Permit Required by District P Use permitted UP Use Permit required L License required — Use not allowed Land Use (1) A Pk P W - Specific Use Regulations AGRICULTURAL AND OPEN SPACE USES Crop Production and Horticulture P - — P Livestock Raising P — — — SMC 19.50.020 Prescribed Grazing - UP — — Produce Stands for On -Site Production P — — — SMC 19.50.070 Trails, Hiking and Bicycling P P P — MANUFACTURING AND PROCESSING USES Agricultural or Food Processing , — — — UP Wineries — — — UP Winery Accessory Uses — — — UP SMC 19.50.020 RECREATION, EDUCATION AND PUBLIC ASSEMBLY USES Community Centers — — UP — Community Garden — UP UP — Equestrian Facilities UP UP — — SMC 19.50.020 Libraries and Museums — UP UP — Parks and Playgrounds — P P I — Recreational Facilities — UP P I - 12 Ord. Title 19 SMC 2022 Page 12 of 14 12-499 Schools, Public and Private — — P — Theaters and Auditoriums — UP P — RESIDENTIAL USES (2) Agricultural Employee Housing P — — — Caretaker and Employee Housing UP UP UP UP Emergency Shelters, 15 or fewer beds — — P — SMC 19.50.035 Emergency Shelters, 16 or more beds — — UP — Personal Indoor Cannabis Cultivation (3) P P P P SMC 19.50.032.A Personal Outdoor Cannabis Cultivation (3) P P P P SMC 19.50.032.13 (Prohibited if multifamily dwelling or mobile home) Residential Accessory Structures and Uses P — — — SMC 19.50.035 Single -Family Dwellings P — — — SMC 19.50.035 Supportive Housing (4) — — UP — Transitional Housing (4) — — UP — Vacation Rental — UP — — SMC 19.50.110 SERVICES Offices — Administrative — UP UP — Cemeteries — — P — Child Day Care Facilities — — P — Corporation Yard — — P — Farmers Market P P P — Governmental and Public Facilities — UP UP — Kennel — — UP — Medical Services — Hospitals — — UP — Telecommunications Facilities, Commercial See Chapter 5.32 SMC, Telecommunications Facility and Antenna Criteria Timeshares — — — — SMC 19.50.140 SPECIAL PURPOSE USES Public Utility Facilities — — UP — Public Utility Equipment P P P P 13 Ord. Title 19 SMC 2022 Page 13 of 14 12-500 Notes: 1. See Section 19.10.050.0 regarding uses not listed. See Division VIII for definitions of the listed land uses. 2. New residential developments subject to the City's Growth Management Ordinance (SMC 19.94). 3. Personal cultivation of cannabis (indoor and outdoor) only allowable in conjunction with residential use subject to SMC 19.50.032. 4. Supportive and transitional housing shall be subject to those restrictions that apply to other residential dwellings of the same type in the same zone. 14 Ord. Title 19 SMC 2022 Page 14 of 14 12-501 Exhibit O City of St. Helena Time Share Ordinance and Supporting Evidence 12-502 Report to the City Council Regular City Council - 22 Mar 2022 Agenda Section: PUBLIC HEARINGS Subject: Ordinance Adding Chapter 17.138 "Time Share Uses" and Sections 17.138.060 to Title 17, Zoning of the St. Helena Municipal Code, amending sections 17.48.030 (Central Business) and 17.52.030 (Service Commercial) and Deleting Section 17.112.130 of the St. Helena Municipal Code CEQA Exempt Determination: Prepared By: Ethan Walsh, City Attorney Reviewed By: April Mitts, Administrative Services Director Approved By: James C. McCann, Interim City Manager BACKGROUND Over the past two years, there has been significant discussion in the community regarding Section 17.112.130 of the City's Zoning Code, which prohibits the creation of a time-share project as a means of ownership of any single-family, two-family or multiple -family dwelling or any apartment house in the City (the "Time Share Ordinance"). The City Council discussed the Time Share Ordinance at its July 14, 2020 meeting in response to concerns raised regarding a real estate listing for a fractional or partial ownership interest in a residential home in the City. The prior City Attorney discussed this issue with the City, focusing on the question of the extent to which the City Council could regulate an ownership structure through the City's zoning authority, and noted the challenges of doing so. At the conclusion of the Council's discussion of this issue, Council directed the City Attorney and staff to continue to research its options to address the concerns raised by members of the community in response to the listing of the home at issue. In the months following the July 2020 Council meeting, the company that had been marketing that original home, now known as Pacaso, began marketing other homes in the City, and the City received additional complaints from members of the community. Based on new information that was available to the City, primarily through Pacaso's marketing materials, the City Attorney's office concluded that the properties being marketed by Pacaso were 12-503 not just fractional or partial ownership structures, but were also being marketed to be used as a time share project that would be prohibited under the City's ordinance, and informed Pacaso of that conclusion. Pacaso disagreed with the City Attorney's conclusion, and initiated a lawsuit in an effort to compel the City to retract its conclusion. That litigation is ongoing. When reviewing the Time Share Ordinance in this context, the City Attorney's office found that the substance of the Time Share Ordinance has not been updated since its adoption in 1982. The City Attorney's office concluded that the Time Share Ordinance would benefit from an update to refine the definitions to more directly address the impacts of time-share uses, to clarify the means used by the City to enforce the restrictions on time share uses, and to clarify how time share uses are treated in non-residential districts. City staff initially delayed initiating any changes to the Time Share Ordinance while the litigation was ongoing. However, due to the continued marketing of time share uses within the City, staff has decided to move forward with recommending the proposed updates to the City's ordinance. On March 1, 2022, the Planning Commission voted unanimously to recommend the City Council approve the proposed ordinance. DISCUSSION The Discussion section of the Staff Report is organized as follows: First, the section provides a brief explanation for the City's conclusion that the homes that have been marketed by Pacaso constitute time share projects. While the City's conclusion does not directly affect the changes to the Zoning Code set forth in the proposed ordinance, it is helpful to understand that the Time Share Ordinance, both in its original form and as proposed to be amended, is intended to protect against the impacts that these homes and similar uses could have on the City's housing supply and the character of the City's residential districts. Second, this section discusses the legal basis for the City's Time Share Ordinance, the reasons why the City prohibited time share uses in residential properties, and why those reasons continue to apply today. Third, this section outlines the changes made in the proposed ordinance and the reasons for the proposed changes. A.Current Time Share Ordinance and Application to Pacaso Homes Section 17.112.130 of the Zoning Code prohibits the creation of a time-share project as a means of ownership of any single-family, two-family or multiple family dwelling or apartment house within the City. A time-share project is defined in that section as any real property that is subject to a time-share program. A time-share program is in turn defined in part as an arrangement whereby the use, occupancy or possession of the property circulates among purchasers according to a fixed or floating time schedule on a periodic basis for a specific period of time during any given year. Pacaso provides a significant amount of information on its website regarding the manner in which its homes are used by the purchasers of a Pacaso home. According to Pacaso's website, the single family residences marketed by Pacaso are held by a property -specific 12-504 limited liability company ("LLC"), and each co-owner purchases a 1/8 share in the LLC. (Pacaso.com/learn) Each 1/8 share entitles the co-owner to 44 stay nights within any 365 day window. Stays can be from 2 to 14 nights in duration for each 1/8 share. Back-toback stays are not permitted. (Pacaso.com/faq/scheduling) Stays are booked on an app, with specific rules governing the number of "special dates" that each co-owner can book, and the number of stays that each owner can book during "peak seasons." (Id.) Each owner can book the residence to use themselves, or may allow guests to use the residence, whether or not the co-owner is present. (Id.) Between each stay, Pacaso conducts a thorough inspection and cleaning. ("5 reasons Pacaso is better than a timeshare." Pacaso.com/blog/better-than-resort-timeshare) The Pacaso model grants each 1/8 owner the right to use the property for a specific period of time (44 days in a year) in increments of 2-14 days. The use, occupancy and possession of the property circulates among the co -owners according to a floating time schedule that gives each co-owner exclusive rights to the property for a specific period of time each year. This use structure fits squarely in the City's definition of a time-share program, and the properties operated by Pacaso in this manner would therefore be timeshare projects under the existing Time Share Ordinance. B.Reasons for the Time Share Ordinance 1. The City's General Plan The City of St. Helena has long been defined by its rural, small town quality and agricultural character. In adopting the St. Helena General Plan Update 2040, the City noted that the defining, unifying goal of all the elements of the 1993 General Plan was: To protect the rural, small town quality and agricultural character of St. Helena. It is the General Plan's intent that the preservation of this small town character be the unifying philosophy that overlays all other stated goals and policies. (General Plan 2040, p. 1-2.) While the 2040 General Plan acknowledges that this is no longer the sole, overriding focus of the General Plan, retaining the small town character of St. Helena remains a primary focus of the City's land use planning. (Id.) A key component of retaining the City's small town character is maintaining a balance between the economic benefits that arise from visitors who come to St. Helena for its wineries, restaurants and historic downtown, and maintaining its authentic small town quality of life for the City's residents. This theme is consistent throughout the City's General Plan, and maintaining this balance is key to the City's long term viability. The General Plan notes in its Introduction that "[t]he community stands out in the Valley for its unique, historic character and its ability to attract visitors while also supporting the needs of its resident population." (General Plan p. 1-8.) The City has set goals to maintain that balance, striving to achieve an economy that "will meet the basic needs of residents, while balancing the benefits and impacts of visitors and provide better economic opportunities. (General Plan 1-15.) The City further seeks to "promote sustainable tourism practices that allow the City to enjoy the economic benefits of visitors to the region while maintaining the authentic small-town quality of life." (General Plan p. 3-9.) 12-505 St. Helena is a renowned tourist destination, bringing visitors from throughout the world to its wineries, restaurants and downtown, but it is also a functioning City and community, with residents who contribute to its social fabric. Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance. The City has commercial districts, like the Service Commercial district and the Central Business district, that provide for uses that serve both visitors and the local community, such as restaurants, retail shops and winery tasting rooms, among others, along with lodging where those visitors can stay. (St. Helena Municipal Code §§17.48.030, 17.52.030.) The City also has residential districts that provide housing for those who live in the community, at varying densities in order to provide a diversity of housing types. 2. Use of Zoning to Preserve Residential Areas The use of zoning to preserve the character of the residential districts of a City has been common for over a century. In the seminal case of Euclid v. Ambler the United States Supreme Court upheld the validity of comprehensive zoning that would set aside residential districts "from which business and trade of every sort, including hotels and apartment houses, are excluded." (Euclid v. Ambler Co. 272 U.S. 365, 390.) The U.S. Supreme Court upheld the Village of Euclid's zoning ordinance in that instance, noting that the inclusion of non-residential uses in residential districts may have an increasingly deleterious impact on the residential area "until, finally, the residential character of the neighborhood and its desirability as a place of detached residences are utterly destroyed." (Id. at 394.) The California Court of Appeals followed Euclid and subsequent cases in upholding the City of Carmel-by-the-Sea's zoning restriction on short-term rentals. (Ewing v. City of Carmel -By -The -Sea (1991) 234 Cal.App.3d 1579.) In that case, the Court noted that the City's chief purpose in adopting the short-term rental restriction was "to provide an appropriately zoned land area within the City for permanently single-family residential uses and structures and to enhance and maintain the residential character of the City." (Id. at 1579.) In upholding Carmel's short-term rental restriction, the Court found that short-term rentals "undoubtedly affect the essential character of a neighborhood and the stability of a community. Short-term tenants have little interest in public agencies or in the welfare of the citizenry. They do not participate in local government, coach little league, or join the hospital guild. They do not lead a scout troop, volunteer at the library, or keep an eye on an elderly neighbor. Literally, they are here today and gone tomorrow —without engaging in the sort of activities that weld and strengthen a community." (Id. at 1591.) 3.Impacts of Time Share Uses on Residential Districts Like Carmel, the City of St. Helena strives to maintain the character of its residential areas in the face of intense demand for accommodations to serve visitors to St. Helena. The 12-506 Time Share Ordinance is one of the means that the City has in place to ensure that it is able to maintain its existing and limited housing stock for use in long term residency, and to maintain the character of its residential zoning districts. When the City originally adopted the Time Share Ordinance in 1982, the City Council made specific findings based on the impact it foresaw if time share uses were to locate in the residential areas of the City. Those findings were as follows: 1. There is a critical shortage of affordable housing in the city for long-term occupancies (more than six months annually), and the availability of additional residential dwelling units is substantially restricted by the growth management system. 2. The conversion of residential dwelling units within the city to time-sharing projects eliminates residential dwelling units otherwise available for long-term occupancies (more than six months annually) in the city. 3. Time-sharing projects have the same character as commercial hotels, motels and other transient occupancy uses due to their transient nature and to the multiple shortterm (less than six months annually) occupancies by those participating in timesharing projects. 4. Such commercial or quasi -commercial like use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods. 5. The city council finds and determines that this section is necessary to protect the public health, safety and welfare of the citizens of the city. As discussed in more detail below, these findings continue to hold true in St. Helena, and continue to support the City's decision to restrict time-share uses in residential districts. i. Housing Shortages and Impacts of Time -Share Uses on Existing Housing Stock In adopting the current Time Share Ordinance, the City Council found that there was a critical shortage of affordable housing in the City for long-term occupancies. That continues to be the case, and is undoubtedly worse than was the case at the time the Time Share Ordinance was originally adopted. The most recent census data lists the median value of owner occupied homes in St. Helena at $1,112,100 for the period of 2015-2019, while the Zillow Home Value Index estimates medial home values in St. Helena to be approximately $1,870,000 as of February 2022. www.census.gov/quickfacts/sthelenacitycalifornia; zillow.com/home-values/.) In contrast, the median household income in St. Helena from 2015-2019 was $90,031, and the median income for a four person household in Napa County for 2021 is approximately $109,200. (www.census.gov/quickfacts/sthelenacitycalifornia; www.hcd.ca.gov/.qrantfunding/income-limits/state-and-federal-income- limits/docs/income-limits-2021.pdf.) At the time of adoption of the City's Housing Element in 2015, the income necessary to purchase a median priced single family home was nearly $200,000 per year, and prices 12-507 have risen dramatically since then. (City of St. Helena Housing Element Update 2015-23, p. 3.) The cost of homes currently in St. Helena are well in excess of what median income residents of St. Helena can afford, as well as median income residents of Napa County generally. Further, as Erika Sklar observed in the St. Helena Housing Update Report that she prepared for the City in April 2018, "St. Helena has more local jobs than people in the labor force, demanding large numbers of commuters to fill local jobs. Workers commute daily into St. Helena, many because there is no local housing that is affordable at the incomes that they make. 36% of St. Helena households cannot afford market rents while 70% of St. Helena households cannot afford to purchase a home. Paramedics and preschool teachers cannot afford St. Helena's market rents. Teachers, registered nurses, winery and hospitality managers and non-profit directors cannot afford homeownership in St. Helena." (St. Helena Housing Update Report, p. 7 (April 2018).) The City has made and continues to make efforts to address the need for affordable housing in the City, including providing assistance for the Brenkle Court, Turley Flats and 963 Pope Street projects. The City has also ensured that new non-residential development will assist the City in providing adequate affordable housing, as evidenced by the significant contributions to affordable housing made by the Farmstead Lodging project through its development agreement with the City. These efforts, however, have highlighted the challenges of providing housing at all income levels, with the most significant challenge being a limited supply of existing housing stock in the City, and a limited supply of available land for new housing. Given the housing shortage already in existence, losing additional housing stock will only make this problem worse. The findings in the original Time Share Ordinance also note that the conversion of homes to time sharing projects would eliminate residential dwelling units that would otherwise be available for long term residential use. This continues to be true, as a home that is used for time share purposes will no longer be available for households to use as their long term residence. This threat to the City's existing housing stock is not insignificant. The publicity regarding Pacaso's rise as a company speaks to a pent up demand for homes that could be converted to time share use, reducing available housing stock for long term use. Pacaso's co-founder has indicated that "[t]here are tens of millions of families that aspire to own second homes but are unable to, due to reasons of cost." (Just Five Months Old, Zillow Co -founder's Pacaso Claims It's Already A Unicorn" Noah Kirsch, March 24, 2021 (www.forbes.com/sites/noahkirsch/2021 /03/24/just-five-months-old- zillowcofounders-pacaso-claims-its-alread-a-unicorn/.)) In discussing Pacaso's model, Dan Wenhold of the venture capital firm Fifth Wall said "[t]hey were taking a previously illiquid asset, which was a timeshare, and making it affordable for the masses, also making it attainable for folks who wanted to own a second home but previously weren't able to." ("Pacaso, the Proptech Startup Founds by Zillow Alums, Raises $125M Series C" Sophia Kunthara (September 14, 2021) (news.crunchbase.com/news/proptech- startup-pacasoraises-125m-series-c.)) Creating a new market for these prospective buyers who otherwise would not buy second homes unquestionably increases demand for these homes by creating an incentive for timeshare companies to buy up residences to meet this market demand. Creating more demand, and reducing supply, will further 12-508 ratchet up housing costs, exacerbating the already significant housing shortage in the City. ii. Impacts to Character of the City's Residential Districts The City Council additionally found as part of the adoption of the original Time Share Ordinance that time-sharing projects have the same character as commercial hotels, motels and other transient occupancy uses due to their transient nature and to the multiple short-term occupancies by those participating in time-sharing projects. The Council concluded that this commercial or quasi -commercial like use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods. This continues to be the case, as the nature of time share uses of residential property is different than the typical long term residential uses for which the residential districts of the City are intended. The complaints that have been made by some local residents regarding the Pacaso homes are illustrative of the distinctions between time share uses and long term residential uses. A sampling of the email complaints received by the City are included in Attachment No. 2 to this Staff Report. The complaints received center on concerns over more intense traffic and parking issues, outdoor parties and conversations going late into the evening, sometimes as late as 2 A.M. One neighbor complained of outdoor lighting shining into her daughter's room at night. They complained of traffic and inadequate parking for the visitors to these homes. Further, neighbors have noted that with each turnover from one stay to another, cleaning and landscaping crews come to clean the unit and prepare it for the next user. While this level of maintenance is appropriate for a commercial vacation property, it impacts the residential character of the surrounding area by adding parking and noise burdens in the neighborhood. Living next door to a home where the residents turnover every 2-14 days, and professional cleaning and landscaping crews come to the property between each visit is much more akin to living by a commercial lodging project than a residential home. This is not at all surprising, given that these time share homes are used by people who are on vacation. While long term residents may have an occasional party at their home, the time share model means that these residences are constantly being used by people who are on vacation, hosting parties or celebrating special occasions. These activities by their nature are more intense than typical residential use of property. The intensity of this use is a significant reason that these uses can change the character of a residential neighborhood. Long term residents, whether owners or renters, will occasionally have guests, and will occasionally have parties, but these time-share homes are used exclusively by people who are coming to the City on a short term basis for vacation or leisure. People will naturally stay out later, entertain more and gather in larger numbers while on vacation. That is the reason that these uses are more appropriate in non-residential areas that are intended to cater to the City's visitors and tourists. Time share uses can change the character of a residential neighborhood by having it serve not only as a residential area but also a visitor lodging area, and subjecting it to the impacts that come with that more intense land use. 12-509 In their marketing materials, Pacaso cites this intensity of use as a benefit, indicating that having these units filled with visitors seven days a week will benefit the local economy, since these visitors will patronize local businesses. (pacaso.com/communities) However, as noted above, the City strives through its General Plan to achieve a balance between benefits to the local economy and maintaining the character of the City. The City seeks to achieve this balance by promoting "sustainable tourist practices that allow the City to enjoy the economic benefits of visitors to the region while maintaining the authentic smalltown quality of life, (General Plan p. 3-9) and striving to achieve a local economy that "will meet the basic needs of residents, while balancing the benefits and impacts of visitors." (General Plan p. 1-15.) Bringing more visitors into residential neighborhoods to improve the local economy does not help to achieve that balance. It instead tips the scales in favor of the local economy, at the expense of the residential character of these neighborhoods. The nature of the timeshare use itself can impact the residential character of the City's residential districts because it will ensure that the time share users can only use their property for a limited amount of time each year. In the case of Pacaso owners, each stay is limited to 2-14 days. As discussed above, in the Ewing v. City of Carmel -by -the -Sea case, the California Court of Appeal found that short term rentals would affect the essential character of a neighborhood and the stability of a community. The Court noted that "[s]hort term rentals have little interest in public agencies or in the welfare of the citizenry. They do not participate in local government, coach little league, or join the hospital guild. They do not lead a Scout troop, volunteer at the library, or keep an eye on an elderly neighbor. Literally they are here today and gone tomorrow —without engaging in the sort of activities that weld and strengthen a community." This same problem is present with time-share uses. Each co-owner is in the unit on a short-term basis, and without the time to participate in the types of activities or build the relationships that create the fabric of a community. At the April 28, 2021 council meeting several Pacaso co -owners spoke of their experiences in St. Helena. All of them spoke of their affection for the community and the traditions they had established, but these were centered on attending local events and visiting shops, restaurants and wineries. These types of transactional activities are all beneficial to the City's local economy and are what the City hopes to see from visitors to the City, but it is not the type of community involvement described in the Ewing case that binds and strengthens a residential community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its small town character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents who will engage in the community in the manner described by the Court in Ewing, to the betterment of the entire community. C.Proposed Amendments to the Time Share Ordinance The proposed Ordinance would make certain changes to the City's Existing Time Share Ordinance, as described below. 12-510 1.Findings and Establishment of New Chapter The proposed Ordinance includes detailed recitals and findings describing the policy bases for the City's regulation of time share uses. The findings are consistent with the findings made as part of the original Time Share Ordinance, but more detail has been added. The policy bases for the proposed Ordinance are discussed in the sections above, and further discussion is not necessary here. The proposed Ordinance also relocates the restrictions on time share uses to its own chapter at Chapter 17.138. The Time Share Ordinance is currently located in Chapter 17.112, General Site Design and Development Standards. City staff believes that with the added level of detail in the Proposed Ordinance, these provisions merit being located in a separate chapter, and has changed the location of the Timeshare Ordinance accordingly. 2.Definitions The Proposed Ordinance amends the definitions that are used to define time share uses, with the new definitions set forth in Section 17.138.020. The new definitions are modeled on the definitions utilized by the state to regulate time-shares in the Vacation Ownership and Time -Share Act of 2004 (Bus. & Prof. Code §§11210-11288), but are modified somewhat to better apply in the land use regulation context. The new ordinance includes a number of definitions that work in concert to define a timeshare use. The ordinance defines a "time-share use" as the use of one or more accommodations, or any part thereof, as part of a time-share property pursuant to a timeshare plan. An "accommodation" is defined in this Chapter to include a range of residential units that could potentially be used for time-share purposes. The types of residential units that can be accommodations are listed at the beginning of Section 17.138.020 in the proposed ordinance. A "time-share plan" is defined in the ordinance, and generally includes any arrangement, plan, scheme or similar device whereby a purchase receives the right to exclusive use of the accommodation, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year. A "time-share property", in turn is defined as one or more accommodations that are subject to the same time-share plan together with any property rights that are appurtenant to the accommodations. A "time-share instrument", is the document or documents that create or govern the operation of the time-share plan. Therefore a time-share use is the use of a residential property that fits within the definition of an "accommodation" under the ordinance, pursuant to a "time-share plan", which grants each owner of the time-share property exclusive use of the property for a certain period of time each year, but not the full year. 12-511 It is important to note that not all properties with multiple owners or owned by business entities (such as LLCs) would constitute a time-share use under these definitions. The definitions focus on the manner in which the accommodation is used, not how it is owned. A time-share plan allows each owner exclusive use of the property for a specific period of time. This manner of use prevents the property from being used for long term residency, and leads to the continual cycling of visitors through the property and the more intense, constant vacation oriented use that the ordinance seeks to limit in residential districts of the City. A property that is owned by a group of friends or extended family members, whether through a separate business entity or otherwise, will not necessarily mandate that only one owner will be able to use the property at a time. The more formal arrangement found in time-share uses increases the intensity of use, in that each individual time-share owner cycles through the property, whereas families or friends are more likely to use the property together or in groups leading to less transition in the residential neighborhood. The more formal relationship, use of professional property managers and rights to exclusive use found in timeshare uses contributes to the commercial character of the property, with added traffic due to the more frequent turnover of visitors and more frequent cleaning and inspection between each user, which is common for a commercial vacation property, but not for a home owned by family or friends. 3.Enforcement The new ordinance additionally adopts a new enforcement structure for the City timeshare restrictions, modeled on the City's short-term rental ordinance. The ordinance prohibits both the use of accommodations for time-share use, and the advertisement of accommodations for time-share uses. This will better allow the City to prevent time-share uses in residential neighborhoods before they occur. The proposed Ordinance also outlines the process that will be used to enforce this new Chapter, again based on the City's existing short-term rental regulations. This approach has proved to be effective in enforcing the City's short-term rental regulations, and will help the City to take a more preventative approach to enforcing its time-share regulations as well. 4.Time Share Uses in Service Commercial and Central Business Districts Finally, while the City's existing Time Share Ordinance did prohibit time-share projects within certain types of residential dwelling units within the City, it does not make distinctions based on the various zoning districts of the City. Given that the primary concerns and impacts of this use arise from the high intensity use of property that negatively impacts the residential character of residential districts within the City, this use may not have the same impacts in commercial districts where visitors can be closer to the amenities in the City that cater to visitors. The proposed new ordinance would allow time-share uses in the Service Commercial and Central Business Districts as conditional uses, provided that such time-share uses would be limited to accommodations in upper floors in conjunction with a mixed use project, would be required to provide at least one parking space for accommodations of two or fewer bedrooms, and at least two parking 12-512 spaces for accommodations of three or more bedrooms, and would be subject to such other conditions imposed by the City has part of the conditional use permit process. As part of the application for a time-share use, the applicant would have to provide specific information including a management plan and specific information on the accommodations and any ancillary uses. The City would then review the application process in accordance with its normal process for review of conditional uses. This would allow the City to address potential impacts associated with this use, similar to the approach that the City uses with hotels and other lodging accommodations in these d istricts. Consistent with this change, the proposed ordinance updates the list of conditional uses in both the Service Commercial and Central Business Districts to include time share uses as regulated by the new Chapter 17.138. The Planning Commission held a public hearing to consider the proposed ordinance at its regular meeting of March 1, 2022. Following the public hearing, the Planning Commission unanimously recommended that the City Council adopt the proposed ordinance. City staff has made minor, non -substantive edits to the proposed ordinance that went to the Planning Commission to correct typographical errors, and to add the sections amending the list of conditional uses in the Service Commercial and Central Business Districts. FISCAL IMPACT None RECOMMENDED ACTION Staff recommends that the City Council introduce by title only and waive further reading of an Ordinance Adding Chapter 17.138 "Time Share Uses" and Sections 17.138.010- 17.138.060 to Title 17, Zoning, of the St. Helena Municipal Code, amending sections 17.48 (Central Business) and 17.52 (Service Commercial) and Deleting Section 17.112.130 of the St. Helena Municipal Code. ATTACHMENTS Attachment 1-St. Helena Time Share Ordinance -Final Attachment 2-Community email comments 12-513 CITY OF ST. HELENA ORDINANCE NO. ADDING CHAPTER 17.138 "TIME SHARE USES" AND SECTIONS 17.138.010 — 17.138.060 TO TITLE 17, ZONING, OF THE ST. HELENA MUNICIPAL CODE, AMENDING SECTIONS 17.48.030 AND 17.52.030 AND DELETING SECTION 17.112.130 OF THE ST. HELENA MUNICIPAL CODE WHEREAS, the City of St. Helena is a popular tourist destination, known for its scenic Napa Valley location, exceptional wineries and restaurants, historic Main Street and small town agricultural character; and WHEREAS, preserving the rural, small town quality and agricultural character of the City of St. Helena has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's 2040 General Plan; and WHEREAS, the City of St. Helena stands out in the Napa Valley for its ability to attract visitors while also supporting the needs of its resident population. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy; and WHEREAS, the City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses; and WHEREAS, the City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City of St. Helena; and WHEREAS, according to the U.S. Census Bureau, the current median household income in the City of St. Helena is $90,031, while the estimated value of owner - occupied housing units from 2015-2019 was approximately $1,112,100, with current real estate listings suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City; and WHEREAS, as noted in the St. Helena Housing Update Report prepared for the City in April 2018, "St. Helena has more local jobs than people in the labor force, demanding large numbers of commuters to fill local jobs. Workers commute daily into -1- 12-514 St. Helena, many because there is no local housing that is affordable at the incomes that they make. Thirty six percent (36%) of St. Helena households cannot afford market rents while seventy percent (70%) of St. Helena households cannot afford to purchase a home. Paramedics and preschool teachers cannot afford St. Helena's market rents. Teachers, registered nurses, winery and hospitality managers and nonprofit directors cannot afford homeownership in St. Helena", and WHEREAS, the City has made significant efforts to address the need for housing at lower income levels, of which recent examples include providing assistance to local nonprofit Our Town St. Helena for the Brenkle Court development, a mutual self-help housing development providing homeownership opportunities to eight low income working families, as well as the acquisition of a home located at 963 Pope Street using a charitable sale strategy. The property at 963 Pope Street is being developed with an additional four units to provide a total of five new affordable rental units in the City; and WHEREAS, further, in connection with the recently approved Farmstead lodging project, the City negotiated with the developer to contribute one million dollars toward the purchase of property to be used for the development of not less than twenty units of housing that will be affordable to low and very low income households, and an additional two million two hundred thousand dollars to be used more generally toward the development of affordable housing in the City; and WHEREAS, the City additionally provided substantial financial assistance to the recently completed Turley Flats Affordable Housing development, which provides eight units of rental affordable housing in a three story building located at 1105 Pope Street; and WHEREAS, these efforts have helped to address the City's need for affordable housing, but have also highlighted the challenge of providing sufficient housing to meet demand, particularly at more affordable levels, due to the significant costs of acquiring housing or land for the development of housing in the City and the limited supply of such land; and WHEREAS, the conversion of existing residential units to uses other than long- term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community; and WHEREAS, the City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses; and -2- 12-515 WHEREAS, to this end, in 1982 the City adopted Ordinance No. 82-07, which prohibited the creation of time-share projects as a means of ownership of any single- family, two-family or multiple -family dwelling or any apartment house within the City. This restriction was imposed because the conversion of residential dwelling units to time-sharing projects would eliminate residential dwelling units that would otherwise be available for long-term occupancies, and were inappropriate in residential areas because those uses have the same character as commercial hotels, motels and other transient occupancy uses, and would result in increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods; and WHEREAS, the City has historically not received complaints about time-sharing uses in residential neighborhoods. Commencing in 2020, however, the City began receiving complaints regarding single family homes in the City that were being sold and/or marketed as "fractional ownership" or "co -ownership" homes, wherein each buyer may acquire a one -eighth interest in a limited liability company that will own the home. Under the structure pursuant to which these dwelling units are marketed and sold, each owner gets a one -eighth share along with the right to use the home for one - eighth of each year indefinitely. During each owner's usage period, that owner has exclusive use of the entire house. All rentals are prohibited; only owners and their guests are permitted to use the house. Each owner pays regular assessments to fund the operating costs of the home and maintenance reserves; and WHEREAS, this arrangement, which provides that each purchaser is entitled to exclusive use of the property for a fixed number of days each year, is a "time-share plan" as defined in Business and Professions Code section 11212, and a "time share program" as defined in Section 17.112.130 of the City's Municipal Code; and WHEREAS, the City has received numerous complaints regarding these properties, including parking impacts from large numbers of people staying at these properties; excessive noise late into the evening due to frequent outdoor parties; traffic due to frequent visitor turnover; traffic, noise and parking concerns due to frequent visits from cleaning, landscape maintenance and pool cleaning services that come to the properties in between each stay to prepare the home for the next guest; and an inability to maintain lines of communication to set community expectations with the users of the unit, as visitors only frequent the homes for short term stays of 2 to 14 days; and WHEREAS, the complaints received by the City are reflective of the reasons that the City prohibited time-share projects within residential areas of the City. The time- share uses provide a short-term, high impact vacation oriented use of the property, where those that buy into the time-share use the home for entertaining and short term stays while visiting restaurants, wineries and other tourist oriented locations in St. Helena and the surrounding Napa Valley; and WHEREAS, this high impact use, combined with the frequent turnover and commercial management of these properties is not consistent with the residential districts in which they are located. It is commercial in nature, in that these time-share -3- 12-516 uses are structured as a short-term, tourist oriented, visitor serving use of the subject properties. The use of these properties as time-shares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City; and WHEREAS, expanded use of residential properties for time-share uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for time-share uses of residential properties; and WHEREAS, this encroachment of tourist oriented, visitor serving uses in residential neighborhoods will not only compromise the residential character of these areas, but will also further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City; and WHEREAS, the City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad authority to regulate the development and use of real property within its jurisdiction to promote the public welfare; and WHEREAS, pursuant to and in accordance with this authority, the City Council desires to reaffirm its restrictions on time-share uses in residential areas, and to update the language of the Zoning Code to provide consistency with the terminology used to define time-share uses in State law. Further, the City desires to provide greater clarity as to the zoning districts in which time-share uses are permitted as conditional uses, and the standards pursuant to which they will be reviewed in those zoning districts; and WHEREAS, the Planning Commission of the City of St. Helena held a duly noticed public hearing on March 1, 2022, as required by law to consider all the information presented by staff, and public testimony presented in writing and at the meeting; and WHEREAS, on March 1 2022, the Planning Commission of the City of St. Helena recommended that the City Council adopt this Ordinance amending the Municipal Code as described herein by a 5-0 vote; and WHEREAS, on March 22, 2022, the City Council held a duly noticed public hearing, accepting testimony from the public, and discussed the proposed amendments and staffs recommended approval of this Ordinance; and WHEREAS, the proposed zoning amendments are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the agricultural, small town character of the City of St. Helena; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply; and -4- 12-517 Now, therefore, the City Council of the City of St. Helena does hereby ordain as follows: SECTION 1: The above recitals are hereby incorporated as though set forth in this section. SECTION 2: Chapter 17.138 and sections 17.138.010 — 17.138.060 are hereby added to Title 17 of the St. Helena Municipal Code, to read as follows: "Chapter 17.138 TIME-SHARE USES 17.138.010 Purpose and Findings 17.138.020 Definitions 17.138.030 Time-share Uses Restricted to Service Commercial (SC) and Central Business (CB) Districts 17.138.040 Application Process and Development Standards 17.138.050 Violations, Enforcement and Civil Penalties 17.138.010 Purpose and Findings A. There is a critical shortage of permanent, long-term housing in the City of St. Helena. B. A limited supply of suitable vacant land, land values, and market demand for land for other uses, including but not limited to use of property for vineyards, have limited the construction of additional housing in the City of St. Helena. C. St. Helena is a popular tourist destination known for its scenic Napa Valley location, exceptional wineries and restaurants, historic Main Street and small town agricultural character. D. The City of St. Helena stands out in the Napa Valley for its ability to attract visitors while also supporting the needs of its resident population. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. E. Time-share uses are not an appropriate land use in the City's residential districts due to the multiple occupancy of time-share properties, the short-term, tourist oriented use of such property and commercial management of time-share facilities, all of which -5- 12-518 create increased traffic generation, excessive noise, disruption to residential communities through commercial -level maintenance of the time-share facilities, and therefore are appropriately confined to commercial zoning districts. F. Conversion of permanent housing to time-share facilities removes existing housing units from the City's existing stock and exacerbates an already severe housing shortage. G. It is therefore in the public interest to prohibit conversions of existing housing units into time-share facilities, as to do so eliminates needed housing stock by diverting those units to a tourist -oriented, commercial use. 17.138.020 Definitions For purposes of this Chapter, the following words and phrases shall have the meaning respectively ascribed to them by this Section: "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.160. "Building" shall have the meaning ascribed to it by Section 17.04.160. "Dwelling unit" shall have the meaning ascribed to it by Section 17.04.160. "Managing entity" means the person who undertakes the duties, responsibilities and obligations of the management of a time-share plan. "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. "Time-share instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a time-share plan and includes the declaration dedicating accommodations to the time-share plan. "Time-share interest" means the right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, regardless of whether or not such right is coupled with a property interest in the time-share property or a specified portion thereof. "Time-share plan" means any arrangement, plan, scheme, or similar device, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given M 12-519 year, on a recurring basis for more than one year, but not necessarily for consecutive years. "Time-share property" means one or more accommodations subject to the same time- share plan, together with any other property or rights to property appurtenant to those accommodations. "Time-share use" means the use of one or more accommodations or any part thereof, as a time-share property pursuant to a time-share plan. 17.138.030 Time-share Uses Restricted to Service Commercial (SC) and Central Business (CB) Districts Time-share uses are conditional uses within the City's Service Commercial (SC) District and Central Business (CB) District, subject to approval of a conditional use permit applied for and approved in conformance with this Chapter. Time-share uses are not permitted in all other Zoning Districts in the City. 17.138.040 Application Process and Development Standards A. Application Process. Approval of a conditional use permit for time-share uses in the Service Commercial District or Central Business District shall be required in accordance with the requirements of Chapter 17.168. In addition to the application requirements contained in Chapter 17.168, an application for a time-share use shall be accompanied by the following documents which shall be subject to the approval of the planning director: 1. Management Plan. A management plan shall describe the methods employed by the applicant to guarantee the future adequacy, stability, and continuity of a satisfactory level of management and maintenance of the time share use. 2. Application Requirements. In addition to any application requirements established by this section and any other applicable requirements of this code, the following information shall be submitted as part of any application to develop or establish a time-share use: a. Typical floor plans for each accommodation. b. The phasing of the construction of the accommodations on the time- share property, if applicable. c. A description of any ancillary uses which are proposed in conjunction with the time share use. d. A description of the method of management of the time share use and indication of the management entity for the time-share property. e. Any restrictions on the use or occupancy of the accommodations. -7- 12-520 f. Any other information or documentation the applicant, city staff or commission deems reasonably necessary to the consideration of the time-share use, including any required environmental documents. B. Development Standards and Operational Requirements. Notwithstanding any other provision of this chapter, the following conditions must be met by any time-share use in any conditionally permitted zone. Additional requirements may be attached to a conditional use permit or development agreement if found to be necessary to assure that the time-share use meets the intent of this chapter: 1. Time-share uses developed in the Service Commercial District or Central Business District shall be limited to accommodations in upper floors in conjunction with a mixed -use project. 2. No existing residential use in the Service Commercial or Central Business District shall be converted to a time-share use. 3. Development Standards. The time-share use shall comply with all development standards for the zone in which it is located. 4. Parking. Parking shall be provided as follows: a. For accommodations of two or fewer bedrooms, one parking space shall be provided for each accommodation. b. For accommodations of three or more bedrooms, two parking spaces shall be provided for each accommodation. 4. Modification or Waiver of Standards. The planning commission may modify or waive one or more of the regulations contained in this section if it determines that strict compliance is not necessary to achieve the purpose and intent of this section. 17.138.060 Violations, Enforcement and Civil Penalties A. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this chapter is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.20. B. Time-share use, and/or advertisement for time-share use, of an accommodation in violation of this chapter is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance. Any such nuisance may be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 1.12, except that the civil penalty for a violation shall be one thousand dollars ($1,000.00). Each day the violation occurs shall constitute a separate offense. -8- 12-521 C. Any responsible person who violates this chapter shall be liable and responsible for a civil penalty of one thousand dollars ($1,000.00) per violation per day such violation occurs. The city may recover such civil penalty by either civil action or administrative citation. Such penalty shall be in addition to all other costs incurred by the city, including without limitation the city's staff time, investigation expenses and attorney's fees. 1. Where the city proceeds by civil action, the court shall have discretion to reduce the civil penalty based upon evidence presented by the responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the court should consider the purpose of this chapter to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the responsible person's enrichment or profit as a result of the violation of this chapter. In any such civil action the city also may abate and/or enjoin any violation of this chapter. 2. Where the city proceeds by administrative citation, the city shall provide the responsible person notice of the right to request an administrative hearing to challenge the citation and penalty, and the time for requesting that hearing. a. The responsible person shall have the right to request the administrative hearing within forty-five (45) days of the issuance of the administrative citation and imposition of the civil penalty. To request such a hearing, the responsible person shall notify the city clerk in writing within forty- five (45) days of the issuance of the citation. The appeal notification shall include all specific facts, circumstances and arguments upon which the appeal is based. b. The city manager is hereby authorized to designate a hearing officer to hear such appeal. The city hearing officer shall conduct a hearing on the appeal within ninety (90) days of the request for the hearing unless one of the parties requests a continuance for good cause. The hearing officer shall only consider those facts, circumstances or arguments that the property owner or responsible person has presented in the appeal notification. c. The hearing officer shall render a decision in writing within thirty (30) days of the conclusion of the hearing. The hearing officer shall have discretion to reduce the civil penalty based upon evidence presented by the property owner or responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the hearing officer should consider the purpose of this chapter to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the property owner's or responsible person's enrichment or profit as a result of the violation of this chapter. d. Any aggrieved party to the hearing officer's decision on the administrative appeal may obtain review of the decision by filing a petition for writ 12-522 of mandate with the Napa County superior court in accordance with the timelines and provisions set forth in Government Code Section 53069.4. e. If, following an administrative hearing, appeal, or other final determination, the owner of the property is determined to be the responsible person for the civil penalty imposed by this section, such penalty, if unpaid within forty-five (45) days of the notice of the final determination, shall become a lien to be recorded against the property on which the violation occurred pursuant to Chapter 1.12. Such costs shall be collected in the same manner as county taxes, and thereafter the property upon which they are a lien shall be sold in the same manner as property now is sold for delinquent taxes. D. Any violation of this chapter may also be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 1.12, except that the civil penalty under Chapter 1.12 for a violation shall be one thousand dollars ($1,000.00). E. Each day the violation of this chapter occurs shall constitute a separate offense. F. The remedies under this chapter are cumulative and in addition to any and all other remedies available at law and equity." SECTION 3: Deletion of Section 17.112.130 Section 17.112.130 is hereby deleted in its entirety. SECTION 4: Amendment of Section 17.48.030 Section 17.48.030 is hereby amended to add the following text as a separate line immediately following "Theaters, movie and legitimate;", and immediately prior to "Tobacco/smoke shop, including the sale of tobacco, tobacco and/or nicotine products and equipment for smoking;": "Time share uses, pursuant to Sections 17.138.030 and 17.138.040;" SECTION 5: Amendment of Section 17.52.030 Section 17.52.030 is hereby amended to add the following text as a separate line immediately following "Theaters, movie and legitimate;", and immediately prior to "Tobacco/smoke shop, including the sale of tobacco, tobacco and/or nicotine products and equipment for smoking;": "Time share uses, pursuant to Sections 17.138.030 and 17.138.040;" SECTION 6: CEQA -10- 12-523 This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. SECTION 6: Effective Date This ordinance shall take effect 30 days after its final adoption, and a summary of this ordinance shall be published once with the names of the members of the Council voting for and against the ordinance in the St. Helena Star, a newspaper of general circulation published in the City of St. Helena. THE FOREGOING ORDINANCE was introduced at a City Council on the day of 202', meeting of the St. Helena City Council on the following vote: Mayor Ellsworth: Vice Mayor Dohring: Councilmember Chouteau: Councilmember Hardy: Councilmember Hall: APPROVED: Geoff Ellsworth, Mayor ATTEST: CITY OF ST. HELENA Cindy Tzafopoulos, City Clerk -11- regular meeting of the St. Helena and was adopted at a regular day of , 2022, by the 12-524 From: Mari Jansdotter <mjansdotter@yahoo.com> To: Anna Chouteau Sent: 6/8/2021 7:25:45 AM Subject: Re: [External] 1242 Madrona pictures Re: Pacaso Thank you, Anna, for your kind reply. I'm sorry you all have to go through this lawsuit by Pacaso and hope the judge find in your favor. I have a follow-up question. Do you know who I should address it to? The Pacas house building on Kearney across the street from us has installed Lights under the roofline that are on all night and installed in such a way they shine straight into our house, especially my daughter's bedroom. Are there any ordinances that I could refer to that help me ask them to please cover / redirect those lights or at least turn them off after 10 p.m? Thank you! Best Mari 12-525 Mi. SRI -T 19 lot 1 .. ........ 12-527 Sent from Yahoo Mail on Android On Tue, Jun 8, 2021 at 7:12 AM, Anna Chouteau <AChouteau@cityofsthelena.org> wrote: Hi Mari, Thank you for your email. I forwarded your email to City staff about the specific permitting questions. Our planning director is out of the office this week. We are defending ourselves in the lawsuit. Our City Attorney filed an anti-SLAPP motion that is now public information and the hearing will be coming up this summer. All my best, Anna Sent from my Wad On Jun 7, 2021, at 6:01 PM, Mari Jansdotter <mjansdotter@yahoo.com> wrote: To clarify, do they have permit allowing the new structure going up at 1242 Madrona? The rendering from original sales listing shows a trellis (see attached) but a structure looking like a live -on emit close to (and taller than) the Oak neighbour' fence is being built. See pictures from today <20210607_175202jpg> <20210607_175219jpg> Sent from Yahoo Mail on Android On Mon, Jun 7, 2021 at 5:38 PM, Mari Jansdotter <mjansdotter@yahoo.com> wrote: Thank you for doing all you can to stop Pacaso! I am not o.k. with Pacaso's violation of city ordinance and I support the city's legal fight. In addition to signing the petition and putting a No Pacaso sign outside my home, what else can we on the community do to help, please? 12-528 I finally afforded my dream home after moving several times the last 10 years, only to a year later have 4! of these Pacaso 'time share' like vacation LLC/commercially owned houses popping up in my neighborhood. I'm devastated - this is supposed to be a residential area!! I am very worried about my family's safe & peaceful living situation, now that I'll be impacted by 4 of these houses (one across the street) - each with 8 groups of owners and/or their guests circulating in and out all year round. Many Pacaso have 4 bedrooms that easily accommodate 8+ people, and pool in the backyards with outdoor areas for gatherings/parties. It's a huge difference having your neighbor throwing an occasional party versus non-stop having a new group of people next door visiting for thier token time of vacation / partying. Pacaso houses also come with increased parking problems as these properties tend not have garages or driveways (often transformed into addl bedroom). Specifically would you mind looking into building code the one at 1242 Madrona / Oak? Looks like they're adding a guest house with vary narrow set back from the oak side neighbor. Is that an approved building? Maybe they're getting around that by making it a partial garage? Add to that, the 4 Pacaso houses are all in close proximity of RLS with kids walking / biking to and from school. What are the safety concerns that this is imposing with new people circulating in and out all year round and increased car traffic? Worst case scenario there will be a liability situation that will put a stop to Pacaso. Please, please stop Pacaso before we even get close to that. Respectfully, Mari Jansdotter Sent from Yahoo Mail on Android 12-529 PACASO = PARTY HOUSES! Debbie Polverino 5/11/2021 To the members of the City Council. In the recent Napa Register article, Austin Allison agrees that short term rentals are a problem, that commercial Timeshares are a problem- that's not what Pacaso is he said. Yet, Pacaso listed the Valley View Street "Pool House" as a 1/8 Timeshare Ownership property. After the city was notified by several concerned citizens and myself regarding "timeshares" listed for sale in residential zoned areas, Pacaso changed its online marketing from "1/8 Timeshare Ownership to 1/8 Shared Ownership. Owners who purchase still share the property in available time slots just like a timeshare. Living next door to a Pacaso home has been living next door to a full-time party house! The constant music with speakers blaring, loud conversations until 2 am and later, noise violations along with excessive vehicles parked on the street or in front of our homes. The additional noise of gardeners blowing dirt and leaves into our yard, Pool service, catering trucks, housekeeping scheduled more frequently. Open houses are held with statements made with, "this is a great place for pool parties and entertaining, it's a perfect place to bring friends and extended family." This home on Valley View Street was a weekend getaway home for the previous owners who had loud weekend parties. It was a constant nightmare and all the homes nearby complained. Now the property has been split up to 8 owners. The Saint Helena P.D. has already been to this home at least 3 times for noise violations after 10pm. There must be a way to stop these repeated violations and offenders. Pacaso's has written policies for its owners on their website that they must adhere to. No parking on the street, no parties, no noise after 9pm to 7am, no dogs over 80 pounds. Policies have been broken several times already from each group including the Pacaso's owners. According to Mr. Allison, Saint Helena is running a dishonest campaign against Pacaso. Pacaso claims discrimination of outside ownership which is not the case. As we all know we welcome all people the opportunity to live in our quiet small town. Pacaso selling an 1,100 square foot home which is smallest of any home on our street for $1.7M is dishonest in my opinion. This is what he says is affordable housing for second home buyers who are paying in full, plus maintenance fees? When commercial companies buy a dozen homes in Napa Valley and plans additional purchases to be split up to 8 shares it is not committed to the community or our quiet neighborhoods. Zoning is in place for a reason. Commercial companies operating in full time residential streets should adhere to the rules that are in place and only buy up in areas where other vacation homes are abundant and not a disruption. What happens should we decide to sell our home? How will people feel about buying next door to a home owned by 8 owners who don't know each other and all come at different time slots for as little as 2 days at a time? We will have to disclose this information. This put a negative mark on our property. This is something I want you to think about! Say NO to Pacaso! Thank you. 12-530 From: Amy Caldarola <amycal@comcast.net> To: Paul Dohring CC: Anna Chouteau; Lester Hardy; Eric Hall Sent: 5/23/2021 1:04:24 PM Subject: [External] Picaso Dear Council Members, This is Amy Caldarola here. I am very concerned about Picaso buying property in our residential neighborhoods under the guise of democratizing home ownership. This is not affordable housing. Picaso properties are time-shares and short-term rentals which violate municipal code provisions. The presence of these properties in residential neighborhoods is inappropriate and will degrade the quality of life. It has already done so with Picaso's property on Valley View; those neighbors are suffering with loud noise, music, and parties that go on to after midnight; even calling the police does not seem to stop them. I support the city in doing everything possible to defeat them. I also support a counter law suit against them if it makes legal sense. With that said, we are fighting for the soul of our community and this needs to be a number one priority. Picaso is in Napa, Sonoma, Healdsburg, and probably will move into Calistoga and Yountville. This is a fight worth fighting. It might be helpful for the affected counties and municipalities to join their resources together to oppose them. Please outline for me what the city is doing and what the plan is. Thank you. I really appreciate you taking the time to keep me informed on this very important and pressing issue. We must act now! Sincerely, Amy Caldarola 12-531 May 11, 2021 Good evening City Council members. My name is Clare Barr and I live in St. Helena. Tonight I would like to speak about the Pacaso Vacation Share homes. I listened carefully to the public comments of Pacaso Share owners made at our last City Council meeting. They sounded sincere in their desire to be a part of the St. Helena community. The problem is they have bought into a business model that will make that nearly impossible. To be a part of a real community means forming bonds with neighbors. How can that come about with a home next door that has possibly dozens of strangers coming and going, with visits no longer than 14 days at a time, a few times a year? And with the likelihood of visits gifted by other share owners, and a cleaning crew who appears before each arrival, the number swells. With the result that a Pacaso share owner, is viewed by their neighbors as only one in a sea of unfamiliar faces. And though the intentions of some of the share buyers might be good, can we say the same for all 7 of the remaining shareowners? One of whom might gift a weekend to his brother for a blowout bachelor party? Or as was the case in Napa, a single shareowner who conducted retreats in which close to a dozen visitors would come and go within one stay. That particular shareowner was charging her guests, which is a complication on an entirely different level. Pacaso would have us believe that their sharebuyers are families who simply want a quiet, lovely getaway. But in actuality, a Pacaso home is built for partying. Their own website says of one offering "This home takes entertaining to new heights". And yet another listing says that a 12-532 particular home "has been completely re -imagined to accommodate families, friends, and large groups". Another listing offers "year round fun and adventure". Now, none of us resent the visitor who wants to have fun. Indeed, our beautiful valley is an ideal place for celebration. And we all do that on occasion. But when you realize that every single visitor owning a Pacaso share has been wooed with the promise of "fun and adventure" within a house "built for entertaining", then you have the possibility of major partying with each and every visitor, all crammed into stays that last from 2-14 days. This is transient occupancy in our residential neighborhoods that cannot possibly be regulated under the Pacaso system. There is a reason why we have ordinances in place that designate where tourists and visitors can stay. It allows us to appreciate our visitors, giving them the space and accommodations in which to party and celebrate, while we ourselves can conduct our daily lives in the sanctuary of our residential neighborhoods. Which in turn, are places where we know our neighbors so well that we trust them with our keys, our pets, and even our children. With whom we share joy and sometimes sorrow, and whom are quick to lend a hand in times of crisis. And if we have learned anything in the last few years, it is that the ability to know and rely on our neighbors is the very thing that sustains our community through thick and thin. A vacation home with a parade of visitors coming and going, does not belong in our residential neighborhoods. Please Say No to Pacaso. Clare Barr St. Helena 12-533 From: Beth Gray <bgray14@gmail.com> To: Geoff Ellsworth Sent: 5/22/2021 3:01:13 PM Subject: [External] Pacaso Dear Mr. Mayor, I am writing to express my strong opposition against the infiltration of Pacaso and their timeshare strategy in the city of Saint Helena. As a full-time resident here in the city (and as your neighbor), I find it atrocious that the city has not been able to stop the infiltration of this community destroying business model. This business will do nothing but destroy our community. As an example, I witnessed the dumping of water from the pool into the creekbed from a home purchased by Pacaso right on the corner of Sylvaner/Reisting as they began to redevelop the home and expect to list it as fractional ownership. Illegal dumping of the pool water with disregard to any of the environmental consequences demonstrates their utter lack of care about the community. Similarly, hearing from the neighbors who live next to a Pacaso home on Valley View, I can only shake my head and sympathize with the poor neighbors having to deal with multiple cars showing up and loud music being played at all hours. One of the reasons I moved from San Francisco to Saint Helena was to enjoy the quiet sounds of nature, the beautifiil outdoors - not to listen to vacationers who only want to party for the two weeks that they have their time in the home. Please protect our city from these timeshares. I understand the city is being sued. I hope that we can collectively put the necessary resources behind this lawsuit to stop Pacaso from any more timeshares in St. Helena. Respectfully, Beth Gray 12-534 Report to the City Council Regular City Council - 12 Apr 2022 F �' EL Agenda Section: CONSENT ITEMS Subject: Consideration of Second Reading and Proposed Adoption of a Ordinance Adding Chapter 17.138 "Time Share Uses" and Sections 17.138.060 to Title 17, Zoning of the St. Helena Municipal Code, amending sections 17.48.030 (Central Business) and 17.52.030 (Service Commercial) and Deleting Section 17.112.130 of the St. Helena Municipal Code CEQA Exempt Determination: Prepared By: Ethan Walsh, City Attorney Reviewed By: April Mitts, Administrative Services Director Approved By: James C. McCann, Interim City Manager BACKGROUND The City Council held a public hearing on the proposed ordinance on March 22, 2022, and introduced the ordinance by title only and waived reading by a unanimous vote of the City Council. Staff recommends that the Council waive second reading and adopt the ordinance. The report below mirrors that provided to the Council at the March 22, 2022 meeting. Over the past two years, there has been significant discussion in the community regarding Section 17.112.130 of the City's Zoning Code, which prohibits the creation of a time-share project as a means of ownership of any single-family, two-family or multiple -family dwelling or any apartment house in the City (the "Time Share Ordinance"). The City Council discussed the Time Share Ordinance at its July 14, 2020 meeting in response to concerns raised regarding a real estate listing for a fractional or partial ownership interest in a residential home in the City. The prior City Attorney discussed this issue with the City, focusing on the question of the extent to which the City Council could regulate an ownership structure through the City's zoning authority, and noted the challenges of doing so. At the conclusion of the Council's discussion of this issue, Council directed the City 12-535 Attorney and staff to continue to research its options to address the concerns raised by members of the community in response to the listing of the home at issue. In the months following the July 2020 Council meeting, the company that had been marketing that original home, now known as Pacaso, began marketing other homes in the City, and the City received additional complaints from members of the community. Based on new information that was available to the City, primarily through Pacaso's marketing materials, the City Attorney's office concluded that the properties being marketed by Pacaso were notjust fractional or partial ownership structures, but were also being marketed to be used as a time share project that would be prohibited under the City's ordinance, and informed Pacaso of that conclusion. Pacaso disagreed with the City Attorney's conclusion, and initiated a lawsuit in an effort to compel the City to retract its conclusion. That litigation is ongoing. When reviewing the Time Share Ordinance in this context, the City Attorney's office found that the substance of the Time Share Ordinance has not been updated since its adoption in 1982. The City Attorney's office concluded that the Time Share Ordinance would benefit from an update to refine the definitions to more directly address the impacts of time-share uses, to clarify the means used by the City to enforce the restrictions on time share uses, and to clarify how time share uses are treated in non-residential districts. City staff initially delayed initiating any changes to the Time Share Ordinance while the litigation was ongoing. However, due to the continued marketing of time share uses within the City, staff has decided to move forward with recommending the proposed updates to the City's ordinance. On March 1, 2022, the Planning Commission voted unanimously to recommend the City Council approve the proposed ordinance. DISCUSSION The Discussion section of the Staff Report is organized as follows: First, the section provides a brief explanation for the City's conclusion that the homes that have been marketed by Pacaso constitute time share projects. While the City's conclusion does not directly affect the changes to the Zoning Code set forth in the proposed ordinance, it is helpful to understand that the Time Share Ordinance, both in its original form and as proposed to be amended, is intended to protect against the impacts that these homes and similar uses could have on the City's housing supply and the character of the City's residential districts. Second, this section discusses the legal basis for the City's Time Share Ordinance, the reasons why the City prohibited time share uses in residential properties, and why those reasons continue to apply today. Third, this section outlines the changes made in the proposed ordinance and the reasons for the proposed changes. A.Current Time Share Ordinance and Application to Pacaso Homes Section 17.112.130 of the Zoning Code prohibits the creation of a time-share project as a means of ownership of any single-family, two-family or multiple family dwelling or apartment house within the City. A time-share project is defined in that section as any real property that is subject to a time-share program. A time-share program is in turn defined in part as an arrangement whereby the use, occupancy or possession of the 12-536 property circulates among purchasers according to a fixed or floating time schedule on a periodic basis for a specific period of time during any given year. Pacaso provides a significant amount of information on its website regarding the manner in which its homes are used by the purchasers of a Pacaso home. According to Pacaso's website, the single family residences marketed by Pacaso are held by a property -specific limited liability company ("LLC"), and each co-owner purchases a 1/8 share in the LLC. (Pacaso.com/learn) Each 1/8 share entitles the co-owner to 44 stay nights within any 365 day window. Stays can be from 2 to 14 nights in duration for each 1/8 share. Back-toback stays are not permitted. (Pacaso.com/faq/scheduling) Stays are booked on an app, with specific rules governing the number of "special dates" that each co-owner can book, and the number of stays that each owner can book during "peak seasons." (Id.) Each owner can book the residence to use themselves, or may allow guests to use the residence, whether or not the co-owner is present. (Id.) Between each stay, Pacaso conducts a thorough inspection and cleaning. ("5 reasons Pacaso is better than a timeshare." Pacaso.com/blog/better-than-resort-timeshare) The Pacaso model grants each 1/8 owner the right to use the property for a specific period of time (44 days in a year) in increments of 2-14 days. The use, occupancy and possession of the property circulates among the co -owners according to a floating time schedule that gives each co-owner exclusive rights to the property for a specific period of time each year. This use structure fits squarely in the City's definition of a time-share program, and the properties operated by Pacaso in this manner would therefore be timeshare projects under the existing Time Share Ordinance. B.Reasons for the Time Share Ordinance 1. The City's General Plan The City of St. Helena has long been defined by its rural, small town quality and agricultural character. In adopting the St. Helena General Plan Update 2040, the City noted that the defining, unifying goal of all the elements of the 1993 General Plan was: To protect the rural, small town quality and agricultural character of St. Helena. It is the General Plan's intent that the preservation of this small town character be the unifying philosophy that overlays all other stated goals and policies. (General Plan 2040, p. 1-2.) While the 2040 General Plan acknowledges that this is no longer the sole, overriding focus of the General Plan, retaining the small town character of St. Helena remains a primary focus of the City's land use planning. (Id.) A key component of retaining the City's small town character is maintaining a balance between the economic benefits that arise from visitors who come to St. Helena for its wineries, restaurants and historic downtown, and maintaining its authentic small town quality of life for the City's residents. This theme is consistent throughout the City's General Plan, and maintaining this balance is key to the City's long term viability. The General Plan notes in its Introduction that "[t]he community stands out in the Valley for its unique, historic character and its ability to attract visitors while also supporting the needs 12-537 of its resident population." (General Plan p. 1-8.) The City has set goals to maintain that balance, striving to achieve an economy that "will meet the basic needs of residents, while balancing the benefits and impacts of visitors and provide better economic opportunities. (General Plan 1-15.) The City further seeks to "promote sustainable tourism practices that allow the City to enjoy the economic benefits of visitors to the region while maintaining the authentic small-town quality of life." (General Plan p. 3-9.) St. Helena is a renowned tourist destination, bringing visitors from throughout the world to its wineries, restaurants and downtown, but it is also a functioning City and community, with residents who contribute to its social fabric. Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance. The City has commercial districts, like the Service Commercial district and the Central Business district, that provide for uses that serve both visitors and the local community, such as restaurants, retail shops and winery tasting rooms, among others, along with lodging where those visitors can stay. (St. Helena Municipal Code §§17.48.030, 17.52.030.) The City also has residential districts that provide housing for those who live in the community, at varying densities in order to provide a diversity of housing types. 2. Use of Zoning to Preserve Residential Areas The use of zoning to preserve the character of the residential districts of a City has been common for over a century. In the seminal case of Euclid v. Ambler the United States Supreme Court upheld the validity of comprehensive zoning that would set aside residential districts "from which business and trade of every sort, including hotels and apartment houses, are excluded." (Euclid v. Ambler Co. 272 U.S. 365, 390.) The U.S. Supreme Court upheld the Village of Euclid's zoning ordinance in that instance, noting that the inclusion of non-residential uses in residential districts may have an increasingly deleterious impact on the residential area "until, finally, the residential character of the neighborhood and its desirability as a place of detached residences are utterly destroyed." (Id. at 394.) The California Court of Appeals followed Euclid and subsequent cases in upholding the City of Carmel-by-the-Sea's zoning restriction on short-term rentals. (Ewing v. City of Carmel -By -The -Sea (1991) 234 Cal.App.3d 1579.) In that case, the Court noted that the City's chief purpose in adopting the short-term rental restriction was "to provide an appropriately zoned land area within the City for permanently single-family residential uses and structures and to enhance and maintain the residential character of the City." (Id. at 1579.) In upholding Carmel's short-term rental restriction, the Court found that short-term rentals "undoubtedly affect the essential character of a neighborhood and the stability of a community. Short-term tenants have little interest in public agencies or in the welfare of the citizenry. They do not participate in local government, coach little league, or join the hospital guild. They do not lead a scout troop, volunteer at the library, or keep an eye on an elderly neighbor. Literally, they are here today and gone tomorrow —without engaging in the sort of activities that weld and strengthen a community." (Id. at 1591.) 12-538 3.Impacts of Time Share Uses on Residential Districts Like Carmel, the City of St. Helena strives to maintain the character of its residential areas in the face of intense demand for accommodations to serve visitors to St. Helena. The Time Share Ordinance is one of the means that the City has in place to ensure that it is able to maintain its existing and limited housing stock for use in long term residency, and to maintain the character of its residential zoning districts. When the City originally adopted the Time Share Ordinance in 1982, the City Council made specific findings based on the impact it foresaw if time share uses were to locate in the residential areas of the City. Those findings were as follows: 1. There is a critical shortage of affordable housing in the city for long-term occupancies (more than six months annually), and the availability of additional residential dwelling units is substantially restricted by the growth management system. 2. The conversion of residential dwelling units within the city to time-sharing projects eliminates residential dwelling units otherwise available for long-term occupancies (more than six months annually) in the city. 3. Time-sharing projects have the same character as commercial hotels, motels and other transient occupancy uses due to their transient nature and to the multiple shortterm (less than six months annually) occupancies by those participating in timesharing projects. 4. Such commercial or quasi -commercial like use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods. 5. The city council finds and determines that this section is necessary to protect the public health, safety and welfare of the citizens of the city. As discussed in more detail below, these findings continue to hold true in St. Helena, and continue to support the City's decision to restrict time-share uses in residential districts. i. Housing Shortages and Impacts of Time -Share Uses on Existing Housing Stock In adopting the current Time Share Ordinance, the City Council found that there was a critical shortage of affordable housing in the City for long-term occupancies. That continues to be the case, and is undoubtedly worse than was the case at the time the Time Share Ordinance was originally adopted. The most recent census data lists the median value of owner occupied homes in St. Helena at $1,112,100 for the period of 2015-2019, while the Zillow Home Value Index estimates medial home values in St. Helena to be approximately $1,870,000 as of February 2022. www.census.gov/quickfacts/sthelenacitycalifornia; zillow.com/home-values/.) In contrast, the median household income in St. Helena from 2015-2019 was $90,031, and the median income for a four person household in Napa County for 2021 is approximately 12-539 $109,200. (www.census.gov/quickfacts/sthelenacitycalifornia; www.hcd.ca.gov/grantfunding/income-limits/state-and-federal-income- limits/docs/income-limits-2021.pdf.) At the time of adoption of the City's Housing Element in 2015, the income necessary to purchase a median priced single family home was nearly $200,000 per year, and prices have risen dramatically since then. (City of St. Helena Housing Element Update 2015-23, p. 3.) The cost of homes currently in St. Helena are well in excess of what median income residents of St. Helena can afford, as well as median income residents of Napa County generally. Further, as Erika Sklar observed in the St. Helena Housing Update Report that she prepared for the City in April 2018, "St. Helena has more local jobs than people in the labor force, demanding large numbers of commuters to fill local jobs. Workers commute daily into St. Helena, many because there is no local housing that is affordable at the incomes that they make. 36% of St. Helena households cannot afford market rents while 70% of St. Helena households cannot afford to purchase a home. Paramedics and preschool teachers cannot afford St. Helena's market rents. Teachers, registered nurses, winery and hospitality managers and non-profit directors cannot afford homeownership in St. Helena." (St. Helena Housing Update Report, p. 7 (April 2018).) The City has made and continues to make efforts to address the need for affordable housing in the City, including providing assistance for the Brenkle Court, Turley Flats and 963 Pope Street projects. The City has also ensured that new non-residential development will assist the City in providing adequate affordable housing, as evidenced by the significant contributions to affordable housing made by the Farmstead Lodging project through its development agreement with the City. These efforts, however, have highlighted the challenges of providing housing at all income levels, with the most significant challenge being a limited supply of existing housing stock in the City, and a limited supply of available land for new housing. Given the housing shortage already in existence, losing additional housing stock will only make this problem worse. The findings in the original Time Share Ordinance also note that the conversion of homes to time sharing projects would eliminate residential dwelling units that would otherwise be available for long term residential use. This continues to be true, as a home that is used for time share purposes will no longer be available for households to use as their long term residence. This threat to the City's existing housing stock is not insignificant. The publicity regarding Pacaso's rise as a company speaks to a pent up demand for homes that could be converted to time share use, reducing available housing stock for long term use. Pacaso's co-founder has indicated that "[t]here are tens of millions of families that aspire to own second homes but are unable to, due to reasons of cost." (Just Five Months Old, Zillow Co -founder's Pacaso Claims It's Already A Unicorn" Noah Kirsch, March 24, 2021 (www.forbes.com/sites/noahkirsch/2021 /03/24/just-five-months-old- zillowcofounders-pacaso-claims-its-alread-a-unicorn/.)) In discussing Pacaso's model, Dan Wenhold of the venture capital firm Fifth Wall said "[t]hey were taking a previously illiquid asset, which was a timeshare, and making it affordable for the masses, also making it attainable for folks who wanted to own a second home but previously weren't able to." ("Pacaso, the Proptech Startup Founds by Zillow Alums, Raises $125M Series 12-540 C" Sophia Kunthara (September 14, 2021) (news.crunchbase.com/news/proptech- startup-pacasoraises-125m-series-c.)) Creating a new market for these prospective buyers who otherwise would not buy second homes unquestionably increases demand for these homes by creating an incentive for timeshare companies to buy up residences to meet this market demand. Creating more demand, and reducing supply, will further ratchet up housing costs, exacerbating the already significant housing shortage in the City. ii. Impacts to Character of the City's Residential Districts The City Council additionally found as part of the adoption of the original Time Share Ordinance that time-sharing projects have the same character as commercial hotels, motels and other transient occupancy uses due to theirtransient nature and to the multiple short-term occupancies by those participating in time-sharing projects. The Council concluded that this commercial or quasi -commercial like use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods. This continues to be the case, as the nature of time share uses of residential property is different than the typical long term residential uses for which the residential districts of the City are intended. The complaints that have been made by some local residents regarding the Pacaso homes are illustrative of the distinctions between time share uses and long term residential uses. A sampling of the email complaints received by the City are included in Attachment No. 2 to this Staff Report. The complaints received center on concerns over more intense traffic and parking issues, outdoor parties and conversations going late into the evening, sometimes as late as 2 A.M. One neighbor complained of outdoor lighting shining into her daughter's room at night. They complained of traffic and inadequate parking for the visitors to these homes. Further, neighbors have noted that with each turnover from one stay to another, cleaning and landscaping crews come to clean the unit and prepare it for the next user. While this level of maintenance is appropriate for a commercial vacation property, it impacts the residential character of the surrounding area by adding parking and noise burdens in the neighborhood. Living next door to a home where the residents turnover every 2-14 days, and professional cleaning and landscaping crews come to the property between each visit is much more akin to living by a commercial lodging project than a residential home. This is not at all surprising, given that these time share homes are used by people who are on vacation. While long term residents may have an occasional party at their home, the time share model means that these residences are constantly being used by people who are on vacation, hosting parties or celebrating special occasions. These activities by their nature are more intense than typical residential use of property. The intensity of this use is a significant reason that these uses can change the character of a residential neighborhood. Long term residents, whether owners or renters, will occasionally have guests, and will occasionally have parties, but these time-share homes are used exclusively by people who are coming to the City on a short term basis for vacation or leisure. People will naturally stay out later, entertain more and gather in larger 12-541 numbers while on vacation. That is the reason that these uses are more appropriate in non-residential areas that are intended to cater to the City's visitors and tourists. Time share uses can change the character of a residential neighborhood by having it serve not only as a residential area but also a visitor lodging area, and subjecting it to the impacts that come with that more intense land use. In their marketing materials, Pacaso cites this intensity of use as a benefit, indicating that having these units filled with visitors seven days a week will benefit the local economy, since these visitors will patronize local businesses. (pacaso.com/communities) However, as noted above, the City strives through its General Plan to achieve a balance between benefits to the local economy and maintaining the character of the City. The City seeks to achieve this balance by promoting "sustainable tourist practices that allow the City to enjoy the economic benefits of visitors to the region while maintaining the authentic smalltown quality of life, (General Plan p. 3-9) and striving to achieve a local economy that "will meet the basic needs of residents, while balancing the benefits and impacts of visitors." (General Plan p. 1-15.) Bringing more visitors into residential neighborhoods to improve the local economy does not help to achieve that balance. It instead tips the scales in favor of the local economy, at the expense of the residential character of these neighborhoods. The nature of the timeshare use itself can impact the residential character of the City's residential districts because it will ensure that the time share users can only use their property for a limited amount of time each year. In the case of Pacaso owners, each stay is limited to 2-14 days. As discussed above, in the Ewing v. City of Carmel -by -the -Sea case, the California Court of Appeal found that short term rentals would affect the essential character of a neighborhood and the stability of a community. The Court noted that "[s]hort term rentals have little interest in public agencies or in the welfare of the citizenry. They do not participate in local government, coach little league, or join the hospital guild. They do not lead a Scout troop, volunteer at the library, or keep an eye on an elderly neighbor. Literally they are here today and gone tomorrow —without engaging in the sort of activities that weld and strengthen a community." This same problem is present with time-share uses. Each co-owner is in the unit on a short-term basis, and without the time to participate in the types of activities or build the relationships that create the fabric of a community. At the April 28, 2021 council meeting several Pacaso co -owners spoke of their experiences in St. Helena. All of them spoke of their affection for the community and the traditions they had established, but these were centered on attending local events and visiting shops, restaurants and wineries. These types of transactional activities are all beneficial to the City's local economy and are what the City hopes to see from visitors to the City, but it is not the type of community involvement described in the Ewing case that binds and strengthens a residential community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its small town character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents who will engage in the community in the manner described by the Court in Ewing, to the betterment of the entire community. 12-542 C.Proposed Amendments to the Time Share Ordinance The proposed Ordinance would make certain changes to the City's Existing Time Share Ordinance, as described below. 1.Findings and Establishment of New Chapter The proposed Ordinance includes detailed recitals and findings describing the policy bases for the City's regulation of time share uses. The findings are consistent with the findings made as part of the original Time Share Ordinance, but more detail has been added. The policy bases for the proposed Ordinance are discussed in the sections above, and further discussion is not necessary here. The proposed Ordinance also relocates the restrictions on time share uses to its own chapter at Chapter 17.138. The Time Share Ordinance is currently located in Chapter 17.112, General Site Design and Development Standards. City staff believes that with the added level of detail in the Proposed Ordinance, these provisions merit being located in a separate chapter, and has changed the location of the Timeshare Ordinance accordingly. 2.Definitions The Proposed Ordinance amends the definitions that are used to define time share uses, with the new definitions set forth in Section 17.138.020. The new definitions are modeled on the definitions utilized by the state to regulate time-shares in the Vacation Ownership and Time -Share Act of 2004 (Bus. & Prof. Code §§11210-11288), but are modified somewhat to better apply in the land use regulation context. The new ordinance includes a number of definitions that work in concert to define a timeshare use. The ordinance defines a "time-share use" as the use of one or more accommodations, or any part thereof, as part of a time-share property pursuant to a timeshare plan. An "accommodation" is defined in this Chapter to include a range of residential units that could potentially be used for time-share purposes. The types of residential units that can be accommodations are listed at the beginning of Section 17.138.020 in the proposed ordinance. A "time-share plan" is defined in the ordinance, and generally includes any arrangement, plan, scheme or similar device whereby a purchase receives the right to exclusive use of the accommodation, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year. A "time-share property", in turn is defined as one or more accommodations that are subject to the same time-share plan together with any property rights that are appurtenant to the accommodations. A "time-share instrument", is the document or documents that create or govern the operation of the time-share plan. 12-543 Therefore a time-share use is the use of a residential property that fits within the definition of an "accommodation" under the ordinance, pursuant to a "time-share plan", which grants each owner of the time-share property exclusive use of the property for a certain period of time each year, but not the full year. It is important to note that not all properties with multiple owners or owned by business entities (such as LLCs) would constitute a time-share use under these definitions. The definitions focus on the manner in which the accommodation is used, not how it is owned. A time-share plan allows each owner exclusive use of the property for a specific period of time. This manner of use prevents the property from being used for long term residency, and leads to the continual cycling of visitors through the property and the more intense, constant vacation oriented use that the ordinance seeks to limit in residential districts of the City. A property that is owned by a group of friends or extended family members, whether through a separate business entity or otherwise, will not necessarily mandate that only one owner will be able to use the property at a time. The more formal arrangement found in time-share uses increases the intensity of use, in that each individual time-share owner cycles through the property, whereas families or friends are more likely to use the property together or in groups leading to less transition in the residential neighborhood. The more formal relationship, use of professional property managers and rights to exclusive use found in timeshare uses contributes to the commercial character of the property, with added traffic due to the more frequent turnover of visitors and more frequent cleaning and inspection between each user, which is common for a commercial vacation property, but not for a home owned by family or friends. 3.Enforcement The new ordinance additionally adopts a new enforcement structure for the City timeshare restrictions, modeled on the City's short-term rental ordinance. The ordinance prohibits both the use of accommodations for time-share use, and the advertisement of accommodations for time-share uses. This will better allow the City to prevent time-share uses in residential neighborhoods before they occur. The proposed Ordinance also outlines the process that will be used to enforce this new Chapter, again based on the City's existing short-term rental regulations. This approach has proved to be effective in enforcing the City's short-term rental regulations, and will help the City to take a more preventative approach to enforcing its time-share regulations as well. 4.Time Share Uses in Service Commercial and Central Business Districts Finally, while the City's existing Time Share Ordinance did prohibit time-share projects within certain types of residential dwelling units within the City, it does not make distinctions based on the various zoning districts of the City. Given that the primary concerns and impacts of this use arise from the high intensity use of property that negatively impacts the residential character of residential districts within the City, this use may not have the same impacts in commercial districts where visitors can be closer to 12-544 the amenities in the City that cater to visitors. The proposed new ordinance would allow time-share uses in the Service Commercial and Central Business Districts as conditional uses, provided that such time-share uses would be limited to accommodations in upper floors in conjunction with a mixed use project, would be required to provide at least one parking space for accommodations of two or fewer bedrooms, and at least two parking spaces for accommodations of three or more bedrooms, and would be subject to such other conditions imposed by the City has part of the conditional use permit process. As part of the application for a time-share use, the applicant would have to provide specific information including a management plan and specific information on the accommodations and any ancillary uses. The City would then review the application process in accordance with its normal process for review of conditional uses. This would allow the City to address potential impacts associated with this use, similar to the approach that the City uses with hotels and other lodging accommodations in these districts. Consistent with this change, the proposed ordinance updates the list of conditional uses in both the Service Commercial and Central Business Districts to include time share uses as regulated by the new Chapter 17.138. The Planning Commission held a public hearing to consider the proposed ordinance at its regular meeting of March 1, 2022. Following the public hearing, the Planning Commission unanimously recommended that the City Council adopt the proposed ordinance. City staff has made minor, non -substantive edits to the proposed ordinance that went to the Planning Commission to correct typographical errors, and to add the sections amending the list of conditional uses in the Service Commercial and Central Business Districts. FISCAL IMPACT None RECOMMENDED ACTION Staff recommends that the City Council conduct the second reading by title only and waive further reading and adopt the Ordinance Adding Chapter 17.138 "Time Share Uses" and Sections 17.138.010-17.138.060 to Title 17, Zoning, of the St. Helena Municipal Code, amending sections 17.48 (Central Business) and 17.52 (Service Commercial) and Deleting Section 17.112.130 of the St. Helena Municipal Code. ATTACHMENTS Attachment 1-St. Helena Time Share Ordinance -Final Attachment 2-Community email comments 12-545 CITY OF ST. HELENA ORDINANCE NO. ADDING CHAPTER 17.138 "TIME SHARE USES" AND SECTIONS 17.138.010 — 17.138.060 TO TITLE 17, ZONING, OF THE ST. HELENA MUNICIPAL CODE, AMENDING SECTIONS 17.48.030 AND 17.52.030 AND DELETING SECTION 17.112.130 OF THE ST. HELENA MUNICIPAL CODE WHEREAS, the City of St. Helena is a popular tourist destination, known for its scenic Napa Valley location, exceptional wineries and restaurants, historic Main Street and small town agricultural character; and WHEREAS, preserving the rural, small town quality and agricultural character of the City of St. Helena has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's 2040 General Plan; and WHEREAS, the City of St. Helena stands out in the Napa Valley for its ability to attract visitors while also supporting the needs of its resident population. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy; and WHEREAS, the City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses; and WHEREAS, the City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City of St. Helena; and WHEREAS, according to the U.S. Census Bureau, the current median household income in the City of St. Helena is $90,031, while the estimated value of owner - occupied housing units from 2015-2019 was approximately $1,112,100, with current real estate listings suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City; and WHEREAS, as noted in the St. Helena Housing Update Report prepared for the City in April 2018, "St. Helena has more local jobs than people in the labor force, demanding large numbers of commuters to fill local jobs. Workers commute daily into -1- 12-546 St. Helena, many because there is no local housing that is affordable at the incomes that they make. Thirty six percent (36%) of St. Helena households cannot afford market rents while seventy percent (70%) of St. Helena households cannot afford to purchase a home. Paramedics and preschool teachers cannot afford St. Helena's market rents. Teachers, registered nurses, winery and hospitality managers and nonprofit directors cannot afford homeownership in St. Helena"; and WHEREAS, the City has made significant efforts to address the need for housing at lower income levels, of which recent examples include providing assistance to local nonprofit Our Town St. Helena for the Brenkle Court development, a mutual self-help housing development providing homeownership opportunities to eight low income working families, as well as the acquisition of a home located at 963 Pope Street using a charitable sale strategy. The property at 963 Pope Street is being developed with an additional four units to provide a total of five new affordable rental units in the City; and WHEREAS, further, in connection with the recently approved Farmstead lodging project, the City negotiated with the developer to contribute one million dollars toward the purchase of property to be used for the development of not less than twenty units of housing that will be affordable to low and very low income households, and an additional two million two hundred thousand dollars to be used more generally toward the development of affordable housing in the City; and WHEREAS, the City additionally provided substantial financial assistance to the recently completed Turley Flats Affordable Housing development, which provides eight units of rental affordable housing in a three story building located at 1105 Pope Street; and WHEREAS, these efforts have helped to address the City's need for affordable housing, but have also highlighted the challenge of providing sufficient housing to meet demand, particularly at more affordable levels, due to the significant costs of acquiring housing or land for the development of housing in the City and the limited supply of such land; and WHEREAS, the conversion of existing residential units to uses other than long- term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community; and WHEREAS, the City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses; and -2- 12-547 WHEREAS, to this end, in 1982 the City adopted Ordinance No. 82-07, which prohibited the creation of time-share projects as a means of ownership of any single- family, two-family or multiple -family dwelling or any apartment house within the City. This restriction was imposed because the conversion of residential dwelling units to time-sharing projects would eliminate residential dwelling units that would otherwise be available for long-term occupancies, and were inappropriate in residential areas because those uses have the same character as commercial hotels, motels and other transient occupancy uses, and would result in increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods; and WHEREAS, the City has historically not received complaints about time-sharing uses in residential neighborhoods. Commencing in 2020, however, the City began receiving complaints regarding single family homes in the City that were being sold and/or marketed as "fractional ownership" or "co -ownership" homes, wherein each buyer may acquire a one -eighth interest in a limited liability company that will own the home. Under the structure pursuant to which these dwelling units are marketed and sold, each owner gets a one -eighth share along with the right to use the home for one - eighth of each year indefinitely. During each owner's usage period, that owner has exclusive use of the entire house. All rentals are prohibited; only owners and their guests are permitted to use the house. Each owner pays regular assessments to fund the operating costs of the home and maintenance reserves; and WHEREAS, this arrangement, which provides that each purchaser is entitled to exclusive use of the property for a fixed number of days each year, is a "time-share plan" as defined in Business and Professions Code section 11212, and a "time share program" as defined in Section 17.112.130 of the City's Municipal Code; and WHEREAS, the City has received numerous complaints regarding these properties, including parking impacts from large numbers of people staying at these properties; excessive noise late into the evening due to frequent outdoor parties; traffic due to frequent visitor turnover; traffic, noise and parking concerns due to frequent visits from cleaning, landscape maintenance and pool cleaning services that come to the properties in between each stay to prepare the home for the next guest; and an inability to maintain lines of communication to set community expectations with the users of the unit, as visitors only frequent the homes for short term stays of 2 to 14 days; and WHEREAS, the complaints received by the City are reflective of the reasons that the City prohibited time-share projects within residential areas of the City. The time- share uses provide a short-term, high impact vacation oriented use of the property, where those that buy into the time-share use the home for entertaining and short term stays while visiting restaurants, wineries and other tourist oriented locations in St. Helena and the surrounding Napa Valley; and WHEREAS, this high impact use, combined with the frequent turnover and commercial management of these properties is not consistent with the residential districts in which they are located. It is commercial in nature, in that these time-share -3- 12-548 uses are structured as a short-term, tourist oriented, visitor serving use of the subject properties. The use of these properties as time-shares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City; and WHEREAS, expanded use of residential properties for time-share uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for time-share uses of residential properties; and WHEREAS, this encroachment of tourist oriented, visitor serving uses in residential neighborhoods will not only compromise the residential character of these areas, but will also further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City; and WHEREAS, the City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad authority to regulate the development and use of real property within its jurisdiction to promote the public welfare; and WHEREAS, pursuant to and in accordance with this authority, the City Council desires to reaffirm its restrictions on time-share uses in residential areas, and to update the language of the Zoning Code to provide consistency with the terminology used to define time-share uses in State law. Further, the City desires to provide greater clarity as to the zoning districts in which time-share uses are permitted as conditional uses, and the standards pursuant to which they will be reviewed in those zoning districts; and WHEREAS, the Planning Commission of the City of St. Helena held a duly noticed public hearing on March 1, 2022, as required by law to consider all the information presented by staff, and public testimony presented in writing and at the meeting; and WHEREAS, on March 1 2022, the Planning Commission of the City of St. Helena recommended that the City Council adopt this Ordinance amending the Municipal Code as described herein by a 5-0 vote; and WHEREAS, on March 22, 2022, the City Council held a duly noticed public hearing, accepting testimony from the public, and discussed the proposed amendments and staffs recommended approval of this Ordinance; and WHEREAS, the proposed zoning amendments are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the agricultural, small town character of the City of St. Helena; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply; and -4- 12-549 Now, therefore, the City Council of the City of St. Helena does hereby ordain as follows: SECTION 1: The above recitals are hereby incorporated as though set forth in this section. SECTION 2: Chapter 17.138 and sections 17.138.010 — 17.138.060 are hereby added to Title 17 of the St. Helena Municipal Code, to read as follows: "Chapter 17.138 TIME-SHARE USES 17.138.010 Purpose and Findings 17.138.020 Definitions 17.138.030 Time-share Uses Restricted to Service Commercial (SC) and Central Business (CB) Districts 17.138.040 Application Process and Development Standards 17.138.050 Violations, Enforcement and Civil Penalties 17.138.010 Purpose and Findings A. There is a critical shortage of permanent, long-term housing in the City of St. Helena. B. A limited supply of suitable vacant land, land values, and market demand for land for other uses, including but not limited to use of property for vineyards, have limited the construction of additional housing in the City of St. Helena. C. St. Helena is a popular tourist destination known for its scenic Napa Valley location, exceptional wineries and restaurants, historic Main Street and small town agricultural character. D. The City of St. Helena stands out in the Napa Valley for its ability to attract visitors while also supporting the needs of its resident population. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. E. Time-share uses are not an appropriate land use in the City's residential districts due to the multiple occupancy of time-share properties, the short-term, tourist oriented use of such property and commercial management of time-share facilities, all of which -5- 12-550 create increased traffic generation, excessive noise, disruption to residential communities through commercial -level maintenance of the time-share facilities, and therefore are appropriately confined to commercial zoning districts. F. Conversion of permanent housing to time-share facilities removes existing housing units from the City's existing stock and exacerbates an already severe housing shortage. G. It is therefore in the public interest to prohibit conversions of existing housing units into time-share facilities, as to do so eliminates needed housing stock by diverting those units to a tourist -oriented, commercial use. 17.138.020 Definitions For purposes of this Chapter, the following words and phrases shall have the meaning respectively ascribed to them by this Section: "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.160. "Building" shall have the meaning ascribed to it by Section 17.04.160. "Dwelling unit" shall have the meaning ascribed to it by Section 17.04.160 "Managing entity" means the person who undertakes the duties, responsibilities and obligations of the management of a time-share plan. "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. "Time-share instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a time-share plan and includes the declaration dedicating accommodations to the time-share plan. "Time-share interest" means the right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, regardless of whether or not such right is coupled with a property interest in the time-share property or a specified portion thereof. "Time-share plan" means any arrangement, plan, scheme, or similar device, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given lI 12-551 year, on a recurring basis for more than one year, but not necessarily for consecutive years. "Time-share property" means one or more accommodations subject to the same time- share plan, together with any other property or rights to property appurtenant to those accommodations. "Time-share use" means the use of one or more accommodations or any part thereof, as a time-share property pursuant to a time-share plan. 17.138.030 Time-share Uses Restricted to Service Commercial (SC) and Central Business (CB) Districts Time-share uses are conditional uses within the City's Service Commercial (SC) District and Central Business (CB) District, subject to approval of a conditional use permit applied for and approved in conformance with this Chapter. Time-share uses are not permitted in all other Zoning Districts in the City. 17.138.040 Application Process and Development Standards A. Application Process. Approval of a conditional use permit for time-share uses in the Service Commercial District or Central Business District shall be required in accordance with the requirements of Chapter 17.168. In addition to the application requirements contained in Chapter 17.168, an application for a time-share use shall be accompanied by the following documents which shall be subject to the approval of the planning director: 1. Management Plan. A management plan shall describe the methods employed by the applicant to guarantee the future adequacy, stability, and continuity of a satisfactory level of management and maintenance of the time share use. 2. Application Requirements. In addition to any application requirements established by this section and any other applicable requirements of this code, the following information shall be submitted as part of any application to develop or establish a time-share use: a. Typical floor plans for each accommodation. b. The phasing of the construction of the accommodations on the time- share property, if applicable. c. A description of any ancillary uses which are proposed in conjunction with the time share use. d. A description of the method of management of the time share use and indication of the management entity for the time-share property. e. Any restrictions on the use or occupancy of the accommodations. -7- 12-552 f. Any other information or documentation the applicant, city staff or commission deems reasonably necessary to the consideration of the time-share use, including any required environmental documents. B. Development Standards and Operational Requirements. Notwithstanding any other provision of this chapter, the following conditions must be met by any time-share use in any conditionally permitted zone. Additional requirements may be attached to a conditional use permit or development agreement if found to be necessary to assure that the time-share use meets the intent of this chapter: 1. Time-share uses developed in the Service Commercial District or Central Business District shall be limited to accommodations in upper floors in conjunction with a mixed -use project. 2. No existing residential use in the Service Commercial or Central Business District shall be converted to a time-share use. 3. Development Standards. The time-share use shall comply with all, development standards for the zone in which it is located. 4. Parking. Parking shall be provided as follows: a. For accommodations of two or fewer bedrooms, one parking space shall be provided for each accommodation. b. For accommodations of three or more bedrooms, two parking spaces shall be provided for each accommodation. 4. Modification or Waiver of Standards. The planning commission may modify or waive one or more of the regulations contained in this section if it determines that strict compliance is not necessary to achieve the purpose and intent of this section. 17.138.060 Violations, Enforcement and Civil Penalties A. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this chapter is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.20. B. Time-share use, and/or advertisement for time-share use, of an accommodation in violation of this chapter is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance. Any such nuisance may be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 1.12, except that the civil penalty for a violation shall be one thousand dollars ($1,000.00). Each day the violation occurs shall constitute a separate offense. -8- 12-553 C. Any responsible person who violates this chapter shall be liable and responsible for a civil penalty of one thousand dollars ($1,000.00) per violation per day such violation occurs. The city may recover such civil penalty by either civil action or administrative citation. Such penalty shall be in addition to all other costs incurred by the city, including without limitation the city's staff time, investigation expenses and attorney's fees. 1. Where the city proceeds by civil action, the court shall have discretion to reduce the civil penalty based upon evidence presented by the responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the court should consider the purpose of this chapter to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the responsible person's enrichment or profit as a result of the violation of this chapter. In any such civil action the city also may abate and/or enjoin any violation of this chapter. 2. Where the city proceeds by administrative citation, the city shall provide the responsible person notice of the right to request an administrative hearing to challenge the citation and penalty, and the time for requesting that hearing. a. The responsible person shall have the right to request the administrative hearing within forty-five (45) days of the issuance of the administrative citation and imposition of the civil penalty. To request such a hearing, the responsible person shall notify the city clerk in writing within forty- five (45) days of the issuance of the citation. The appeal notification shall include all specific facts, circumstances and arguments upon which the appeal is based. b. The city manager is hereby authorized to designate a hearing officer to hear such appeal. The city hearing officer shall conduct a hearing on the appeal within ninety (90) days of the request for the hearing unless one of the parties requests a continuance for good cause. The hearing officer shall only consider those facts, circumstances or arguments that the property owner or responsible person has presented in the appeal notification. c. The hearing officer shall render a decision in writing within thirty (30) days of the conclusion of the hearing. The hearing officer shall have discretion to reduce the civil penalty based upon evidence presented by the property owner or responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the hearing officer should consider the purpose of this chapter to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the property owner's or responsible person's enrichment or profit as a result of the violation of this chapter. d. Any aggrieved party to the hearing officer's decision on the administrative appeal may obtain review of the decision by filing a petition for writ MI 12-554 of mandate with the Napa County superior court in accordance with the timelines and provisions set forth in Government Code Section 53069.4. e. If, following an administrative hearing, appeal, or other final determination, the owner of the property is determined to be the responsible person for the civil penalty imposed by this section, such penalty, if unpaid within forty-five (45) days of the notice of the final determination, shall become a lien to be recorded against the property on which the violation occurred pursuant to Chapter 1.12. Such costs shall be collected in the same manner as county taxes, and thereafter the property upon which they are a lien shall be sold in the same manner as property now is sold for delinquent taxes. D. Any violation of this chapter may also be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 1.12, except that the civil penalty under Chapter 1.12 for a violation shall be one thousand dollars ($1,000.00). E. Each day the violation of this chapter occurs shall constitute a separate offense. F. The remedies under this chapter are cumulative and in addition to any and all other remedies available at law and equity." SECTION 3: Deletion of Section 17.112.130 Section 17.112.130 is hereby deleted in its entirety. SECTION 4: Amendment of Section 17.48.030 Section 17.48.030 is hereby amended to add the following text as a separate line immediately following "Theaters, movie and legitimate;", and immediately prior to "Tobacco/smoke shop, including the sale of tobacco, tobacco and/or nicotine products and equipment for smoking;": "Time share uses, pursuant to Sections 17.138.030 and 17.138.040;" SECTION 5: Amendment of Section 17.52.030 Section 17.52.030 is, hereby amended to add the following text as a separate line immediately following "Theaters, movie and legitimate;", and immediately prior to "Tobacco/smoke shop, including the sale of tobacco, tobacco and/or nicotine products and equipment for smoking;": "Time share uses, pursuant to Sections 17.138.030 and 17.138.040;" SECTION 6: CEQA -10- 12-555 This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. SECTION 6: Effective Date This ordinance shall take effect 30 days after its final adoption, and a summary of this ordinance shall be published once with the names of the members of the Council voting for and against the ordinance in the St. Helena Star, a newspaper of general circulation published in the City of St. Helena. THE FOREGOING ORDINANCE was introduced at a City Council on the day of , 2022 meeting of the St. Helena City Council on the following vote: Mayor Ellsworth: Vice Mayor Dohring: Councilmember Chouteau: Councilmember Hardy: Councilmember Hall: APPROVED: Geoff Ellsworth, Mayor ATTEST: CITY OF ST. HELENA Cindy Tzafopoulos, City Clerk -11- regular meeting of the St. Helena and was adopted at a regular day of , 2022, by the 12-556 From: Mari Jansdotter <mjansdotter@yahoo.com> To: Anna Chouteau Sent: 6/8/2021 7:25:45 AM Subject: Re: [External] 1242 Madrona pictures Re: Pacaso Thank you, Anna, for your kind reply. I'm sorry you all have to go through this lawsuit by Pacaso and hope the judge find in your favor. I have a follow-up question. Do you know who I should address it to? The Pacas house building on Kearney across the street from us has installed lights under the roofline that are on all night and installed in such a way they shine straight into our house, especially my daughter's bedroom. Are there any ordinances that I could refer to that help me ask them to please cover / redirect those lights or at least turn them off after 10 p.m? Thank you! Best Mari 12-557 m i 4':: 12-559 Sent from Yahoo Mail on Android On Tue, Jun 8, 2021 at 7:12 AM, Anna Chouteau <AChouteau@cityofsthelena.org> wrote: Hi Mari, Thank you for your email. I forwarded your email to City staff about the specific permitting questions. Our planning director is out of the office this week. We are defending ourselves in the lawsuit. Our City Attorney filed an anti-SLAPP motion that is now public information and the hearing will be coming up this summer. All my best, Anna Sent from my iPad On Jun 7, 2021, at 6:01 PM, Mari Jansdotter <mjansdotter@yahoo.com> wrote: To clarify, do they have permit allowing the new stricture going up at 1242 Madrona? The rendering from original sales listing shows a trellis (see attached) but a structure looking like a live -on unit close to (and taller than) the Oak neighbour' fence is being built. See pictures from today <20210607_175202jpg> <20210607_175219jpg> Sent from Yahoo Mail on Android On Mon, Jun 7, 2021 at 5:38 PM, Mari Jansdotter <mjansdotter@yahoo.com> wrote: Thank you for doing all you can to stop Pacaso! I am not o.k. with Pacaso's violation of city ordinance and I support the city's legal fight. In addition to signing the petition and putting a No Pacaso sign outside my home, what else can we on the community do to help, please? 12-560 I finally afforded my dream home after moving several times the last 10 years, only to a year later have 4! of these Pacaso 'time share' like vacation LLC/coin nercially owned houses popping up in my neighborhood. I'm devastated - this is supposed to be a residential area!! I am very worried about my family's safe & peaceful living situation, now that I'll be impacted by 4 of these houses (one across the street) - each with 8 groups of owners and/or their guests circulating in and out all year round. Many Pacaso have 4 bedrooms that easily accommodate 8+ people, and pool in the backyards with outdoor areas for gatherings/parties. It's a huge difference having your neighbor throwing an occasional party versus non-stop having a new group of people next door visiting for thier token time of vacation / partying. Pacaso houses also come with increased parking problems as these properties tend not have garages or driveways (often transformed into addl bedroom). Specifically would you mind looking into building code the one at 1242 Madrona / Oak? Looks like they're adding a guest house with vary narrow set back from the oak side neighbor. Is that an approved building? Maybe they're getting around that by making it a partial garage? Add to that, the 4 Pacaso houses are all in close proximity of RLS with kids walking / biking to and from school. What are the safety concerns that this is imposing with new people circulating in and out all year round and increased car traffic? Worst case scenario there will be a liability situation that will put a stop to Pacaso. Please, please stop Pacaso before we even get close to that. Respectfully, Mari Jansdotter Sent from Yahoo Mail on Android 12-561 PACASO = PARTY HOUSES! Debbie Polverino 5/11/2021 To the members of the City Council. In the recent Napa Register article, Austin Allison agrees that short term rentals are a problem, that commercial Timeshares are a problem- that's not what Pacaso is he said. Yet, Pacaso listed the Valley View Street "Pool House" as a 1/8 Timeshare Ownership property. After the city was notified by several concerned citizens and myself regarding "timeshares" listed for sale in residential zoned areas, Pacaso changed its online marketing from 1/8 Timeshare Ownership to 1/8 Shared Ownership. Owners who purchase still share the property in available time slots just like a timeshare. Living next door to a Pacaso home has been living next door to a full-time party house! The constant music with speakers blaring, loud conversations until 2 am and later, noise violations along with excessive vehicles parked on the street or in front of our homes. The additional noise of gardeners blowing dirt and leaves into our yard, Pool service, catering trucks, housekeeping scheduled more frequently. Open houses are held with statements made with, "this is a great place for pool parties and entertaining, it's a perfect place to bring friends and extended family." This home on Valley View Street was a weekend getaway home for the previous owners who had loud weekend parties. It was a constant nightmare and all the homes nearby complained. Now the property has been split up to 8 owners. The Saint Helena P.D. has already been to this home at least 3 times for noise violations after 10pm. There must be a way to stop these repeated violations and offenders. Pacaso's has written policies for its owners on their website that they must adhere to. No parking on the street, no parties, no noise after 9pm to 7am, no dogs over 80 pounds. Policies have been broken several times already from each group including the Pacaso's owners. According to Mr. Allison, Saint Helena is running a dishonest campaign against Pacaso. Pacaso claims discrimination of outside ownership which is not the case. As we all know we welcome all people the opportunity to live in our quiet small town. Pacaso selling an 1,100 square foot home which is smallest of any home on our street for $1.7M is dishonest in my opinion. This is what he says is affordable housing for second home buyers who are paying in full, plus maintenance fees? When commercial companies buy a dozen homes in Napa Valley and plans additional purchases to be split up to 8 shares it is not committed to the community or our quiet neighborhoods. Zoning is in place for a reason. Commercial companies operating in full time residential streets should adhere to the rules that are in place and only buy up in areas where other vacation homes are abundant and not a disruption. What happens should we decide to sell our home? How will people feel about buying next door to a home owned by 8 owners who don't know each other and all come at different time slots for as little as 2 days at a time? We will have to disclose this information. This put a negative mark on our property. This is something I want you to think about! Say NO to Pacaso! Thank you. 12-562 From: Amy Caldarola <amycal@comcast.net> To: Paul Dohring CC: Anna Chouteau; Lester Hardy; Eric Hall Sent: 5/23/2021 1:04:24 PM Subject: [External] Picaso Dear Council Members, This is Amy Caldarola here. I am very concerned about Picaso buying property in our residential neighborhoods under the guise of democratizing home ownership. This is not affordable housing. Picaso properties are time-shares and short-term rentals which violate municipal code provisions. The presence of these properties in residential neighborhoods is inappropriate and will degrade the quality of life. It has already done so with Picaso's property on Valley View; those neighbors are suffering with loud noise, music, and parties that go on to after midnight; even calling the police does not seem to stop them. I support the city in doing everything possible to defeat them. I also support a counter law suit against them if it makes legal sense. With that said, we are fighting for the soul of our community and this needs to be a number one priority. Picaso is in Napa, Sonoma, Healdsburg, and probably will move into Calistoga and Yountville. This is a fight worth fighting. It might be helpful for the affected counties and municipalities to join their resources together to oppose them. Please outline for me what the city is doing and what the plan is. Thank you. I really appreciate you taking the time to keep me informed on this very important and pressing issue. We must act now! Sincerely, Amy Caldarola 12-563 May 11, 2021 Good evening City Council members. My name is Clare Barr and I live in St. Helena. Tonight I would like to speak about the Pacaso Vacation Share homes. I listened carefully to the public comments of Pacaso Share owners made at our last City Council meeting. They sounded sincere in their desire to be a part of the St. Helena community. The problem is they have bought into a business model that will make that nearly impossible. To be a part of a real community means forming bonds with neighbors. How can that come about with a home next door that has possibly dozens of strangers coming and going, with visits no longer than 14 days at a time, a few times a year? And with the likelihood of visits gifted by other share owners, and a cleaning crew who appears before each arrival, the number swells. With the result that a Pacaso share owner, is viewed by their neighbors as only one in a sea of unfamiliar faces. And though the intentions of some of the share buyers might be good, can we say the same for all 7 of the remaining shareowners? One of whom might gift a weekend to his brother for a blowout bachelor party? Or as was the case in Napa, a single shareowner who conducted retreats in which close to a dozen visitors would come and go within one stay. That particular shareowner was charging her guests, which is a complication on an entirely different level. Pacaso would have us believe that their sharebuyers are families who simply want a quiet, lovely getaway. But in actuality, a Pacaso home is built for partying. Their own website says of one offering "This home takes entertaining to new heights". And yet another listing says that a 12-564 particular home "has been completely re -imagined to accommodate families, friends, and large groups". Another listing offers "year round fun and adventure". Now, none of us resent the visitor who wants to have fun. Indeed, our beautiful valley is an ideal place for celebration. And we all do that on occasion. But when you realize that every single visitor owning a Pacaso share has been wooed with the promise of "fun and adventure" within a house "built for entertaining", then you have the possibility of major partying with each and every visitor, all crammed into stays that last from 2-14 days. This is transient occupancy in our residential neighborhoods that cannot possibly be regulated under the Pacaso system. There is a reason why we have ordinances in place that designate where tourists and visitors can stay. It allows us to appreciate our visitors, giving them the space and accommodations in which to party and celebrate, while we ourselves can conduct our daily lives in the sanctuary of our residential neighborhoods. Which in turn, are places where we know our neighbors so well that we trust them with our keys, our pets, and even our children. With whom we share joy and sometimes sorrow, and whom are quick to lend a hand in times of crisis. And if we have learned anything in the last few years, it is that the ability to know and rely on our neighbors is the very thing that sustains our community through thick and thin. A vacation home with a parade of visitors coming and going, does not belong in our residential neighborhoods. Please Say No to Pacaso. Clare Barr St. Helena 12-565 From: Beth Gray <bgray14@gmail.com> To: Geoff Ellsworth Sent: 5/22/2021 3:01:13 PM Subject: [External] Pacaso Dear Mr. Mayor, I am writing to express my strong opposition against the infiltration of Pacaso and their timeshare strategy in the city of Saint Helena. As a full-time resident here in the city (and as your neighbor), I find it atrocious that the city has not been able to stop the infiltration of this community destroying business model. This business will do nothing but destroy our community. As an example, I witnessed the dumping of water from the pool into the creekbed from a home purchased by Pacaso right on the corner of Sylvaner/Reisling as they began to redevelop the home and expect to list it as fractional ownership. Illegal dumping of the pool water with disregard to any of the environmental consequences demonstrates their utter lack of care about the community. Similarly, hearing from the neighbors who live next to a Pacaso home on Valley View, I can only shake my head and sympathize with the poor neighbors having to deal with multiple cars showing up and loud music being played at all hours. One of the reasons I moved from San Francisco to Saint Helena was to enjoy the quiet sounds of nature, the beautiful outdoors - not to listen to vacationers who only want to party for the two weeks that they have their time in the home. Please protect our city from these timeshares. I understand the city is being sued. I hope that we can collectively put the necessary resources behind this lawsuit to stop Pacaso from any more timeshares in St. Helena. Respectfully, Beth Gray 12-566 CITY OF ST. HELENA ORDINANCE NO.2022-5 ADDING CHAPTER 17.138 "TIME SHARE USES" AND SECTIONS 17.138.010 — 17.138.060 TO TITLE 17, ZONING, OF THE ST. HELENA MUNICIPAL CODE, AMENDING SECTIONS 17.48.030 AND 17.52.030 AND DELETING SECTION 17.112.130 OF THE ST. HELENA MUNICIPAL CODE WHEREAS, the City of St. Helena is a popular tourist destination, known for its scenic Napa Valley location, exceptional wineries and restaurants, historic Main Street and small-town agricultural character; and WHEREAS, preserving the rural, small-town quality and agricultural character of the City of St. Helena has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's 2040 General Plan; and WHEREAS, the City of St. Helena stands out in the Napa Valley for its ability to attract visitors while also supporting the needs of its resident population. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy; and WHEREAS, the City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses; and WHEREAS, the City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City of St. Helena; and WHEREAS, according to the U.S. Census Bureau, the current median household income in the City of St. Helena is $90,031, while the estimated value of owner -occupied housing units from 2015-2019 was approximately $1,112,100, with current real estate listings suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City; and WHEREAS, as noted in the St. Helena Housing Update Report prepared for the City in April 2018, "St. Helena has more local jobs than people in the labor force, demanding large numbers of commuters to fill local jobs. Workers commute daily into St. Helena, many because there is no local housing that is affordable at the incomes that 12-567 they make. Thirty six percent (36%) of St. Helena households cannot afford market rents while seventy percent (70%) of St. Helena households cannot afford to purchase a home. Paramedics and preschool teachers cannot afford St. Helena's market rents. Teachers, registered nurses, winery and hospitality managers and nonprofit directors cannot afford homeownership in St. Helena"; and WHEREAS, the City has made significant efforts to address the need for housing at lower income levels, of which recent examples include providing assistance to local nonprofit Our Town St. Helena for the Brenkle Court development, a mutual self-help housing development providing homeownership opportunities to eight low income working families, as well as the acquisition of a home located at 963 Pope Street using a charitable sale strategy. The property at 963 Pope Street is being developed with an additional four units to provide a total of five new affordable rental units in the City; and WHEREAS, further, in connection with the recently approved Farmstead lodging project, the City negotiated with the developer to contribute one million dollars toward the purchase of property to be used for the development of not less than twenty units of housing that will be affordable to low and very low-income households, and an additional two million two hundred thousand dollars to be used more generally toward the development of affordable housing in the City; and WHEREAS, the City additionally provided substantial financial assistance to the recently completed Turley Flats Affordable Housing development, which provides eight units of rental affordable housing in a three story building located at 1105 Pope Street; and WHEREAS, these efforts have helped to address the City's need for affordable housing, but have also highlighted the challenge of providing sufficient housing to meet demand, particularly at more affordable levels, due to the significant costs of acquiring housing or land for the development of housing in the City and the limited supply of such land; and WHEREAS, the conversion of existing residential units to uses other than long- term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community; and WHEREAS, the City additionally has, for many years, worked to presence its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses; and 12-568 WHEREAS, to this end, in 1982 the City adopted Ordinance No. 82-07, which prohibited the creation of time-share projects as a means of ownership of any single- family, two-family or multiple -family dwelling or any apartment house within the City. This restriction was imposed because the conversion of residential dwelling units to time- sharing projects would eliminate residential dwelling units that would otherwise be available for long-term occupancies, and were inappropriate in residential areas because those uses have the same character as commercial hotels, motels and other transient occupancy uses, and would result in increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods; and WHEREAS, the City has historically not received complaints about time-sharing uses in residential neighborhoods. Commencing in 2020, however, the City began receiving complaints regarding single family homes in the City that were being sold and/or marketed as "fractional ownership" or "co -ownership" homes, wherein each buyer may acquire a one -eighth interest in a limited liability company that will own the home. Under the structure pursuant to which these dwelling units are marketed and sold, each owner gets a one -eighth share along with the right to use the home for one -eighth of each year indefinitely. During each owner's usage period, that owner has exclusive use of the entire house. All rentals are prohibited; only owners and their guests are permitted to use the house. Each owner pays regular assessments to fund the operating costs of the home and maintenance reserves; and WHEREAS, this arrangement, which provides that each purchaser is entitled to exclusive use of the property for a fixed number of days each year, is a "time-share plan" as defined in Business and Professions Code section 11212, and a "time share program" as defined in Section 17.112.130 of the City's Municipal Code; and WHEREAS, the City has received numerous complaints regarding these properties, including parking impacts from large numbers of people staying at these properties; excessive noise late into the evening due to frequent outdoor parties; traffic due to frequent visitor turnover; traffic, noise and parking concerns due to frequent visits from cleaning, landscape maintenance and pool cleaning services that come to the properties in between each stay to prepare the home for the next guest; and an inability to maintain lines of communication to set community expectations with the users of the unit, as visitors only frequent the homes for short term stays of 2 to 14 days; and WHEREAS, the complaints received by the City are reflective of the reasons that the City prohibited time-share projects within residential areas of the City. The time-share uses provide a short-term, high impact vacation -oriented use of the property, where those that buy into the time-share use the home for entertaining and short term stays while visiting restaurants, wineries and other tourist -oriented locations in St. Helena and the surrounding Napa Valley; and WHEREAS, this high impact use, combined with the frequent turnover and commercial management of these properties is not consistent with the residential districts in which they are located. It is commercial in nature, in that these time-share uses are 12-569 structured as a short-term, tourist oriented, visitor serving use of the subject properties. The use of these properties as time-shares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more. appropriately located in commercial districts of the City; and WHEREAS, expanded use of residential properties for time-share uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for time-share uses of residential properties; and WHEREAS, this encroachment of tourist oriented, visitor serving uses in residential neighborhoods will not only compromise the residential character of these areas, but will also further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City; and WHEREAS, the City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad authority to regulate the development and use of real property within its jurisdiction to promote the public welfare; and WHEREAS, pursuant to and in accordance with this authority, the City Council desires to reaffirm its restrictions on time-share uses in residential areas, and to update the language of the Zoning Code to provide consistency with the terminology used to define time-share uses in State law. Further, the City desires to provide greater clarity as to the zoning districts in which time-share uses are permitted as conditional uses, and the standards pursuant to which they will be reviewed in those zoning districts; and WHEREAS, the Planning Commission of the City of St. Helena held a duly noticed public hearing on March 1, 2022, as required by law to consider all the information presented by staff, and public testimony presented in writing and at the meeting; and WHEREAS, on March 1, 2022, the Planning Commission of the City of St. Helena recommended that the City Council adopt this Ordinance amending the Municipal Code as described herein by a 5-0 vote; and WHEREAS, on March 22, 2022, the City Council held a duly noticed public hearing, accepting testimony from the public, and discussed the proposed amendments and staff's recommended approval of this Ordinance; and WHEREAS, the proposed zoning amendments are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the agricultural, small town character of the City of St. Helena; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply; and Now, therefore, the City Council of the City of St. Helena does hereby ordain as follows: 12-570 SECTION 1: The above recitals are hereby incorporated as though set forth in this section. SECTION 2: Chapter 17.138 and sections 17.138.010 — 17.138.060 are hereby added to Title 17 of the St. Helena Municipal Code, to read as follows: "Chapter 17.138 TIME-SHARE USES 17.138.010 Purpose and Findings 17.138.020 Definitions 17.138.030 Time-share Uses Restricted to Service Commercial (SC) and Central Business (CB) Districts 17.138.040 Application Process and Development Standards 17.138.050 Violations, Enforcement and Civil Penalties 17.138.010 Purpose and Findings A. There is a critical shortage of permanent, long-term housing in the City of St. Helena. B. A limited supply of suitable vacant land, land values, and market demand for land for other uses, including but not limited to use of property for vineyards, have limited the construction of additional housing in the City of St. Helena. C. St. Helena is a popular tourist destination known for its scenic Napa Valley location, exceptional wineries and restaurants, historic Main Street and small-town agricultural character. D. The City of St. Helena stands out in the Napa Valley for its ability to attract visitors while also supporting the needs of its resident population. Maintaining the balance between the quality of fife for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy. E. Time-share uses are not an appropriate land use in the City's residential districts due to the multiple occupancy of time-share properties, the short-term, tourist -oriented use of such property and commercial management of time-share facilities, all of which create increased traffic generation, excessive noise, disruption to residential communities through commercial -level maintenance of the time-share facilities, and therefore are appropriately confined to commercial zoning districts. F. Conversion of permanent housing to time-share facilities removes existing housing units from the City's existing stock and exacerbates an already severe housing shortage. G. It is therefore in the public interest to prohibit conversions of existing housing units into time-share facilities, as to do so eliminates needed housing stock by diverting those units to a tourist -oriented, commercial use. 17.138.020 Definitions For purposes of this Chapter, the following words and phrases shall have the meaning respectively ascribed to them by this Section: "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit,. hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single-family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.160. "Building" shall have the meaning ascribed to it by Section 17.04.160. "Dwelling unit" shall have the meaning ascribed to it by Section 17.04.160. "Managing entity" means the person who undertakes the duties, responsibilities and obligations of the management of a time-share plan. "Person" means a.natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. "Time-share instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a time-share plan and includes the declaration dedicating accommodations to the time-share plan. "Time-share interest" means the right to exclusively occupy a time-share property for a period of time on a recurring basis pursuant to a time-share plan, regardless of whether or not such right is coupled with a property interest in the time-share property or a specified portion thereof. "Time-share plan" means any arrangement, plan, scheme, or similar device, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. - 12-572 "Time-share property" means one or more accommodations subject to the same time- share plan, together with any other property or rights to property appurtenant to those accommodations. "Time-share use" means the use of one or more accommodations or any part thereof, as a time-share property pursuant to a time-share plan. 17.138.030 Time-share Uses Restricted to Service Commercial (SC) and Central Business (CB) Districts Time-share uses are conditional uses within the City's Service Commercial (SC) District and Central Business (CB) District, subject to approval of a conditional use permit applied for and approved in conformance with this Chapter. Time-share uses are not permitted in all other Zoning Districts in the City. 17.138.040 Application Process and Development Standards A. Application Process. Approval of a conditional use permit for time-share uses in the Service Commercial District or Central Business District shall be required in accordance with the requirements of Chapter 17.168. In addition to the application requirements contained in Chapter 17.168, an application for a time-share use shall be accompanied by the following documents which shall be subject to the approval of the planning director: 1. Management Plan. A management plan shall describe the methods employed by the applicant to guarantee the future adequacy, stability, and continuity of a satisfactory level of management and maintenance of the time share use. 2. Application Requirements. In addition to any application requirements established by this section and any other applicable requirements of this code, the following information shall be submitted as part of any application to develop or establish a time-share use: a. Typical floor plans for each accommodation. b. The phasing of the construction of the accommodations on the time- share property, if applicable. c. A description of any ancillary uses which are proposed in conjunction with the time share use. d. A description of the method of management of the time share use and indication of the management entity for the time-share property. e. Any restrictions on the use or occupancy of the accommodations. 12-573 f. Any other information or documentation the applicant, city staff or commission deems reasonably necessary to the consideration of the time-share use, including any required environmental documents. B. Development Standards and Operational Requirements. Notwithstanding any other provision of this chapter, the following conditions must be met by any time-share use in any conditionally permitted zone. Additional requirements may be attached to a conditional use permit or development agreement if found to be necessary to assure that the time-share use meets the intent of this chapter: 1. Time-share uses developed in the Service Commercial District or Central Business District shall be limited to accommodations in upper floors in conjunction with a mixed -use project. 2. No existing residential use in the Service Commercial or Central Business District shall be converted to a time-share use. 3. Development Standards. The time-share use shall comply with all development standards for the zone in which it is located. 4. Parking. Parking shall be provided as follows: a. For accommodations of two or fewer bedrooms, one parking space shall be provided for each accommodation. b. For accommodations of three or more bedrooms, two parking spaces shall be provided for each accommodation. 4. Modification or Waiver of Standards. The planning commission may modify or waive one or more of the regulations contained in this section if it determines that strict compliance is not necessary to achieve the purpose and intent of this section. 17.138.060 Violations, Enforcement and Civil Penalties A. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this chapter is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.20. B. Time-share use, and/or advertisement for time-share use, of an accoinmodation in violation of this chapter is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance. Any such nuisance may be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 1.12, except that the civil penalty for a violation shall be one thousand dollars ($1,000.00). Each day the violation occurs shall constitute a separate offense. 12-574 C. Any responsible person who violates this chapter shall be liable and responsible for a civil penalty of one thousand dollars ($1,000.00) per violation per day such violation occurs. The city may recover such civil penalty by either civil action or administrative citation. Such penalty shall be in addition to all other costs incurred by the city, including without limitation the city's staff time, investigation expenses and attorney's fees. 1. Where the city proceeds by civil action, the court shall have discretion to reduce the civil penalty based upon evidence presented by the responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the court should consider the purpose of this chapter to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the responsible person's enrichment or profit as a result of the violation of this chapter. In any such civil action the city also may abate and/or enjoin any violation of this chapter. 2. Where the city proceeds by administrative citation, the city shall provide the responsible person notice of the right to request an administrative hearing to challenge the citation and penalty, and the time for requesting that hearing. a. The responsible person shall have the right to request the administrative hearing within forty-five (45) days of the issuance of the administrative citation and imposition of the civil penalty. To request such a hearing, the responsible person shall notify the city clerk in writing within forty-five (45) days of the issuance of the citation. The appeal notification shall include all specific facts, circumstances and arguments upon which the appeal is based. b. The city manager is hereby authorized to designate a hearing officer to hear such appeal. The city hearing officer shall conduct a hearing on the appeal within ninety (90) days of the request for the hearing unless one of the parties requests a continuance for good cause. The hearing officer shall only consider those facts, circumstances or arguments that the property owner or responsible person has presented in the appeal notification. c. The hearing officer shall render a decision in writing within thirty (30) days of the conclusion of the hearing. The hearing officer shall have discretion to reduce the civil penalty based upon evidence presented by the property owner or responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the hearing officer should consider the purpose of this chapter to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the property owner's or respohsible person's enrichment or profit as a result of tH6 violation of this chapter. d. Any aggrieved party to the hearing officer's decision on the administrative appeal may obtain review of the decision by filing a petition for writ of mandate with the Napa County superior court in accordance with the timelines and provisions set forth in Government Code Section 53069.4. - - 12-575 e. If, following an administrative hearing, appeal, or other final determination, the owner of the property is determined to be the responsible person for the civil penalty imposed by this section, such penalty, if unpaid within forty-five (45) days of the notice of the final determination, shall become a lien to be recorded against the property on which the violation occurred pursuant to Chapter 1.12. Such costs shall be collected in the same manner as county taxes, and thereafter the property upon which they are a lien shall be sold in the same manner as property now is sold for delinquent taxes. D. Any violation of this chapter may also be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 1.12, except that the civil penalty under Chapter 1.12 for a violation shall be one thousand dollars ($1,000.00). E. Each day the violation of this chapter occurs shall constitute a separate offense. F. The remedies under this chapter are cumulative and in addition to any and all other remedies available at law and equity." SECTION 3: Deletion of Section 17.112.130 Section 17.112.130 is hereby deleted in its entirety. SECTION 4: Amendment of Section 17.48.030 Section 17.48.030 is hereby amended to add the following text as a separate line immediately following "Theaters, movie and legitimate;", and immediately prior to "Tobacco/smoke shop, including the sale of tobacco, tobacco and/or nicotine products and equipment for smoking;": "Time share uses, pursuant to Sections 17.138.030 and 17.138.040;" SECTION 5: Amendment of Section 17.52.030 Section 17.52.030 is hereby amended to add the following text as a separate line immediately following "Theaters, movie and legitimate;", and immediately prior to "Tobacco/smoke shop, including the sale of tobacco, tobacco and/or nicotine products and equipment for smoking;": "Time share uses, pursuant to Sections 17.138.030 and 17.138.040;" SECTION 6: CEQA This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of 12-576 this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. SECTION 6: Effective Date This ordinance shall take effect 30 days after its final adoption, and a summary of this ordinance shall be published once with the names of the members of the Council voting for and against the ordinance in the St. Helena Star, a newspaper of general circulation published in the City of St. Helena. THE FOREGOING ORDINANCE was introduced at a regular meeting of the St. Helena City Council on the 22nd day of March 2022, and was adopted at a regular meeting of the St. Helena City Council on the 12th day of April 2022, by the following vote: Mayor Geoff Ellsworth: Yes Vice Mayor Paul Dohring: Yes Council Member Anna Chouteau: Yes Council Member Lester Hardy: Yes Council Member Eric Hall: Yes APPROVED: Geoff Ellsworth, Mayor I, CINDY TZAFOPOULOS, CITY CLERK of the City of St. Helena, California, do hereby certify that the foregoing Ordinance was regularly introduced and placed upon its first reading at a regular meeting of the City Council on the 22nd day of March 2022. That thereafter said Ordinance was duly adopted and passed at a regular meeting of the City Council on the 12th day of April 2022, by the following vote: Mayor Geoff Ellsworth: Yes Vice Mayor Paul Dohring: i Yes Council Member Anna Chouteau: Yes Council Member Lester Hardy: Yes Council Member Eric Hall: Yes ATTEST: c Cindy TzafO$OUIOS, CYy dbe--rk �cr ^w � AO�ated May r�~ 12-578 Exhibit P Ordinance Proposed by Pacaso Adding Chapter 5.98 12-579 DRAFT ORDINANCE 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. 12-7 12-580 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 -awned 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 -awned Property Management Permit Required. A. A Co -owned Property Manager shall not manage a Co -owned Housing Unit without obtaining a Co -owned Property Management Permit from the City. 2 �a '] �€ NeIikl 12-8 12-581 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 deemed abandoned. 3 t t� �._. 12-9 12-582 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: 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. F. An application for the reinstatement of a previously suspended Co -owned Housing 4 t .�_.� Y� ;I �\cF t�v� I� � �� 4�� 4� �"�� j� t"•^%� 11 t� {�1,� ��� � !� ��� `7 i 12-10 12-583 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 Co - owned Property Manager seeking to reinstate a Co -owned Housing Unit Permit that has 5 N F_ CCI `i 12-11 12-584 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 provisions of this Code or any state or federal law pertaining to noise, disorderly 6 7 fjA'�} 12-12 12-585 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 receptions. 7 kEA 12-13 12-586 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.: a. Outside of the Co -owned Housing Unit; or 8 ff r tttYYY111 . 12-14 12-587 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 nonowner 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) 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 9 � i_lur�rj,, f c`rt V11\ k`T ���l(-`Zi/ Lt 12-15 12-588 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 (13)(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. 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 10 �__11 A �.,_ 011 111F b"t", Q (,!::2 -,vzt%� i 1rof - f (� \ 12-16 12-589 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. r � 11 i12-17 12-590 Exhibit Q September 13, 2022, City Council Agenda Item No. SS2 Fractional Homeownership Update https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=2833800&dbid=0&repo=CNB Fractional Homeownership Update — Correspondence https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=2833864&dbid=0&repo=CNB Fractional Homeownership Update — PowerPoint https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=2833866&dbid=0&repo=CNB 12-591 Exhibit R September 27, 2022, City Council Agenda Item No. 1 https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=2835823&dbid=0&repo=CNB Correspondence https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=2835861 &dbid =0&repo=CNB 12-592 Exhibit S October 6, 2022, Planning Commission Agenda Item No. SS.2 https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=2836766&dbid=0&repo=CNB https:Hecros.newportbeachca.aov/WEB/DocView.aspx?id=2836767&dbid=0&repo=CNB 12-593 Exhibit T October 20, 2022, Planning Commission Agenda Item No. 6 https://ecros.newportbeachca.qov/WEB/DocView.aspx?id=2837565&dbid=0&repo=CN B 12-594 Exhibit U February 23, 2023, Planning Commission Agenda Item No. 6 https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=2859668&dbid=0&repo=CNB Staff Presentation https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=2859669&dbid=0&repo=CNB 12-595 Exhibit V March 14, 2023, City Council Agenda Item No.12 https://ecros. newportbeachca.gov/WEB/DocView.aspx?id=2863026&dbid=0&repo=CNB Correspondence https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=2863125&dbid=0&repo=CNB https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=2863126&dbid=0&repo=CNB PowerPoint https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=2863131 &dbid=0&repo=CNB Staff Memo https:Hecros. newportbeachca.gov/WEB/DocView.aspx?id=2863127&dbid=0&repo=CNB Week in Review https:Hecros.newportbeachca.gov/WEB/DocView.aspx?id=2863128&dbid=0&repo=CNB 12-596 Exhibit W Local Coastal Program Amendment No. PA2022-0202 12-597 EXHIBIT W LOCAL COSTAL PLAN AMENDMENT NO. PA2022-0202 Section 1: The row entitled "Time Share Facilities" in Table 21.20-1 of Section 21.20.020 (Commercial Coastal Zoning Districts Land Uses) of the Newport Beach Municipal Code is amended to read as follows: Commercial Coastal Zoning Districts TABLE 21.20-1 ALLOWED USES A Allowed — Not Allowed* Land Use See Part 7 of this Implementation Plan for CM CV CV- Specific land use definitions. CC CG (3) CN (3) LV (3) OG Use Regulations See Chapter 21.12 for unlisted uses. Visitor Accommodations Time Shares — A — — A — — Section 21.48.025 Section 2: Section 21.48.025(A) (Applicability) of the Newport Beach Municipal Code is amended to read as follows: A. Applicability. The provisions of this section shall apply to applications involving the development or creation of new visitor accommodations or the expansion, reduction, redevelopment, demolition, conversion, closure, or cessation of existing visitor accommodations. The conversion of property that was not used as a visitor accommodation into a time share accommodation shall constitute the development or creation of a new visitor accommodation. As used herein, "time share accommodation(s)" shall have a separate meaning from visitor accommodation (s)." For purposes of this section, "time share accommodation(s)" shall mean any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other or structure constructed for residential use and occupancy, including, but not limited to, a single -unit dwelling, two -unit dwelling, multi -unit dwelling. Section 3: Section 21.48.025(C)(5) (Mitigation) of the Newport Beach Municipal Code is amended to read as follows: 5. Mitigation. If the review authority determines that the development will impact existing lower cost visitor -serving accommodations, or provide only high or moderate 12-598 cost visitor accommodations or limited use overnight visitor accommodations such as time share uses and condominium -hotels, then mitigation commensurate with the impact shall be provided by one of more of the following: a. Replacement of low cost rooms lost shall be provided at a one-to-one ratio either on site or a suitable off -site location within the City; b. Payment of an in -lieu fee commensurate with the impact shall be required, c. Programmatic components that provide low cost overnight visitor accommodations; or d. Other form of mitigation addressing cost of stay. The review authority may authorize deviations from development standards that provide economic incentives to the development to maintain affordability. Section 4: Section 21.48.025(E) (Tsunami Information and Evacuation Plans) of the Newport Beach Municipal Code is retitled and amended to read as follows: E. Conversion of Existing Dwelling Units Prohibited. The conversion of existing residential dwelling units into a time share use shall be prohibited. Section 5: Section 21.48.025(F) (Tsunami Information and Evacuation Plans) of the Newport Beach Municipal Code is added to read as follows: F. Tsunami Information and Evacuation Plans. Visitor -serving accommodations in areas identified as susceptible to tsunami inundation shall be required to provide guests with information on tsunami information and evacuation plans. Section 6: The definition of "Limited use overnight visitor accommodations (LUOVA)" within Section 21.70.020 (Definitions of Specialized Terms and Phrases) of the Newport Beach Municipal Code is amended to read as follows: Limited use overnight visitor accommodations (LUOVA). See "Time share use." Section 7: The definition of "LUOVA" within Section 21.70.020 (Definitions of Specialized Terms and Phrases) of the Newport Beach Municipal Code is deleted. Section 8: The definition of "Time Share Facility (Land Use)" within Section 21.70.020 (Definitions of Specialized Terms and Phrases) of the Newport Beach Municipal Code is amended to read as follows: Time Share (Land Use). See "Visitor accommodations." 12-599 Section 9: The definition of "Visitor Accommodations (Land Use)" within Section 21.70.020 (Definitions of Specialized Terms and Phrases) of the Newport Beach Municipal Code is amended to read as follows. - Visitor Accommodations (Land Use) "Time share accommodations" shall have a separate meaning from "visitor accommodation (s)." "Time share accommodations" as used in the definition of "time share instrument," "time share interval," "time share property," and "time share use" shall mean any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other or structure constructed for residential use and occupancy, including, but not limited to, a single -unit dwelling, two -unit dwelling, multi -unit dwelling. 1. "Bed and breakfast inn" means a dwelling unit that offers guest rooms or suites for a fee for less than thirty (30) days, with incidental eating and drinking service provided from a single kitchen for guests only. 2. "Campground" means a lot upon which one or more sites are located, established, or maintained for rent as an overnight tenting or camping area for recreation or vacation purposes. 3. "Hostel" means establishments offering supervised overnight sleeping accommodations, primarily for travelers who use nonmotorized transportation or commercial or public transportation. Such sleeping accommodations are designed, intended to be used and are used, rented or hired out as temporary or overnight accommodations for guests in which daily services of linen change, towel change, soap change and general cleanup are provided by the management. If kitchen or eating facilities are provided, they are communal in nature. 4. "Hotel" means an establishment that provides guest rooms or suites for a fee to transient guests for sleeping purposes. Access to units is primarily from interior lobbies, courts, or halls. Related accessory uses may include conference and meeting rooms, restaurants, bars, and recreational facilities. Guest rooms may or may not contain kitchen facilities for food preparation (i.e., refrigerators, sinks, stoves, and ovens). Hotels with kitchen facilities are commonly known as extended stay hotels. A hotel operates subject to taxation under Revenue and Taxation Code Section 7280. 5. "Motel' means an establishment that provides guest rooms for a fee to transient guests for sleeping purposes. Guest rooms do not contain kitchen facilities. A motel is distinguished from a hotel primarily by direct independent access to, and adjoining parking for, each guest room. A motel operates subject to taxation under Revenue and Taxation Code Section 7280. 12-600 6. "Recreational vehicle (RV) park" means a lot upon which two or more recreational vehicle sites are located, established, or maintained for occupancy for a rental fee by recreational vehicles of the general public as temporary living quarters for recreation or vacation purposes. 7. "Short-term lodging" means a dwelling unit that is rented or leased as a single housekeeping unit (see "Single housekeeping unit") for a period of less than thirty (30) days. 8. "Single room occupancy, residential hotels (SRO)" means buildings with six or more guest rooms without kitchen facilities in individual rooms, or kitchen facilities for the exclusive use of guests, and which are also the primary residences of the hotel guests. 9. "Time share instrument" means one or more documents, by whatever name denominated, creating a time share plan or governing the operation of a time share plan, and includes the declaration dedicating time share accommodations to the time share plan. 10. "Time share interval" means the period or periods of time when the purchaser in a time share plan is afforded the opportunity to use the time share accommodations of a time share plan. 11. "Time share plan" means any arrangement, plan, scheme, or similar device, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property, or any portion thereof, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A time share plan shall be deemed to exist whenever such recurring rights of exclusive use to the real property, or portion thereof, are created, regardless of whether such exclusive rights of use are a result of a grant of ownership rights, possessory rights, membership rights, rights pursuant to contract, or ownership of a fractional interest or share in the real property, or portion thereof, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time share plan. 12. "Time share property" means one or more time share accommodations subject to the same time share instrument, together with any other property or rights to property appurtenant to those time share accommodations. 13."Time share unit" means the time share property or portion of a time share property in which a time share interval exists and that is designated for separate use. 12-601 U."Time share use" means the use of one or more time share accommodations or any part thereof, as a time share property. 12-602 EXHIBIT X FINDINGS OF LOCAL COASTAL PROGRAM AMENDMENT NO. PA2022-0202 CONSISTENCY WITH THE GENERAL PLAN AND COASTAL LAND USE PLAN 1. The Local Coastal Program Amendment No. PA2022-0202 is consistent with the City's General Plan. It would serve to implement the following goals and policies of the General Plan: Land Use Element Policy LU 2.61 which states, "Visitor Serving Uses Provide uses that serve visitors to Newport Beach's ocean, harbor, open spaces, and other recreational assets, while integrating them to protect neighborhoods and residents." Local Coastal Program Amendment No. 2022-0202 would continue to allow time share uses, which is a visitor serving use in some commercial zones, while clarifying that fractional ownership uses are a time share as confirmed by a representative of Pacaso and not permitted in residential zones areas. This would prevent additional commercialization of the residential neighborhoods and protect them from impacts created by increased traffic and noise. Land Use Element Goal LU 4, which states, "Management of growth and change to protect and enhance the livability of neighborhoods and achieve distinct and economically vital business and employment districts, which are correlated with supporting infrastructure and public services and sustain Newport Beach's natural setting." Classifying fractional ownership uses as time shares continues to allow the business within certain commercial zones. This clarification would also help preserve the long-term housing stock by eliminating the conversion of existing and new housing developments into time share uses, and further ensure that the commercial businesses would not encroach into residential areas and impact the livability of said neighborhoods. Housing Element Goal #4, which states, "Housing opportunities for as many renter- and owner -occupied households as possible in response to the market demand and RHNA obligations for housing in the City." Conversion of residential dwelling units into time shares removes the dwelling units from the market, thus making them no longer available for occupancy of full-time residences. The proposed amendment would serve to prevent single -unit residences from being taken off the market, thus protecting these housing opportunities for renters and owner -occupied households alike. Housing Element Goal #5, which states, "Preservation of the City's housing stock for extremely low-, very low-, low-, and moderate -income households." Removing market - rate dwelling units from the City's housing stock impacts the affordability of housing across all income levels. As fewer dwelling units become available for rent or sale, the price increases. These price increases reduce the opportunities to provide affordable housing to extremely low-, very low-, low-, and moderate -income households. The proposed amendment would prevent conversion of single -unit residences into a visitor 12-603 serving accommodation, thus preserving the number of units in the City's housing stock, which would help minimize increases to housing costs. 2. Local Coastal Program Amendment No. 2022-0202 serves to implement Coastal Land Use Plan (CLUP) Table 2.1.1-1 (Land Use Plan Categories) of the LCP, which establishes the type, density, and intensity of land uses within the coastal zone, including residential land use categories that are intended for residential dwellings. The amendment clarifies that time share use of residential property is prohibited in order to maintain the residential character of communities. Local Coastal Program Amendment No. 2022-0202 would continue to allow time shares in other areas where visitor serving uses are currently permitted. This includes the CM, CV, MU-H, and MU- W Coastal Land Use Designations, which are identified in CLUP Table 2.1.1-1 to provide visitor serving uses. 3. While CLUP Policy 2.3.3-6 authorizes the short-term rental of dwelling units as a means of providing lower -cost overnight visitor accommodations, the maximum number of short-term rentals are capped at a maximum of 1,550 permits to prevent adverse impacts to residential areas and preserve housing stock within the coastal zone. Unlike short term rentals, time share use of coastal residential properties is a high -cost option to visit the coast on a limited basis, but have similar negative impacts to housing supply and neighborhood disturbances that short term rentals create. Therefore, it is appropriate to prohibit this type of visitor -serving commercial use in residential neighborhoods. Furthermore, Local Coastal Program Amendment No. 2022-0202 will not impact the City's ability to support the wide variety of visitor accommodations that are currently provided, including 4,086 hotel/motel rooms hotels and motels, a cap of 1,550 short term lodging units, and approximately 471 campground and RV sites. 4. The operation of time share use of residential property increases noise and traffic in residential neighborhoods that changes the character of the neighborhoods in a manner that negatively impacts the public health, safety, and welfare. 5. As the number of time share uses of residential property increases in the City, the number of dwelling units for long-term occupancy can decrease. This decrease impacts the ability for the City to comply with the 6th and future cycle RHNA allocation. 12-604 EXHIBIT Y LOCAL COASTAL PROGRAM AMENDMENT No. PA2022-0202 DE MINIMIS FINDINGS 1. The Local Coastal Program Amendment No. 2022-0202 would have no impact, either individually or cumulatively, on coastal resources, and that it is consistent with the Chapter 3 policies of the Coastal Act. The City of Newport Beach has seen an influx of time share use of residential property, where ownership of residence is equally shared among multiple nonrelated owners (typically between four and 12 owners) through a formal arrangement. The amount of time an owner may access and use the property is directly correlated to their share of ownership (e.g., a 1/8 share owner would be allotted 45 days per year). This time allotment is not typically used consecutively, but rather one or two weeks at a time. This has resulted in increased traffic, additional parking congestion, and increased noise within the residential areas of the coastal zone due to the fractional ownership uses operating as a short-term vacation stay in lieu of a full-time owner -occupied unit. Local Coastal Program Amendment No. 2022-0202 would clarify that fractional ownership uses are defined as a time share use within the City of Newport Beach. Time share uses are currently allowed in the CG (Commercial General), CV (Commercial Visitor -Serving), CV (Commercial Visitor -Serving), MU-MM (Mixed -Use Mariners' Mile), and MU-CV/15th St. (Mixed -Use Cannery Village and 15th Street) coastal zoning districts. The permitted locations and development standards that apply to time shares would not be changed by Local Coastal Program Amendment No. 2022-0202. Furthermore, the LCP does not authorize new development or establish new uses within the coastal zone. As a result, there would be no impact on coastal resources or public access to coastal resources. Moreover, Local Coastal Program Amendment No. 2022-0202 is consistent with the Chapter 3 policies of the Coastal Act. The local government provides public notice of the proposed amendment at least 21 days prior to submitting the amendment to the Commission, by one of the following methods: posting on -site and off -site in the affected area, newspaper publication, or direct mailing to owners and occupants of contiguous property. The City Council of the City of Newport Beach held study sessions to accept public testimony and discuss the impacts of fractional ownership uses on November 16, 2022, September 13, 2022, September 27, 2022, and March 14, 2023. Likewise, the Planning Commission of the City of Newport Beach held similar study sessions on October 6, 2022, October 20, 2022, and February 24, 2023. The public testimony provided during the study sessions provided guidance to formulate the specific language contained in Local Coastal Program Amendment No. 2022-0202. These 12-605 study sessions were duly agendized and posted to the City's website 72-hours in advance of the study session. To consider Local Coastal Program Amendment No. 2022-0202, the Planning Commission conducted a public hearing on April 20, 2023. Public Notice of this hearing was published on #f in the Daily Pilot, the local adjudicated newspaper with distribution in Newport Beach; as well as, posted on the City's website. Additionally, a Notice of Availability of a draft LCP amendment was posted in the city libraries on #_#Wffi#J The City Council also conducted a public hearing to consider the proposed amendment to the LCP on May 9, 2023. Public notice of the City Council hearing was published in the Daily Pilot and posted to the City's website on �] Therefore, the 21-day notice requirement has been satisfied. 3. The amendment does not propose any change in use of land or water or allowable use of property. The Local Coastal Program (Title 21 of the Newport Beach Municipal Code) includes various permitted use and development regulations for the coastal zone. Among these is time shares, a visitor accommodation that is permitted in the CG (Commercial General), CV (Commercial Visitor -Serving), CV (Commercial Visitor - Serving), MU-MM (Mixed -Use Mariners' Mile), and MU-CV/15th St. (Mixed -Use Cannery Village and 15th Street) coastal zoning districts. Local Coastal Program Amendment No. 2022-0202 would clarify that fractional ownership uses are defined as a time share use. There would be not change to the allowable uses within the coastal zone as established by the LCP. Furthermore, the LCP amendment does not authorize development or alter existing development standards, thus would not result in the change in use of land or water. 12-606 Attachment C Fractional Ownership Map 12-607 Fractional Ownership f �•• � 1� �?�' � n�p[tINBRS OR m „1 i rd FRRo /704 t HOSPITAL RD J r �! o 4r apt' R a G 3 0� ak 4 2 4 a s �a .r 0 Dh Si Y W gs r m f, W -1 9 � 5 • � s9� sJ 3 Y ¢ Iu z Residential *J� +7n r PARK AVE � 7 Zoning R— 1 ti � $4 R-1 z ak x R-2 Fractional R-2 R_Bl Home ownership R-g I Locations Rnn � Rnn r Total of 12 Known Facilities 12-608 Attachment D Complied Meeting Minutes 12-609 November 16, 2021, City Council Study Session Minutes 12-610 City of Newport Beach City Council Meeting November 16, 2021 In response to Council Member Brenner s question. Deputy Community Development Director Campbell assured Council that any additional comments resulting from the Housing Element Update Advisory Committee meeting can be added to the revised housing plan before submitting to HCD. Mayor Avery acknowledged staff for their knowledge, time, and energy to revise the housing plan. SS3. Fractional Home Ownership Community Development Director Jurjis utilized a presentation to discuss fractional ownership of real estate, companies selling fractional ownership. how it works, operations, community concerns. City regulations, and the Newport Beach Municipal Code (NBMC) table of allowed uses, definitions. In response to Council Member Dixon's question. Community Development Director Juris noted the definition of conversion and its subjective interpretation and application. Council Member Blom highlighted the percentage of LLCs and trust ownerships in Newport Beach and discussed the reality of future home ownership and impact to the City with the elimination of fractional ownership. In response to Council Member Brenner's questions, Community Development Director Jurjis confirmed the zones in which fractional ownership and Short -Term Lodging (STL) are allowed and not allowed, explained how time share use is subject to the definition, zoning rules when properties convert to condominiums, and the cap on STL applications. Pacaso's Director of Government and Community Relations Ellen Haberle utilized a presentation to discuss co -ownership history, Pacaso's role, owner agreements, and enforced policies. In response to Council questions, Ms. Haberle provided the definition of a luxury home, stated who holds the title and how the co -owners are listed, and related Pacaso Is enforcement procedures for respecting local ordinances; confirmed that Pacaso is employed by the LLC to serve as property and program manager; noted that the company uses an LLC operating agreement; stated that ownership interests are sold in one -eighth increments with a 50% cap, and an average owner group consisting of 6-7 members; stated that while neighbor and owner conflict is a reality. local ordinances can preserve the peace, quiet, safety and comfort of the residents; and explained Pacaso's equitable scheduling calendar tool, the rules for member guests, and occupancy cycles. Community Development Director Jurjis agreed to seek collaboration with fractional home ownership companies, like Pacaso. to establish a mutual understanding of City regulations and company enforcement procedures. Ms. Haberle agreed to collaborate with City staff to identify cities with preventative ordinances. Council Member O'Neill expressed concern about regulation standards for commercial enterprise. Community Development Director Jurjis shared that a threshold provision exists for fractionally owned properties with 11 or more members. which requires filing with the Department of Real Estate and public records. Nancy Scarbrough believed that the rotation frequency of member stays is subjective and questioned how fractional ownership will affect property taxes. City of Newport Beach 12-611 Volume 65 - age 184 City of Newport Beach City Council Meeting November 16, 2021 Russell Dahl expressed concern for Pacaso's minimal data and history, unpredictable member behavior and guest visits, long-term unknown ramifications, and avoidance of the City's short- term occupancy and rental rules. Susan Stoneburner asked Council to consider classifying fractional ownership homes as STLs, described her experience with a Pacaso property, and expressed the opinion that the home is being used as a short-term rental without a short-term rental agreement, business license, or proper City taxation. Cathy Brown shared her dismay about having a Pacaso property in a single-family residential zone. Mike O'Neill shared and praised his relationship and experience as a fractional owner with Pacaso. Richard Manga noted his support and relationship as a fractional owner with Pacaso. Mike Desantis shared his displeasure and experience as a Pacaso property neighbor, expressed concern that his experiences conflicted with Ms. Haberle's presentation, and noted how the property has impacted the neighborhood. Connie Adnoff requested Council investigate legal options for when fractional owner members disturb the local community. Chuck Fancherbelieved that the City should focus on nuisance issues and not regulate good behavior, predict behavior, or profile guests. David Tanner requested that staff explore using fractional ownerships as a vehicle for affordable housing units. Council Member Blom correlated bad behavior sightings at fractionally owned properties with problems exhibited at individually owned dwelling& expressed concern with limiting opportunities and creating more regulations for property purchases and uses, and encouraged communication amongst neighbors. Mayor Pro Tem Muldoon expressed the opinion that fractional ownership cannot be eliminated and that it does not violate timeshare ordinances. In response to Mayor Pro Tem Muldoon's questions, City Attorney Harp shared conduct and public nuisance regulations and possibly creating a voluntary centralized complaint hotline as a communication tool with Pacaso and other fractional ownership businesses. Community Development Director Jurjis reviewed the Department of Real Estate time share laws and procedures for fractional ownership with 1 t or more members, confirmed that Newport Beach regulations would need amending to include a time share cap, and concurred that the current City definition of time share does not fit the Pacaso application. In response to Council Member Dixon's questions. Ms. Haberle compared second homeowner travel habits to short-term renters, discussed policy guidelines for complaints, and agreed to share complaint reports with the City. City Attorney Harp clarified the difference between fractional ownership and short-term rentals. In response to Council Member Duffield's question, Community Development Director Jurjis explained that home sale prices are based on supply and demand and the possibility does exist for a private homeowner to overprice an individual home sale with the hope of a fractional owner sale at a higher cost. SS4. Water Conservation Ordinance Update Mayor Avery continued the item to the next City Council meeting. city of Newport Beach 12-612 Volume 65 - Page 185 City of Newport Beach City Council Meeting November 16, 2021 III. PUBLIC COMMENTS ON AGENDA AND NON -AGENDA ITEMS Jim Mosher clarified that correspondence regarding offshore oil drilling and spent fuel at the San Onofre Nuclear Generating Station are both matters for which Council Members have been asked to be included on a future agenda and suggested handouts posted in the Council Chambers be amended to reflect this. City Attorney Flarp announced that the City Council would adjourn to Closed Session to discuss the items listed in the Closed Session agenda and read the titles; and reported that City Manager Leung will be recusing herself on Closed Session Item IV.B due to potential financial interest conflicts. IV. CLOSED SESSION -- Council Chambers Conference Room A. CONFERENCE WITH LABOR NEGOTIATORS (Government Code § 54957.6): 1 matter Agency Designated Representatives: Grace K. Leung, City Manager. and Barbara Salvini, Human Resources Director, Negotiators, Employee Organization: Newport Beach Employees League (NBEL) B. CONFERENCE WITH LABOR NEGOTIATORS (Government Code § 54957.6): 1 matter Agency Designated Representatives: Brad Avery, Mayor; and Kevin Muldoon, Mayor Pro Tem Unrepresented Employee: Grace K. Leung, City Manager V. RECESSED - 6:09 p.m VI. RECONVENED AT 6:41 P.M. FOR REGULAR MEETING V1 L ROLL CALL Present: Mayor Brad Avery, Mayor Pro Tem Kevin Muldoon, Council Member Noah Blom, Council Member Joy Brenner, Council Member Diane Dixon, Council Member Duffy Duffield, Council Member Will O'Neill VIII. CLOSED SESSION REPORT City Attorney Harp announced that no reportable actions were taken. IX. INVOCATION - Pastor Rick Mixon, Fairview Community Church, Costa Mesa X. NATIONAL ANTHEM AND PLEDGE OF ALLEGIANCE - World War II Veteran Frank Pucci Ili and Council Member O'Neill, respectively XI. NOTICE TO THE PUBLIC XI1. CITY COUNCIL ANNOUNCEMENTS AND ORAL REPORTS FROM CITY COUNCIL ON COMMITTEE ACTIVITIES Council Member Brenner: • Attended the Newport Beach Foundation reception, spoke to the Newport Beach Chamber of Commerce. Wake LTp Newport, and the Commodores and noted the websites stopsb9oc.com, ourcommuIYozI %.OIL TNe"'looft Beach-613Volumeagee186 12 September 13, 20227 City Council Study Session Minutes 12-614 CITY OF NEWPORT BEACH City Council Meeting Minutes Study Session and Regular Meeting September 13, 2022 1. ROLL CALL - 4:05 p.m. Present: Mayor Kevin Muldoon, Mayor Pro Tern Noah Blom, Council Member Brad Avery, Council Member Joy 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. Fractional Home Ownership Update Community Development Director Jurjis and Consultant David Blumenthal utilized a presentation to discuss the findings of the 22 cities surveyed, map of the 11 known fractional home ownership locations in the City, and case studies from St. Helena, Palm Springs, and Park City, Utah. Carmen Rawson sought information regarding timeshares in the City, cited chapters in the Newport Beach Municipal Code (NBMC) relative to timeshares, areas where timeshares are permitted, listed three fractional ownership companies breaking the NBMC, and defined timeshares and types of timeshares. In response to Council Member O'Neill's question, Ms. Rawson referenced NBMC Chapters 21.18 and 21.70. Nancy Scarbrough noted sentiment shared among residents regarding fractional ownership during recent community events, asked that Council consider the residents' dissatisfaction, and direct City staff to further explore options to regulate or restrict fractional home ownership. Bridget O'Connor opposed the fractional home ownership model. Cary Cruz asked Council to curb shared ownership in the City, Denise Macias opposed fractional ownership. Gabe Dima-Smith, Pacaso representative, clarified Pacaso's business model and indicated that the owners are interested in enjoying second -home ownership for single-family residential use. and that short-term rental is prohibited under the business model. Lisa Mathias opposed the use of single-family dwellings in the R 1 zone for shared property development. An unidentified speaker expressed opposition to fractional home ownership. Denys Oberman expressed the opinion that entities acting as consolidators are using a short- term lodging model, asked Council for clarity on characterizing fractional home ownership as short-term lodging, and not allow them in residential zones and dense family -oriented residential neighborhoods. Roberta Schmidt referenced a Pacaso statement in the Orange County Register, noting a typical rental time of one week, and shared her concerns for keeping a community feel, knowing your neighbors, nearby fractional owners coming and going, community growth and stability. City of Nawp9ij Beach =.,,, City of Newport Beach City Council Meeting September 13, 2022 Mark Markos expressed opposition to fractional home ownership. In response to Mayor Muldoon's request, Mr. Markus indicated that a fractional home ownership sublease can be found online and agreed to forward a copy to staff. Angela Cahger expressed opposition to fractional home ownership. Brita Leffler advocated for preserving historical construction and banning fractional home ownership development. Bob Yant relayed a non -supportive community opinion and suggested utilizing a cease and desist order or regulation enforcement to stop fractional home ownership in the City. Ann Archie described late night noise and noted concern for the quality of life for residents living around fractional. home ownership properties. Jack Brown described people coming and going in the fractional home ownership near his home. Russ Dahl expressed the seriousness of this issue and how it changes the complexity of the neighborhood. Roberta Schmidt noted benefits to Pacaso in a fractional home ownership real estate transaction. Philip Mark expressed concern relative to how the fractional home ownership count has grown from two to twelve, questioned why the NBMC is not being enforced. asked For quick action, and for the City Attorney to review the NBMC to determine applicability. Beverly Johnson, Compass Realty agent, stated that Compass Realty does not have any fractional home ownership listings and is seeking reasonable comparisons. Philomena Mark urged Council to take action regarding fractional home ownership developments, noted quality of life disruptions from a nearby fractional home ownership property, and asked Council to ban further development. Mayor Muldoon recessed the meeting at 4.42 p.m. and reconvened the meeting at 4:53 p.m. with all members of the City Council in attendance. In response to Council Member O'Neill's questions, City Attorney Harp confirmed that Newport Beach defines code sections differently than other cities and that, while a NBMC section references fractional home ownership for timeshare projects, the code refers to a development, pointed out that over 34% of homes in Newport Beach are held in a LLC configuration, noted issues with applicability of provisions, indicated that Sonoma and St. Helena regulate their ordinances by looking at the operational plan and uses to craft regulations, relayed due process and regulation validity issues in the St. Helena lawsuit. indicated that a concise definition is required with an update to the NBMC and Local Coastal Program (LCP), recommended regulating use without capturing others in it, and agreed to work on regulations for consideration by the City Council. Council Member O'Neill supported regulations that would be similar to defining fractional home ownerships as a timeshare plan and thought the current model does not match the General Plan or zoning code, and encouraged residents to call code enforcement on all code violations. City Attorney Harp suggested bringing the matter to the Planning Commission after initiating the amendment. Council Member Dixon agreed with Council Member O'Neill. thanked the residents for attending the meeting, noted impacts throughout the City, suggested staff look at what other jurisdictions have done and come back with recommendations, and suggested adopting a moratorium in the meantime, City of NeWp(?A, Beach =.,,s City of Newport Beach City Council Meeting September 13, 2022 Council Member Avery noted that, even before Pacaso, the City was starting to lose local control to the State, experienced more density and traffic, agreed with implementing a moratorium, cautioned the potential cost to the City, supported looking at what other cities have done and updating the NBMC to mitigate the impacts. In response to Council Member Brenner's questions, Community Development Director Jurjis indicated that the City has not studied the State of Washington to confirm if they have banned fractional home ownership. City Attorney Harp noted that a cease and desist order would be based on current NBMC provisions and confirmed that a moratorium places a hold on development and would be the path to immediate action. Council Member Brenner expressed concerns for neighborhoods affected by short-term lodging, the Regional Housing Needs Assessment (RHNA), residential care facilities, and homelessness, and relayed the importance of finding a solution as soon as possible. Council Member Duffield expressed the opinion that further study is needed to amend the NBMC and supported considering a moratorium. Mayor Muldoon summarized the direction to staff to explore a regulation timeshare plan with the Planning Commission. conduct more studies on Sonoma and other communities, enact a moratorium and prohibition in the R-1 zone, and to move with expediency. In response to Council Member O'Neill's question. City Attorney Harp detailed the standards for a moratorium. In response to Council Member Dixon's question, City Attorney Harp clarified that the City Council must initiate the code change first before going to the Planning Commission. Mayor Muldoon clarified that the moratorium would come to Council for a vote and the code amendment first needs to be initiated by Council before going to the Planning Commission, III. PUBLIC COMMENTS ON AGENDA AND NON -AGENDA ITEMS Steven Gerard distributed a flyer, invited the City to become a Personhood City and attend the lurk Cameron movie titled Lifemark, asked that this be placed on a future agenda, and sang a song. Regarding Item 18 (Amending and Re -Adopting the 2021-2029 6th Cycle Housing Element), an unidentified speaker from the Southwest Region of Carpenters expressed concern relative to the environmental impacts of the Housing Element and an interest in having local and skilled workforce requirements added into projects moving forward since he believed it would benefit the climate, boost economic development, and mitigate transportation and greenhouse gases. City Attorney Harp announced that the City Council would adjourn to Closed Session to discuss the item listed on the Closed Session agenda and read the title. IV. CLOSED SESSION -- After Study Session - Council Chambers Conference Room A. CONFERENCE WITH REAL PROPERTY NEGOTIATORS (Government Code § 54956.8): 1 matter Property: 1201 Dove Street, Newport Beach, California 92660 (APN 427-221-06). City Negotiators: Seimone Jurjis. Community Development Director and Lauren Wooding Whitlinger, Real Property Administrator. City of RanWpgA, Beach =.s„ September 27, 2022, City Council Meeting Minutes 12-618 CITY OF NEWPORT BEACH City Council Meeting Minutes Special Meeting September 27, 2022 I. CALL THE MEETING TO ORDER II. 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)1100-20221 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. City of Newpor3j Beach =.,,y City of Newport Beach City Council. Meeting September 27, 2022 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 ga. 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. City of Newpart Beach =.s=o City of Newport Beach City Council Meeting September 27, 2022 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. 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). 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. City of Newpod Beach =.s=, City of Newport Beach City Council Meeting September 27, 2022 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 (P.42022-0202); 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. City of Nempod Beach =.,__ City of Newport Beach City Council Meeting September 27, 2022 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. -"i L Leilani I. Brown City Clerk ��FrJ13�� City of Newport Beach =.s=, October 6, 2022, Planning Commission Study Session Minutes 12-624 DocuSign Envelope ID: 2E4CA2B6-698E-4A00-923B-95DC55343673 NEWPORT BEACH PLANNING COMMISSION SPECIAL MEETING MINUTES CITY COUNCIL CHAMBERS — 100 CIVIC CENTER DRIVE THURSDAY, OCTOBER 6, 2022 REGULAR MEETING — 6:30 P.M. CALL TO ORDER - The meeting was called to order at 6:30 p.m. PLEDGE OF ALLEGIANCE — Commissioner Klaustermeier III. ROLL CALL PRESENT: Chair Lauren Kleiman, Secretary Mark Rosene, Commissioner Tristan Harris, Commissioner Sarah Klaustermeier, Commissioner Lee Lowrey, Commissioner Erik Weigand ABSENT: Vice Chair Curtis Ellmore Staff Present: Community Development Director Seimone Jurjis, Deputy Community Development Director Jim Campbell, City Attorney Aaron Harp, Principal Planner Jaime Murillo, Administrative Assistant Clarivel Rodriguez, Department Assistant Savannah Martinez IV. PUBLIC COMMENTS None V. REQUEST FOR CONTINUANCES None VI. CONSENT ITEMS ITEM NO. 1 MINUTES OF SEPTEMBER 8, 2022 Recommended Action: Approve and file Motion made by Commissioner Weigand and seconded by Secretary Rosene to approve the minutes of the September 8, 2022, meeting as amended. AYES: Harris, Kleiman, Lowrey, Rosene, and Weigand NOES: None ABSTAIN: Klaustermeier ABSENT: Ellmore VII. STUDY SESSION ITEM NO. 2 CODE UPDATE RELATED TO FRACTIONAL HOMEOWNERSHIP (PA2022-0202) Site Location: Citywide Summary: Staff will provide the Planning Commission with an update regarding the growing trend of fractional homeownership, how other jurisdictions are addressing the use, deficiencies in current codes, and the outcome of recent City Council discussions on this topic. 12-625 DocuSign Envelope ID: 2E4CA2B6-698E-4A00-923B-95DC55343673 Planning Commission Special Meeting Agenda October 6, 2022 Recommended Action: Receive Presentation on fractional homeownership and provide staff direction Community Development Director Jurjis thanked the Planning Commission for attending the special meeting, reminded them that it is a study session with no formal action required, and requested input on policy recommendations on fractional ownership with the goal of gaining consensus from the Planning Commission for staff to use to draft an ordinance that can be recommended to the City Council. He encouraged questions before turning the presentation over to Principal Planner Murillo. Principal Planner Murillo utilized a presentation to provide the Planning Commission with an overview of the discussion, what is fractional homeownership, fractional ownership of real estate, companies selling fractional ownership, how it works, operations, complaints/concerns, claimed benefits, City regulations, municipal code review, "timeshare" and "development" definitions, and city timeshare requirements. Furthermore, he reviewed the City Council background and direction, research report findings, 12 known properties in the City, and case studies for St. Helena, CA, Palm Springs, CA, and Park City, UT. Principal Planner Murillo presented options and recommendations based on direction from the City Council — Option A definition and Option B definition, including review process options, parking requirements, noise restrictions, separation standards, trash management, management plan, prohibited subletting, the Good Neighbor policy, owner acknowledgements, and grandfathering provisions. In response to Secretary Rosene's question, Principal Planner Murillo stated that Option B can be exercised either with a use permit or zoning clearance. Community Development Director Jurjis indicated that the City is looking at fractional ownership as a new land use category as opposed to a permit program like Short-term Lodging (STL). In response to Commissioner Lowrey's inquiry, City Attorney Harp reviewed the set-up structure and state regulations for fractional ownership and how it differs from tenant in common. In response to Commissioner Weigand's questions, Deputy Community Development Director Campbell verified that the City would need to go to the California Coastal Commission (CCC) for any amendment to the Local Coastal Program (LCP). City Attorney Harp indicated that fractional ownership properties generally want to be in the coastal zone, some City's have banned it by zone. He expects push back from some City Council members who think that some coastal zone areas are overburdened, and restricted areas could be crafted if preferred by the Planning Commission. Deputy Community Development Director Campbell relayed that CCC staff does not consider fractional ownership an issue but looks at the use as a timeshare. Community Development Director Jurjis noted that the City only regulates land use and will use municipal codes to enforce violations. City Attorney Harp recognized enforcement challenges related to violations from property users who are not owners. Community Development Director Jurjis shared a Pacaso property complaint and the City's response to a violation on the property and noted a reactive program for code violations, the Timeshare Act for fractional ownership, and Planning Commission discretion to lower the size of fractional portions. Commissioner Weigand suggested a negotiation between the industry, City, and a resident representative. Community Development Director Jurjis agreed with this approach and for staff to have conversations and collaborate with the three active companies in Newport Beach on acceptable regulatory standards. City Attorney Harp was in agreement that it would be wise for the City to get guidance from the St. Helena litigation and January trial outcome. City Attorney Harp explained that his office provides legal advice to the City and will reach out to expert counsel for guidance as needed. Community Development Director Jurjis explained that Pacaso purchases and prepares the property for the fractional sale to the one eighth ownership and collects a fee for property management and indicated that an Page 2 of 7 12-626 DocuSign Envelope ID: 2E4CA2B6-698E-4A00-923B-95DC55343673 Planning Commission Special Meeting Agenda October 6, 2022 operating agreement and management company are included in the regulations. In closing, Commissioner Weigand sought protection for properties passed down within a family. In response to Commissioner Harris' questions, Community Development Director Jurjis confirmed that it is possible for fractional owners to modify the agreement but once the property is designated as a fractional ownership the owners must comply with the rules or be subject to enforcement. City Attorney Harp noted different approaches by other cities and strategies by fractional ownership companies. Principal Planner Murillo reviewed the Carmel by the Sea report notes but was unaware of the details. In response to Commissioner Klaustermeier's questions, City Attorney Harp relayed that the City could consider an amortization program for fractional ownership homes established before regulations are in place, but typically they will have a good defense of nonconforming use and an amortization program would then be used to regulate them. In response to Secretary Rosene's comment, City Attorney Harp recommended using a fractional ownership model and narrower approach to the definition that is defensible, addressing the issues, building regulations similar to STL, and using a zoning clearance as opposed to a use permit. Furthermore, he liked the idea of working with the industry to find out what they think is acceptable to avoid litigation. Gabe Dima-Smith, Public Affairs Manager for Pacaso, utilized a presentation to demystify areas of the Pacaso business model and review co -ownership as an age-old practice, Pacaso buyer ratio to one home, Pacaso business model, co -ownership not timeshare, who are Pacaso owners, neighbors not short-term renters, fully - managed experience, Pacaso versus timeshare, nightly rental, traditional second homes, and Airbnb, facts versus fiction, and neighbors(a)oacaso.com to address questions or concerns. In response to Commissioner Weigand's question, Mr. Dima-Smith explained Pacaso's code enforcement procedures in their Neighbor Playbook that address regulation adherence, violations, enforcement, monetary fines, and suspended stays. Furthermore, he indicated that Pacaso is not a publicly traded company. In response to Commissioner Weigand's question, City Attorney Harp stated that the City cannot specify a fractional ownership company in the City, but with one set of rules can remove bad actors through enforcement and revoked permits and property uses. Furthermore, he noted that the City can take action against an independent operator but learned from Pacaso that only the company could get owners removed by a provision in the agreement. In response to Commissioner Weigand's comment, Mr. Dima-Smith recognized the fear of a change to the community culture with a large number of fractional ownerships in an area, expressed the unlikelihood of a 40- 50 home expansion of the business, and relayed a pathway towards regulation that can prevent potential variables by working together. Commissioner Weigand recognized the infancy stage of fractional ownership, the past scramble to save the character of the neighborhood during the infancy of Vrbo and Airbnb, and the opportunity to try to figure it all out now, inquired about Pacaso's interest in working together with the City, a third -party attorney, and resident input, noted the public concerns, expressed an interest in not rushing through the process, and noted pressure in the community to act quickly, personal concern for the families passing down homes, how it works with real estate agents, and protection for residential areas. In response to Commissioner Harris' inquiry, Mr. Dima-Smith provided the history and an update on the fractional ownership cease and desist letter in Carmel by the Sea. In response to Secretary Rosene's question, Mr. Dima-Smith suggested options to reach a reconciliation of regulations and recognized that identifying an exact proposal during the meeting would be challenging. In response to Commissioner Harris' question, Mr. Dima-Smith indicated that every property has a home manager that is local in the community and accessible 24 hours a day. Page 3 of 7 12-627 DocuSign Envelope ID: 2E4CA2B6-698E-4A00-923B-95DC55343673 Planning Commission Special Meeting Agenda October 6, 2022 In response to Commissioner Klaustermeier's question, Mr. Dima-Smith indicated that Pacaso has no ownership once the shares are sold to the ownership group nor a right to sell the home and that all the owners need to agree to sell it to one buyer. In response to Chair Kleiman's inquiries, Mr. Dima-Smith noted an 80 percent financing option with Pacaso, loans backed by Pacaso, a process to protect the interest of the owners, Best Neighbor Practices rules as part of the ownership agreement, a kitchen counter posting of unique City codes (enforcement issues, quiet hours, trash requirements, noise, and parking), and property taxes obligations for all owners that does not include Transient Occupancy Tax (TOT) tax. Carmen Rawson questioned where the "development" definition included in the presentation come from, read the definition from Chapter 21:70 of the Newport Beach Municipal Code, and asked for clarification, thought Pacaso is a timeshare operation because owners are limited to the number of days at the property, noted differences in enforcement action for STL violations and STL oversaturation in the Balboa Peninsula, and asked the Planning Commission to follow Option A and apply the regulation in the R1 and R2 zones. Mr. Jim Mosher expressed how he was surprised to see staff's Option B presentation, shared the comments by the City Council at the September 27, 2022, City Council meeting prohibiting timeshares anywhere in Newport Beach except in certain commercial areas, staff told the Council that fractional ownership does not fit the definition of timeshare, and for the Planning Commission to prepare a definition that would fit the model and exclude the homes passed down within a family. Mr. Mosher noted that he does not think the revision is necessary because the definition for "development" is found in Title 20/Zoning Code that has regulated land use since 1982 and prohibits timeshares of residential units. Max, a local Pacaso employee, read a statement in support of fractional homeownership on behalf of Pacaso owners Cindy and Randy. Russ Dahl lives next to the Peninsula Point Pacaso home and believed no one likes the fractional ownership model and assimilated it to a timeshare and noted property behaviors, disruptions to the community, changes to the fabric of the community, property pricing, and a proliferation of properties and companies that were not intended. Lauren, a local Pacaso employee, read a statement in support of fractional homeownership on behalf of Pacaso owner Steve Hayes. Nancy Scarbrough noted two previous meetings with approximately 75 people in attendance who opposed fractional ownership, the fractional ownership sales process, and the creation of an asset class that messes with the neighborhood home values, inquired about how many of the 11 fractional homes in Newport Beach have eight owners, relayed five active listings for fractional ownership homes on the market, and thought fractional ownership properties operate like STLs and are multifamily homes in a single family zoning. She asked the Planning Commission to consider how they might feel living next to a fractional ownership property. Jeff, local Pacaso employee, read a statement in support of fractional homeownership on behalf of local Pacaso owner Anthony Cumar. An unidentified local Pacaso employee read a statement in support of fractional homeownership on behalf of local business owner Jessica Roy. Tim, a local Pacaso employee, read a statement in support of fractional homeownership on behalf of a local Pacaso owner. Ken Rawson acknowledged the community members who filled the chambers at the City Council meeting with concern for fractional ownership growth, noted an exchange option in the Elite Homes model that allows owners to stay at other properties within their system and resembles a timeshare, and asked the Planning Commission to limit fractional ownership development. Page 4 of 7 12-628 DocuSign Envelope ID: 2E4CA2B6-698E-4A00-923B-95DC55343673 Planning Commission Special Meeting Agenda October 6, 2022 At the request of Chair Kleiman, Community Development Director Jurjis clarified that with a majority vote the City Council directed staff to come back to the Planning Commission, look at the adopted St. Helena ordinance, and find a way to regulate fractional ownership with guidance and recommendations from the Planning Commission that can be supported and brought back to the City Council. In response to Commissioner Weigand's question, Community Development Director Jurjis relayed that the City cannot restrict Pacaso-like companies to only purchase and operate the existing 1500 STL designated properties because the City regulates the land use by looking at the zoning and not the STL status, staff is looking for the Planning Commission to provide direction and language for a framework that would regulate the use of the land, and staff's recommendation of R1 zone with a 500 foot separation and City Attorney Harp concurred. Commissioner Weigand proposed using a hybrid of Options A & B towards the creation of an ordinance that protects the City while monitoring the St. Helena case and expressed his lack of preparation to go all the way with option A without knowing the outcome of St. Helena. Community Development Director Jurjis turned to Chair Kleiman to develop a consensus among Commissioners for the direction to staff. Commissioner Lowrey acknowledged all parties involved, a complicated issue with strong opinions on both sides, and not prepared to vote or recommend specific direction. He recommended forming a subcommittee for further study. In response to Commissioner Harris' question, City Attorney Harp clarified that the City Council elected to not move forward with a moratorium. Commissioner Harris noted that neither option was satisfactory, Option A potentially exposes the City to a lawsuit and Option B does not address all the impacts, expressed an interest in identifying and addressing the issues now, and supported a working group consisting of members of the public, neighbors, and industry. Commissioner Klaustermeier concurred with Commissioner Harris, thought the fractional ownership model is like a STL, recalled capping STL in the community, suggested reworking Option B and regulate it with separation standards that will satisfy the public, indicated she would not like a fractional ownership property next to her residence, and encouraged finding a way to proactively work together with the agencies to identify an agreeable way to regulate fractional ownership. Secretary Rosene relayed not wanting to expose the City to litigation using Option A, fractional ownership homes appear to be in the R2 zone, and R1 zone being an inappropriate placement. He wondered if the next step might be for staff to prepare a written ordinance that the Planning Commission could evaluate and get specific. City Attorney Harp advised the Planning Commission to move forward with a recommendation to the City Council of what is best without regard for potential litigation. Secretary Rosene noted that this seems like a policy decision and the Commission may be struggling because that is not their scope, and it is easy to prepare an ordinance when the City Council is clear about what is wanted. Chair Kleiman relayed that the policy decision was already made by the Council and provided to the Planning Commission, this is a study session and a first exposure, there is no need to craft language from the dais or approve anything tonight, and the Planning Commission needs to provide further direction to staff. She summarized the consensus for crafting a fractional ownership definition and an ordinance framework. The Planning Commission and staff discussed the possibility of forming an ad hoc committee with members of the Planning Commission, public, and industry to address the land use. Page 5 of 7 12-629 DocuSign Envelope ID: 2E4CA2B6-698E-4A00-923B-95DC55343673 Planning Commission Special Meeting Agenda October 6, 2022 In response to Commissioner Weigand's question, Community Development Director Jurjis relayed that the Council delegated this task to the Planning Commission to access the land use, noted staff support, reminded the Commission of the Brown Act requirement for an ad hoc committee beyond three Planning Commission members. Commission Weigand questioned the Planning Commission's authority and time commitment to review proposals and the process for granting fractional ownership purchases and appeals. In response, Community Development Directory Jurjis thought that this is a discussion to have with the Commissioners and noted how staff works well in collaboration with ad hoc and steering committees and the Planning Commission. Commissioner Weigand thought making decisions from the dais without having the presentation prior to the meeting is poor public policy, encouraged being mindful of a process for future applications, and planned for more discussion. In response to Commissioner Weigand's question, Community Development Director Jurjis indicated that the 500-foot separation standard as opposed to 1000 feet was determined by mapping current properties to strike a balance and expressed an interest in getting guidance from the Commission regarding this standard. Commissioner Weigand noted grandfathered properties, consideration for a 1000-foot separation standard, and future discussion. In response to Chair Kleiman's assessment, Community Development Director Jurjis clarified the Brown Act rules for an ad hoc committee greater than three Planning Commission members. Commissioner Lowrey proposed a motion to form an ad hoc committee to review fractional ownership consisting of three Commissioners who would report back to the Planning Commission within 90 days with findings. He volunteered to be on the committee. In response to Chair Kleiman's inquiry, Community Development Director Jurjis advised the Commission to move the ad hoc committee review as quickly as possible with a maximum of 90 days and noted next steps to agendize the item. City Attorney Harp indicated that a general direction to staff is all that is needed now, and staff will bring it back to the next meeting. With a show of hands, the Planning Commission was in majority agreement. In response to Commissioner Weigand's concern for timing, Community Development Directory Jurjis confirmed that a 90-day period is possible for staff and 60-days is workable as well. In response to Chair Kleiman's inquiry, Commissioners Lowrey, Harris, and Rosene volunteered to be on the ad hoc committee and will be subject to a vote. VIII. STAFF AND COMMISSIONER ITEMS ITEM NO. 3 MOTION FOR RECONSIDERATION None ITEM NO.4 REPORT BY THE COMMUNITY DEVELOPMENT DIRECTOR OR REQUEST FOR MATTERS WHICH A PLANNING COMMISSION MEMBER WOULD LIKE PLACED ON A FUTURE AGENDA Deputy Community Development Director Campbell reported to the Planning Commission a letter received from the State Department of Housing and Community Development stating that the Housing Element is certified. The City is the ninth jurisdiction in Orange County. He announced the next Planning Commission meeting on October 20, 2022, with five agenda items. ITEM NO. 5 REQUESTS FOR EXCUSED ABSENCES None IX. ADJOURNMENT - The meeting adjourned at 8:47 P.M Page 6 of 7 12-630 DocuSign Envelope ID: 2E4CA2B6-698E-4A00-923B-95DC55343673 Planning Commission Special Meeting Agenda October 6, 2022 The agenda for the October 6, 2022, Planning Commission meeting was posted on Friday, September 30, 2022, at 12:45 p.m. in the Chambers binder, on the digital display board located inside the vestibule of the Council Chambers at 100 Civic Center Drive, and on the City's website on Friday, September 30, 2022, at 12:30 p.m. Lauren Kleiman, Chair Mark Rosene, Secretary Page 7 of 7 12-631 October 20, 2022, Planning Commission Meeting Minutes 12-632 DocuSign Envelope ID: 05E2424B-1 C69-4AOF-91 A9-DA29BA6476DC Planning Commission Regular Meeting Agenda October 20, 2022 Commissioner Weigand requested staff be watchful of part B in the first recommendation. Commissioner Harris concurred with Secretary Rosene that recommendation two, part B is more applicable to retail and suggested constraining it to retail. Mr. Mosher inquired about how small fractional numbers will be fairly treated for earned credits from recommendations one and two and how eating establishments in Newport Beach will be affected by recommendation four. Principal Planner Zdeba relayed that rounding up is used for parking in the code and staff would need to study it more before putting it in to an ordinance and Deputy Community Development Director Campbell noted that the updated parking requirements will help facilitate permanent COVID patios, a small, anticipated parking reduction for some larger restaurants, and the impossibility of assessing potential impact on every restaurant in town. NEW BUSINESS ITEM NO. 5 MUNICIPAL CODE AND CITY COUNCIL POLICY REVIEW (PA2022-0219) Site Location: Not Applicable Summary: Establish an ad hoc committee of Planning Commissioners to assist the City Council in reviewing the Municipal Code and City Council Policies. Recommended Action: 1. Find the recommended action not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3; and 2. Form an ad hoc committee and authorize the Chair to appoint up to three Planning Commissioners to assist City staff in reviewing the Municipal Code and City Council Policies related to planning and zoning activities. Assistant City Attorney Summerhill informed Chair Kleiman that it is her discretion to appoint the members of the ad hoc committee. Motion made by Chair Kleiman and seconded by Vice Chair Ellmore to appoint Commissioners Harris, Rosene, and Klaustermeier to the ad hoc committee. AYES: Ellmore, Harris, Klaustermeier, Kleiman, Lowrey, Rosene, and Weigand NOES: None ABSTAIN: None ABSENT: None ITEM NO. 6 CODE UPDATE RELATED TO FRACTIONAL HOMEOWNERSHIP (PA2022-0202) Site Location: Not Applicable Summary: Establish an ad hoc committee of Planning Commissioners to assist City staff and the City Council in reviewing the issue of fractional homeownership. Recommended Action: 1. Find the recommended action not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3; and Page 5 of 7 12-633 DocuSign Envelope ID: 05E2424B-1 C69-4AOF-91 A9-DA29BA6476DC IX. X. Planning Commission Regular Meeting Agenda October 20, 2022 2. Form an ad hoc committee consisting of Commissioners Lowrey, Harris, and Rosene to assist City Staff and the City Council in reviewing and potentially regulating fractional homeownership. Motion made by Chair Kleiman and seconded by Vice Chair Ellmore to appoint Commissioners Rosene, Weigand, and Lowrey to the ad hoc committee. AYES: Ellmore, Harris, Klaustermeier, Kleiman, Lowrey, Rosene, and Weigand NOES: None ABSTAIN: None ABSENT: None Mr. Mosher reminded Chair Kleiman of the Brown Act requirement to allow public comment on hearing and agenda items and reiterated that forming an ad hoc committee is not the direction of the City Council who directed the Planning Commission to study and correct the definition of time share project so it would include a fractional ownership sold to a group of strangers and exclude a home shared by family and friends. He thought forming an ad hoc committee and a 500-foot separation requirement were bad ideas and the Planning Commission should follow the direction provided by the City Council. Assistant City Attorney Summerhill declined commenting on Mr. Mosher's comments to avoid going in depth because the item was to form an ad hoc committee and noted that issues will be revisited as they come forward. STAFF AND COMMISSIONER ITEMS ITEM NO. 7 MOTION FOR RECONSIDERATION None ITEM NO. 8 REPORT BY THE COMMUNITY DEVELOPMENT DIRECTOR OR REQUEST FOR MATTERS WHICH A PLANNING COMMISSION MEMBER WOULD LIKE PLACED ON A FUTURE AGENDA Deputy Community Development Director Campbell announced the next Planning Commission meeting on November 3, 2022, to review two agenda items and the next City Council meeting to go forward with the Circulation Element Update and conduct public hearings on the Lido House Hotel expansion and reconsideration for The Tennis Club at Newport Beach project. He further informed the Planning Commission of the ongoing General Plan Update process and steering committee who will recommend people for a General Plan Advisory Committee (GPAC) and send it to the City Council in November 2022 for appointment. Lastly, he noted that the GPAC will begin working in January 2023 and will focus on the Land Use Element and zoning amendments to implement the Housing Element, provide advice to staff, and be a body for public outreach and discussion for the comprehensive update of all elements. ITEM NO. 9 REQUESTS FOR EXCUSED ABSENCES None ADJOURNMENT — The meeting was adjourned at 7:52 p.m. Page 6 of 7 12-634 February 23, 2023, Planning Commission Meeting Minutes 12-635 Planning Commission Regular Meeting Agenda February 23, 2023 1. Conduct a public hearing; 2. Find this project exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) and statutorily exempt under Sections 15262 and 15265 of the CEQA Guidelines, because it has not potential to have a significant effect on the environment; and 3. Adopt Resolution PC2023-011 approving the Coastal Development Permit filed as PA2017-046. Principal Planner Zdeba used a presentation to review the Balboa Village Parking Management District Plan background, purpose, implementing components, coastal consistency, and recommendation. Commissioners Rosene and Klaustermeier reported no ex parte communications and Commissioner Harris and Lowrey reported having spoken with area property owners. Chair Ellmore opened the public hearing. Jim Pertrulli asked if the parking on Adams Street will change and if his duplex spaces are included in the 161 spaces that will be more public. Jim Mosher noted a spillover parking analysis not included for consideration of an anticipated problem, typo on handwritten page 31 referring to the California Coastal Commission (CCC) approval when it is the Planning Commission's approval, missing implementation specifics, Municipal Code, and incomplete pieces. Principal Planner Zdeba stated that no changes are planned for parking on Adams Street and residential parking garages are not included in the off-street parking pool that represents private commercial parking. Furthermore, he relayed that Mr. Mosher was referencing a residential parking permit program, which was not supported by the residents nor the CCC and thus not carried forward. He added that spillover parking impacts could happen if the Village is successful and that they can be reviewed in the required two-year review period. Chair Ellmore closed the public hearing. In response to Commissioner Harris' questions, Principal Planner Zdeba indicated that the code does not speak to potential private parking being utilized to offset residential parking and would not be consistent with the program intent. He noted that the plan has flexibility built-in to make changes and the Employee Parking Permit program is intended to help divert the spillover. Motion made by Commissioner Harris and seconded by Vice Chair Rosene to approve the item as recommended. AYES: Ellmore, Harris, Klaustermeier, Lowrey, and Rosene NOES: None ABSTAIN: None ABSENT: None VIII. DISCUSSION ITEMS ITEM NO. 6 FRACTIONAL HOMEOWNERSHIP (PA2022-0202) Summary: A discussion of potential regulation of fractional homeownership. Recommended Action: Page 6 of 10 12-636 Planning Commission Regular Meeting Agenda February 23, 2023 Receive a presentation of the Planning Commission ad -hoc committee on fractional homeownership and provide a recommendation to the City Council. Community Development Director Jurjis explained that the City Council has passed this item to the Planning Commission to work on, an Ad -Hoc Committee with Commissioner Lowrey and Vice Chair Rosene was formed, the staff has spent an enormous amount of time on the item, the recommendation is the Ad -Hoc Committee's idea of how to address fractional ownership, and the subject is difficult and not perfect. He asked that the Planning Commission provide feedback which will be provided to the City Council on March 14 for further review. Principal Planner Murillo used a presentation to review what is fractional ownership, how it works, operations, complaints/concerns, background of past City Council direction, the Planning Commission study session with staff and Ad -Hoc Committee formation, and Ad Hoc Committee considerations. He shared the recommendations of the Ad -Hoc Committee which included a regulatory process, location restrictions and maximum caps, parking requirements, noise restrictions, management plan, prohibition of subletting and guest use, Good Neighbor Policy, owner acknowledgments, and grandfathering provisions. Principal Planner Murillo stated the recommendation requested and displayed a summary of the recommendations of the Ad -Hoc Committee for discussion purposes. Chair Ellmore provided an opportunity for public comment. Carmen Rawson thought that timeshares cannot be regulated like Short -Term Lodging (STL), questioned how regulations will be enforceable, asked for an update on what other cities are doing, noted the impacts, thought the City's goal should be to have more residents, questioned removal of separation requirements, and noted the challenge of regulating subletting. Jim Mosher noted the difference in stay times between fractional ownership homes and co -owned homes, concern for regulating ownership, the applicability of the timeshare definition to fractional ownership, and differences in ordinances enacted in Park City, UT that prohibit fractional ownership in most residential areas except for where timeshares are allowed and Carmel where timeshares are banned in all residential areas, and sale advertisements will be prohibited. Maureen Cotton, President of Central Newport Beach Community Association, referenced Mr. Mosher's letter to the Planning Commission dated yesterday as having clarified all the City needs to know, noted ordinances already placed by the City, asked for timeshares and fractional ownership to be called the same, described stay lengths, programming, and STL permit rules, asked the Planning Commission to review the letter from Mr. Mosher and her, thought the fractional ownerships are acting like timeshares and should be limited to where they are allowed in the City, and relayed the burden to City services. Denys Oberman asked for the presentation to be made available to the public and a reasonable opportunity to provide input, provided background information on fractional ownership companies and thought the corporate setup is not comparable to families forming a LLC for trust reasons, strongly opposed permitting commercial entities engaged in the business of fractional ownership and timeshare activity in residential neighborhoods, questioned if fractional ownership falls in the purview of timeshare ordinances and legal framework, believed that fractional ownership structures are not STL, noted impacts to the community, and suggested fractional ownership is a fundamental change in land use plans. Max H. Johnson requested the clarification and specification of the agenda item be available before the meeting, seconded that fractional ownership is a timeshare and not allowed in the City of Newport, noted the urgency to ban or enaction of a moratorium on fractional ownership in other cities with no legal repercussions, urged the Planning Commission to consider placing a moratorium or ban and using a buffer/pause until a decision is made, and relayed the quality of life in the Peninsula Point. Nancy Scarbrough noted her frustration for not having information in advance of the meeting, supported comments by Jim Mosher and Carmen Rawson, noted a 30 percent Pacaso staff reduction in the fourth quarter and 100 employees fired recently, stated that fractional ownership homes are permanently out of the residential housing stock and overvalued, and thought the focus of the discussion should be on what is best for the residents, Page 7 of 10 12-637 Planning Commission Regular Meeting Agenda February 23, 2023 stepping back, enacting a moratorium, conducting a thorough study of other cities, and seeking a second legal opinion. Ken Rawson inquired about why the Ad -Hoc Committee is recommending regulating fractional ownership and expressed concern for regulation details and limits to the number of fractional ownership homes. Purvi Doshi, Senior Public Affairs Manager for Pacaso, thanked the staff and Planning Commission subcommittee, expressed gratitude for working collaboratively, and expressed hope to move forward with policies that address the City's concerns and enrich lives, noted a regulations draft prepared by Pacaso that addresses concerns, supported the recommendations presented, recommended a cap of about 500 fractional ownership homes City- wide, relayed the differences of a Pacaso home versus a timeshare, and described the characteristics of a fractional owner. Gina Cruz supported the other speakers and expressed her astonishment at the proposed 500 fractional ownership cap. Chair Ellmore ended the opportunity for public comment. Chair Ellmore recapped what is being requested of the Planning Commission. Assistant City Attorney Summerhill suggested a permit suspension penalty to address enforcement issues and using the co-owner permit and acknowledgements to verify who is on the property and address subletting issues. In response to Chair Ellmore's inquires, Principal Planner Murillo indicated that there is no data on police department complaints at Pacaso properties, Community Development Director Jurjis shared one complaint to code enforcement that was quickly resolved. Chair Ellmore stated that a party atmosphere does not seem to be apparent with 12 fractional ownership properties and one complaint. Vice Chair Rosene suggested to the public that the opportunity still exists to reach out to the new Council to recommend broadening the definition of timeshares and include fractional ownership under it. He stated this action is not in the purview of this body and supported the inclusion of a public hearing process by the Zoning Administrator (ZA) for complete transparency, adding a management permit, prohibiting fractional ownership in a R-1 zone, and meeting the guidelines of the City codes. Commissioner Lowrey thanked staff for their help, recapped what is being asked of the Planning Commission and the goal of creating regulations that a lot of people could agree on. He noted his issues of ownership and contract law, legal challenges in the State, and a fair recommendation to forward to the City Council as a starting point that could return to the Planning Commission for a full resolution. Community Development Director Jurjis indicated that the current recommendation of a regulatory framework would be included in the business license side so it will not come back to the Planning Commission, but will depend on how the Council looks at it. Assistant City Attorney Summerhill relayed that the St. Helena case is pending, and the trial date has been pushed out to January 2024. Vice Chair Rosene relayed that the recommendation is an attempt to come up with practical regulation and provide visibility to what's happening in the neighborhoods and does not mean it is the only option. He noted the option to broaden the timeshare definition with the City Council. Secretary Klaustermeier thought fractional ownership sounds like a timeshare framed differently, is a business model that commercializes residential neighborhoods with a profit taken through sales and operates like STL which is capped in the City. She concurred with Vice Chair Rosene regarding the opportunity for the City Council to revise the way timeshare is defined and preferred not permitting this use and legally find a way to make that happen. In response to Commissioner Harris' inquires, Assistant City Attorney Summerhill indicated that Carmel by the Sea tweaked and expanded their timeshare definition to capture fractional ownership, which is the equivalent to a ban, the ordinance is just now taking effect, she is not aware of a lawsuit on the case, and they prohibited the Page 8 of 10 12-638 Planning Commission Regular Meeting Agenda February 23, 2023 advertisement by realtors of the units. Furthermore, she is aware of cease -and -desist instances, but does not know the enforcement efforts in the jurisdictions. Commissioner Harris was curious about the process with homeowners and companies and buffer zones, did not know how the City could enforce permit suspension restrictions and regulations, thought punitive or financial consequences made sense, and inquired about possible restricted areas and a cap number. Commissioner Lowrey explained that the Committee chose a cap method because it would be difficult to enforce spacing and a cap limit was more appropriate. He predicted a slowdown in sales with the rates changes over the last six to seven months. In response to Commissioner Harris' question, Community Development Director Jurjis stated that the recommendation is a starting point of what enforcement could look like, consists of parts taken from the STL policy, and plans for enforcement like STL. Vice Chair Rosene restated his recommendations: 1- Consider the option to broaden the definition of timeshare. 2- Transparency for neighbors is needed with a regulatory process and permitted through the public ZA process for the property and co-owner permit. (A management company must be maintained) 3- Prohibit fractional ownership in the R-1 Zone. 4- Add practical regulations that create a good neighbor atmosphere. 5- Add language that suspends a permit after a certain number of complaints. 6- Explore an advertisement prohibition. Vice Chair Rosene thanked staff. Chair Ellmore proceeded with establishing a consensus of the Planning Commission for a recommendation. He confirmed the Planning Commission can recommend that the City Councill broaden the definition of timeshare. In response to Chair Ellmore, Vice Chair Rosene thought permit suspensions should be placed in the recommendation and discretion should be given to staff for review. In response to Commissioner Lowrey's question, Assistant City Attorney Summerhill thought transparency can be created through a regulatory permit but is not sure if it would be through the ZA if the direction provided is to use a regulatory permit. The Commission agreed not using the ZA, but recommended some transparency be provided to the neighbors through the permit process. Chair Ellmore recommended the the Council further evaluate the idea of not allowing fractional ownership in the R-1 Zone. The Commission discussed a reasonable cap limit and agreed to forward it to the City Council to address. In response to Commissioner Lowrey's question, Chair Ellmore clarified that the recommendation includes reviewing the timeshare definition to see if by broadening it, fractional ownership can be incorporated. ITEM NO. 7 APPEAL FEE DISCUSSION Summary: A discussion of planning application appeal fees and a recommendation to the Finance Committee and City Council. Recommended Action: 1. Find any recommendation to the City Council regarding planning application appeal fees is not subject to the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) Page 9 of 10 12-639 March 14, 2023, City Council Meeting Minutes 12-640 City of Newport Beach City Council Meeting March 14, 2023 11. Acceptance of Proposition 69 Reimbursement [100-20231 a) Determine this action is exempt from the California Environmental Quality Act (CEQ L) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and b) Approve Budget Amendment No. 23-056 accepting Proposition fig funds in the amount of $37,406.15 as reimbursement for the purchase of specified crime scene and evidence processing equipment and appropriating $37,406.15 in increased expenditures in Account No. 01035355- 841415. Motion by Mayor Pro Tern O'Neill seconded by Council Member Kleiman, to approve the Consent Calendar; and noting the recusals by Council Member Stapleton to Items 6 and 7, the recusals by Council Member Weigand to Items 6 and 7, the recusal by Council Member Grant to item 7, and the amendment to Item 1. The motion carried unanimously. XV1. ITEMS REMOVED FROM THE CONSENT CALENDAR - None XVII. PUBLIC COMMENTS ON NON AGENDA ITEMS Nancy Gardner inquired about Citywide evacuation plans and suggested more evacuation information be provided to residents. Jim Dastur read his letter that was submitted to Council and requested that City staff hold the Assessment District 124 meeting at the Balboa Island Fire Station prior to March 31, 2023 and not April 22, 2023, or move the date for the assessment payment from March 31, 2023 to the end of April. XVIII. CURRENT BUSINESS 12. Code Update Recommendations Related to Fractional Homeownership (PA2022-0202) [100-20231 Community Development Director Jurjis and Principal Planner Murillo utilized a presentation to discuss prior City Council, Planning Commission and Ad Hoe Committee discussion and direction, and Planning Commission recommendations to Council to expand the definition of timeshare and provided revised definitions. Principal Planner Murillo noted recommendations if Council determined to authorize fractional ownership as a use separate from timeshares and reviewed a regulatory process for a new use, and provided additional options for consideration. In response to Mayor Pro Tem O'Neill's question, Principal Planner Murillo relayed the process for Council to change the definition and City Attorney Harp confirmed [and later revised] that the draft language can come directly back to Council without going to the Planning Commission because the Planning Commission has done an extensive assessment and provided a recommendation. Community Development Director Juzjis confirmed that Newport Beach Municipal Code (NBMC) Titles 20 and 21 will be included in the vote for consistency. In response to Council Member Avery's question, Principal Planner Murillo relayed that Pacaso's operating requirements do not allow for subletting. Mayor Blom acknowledged the public in attendance, reminded them that Council will be providing direction today to staff for an ordinance to come back to the City Council and not voting on the ordinance tonight, and expressed an understanding about the public's frustration. Council Member Grant noted the evidence on this item. expressed gratitude to the public for attending tonight's meeting. and stated that she understands what the community is experiencing and their policy interests. City of �le�t}aprt Beach =.,,, City of Newport Beach City Council Meeting March 14, 2423 Mayor Pro Tern O'Neill expressed the opinion that the direction from Council tonight will be to bring back the proposed language that aligns with what the public is desiring, and suggested that Council take a straw vote. Council Member Weigand stated that he opposed fractional homeownership. Council Member Kleiman expressed the opinion that Pacaso is a market disrupter and noted allowable land uses, the City's purview, and discussed transient use. She expressed a lack of confidence that the law will be on the side of the City related to the interpretation of land use, but expressed that it was clear from the correspondence received that the community desires to disallow this use to the extent the City is able. She suggested adding language to the City's existing ordinance that addresses fractional ownership, thought that regulating through a permit process raises other questions about monitoring and enforcement and burdens the neighbors, and supported the recommendation and adding language to the existing ordinance. Council. Member Stapleton concurred with his Council colleagues, emphasized he wants to protect property rights, expressed the opinion that the City needs to properly address fractional ownership and the current use is an improper use of land planning and creates a camouflage for timeshares, noted his interest in continuing a friendly family atmosphere in District 1, and opposed the commercialization of neighborhoods, adverse effects to quality of life, and reducing future housing stock. He expressed support for local investors that generate large revenue for the General Fund and an expansion of the timeshare definition. Mayor Blom echoed his colleagues' sentiments and expressed support for expanding the timeshare definition. Council Member Avery stated that he never thought residential areas (R1) would be threatened by changes from the State, noted the importance of building families, relationships, and community, relayed there are plenty of Short Term Lodging (STL) opportunities in the City, and expressed the opinion that the cycle of rehabilitation facilities and timeshares are too much for R1 neighborhoods. Nancy Gardner opposed using R2 zones for rehabilitation facilities and timeshares to avoid having them in R1 zones. Jim Mosher applauded Council's direction and suggested the ordinance include a mechanism for enforcing use and advertising the use. Patty Janssen stated that STLs act the same as vacation rental properties and proof of ownership is not required for subletting the rentals or fractional ownership properties. Kathy Kost provided her perspective about her family and the Pacaso model. Randy Kost relayed his experiences in Newport Beach as a fractional owner, and asked Council to consider the owners. Crary Cruz concurred with Nancy Gardner, noted code enforcement for STLs did not work, and cautioned Council to embrace membership vacation homes for rent coming into Newport Beach. Max Gardner asked Council to consider rules and regulations for how the management companies operate and how neighbors can communicate issues. Denys Oberman, on behalf of the leadership Committee, noted a correspondence sent on March 13, 2023, the importance of the fractional ownership definition and enforcement, requested Council consider residential zones beyond R1, and asked for clarification about the minimum unit count indicated in the staff report. Volue 66 - Page512 City 0mBeach 12-642 City of Newport Beach City Council Meeting March 14, 2023 Russ Doll noted a legal letter of position on November 10, 2021, expressed concern about the turnover at a neighboring Pacaso property, and stated the need for a mechanism to manage or remedy ongoing behavior. Maureen Cotton, President of the Central Newport Beach Community Association, thanked City staff and Council for the proposed language and supported the preferred recommendation, but suggested adding language that bans advertising the sale of fractional ownership properties. Andre Jones, Pacaso employee, read comments from Roy Mendrin of Silver Star Sound & Comm who shared his experiences as a local business owner working with Pacaso. John Panache shared why he became a fractional owner and how his family is part of the community. Jim Miller noted cities that are rewriting timeshare ordinances to prohibit hotel -like activity in residential areas and discussed timeshare and STL behavior. An unidentified speaker thanked Council for considering defining Pacaso as a timeshare and protecting local communities, encouraged Council to ensure that people who live in residential areas are accountable, possess an individual commitment to the greater good, and preserve what makes Newport Beach special, and suggested only allowing fractional ownerships in commercial zones. Lisa Sutton noted the City needs to clarify its direction on timeshares or the Pacaso model, and asked Council to be aware of loopholes that would allow fractional ownerships. Katie Sandvig, Pacaso employee, read comments on behalf of fractional homeowner Chris Looney, who thought that shared ownership is good for Newport Beach and encouraged Council to think favorably on co -ownership. Katie Durham, Pacaso employee, read comments from fractional homeowner Aaron Clark, who supported Pacaso. An unidentified speaker expressed the opinion that fractional ownership changes the fabric of the neighborhood by having temporary neighbors and offered a suggestion for the sale of grandfathered properties so they can return to single property ownership. Megan Licata, Pacaso employee, read comments from fractional homeowner Devon Atchison, who expressed hope that Council will allow more families a way into home ownership in Newport Beach and surrounding beach areas. Max, Pacaso employee, read comments from fractional homeowner Scott Hanson, who stated that he and his family support local businesses, promise to never rent out the home, take great care of the home, and thought it is a mistake to limit home ownership to 100 percent ownership. Karen Carlson thanked Council for taking a poll at the beginning of the meeting, supported the recommendation, and urged a moratorium on new fractional ownerships. Lee Pearl relayed being proud of how the community has come together on this issue and commended Council for a decision that he feels will be positive for the community. Steven Bass introduced his neighbors and asked that the neighborhood not be commercialized. Debbie Stevens, President of the Corona del Mar Residents Association. expressed the opinion that timeshares, STLs, and fractional ownerships act the same and that this is a quality of life issue, noted pressures from the State and the importance of having City control over fractional ownership, asked for a continued ban in residential areas and keeping fractional ownership in commercial areas, ands tee she suppo a •ecommendations. It ONewpodBeach y 12-643 City of Newport Beach City Council Meeting March 14, 2023 Terry Janssen, President of Balboa Island Improvement Association, discussed the responses from a call -to -action email sent to their database regarding fractional ownership. Ben Roth noted no communication with neighboring fractional homeowners and that this is about the masses and not the few. An unidentified speaker stated that STLs are short term rentals and fractional ownerships are short term residents, but they are the same thing, noted voting privileges to being a resident, and cautioned Council on what the City is investing in. Thomas Palestrini, Pacaso employee, read comments from fractional homeowner Steve Hayes, who stated how he and his family use the property, noted his interest in high standards, a well -maintained property, and owners with a vested interest. in the property, and relayed he pays taxes. Gina Cruz suggested Council should consider the many standards of fractional ownership operators besides Pacaso, discussed issues with the current 12 fractional ownership properties in the City, and asked Council to take peace and tranquility for residents into consideration. Monika Krogmann questioned if Balboa Peninsula will be renamed the Balboa Peninsula Resort. Amber Snider, Newport Beach Fire Safe Council and Corona del Mar Alumni Association member, asked Council to save the neighborhoods and watch out for the children living nearby, especially with special needs. Carmen Rawson labeled fractional owners as transient, noted the impact in R2 zones, surveyed the audience by a show of hands to demonstrate who opposes any fractional ownership, disagreed with the assumption that fractional ownership is taking over empty homes, and asked Council to be prompt. An unidentified speaker asked Council to protect the residents' quality of life and put a stop to fractional ownership. Purvi Doshi, Pacaso employee, thanked staff and Council for their time and devotion to studying co -ownership, expressed the opinion that co -ownership is a valuable and protected property right, noted meetings with staff to discuss potential solutions, desired to work with the City to develop common sense regulations, and urged the City to continue talks so regulations can be created that work for everybody. Max Johnson stated he started a petition, expressed the opinion that there will be missed tax collections for essential services due to fractional ownerships, and urged Council to support all the residents who are against fractional ownership. Jim Moloney, Balboa Island Preservation Association Chair, thought fractional ownership accelerates the rate of homes being torn down and rebuilt into large cubes to maximize the square footage, and noted there will be more sales revenue in the short term but emphasized the disruption in the long term. City Attorney Harp corrected his previous statement and reported that the item «gill need to go back to the Planning Commission for consideration and to hold a public hearing pursuant to the NBMC, and, in response to Mayor Pro Tem. O'Neill's question, he relayed that there is a 0 week [correction from 60 days] legal requirement for public review before adoption and the clock begins as soon as it is made available to the public. Mayor Blom noted how complex the issue is and how much time was taken to ensure an appropriate recommendation. City of Newport Beach =.,,, City of Newport Beach City Council Meeting March 14, 2023 In response to Council Member Weigand's questions, Community Development Director Jurjis stated that enforcement procedures are documented in the NBMC and the 1.2 existing Pacaso properties would be grand£athered based on the current direction of Council, no Transient Occupancy Tax (TOT) can be extracted, and these properties will not be viewed as STL. He indicated that he defers to the City Council for any additional regulations. However, he recommended moving forward with a focus on changing the timeshare definition for expediency instead of discussing additional regulations. Mayor Blom concurred with Community Development Director Jurjis and suggested moving forward with the staff recommendation, Motion by Council Member Grant, seconded. by Mayor Blom, to a) determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15262 of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and b) provide direction to go with the Planning Commission's preferred option of broadening the definition of timeshare to capture fractional homeownership, The motion carried unanimously. XIX. MOTION FOR RECONSIDERATION - None XX. ADJOURNMENT - 7:33 p.m. The agenda was posted on the City's website and on the City Uicy Ule]rK Hall electronic bulletin board City of Newport Beach =.,,, Attachment E Planning Commission Resolution No. PC2023-018 12-646 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B RESOLUTION NO. PC2023-018 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF NEWPORT BEACH, CALIFORNIA RECOMMENDING CITY COUNCIL AUTHORIZE SUBMITTAL OF A LOCAL COASTAL PLAN AMENDMENT TO THE CALIFORNIA COASTAL COMMISSION REQUESTING TO AMEND SECTION 21.48.025 (TIME SHARE FACILITIES) AND SECTION 21.70.020 (DEFINITIONS OF SPECIALIZED TERMS AND PHRASES) OF THE NEWPORT BEACH MUNICIPAL CODE RELATED TO TIME SHARES (PA2022-0202) THE PLANNING COMMISSION OF THE CITY OF NEWPORT BEACH HEREBY FINDS AS FOLLOWS: SECTION 1. STATEMENT OF FACTS. 1. Article XI Section 7 of the California Constitution authorizes cities to make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws. 2. California Government Code Section 65850 et seq. authorizes a city to adopt ordinances that regulate land uses as a valid use of its police powers. 3. Section 200 of the City of Newport Beach ("City") Charter vests the City Council with the authority to make and enforce all laws, rules, and regulations with respect to municipal affairs subject only to the restrictions and limitations contained in the Charter and the State Constitution, and the power to exercise, or act pursuant to any and all rights, powers and privileges, or procedures granted or prescribed by any law of the State of California. 4. In 1982, the City Council adopted Ordinance No. 82-14 prohibiting the development of time share projects within Newport Beach in order to protect against unique problems associated with transient occupancy. 5. In 1996, the City Council adopted Ordinance 96-7 which provided a narrow exception to allow time share projects in commercial districts subject to a conditional use permit but continuing to prohibit time shares of residential property. 6. Over the past three years, Newport Beach and cities that serve as tourist destinations, have experienced a wave of purchases of single -unit residences, which are then re -sold into fractional shares. For example, over the past 15 months, the number of fractional -owned residences has nearly tripled with at least 12 fractionally owned homes in Newport Beach. 7. Under this new model, the residence is owned in up to 1 /8 shares with stays ranging from two to fourteen nights in duration resulting in frequent turnover of the properties' occupants and its commercial management. 12-647 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Rl Planning Commission Resolution No. PC2023-018 Paae 2 of 11 Fractionally owned homes create impacts on the City's housing supply and character of residential neighborhoods. With respect to the housing supply, Governor Gavin Newsom declared a housing crisis in the State of California and called for the development of 3.5 million new homes to be built by 2025, to meet the population's housing needs. As a result, the State of California has adopted a number of housing bills such as Senate Bill Nos. 8, 9, 10, 35 and 330, and an aggressive Regional Housing Needs Assessment ("RHNA") for the 6t" Cycle Housing Element covering the 2021-2029 ("6t" Cycle Housing Element"). 10. The City's RHNA for the 6tn Cycle Housing Element is 4,845 new housing units, which units are intended to meet the housing needs of existing and future residents within the jurisdictional boundaries of Newport Beach. 11. According to the 6t" Cycle Housing Element, whereas the median home price in the State of California was $579,770 as of 2020, the median home value of single -unit homes and condominiums in Newport Beach was $2,407,454. The fractional ownership of single -unit residences as a second home further exacerbates the housing supply in Newport Beach to meet housing demand. 12. With respect to the impacts on the character of residential neighborhoods, the City is a popular tourist destination known for its beaches and temperate weather. In accordance with Ewing v. Carmel -by -the -Sea, (1991) 234 Cal. App. 3d 1579, which upheld the City of Carmel-by-the-Sea's right to impose zoning restrictions on short-term rentals, the Newport Beach City Council adopted Ordinance No. 92-13 on May 11, 1992, establishing regulations for the operation of short-term lodging units in order to mitigate the impact of this use on the residents of the City. 13. On May 11, 2004, the City Council adopted Ordinance No. 2004-6 prohibiting the issuance of new short-term lodging permits after June 1, 2004, to any dwelling unit on a parcel zoned as a single -unit residence or designated for single-family residential use as part of a Planned Community Development Plan, Specific Area Plan or Planned Residential District. 14. In 2020 and 2021, the City Council adopted Ordinance Nos. 2020-15, 2020-26, and 2021-28, amending the City's short-term lodging regulations, based upon evidence and documentation attesting to the need to further regulate and control short-term lodging units in residential zones, to ensure that, among other things, short-term lodging units are regulated in a way to maintain harmony with surrounding uses. 15. Due to the proliferation of short-term rentals and their impact on neighborhoods and long-term housing, Ordinance No. 2021-28 placed a cap of 1,550 on the number of short-term lodging permits allowed in the City. 12-648 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2023-018 Paae 3 of 11 16. Fractional homeownership properties operate much like short-term lodgings in that they limit occupancy by owners of a fractional interest in a property to less than 30 consecutive days. 17. Section 30500 of the California Public Resources Code requires each county and city to prepare a Local Coastal Program ("LCP") for that portion of the coastal zone within its jurisdiction. 18. In 2005, the City adopted the City of Newport Beach Local Coastal Program Coastal Land Use Plan as amended from time to time. 19. The California Coastal Commission effectively certified the City's Local Coastal Program Implementation Plan on January 13, 2017, and the City added Title 21 (Local Coastal Program Implementation Plan) ("Title 21 ") to the City of Newport Beach Municipal Code ("NBMC") whereby the City assumed coastal development permit -issuing authority on January 30, 2017. 20. On November 16, 2021, the City Council conducted a study session to discuss fractional ownership uses within dwelling units. 21. On September 13, 2022, the City Council conducted a second study session to discuss the fractional ownership uses within the City. Written and oral testimony provided included a report on how other jurisdictions were addressing fractional ownership uses. Fifteen of the 22 jurisdictions surveys classified fractional ownership uses as a time share. Additional public testimony included concerns about increases in traffic, noise, and trash, as well as fractional ownership uses having an adverse impact on the character of the existing residential neighborhoods. 22. On September 27, 2022, the City Council adopted Resolution 2022-61, initiating a Code Amendment to Title 20 ("Planning and Zoning") and a Local Coastal Program Amendment to Title 21 of the NBMC. The City Council directed staff to work with the Planning Commission to develop regulations that would regulate fractional ownership uses in the best manner that would protect the character of residential neighborhoods. 23. On October 6, 2022, the Planning Commission conducted a study session to discuss fractional ownership uses and accept public testimony. At the conclusion of study session, the Planning Commission expressed the desire to form an Ad -Hoc Committee and work closely with staff to formulate appropriate regulations. 24. On October 20, 2022, the Planning Commission formally formed an Ad -Hoc Committee to evaluate potential amendments to Title 20 and Title 21 related to fractional ownership uses within the City. The Ad -Hoc Committee met a total of seven times, during which the Committee discussed potential regulatory schemes with staff from Community Development Department and City Attorney's Office. During these meetings, the Ad - Hoc Committee also met with representatives from one firm that facilitates fractional ownership uses (Pacaso, Inc.) and several concerned citizens to ensure the Committee members had a full understanding of the issue. 12-649 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2023-018 Paae 4 of 11 25. On February 24, 2023, the Ad -Hoc Committee presented their findings to the full Planning Commission. After accepting public testimony and discussing the matter at length, the Planning Commission approved forwarding two recommendations to the City Council. The preferred recommendation was to broaden the definition of time shares to include fractional ownership uses. As an alternative recommendation, the Planning Commission stated the City Council could consider creating a separate regulatory scheme to allow fractional ownership uses in all zones, except the Single -Unit Residential (R-1) Zoning Districts. 26. On March 14, 2023, the City Council discussed the Planning Commission's recommendations. After accepting further public testimony on fractional ownership uses within the City and discussing the issue, the City Council directed staff to move forward with the Planning Commission's preferred option of broadening the definition of timeshare to capture. 27. Pursuant to Section 13515 (Public Participation and Agency Coordination Procedures) of the California Code of Regulations Title 14, Division 5.5, Chapter 8, Subchapter 2, Article 5 (Public Participation) ("Section 13515"), drafts of LCP Amendment (PA2022-0202) were made available and a Notice of Availability was distributed at least six weeks prior to the anticipated final action date. 28. A public hearing was held on April 20, 2023, in the Council Chambers located at 100 Civic Center Drive, Newport Beach, California. A notice of time, place and purpose of the public hearing was given in accordance with the California Government Code Section 54950 et seq. ("Ralph M. Brown Act") and Chapter 21.62 (Public Hearings) of the NBMC. Evidence, both written and oral, was presented to, and considered by, the Planning Commission at this public hearing. 29. The City desires to update Section 21.48.025 (Time Share Facilities) and related definitions set forth in Section 21.70.020 of the NBMC. This code amendment does not impact the City's ability to support coastal access in that 4,086 hotel/motel rooms hotels and motels, 1,550 short-term lodging units, and approximately 471 campground and RV sites are available to provide coastal access to the public. SECTION 2. CALIFORNIA ENVIRONMENTAL QUALITY ACT DETERMINATION. 1. The LCP Amendment (PA2022-0202) is exempt from environmental review under the California Environmental Quality Act ("CEQA") pursuant to Section 15060(c)(2) of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, which states that a project is not further review under CEQA if "[t]he activity will not result in a direct or reasonably foreseeable indirect physical change in the environment". Fractional ownership uses are not listed as a permitted use or defined under the Municipal Code. This is amendment would clarify that fractional ownership uses are classified as time shares, which are currently regulated by the NBMC. This amendment does not alter the manner in which time shares are regulated and therefore would not result in a physical change in the environment. 12-650 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2023-018 Paae 5 of 11 SECTION 3. FINDINGS. 1. The LCP Amendment (PA2022-0202) is consistent with the City's General Plan. It would serve to implement the following goals and policies of the General Plan: Land Use Element Policy LU 2.6, which states, "Visitor Serving Uses Provide uses that serve visitors to Newport Beach's ocean, harbor, open spaces, and other recreational assets, while integrating them to protect neighborhoods and residents." The proposed amendment would continue to allow time share uses, which is a visitor serving use in some commercial zones, while clarifying that fractional ownership uses are not permitted in residential zones areas. This would prevent additional commercialization of the residential neighborhoods and protect them from impacts created by increased traffic and noise. Land Use Element Goal LU 4, which states, "Management of growth and change to protect and enhance the livability of neighborhoods and achieve distinct and economically vital business and employment districts, which are correlated with supporting infrastructure and public services and sustain Newport Beach's natural setting." Classifying fractional ownership uses as time shares continues to allow the business within certain commercial zones. This clarification would also help preserve the long-term housing stock by eliminating the conversion of existing and new housing developments into time share uses, and further ensure that the commercial businesses would not encroach into residential areas and impact the livability of said neighborhoods. Housing Element Goal #4, which states, "Housing opportunities for as many renter- and owner -occupied households as possible in response to the market demand and RHNA obligations for housing in the City." Conversion of residential dwelling units into time shares removes the dwelling units from the market, thus making them no longer available for occupancy of full-time residences. The proposed amendment would serve to prevent single - unit residences from being taken off the market, thus protecting these housing opportunities for renters and owner -occupied households alike. Housing Element Goal #5, which states, "Preservation of the City's housing stock for extremely low-, very low-, low-, and moderate -income households." Removing market -rate dwelling units from the City's housing stock impacts the affordability of housing across all income levels. As fewer dwelling units become available for rent or sale, the price increases. These price increases reduce the opportunities to provide affordable housing to extremely low-, very low-, low-, and moderate -income households. The proposed amendment would prevent conversion of single -unit residences into a visitor serving accommodation, thus preserving the number of units in the City's housing stock, which would help minimize increases to housing costs. 2. The proposed Title 21 amendment serves to implement Coastal Land Use Plan (CLUP) Table 2.1.1-1 (Land Use Plan Categories) of the LCP, which establishes the type, density, and intensity of land uses within the coastal zone, including residential land use categories that are intended for residential dwellings. The amendment clarifies that fractional ownership uses are considered time shares, a type of visitor -serving commercial use that is prohibited in residential neighborhoods in order to maintain the residential character of 12-651 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2023-018 Paae 6 of 11 communities. The proposed amendment would continue to allow time shares in other areas where visitor serving uses are currently permitted. This includes the CM, CV, MU-H, and MUM Coastal Land Use Designations, which are identified in CLUP Table 2.1.1-1 to provide visitor serving uses. 3. While CLUP Policy 2.3.3-6 authorizes the short-term rental of dwelling units as a means of providing lower -cost overnight visitor accommodations, the maximum number of short-term rentals are capped at a maximum of 1,550 permits to prevent adverse impacts to residential areas and preserve housing stock within the coastal zone. Unlike short term rentals, fractional ownership of coastal properties is a high -cost option to visit the coast on a limited basis, but have similar negative impacts to housing supply and neighborhood disturbances that short term rentals create. Therefore, it is appropriate to prohibit this type of visitor - serving commercial use in residential neighborhoods. Furthermore, this amendment will not impact the City's ability to support the wide variety of visitor accommodations that are currently provided, including 4,086 hotel/motel rooms hotels and motels, a cap of 1,550 short term lodging units, and approximately 471 campground and RV sites. 4. The LCP Amendment (PA2022-0202) shall not become effective until approval by the California Coastal Commission and adoption, including any modifications suggested by the California Coastal Commission, by resolution and/or ordinance of the City Council of the City of Newport Beach. 5. The LCP, including the LCP Amendment (PA2022-0202), will be carried out fully in conformity with the California Coastal Act. 6. The recitals provided in this resolution are true and correct and are incorporated into the operative part of this resolution. SECTION 4. DECISION. NOW, THEREFORE, BE IT RESOLVED: The Planning Commission of the City of Newport Beach hereby finds Local Costal Program Amendment (PA2022-0202) is exempt from environmental review under the California Environmental Quality Act ("CEQA") pursuant to Section 15060(c)(2) of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, which states that a project is not further review under CEQA if "[t]he activity will not result in a direct or reasonably foreseeable indirect physical change in the environment". Fractional ownership uses are not listed as a permitted use or defined under the Zoning Code. This is amendment would clarify that fractional ownership uses are classified as time shares, which are currently regulated by the NBMC. This amendment does not alter the manner in which time shares are regulated and therefore would not result in a physical change in the environment. 2. The Planning Commission hereby recommends the City Council authorize staff to submit the Local Coastal Program Amendment (PA2022-0202), as set forth in Exhibit "A," which is attached hereto and incorporated herein by reference, to the California Coastal Commission. 12-652 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2023-018 Paae 7 of 11 PASSED, APPROVED, AND ADOPTED THIS 20TH DAY OF APRIL 2023. AYES: Barto, Harris, Klaustermeier, Langford, Lowrey, and Rosene NOES: None ABSTAIN: None ABSENT: None BY: Mark Rosene, Vice Chair BY: sar4' "SftVv U*W Sarah Klaustermeier, Secretary 12-653 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2023-018 Paae 8 of 11 10:/:111I dV_VA LOCAL COSTAL PLAN AMENDMENT NO. PA2022-0202 Section 1: Section 21.48.025(A) of the Newport Beach Municipal Code is amended to read as follows: A. Applicability. The provisions of this section shall apply to applications involving the development or creation of new visitor accommodations or the expansion, reduction, redevelopment, demolition, conversion, closure, or cessation of existing visitor accommodations. Converting an accommodation that was not used as a visitor accommodation into one that is used as a visitor accommodation, shall constitute the development or creation of a new visitor accommodation. Section 2: Section 21.48.025(C)(5) of the Newport Beach Municipal Code is amended to read as follows: 5. Mitigation. If the review authority determines that the development will impact existing lower cost visitor -serving accommodations, or provide only high or moderate cost visitor accommodations or limited use overnight visitor accommodations such as time share uses and condominium -hotels, then mitigation commensurate with the impact shall be provided by one of more of the following: a. Replacement of low cost rooms lost shall be provided at a one-to-one ratio either on site or a suitable off -site location within the City; b. Payment of an in -lieu fee commensurate with the impact shall be required; c. Programmatic components that provide low cost overnight accommodations; or d. Other form of mitigation addressing cost of stay. The review authority may authorize deviations from development standards that provide economic incentives to the development to maintain affordability. Section 3: Section 21.48.025(E) of the Newport Beach Municipal Code is amended to read as follows: E. Conversion of Existing Dwelling Units Prohibited. The conversion of existing residential dwelling units into a time share use shall be prohibited. Section 4: Section 21.48.025(F) of the Newport Beach Municipal Code is added to read as follows: F. Tsunami Information and Evacuation Plans. Visitor -serving accommodations in areas identified as susceptible to tsunami inundation shall be required to provide guests with information on tsunami information and evacuation plans. 12-654 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2023-018 Paae 9 of 11 Section 5: The definition of "Accommodation" is added to Section 21.70.020 of the Newport Beach Municipal Code is to read as follows: "Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other or structure constructed for residential use and occupancy, including, but not limited to, a single -unit dwelling, two -unit dwelling, multi -unit dwelling. Section 6: The definition of "Limited use overnight visitor accommodations (LUOVA)" within Section 21.70.020 of the Newport Beach Municipal Code is amended to read as follows: Limited use overnight visitor accommodations (LUOVA). See "Time share use." Section 7: The definition of "LUOVA" within Section 21.70.020 of the Newport Beach Municipal Code is deleted. Section 8: The definition of "Time Share Facility (Land Use)" within Section 21.70.020 of the Newport Beach Municipal Code is amended to read as follows: Time Share (Land Use). See "Visitor accommodations." Section 9: The definition of "Visitor Accommodations (Land Use)" within Section 21.70.020 of the Newport Beach Municipal Code is amended to read as follows: Visitor Accommodations (Land Use) 1. "Bed and breakfast inn" means a dwelling unit that offers guest rooms or suites for a fee for less than thirty (30) days, with incidental eating and drinking service provided from a single kitchen for guests only. 2. "Campground" means a lot upon which one or more sites are located, established, or maintained for rent as an overnight tenting or camping area for recreation or vacation purposes. 3. "Hostel" means establishments offering supervised overnight sleeping accommodations, primarily for travelers who use nonmotorized transportation or commercial or public transportation. Such sleeping accommodations are designed, intended to be used and are used, rented or hired out as temporary or overnight accommodations for guests in which daily services of linen change, towel change, soap change and general cleanup are provided by the management. If kitchen or eating facilities are provided, they are communal in nature. 4. "Hotel" means an establishment that provides guest rooms or suites for a fee to transient guests for sleeping purposes. Access to units is primarily from interior lobbies, courts, or halls. Related accessory uses may include conference and meeting rooms, restaurants, bars, and recreational facilities. Guest rooms may or may not contain kitchen facilities for food preparation (i.e., refrigerators, sinks, stoves, and ovens). Hotels with kitchen facilities are commonly known as extended stay hotels. A hotel operates subject to taxation under Revenue and Taxation Code Section 7280. 12-655 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2023-018 Paae 10 of 11 5. "Motel" means an establishment that provides guest rooms for a fee to transient guests for sleeping purposes. Guest rooms do not contain kitchen facilities. A motel is distinguished from a hotel primarily by direct independent access to, and adjoining parking for, each guest room. A motel operates subject to taxation under Revenue and Taxation Code Section 7280. 6. "Recreational vehicle (RV) park" means a lot upon which two or more recreational vehicle sites are located, established, or maintained for occupancy for a rental fee by recreational vehicles of the general public as temporary living quarters for recreation or vacation purposes. 7. "Short-term lodging" means a dwelling unit that is rented or leased as a single housekeeping unit (see "Single housekeeping unit") for a period of less than thirty (30) days. 8. "Single room occupancy, residential hotels (SRO)" means buildings with six or more guest rooms without kitchen facilities in individual rooms, or kitchen facilities for the exclusive use of guests, and which are also the primary residences of the hotel guests. 9. "Time share instrument" means one or more documents, by whatever name denominated, creating a time share plan or governing the operation of a time share plan, and includes the declaration dedicating accommodations to the time share plan. 10. "Time share interval" means the period or periods of time when the purchaser in a time share plan is afforded the opportunity to use the accommodations of a time share plan. 11. "Time share plan" means any arrangement, plan, scheme, or similar device, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property, or any portion thereof, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A time share plan shall be deemed to exist whenever such recurring rights of exclusive use to the real property, or portion thereof, are created, regardless of whether such exclusive rights of use are a result of a grant of ownership rights, possessory rights, membership rights, rights pursuant to contract, or ownership of a fractional interest or share in the real property, or portion thereof, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time share plan. 12. "Time share property" means one or more accommodations subject to the same time share instrument, together with any other property or rights to property appurtenant to those accommodations. 13."Time share unit" means the time share property or portion of a time share property in which a time share interval exists and that is designated for separate use. 12-656 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2023-018 Paae 11 of 11 U."Time share use" means the use of one or more accommodations or any part thereof, as a time share property. 12-657 Attachment F Planning Commission Resolution No. PC2023-019 12-658 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B RESOLUTION NO. PC2023-019 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF NEWPORT BEACH, CALIFORNIA, RECOMMENDING CITY COUNCIL ADOPT AN AMENDMENT TO TITLE 20 (PLANNING AND ZONING) OF THE NEWPORT BEACH MUNICIPAL CODE RELATED TO COMMERCIAL PARKING (PA2021-104) THE PLANNING COMMISSION OF THE CITY OF NEWPORT BEACH HEREBY FINDS AS FOLLOWS: SECTION 1. STATEMENT OF FACTS. 1. On January 26, 2021, the City Council of the City of Newport Beach ("City") conducted a study session regarding parking regulations and outdoor dining. At the conclusion of the session, the City Council asked staff to study potential updates to the City's parking regulations to modernize them, to address emerging trends such as rideshare and delivery services and identify other changes to support the retention of expanded outdoor dining due to the COVID-19 pandemic. 2. City staff retained a parking consultant, Nelson\Nygaard, to help study best practices and returned to a City Council study session on November 30, 2021, to share some of the initial findings. The City Council adopted Resolution No. 2021-121 initiating a code amendment to Title 20 (Planning and Zoning) of the Newport Beach Municipal Code ("NBMC") related to parking ("Code Amendment"). 3. On September 7, 2022, City staff hosted a virtual community meeting to share potential changes to the regulations related to parking. 4. On October 20, 2022, the Planning Commission conducted a study session to discuss and provide input and direction to City staff on the identified potential updates to the NBMC, including bicycle -based reductions, shared -mobility -based reductions, revised parking ratios, and administrative reductions by the Community Development Director. 5. A public hearing was held on April 20, 2023, in the Council Chambers located at 100 Civic Center Drive, Newport Beach, California. A notice of time, place and purpose of the public hearing was given in accordance with the California Government Code Section 54950 et seq. ("Ralph M. Brown Act") and Chapter 20.62 (Public Hearings) of the NBMC. Evidence, both written and oral, was presented to, and considered by, the Planning Commission at this public hearing. SECTION 2. CALIFORNIA ENVIRONMENTAL QUALITY ACT DETERMINATION. The Code Amendment is not a project subject to the California Environmental Quality Act ("CEQA") in accordance with Section 20165 of the California Public Resources Code and Sections 15060(c)(2), 15060(c)(3), and 15378 of the California Code of Regulations, Title 14, Division 6, Chapter 3 ("CEQA Guidelines"). The Code Amendment is also exempt pursuant to 12-659 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2023-019 Paae 2 of 12 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. SECTION 3. FINDINGS. An amendment to Title 20 (Planning and Zoning) of NBMC is a legislative act. Neither Chapter 20.66 (Planning and Zoning, Amendments) of Title 20 (Planning and Zoning) of NBMC, or Article 2 (Adoption of Regulations) of Chapter 4 (Zoning Regulations) of Division 1 (Planning and Zoning) of Title 7 (Planning and Land Use) of the California Government Code set forth any required findings for either approval or denial of such amendments. Notwithstanding the foregoing, the Code Amendment is consistent with the City Council's initiation and is in furtherance of the General Plan's Goals and, specifically, the following Policies: Policies: 1. LU 5.3.6 (Parking Adequacy and Location). Require that adequate parking be provided and is conveniently located to serve tenants and customers. 2. LU 6.2.5 (Neighborhood Supporting Uses). Requires uses shall be designed to ensure compatibility with adjoining residential addressing such issues as noise, lighting, and parking. 3. CE 8.1.1 (Required Parking). Require that new development provide adequate, convenient parking for residents, guests, business patrons, and visitors. 4. CE 8.1.11 (Parking Requirements for Pedestrian -Oriented and Local -Serving Uses). Consider revised parking requirements for small scale neighborhood serving commercial uses in areas that derive most of their trade from walk-in business, especially where on - street or other public parking is available. Fact in Support of Policies: The Code Amendment includes revisions to the parking requirements for take-out service and full service eating and drinking establishments (i.e., "restaurants"). The Code Amendment leaves all other parking requirements intact. Policies: 1. LU 6.8.4 (Shared Parking Facilities). 12-660 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2023-019 Paae 3 of 12 Encourage the development of shared parking facilities and management programs among private property owners that provides for adequate parking for residents, guests, and business patrons. 2. LU 6.16.4 (Shared Parking Facilities). Work with property owners and developers to encourage more efficient use of parcels for parking that can be shared by multiple businesses. 3. LU 6.20.2 (Shared Parking Structures). Accommodate the development of structures that provide parking for multiple businesses along the (Corona del Mar] corridor, provided that the ground floor of the street frontage is developed for pedestrian -oriented retail uses. 4. CE 8.1.9 (Shared Parking Facilities). Consider allowing shared parking in mixed use and pedestrian oriented areas throughout the City. Fact in Support of Policies: The Code Amendment would allow the Community Development Director to administratively allow shared parking for multiple businesses when there is a clear and demonstrated offset in operational hours. Policies: 1. CE 6.1.4 (Rideshare Vehicles). Monitor the volume and proliferation of on demand rideshare services (e.g., Uber and Lyft) and respond with appropriate level of design guidance and regulation of curbside uses (including loading zone) and parking lot utilization. 2. CE 7.1.5 (Facilities for Alternative Modes). Require new development projects to provide facilities commensurate with the development type and intensity to support alternative modes, such as preferential parking for carpools, bike racks, bike stations, bicycle lockers, showers, commuter information areas, rideshare vehicle loading areas, water transportation docks, and bus stop improvements. 3. CE 8.1.2 (Parking Considerations of Rideshare Vehicles). Develop parking demand statistics that consider the efficiency of rideshare services and the potential for reduction in parking requirements. 12-661 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2023-019 Paae 4 of 12 Fact in Support of Policies: The Code Amendment considers alternative modes of transportation and encourages them through offering reduced parking requirements when onsite accommodations are provided. SECTION 4. DECISION. NOW, THEREFORE, BE IT RESOLVED: 1. The Planning Commission of the City of Newport Beach hereby finds the Code Amendment is not a project subject to the California Environmental Quality Act ("CEQA") in accordance with Section 21065 of the California Public Resources Code and Sections 15060(c)(2), 15060(c)(3), and 15378 of the California Code of Regulations Title 14, Division 6, Chapter 3 ("CEQA Guidelines"). The Code Amendment 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. 2. The Planning Commission hereby recommends approval of the Code Amendment, as set forth in Exhibit "A," which is attached hereto and incorporated herein by reference. PASSED, APPROVED, AND ADOPTED THIS 20TH DAY OF APRIL 2023. AYES: Barto, Harris, Klaustermeier, Langford, Lowrey, and Rosene NOES: None ABSTAIN: None ABSENT: Ellmore BY: Mark Rosene, Vice Chair BY: �&r4, "SftVv U*W Sarah Klaustermeier, Secretary Attachment: Exhibit A — Title 20 (Planning and Zoning) Amendment 12-662 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2023-019 Paae 5 of 12 10:/:111I ifi_VA TITLE 20 (PLANNING AND ZONING) CODE AMENDMENT A portion of Table 2-4 in Section 20.20.020 (Commercial Zoning Districts Land Uses and Permit Requirements) of the NBMC is amended to read as follows: Commercial Office Zoning Districts Permit Requirements P Permitted by Right TABLE 2-4 CUP Conditional Use Permit (Section 20.52.020) ALLOWED USES AND PERMIT REQUIREMENTS MUP Minor Use Permit (Section 20.52.020) LTP Limited Term Permit (Section 20.52.040) — Not allowed Land Use Specific Use See Part 7 of this title for land use definitions. OA OG OM OR Regulations See Chapter 20.12 for unlisted uses. Eating and Drinking Establishments Accessory Food Service (open to public) P P P P Section 20.48.090 Bars, Lounges, and Nightclubs CUP — — CUP Section 20.48.090 Fast Food (no late hours) (1)(2) P/MUP P/MUP Section 20.48.090 Fast Food (with late hours) (1) MUP MUP Section 20.48.090 Food Service (no alcohol, no late hours) (1)(2) P/MUP P/MUP P/MUP P/MUP Section 20.48.090 Food Service (no late hours) (1) MUP MUP MUP MUP Section 20.48.090 Food Service (with late hours) (1) CUP CUP CUP CUP Section 20.48.090 Take -Out Service —Fast -Casual (up to 20 seats) (2) P/MUP P/MUP P/MUP P/MUP Section 20.48.090 12-663 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2O23-019 Paae 6 of 12 A portion of Table 2-5 in Section 20.20.020 (Commercial Zoning Districts Land Uses and Permit Requirements) of the NBMC is amended to read as follows: Commercial Retail Zoning Districts Permit Requirements P Permitted by Right TABLE 2-5 ALLOWED USES AND PERMIT CUP Conditional Use Permit (Section 20.52.020) REQUIREMENTS MUP Minor Use Permit (Section 20.52.020) LTP Limited Term Permit (Section 20.52.040) — Not allowed Land Use See Part 7 of this title for land use Specific Use CC CG CM CN CV CV-LV definitions. Regulations See Chapter 20.12 for unlisted uses. Eating and Drinking Establishments Accessory Food Service (open to P P P P P P Section 20.48.090 public) Bars, Lounges, and Nightclubs CUP CUP CUP CUP CUP — Section 20.48.090 Fast Food (no late hours) (1)(2) P/MUP P/MUP P/MUP P/MUP P/MUP P/MUP Section 20.48.090 Fast Food (with late hours) (1) MUP MUP MUP MUP MUP MUP Section 20.48.090 Food Service (no alcohol, no late P/MUP P/MUP P/MUP P/MUP P/MUP P/MUP Section 20.48.090 hours) (1)(2) Food Service (no late hours) (1) MUP MUP MUP MUP MUP MUP Section 20.48.090 Food Service (with late hours) (1) CUP CUP CUP CUP CUP CUP Section 20.48.090 Take -Out Service —Fast -Casual (up to P/MUP P/MUP P/MUP P/MUP P/MUP P/MUP Section 20.48.090 20 seats) (2) 12-664 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2O23-019 Paae 7 of 12 A portion of Table 2-8 in Section 20.22.020 (Mixed -Use Zoning Districts Land Uses and Permit Requirements) of the NBMC is amended to read as follows: Mixed -Use Zoning Districts Permit Requirements P Permitted by Right TABLE 2-8 CUP Conditional Use Permit (Section 20.52.020) ALLOWED USES AND PERMIT REQUIREMENTS MUP Minor Use Permit (Section 20.52.020) LTP Limited Term Permit (Section 20.52.040) — Not Allowed Land Use See Part 7 of this title for land use MU-MM MU Specific Use MU-V MU-DW CV/15th definitions. (6) Regulations St. (7) See Chapter 20.12 for unlisted uses. Eating and Drinking Establishments Accessory Food Service (open to public) P P P P Section 20.48.090 Fast Food (no late hours) (4)(5) P/MUP P/MUP P/MUP P/MUP Section 20.48.090 Fast Food (with late hours) (4) MUP MUP P/MUP MUP Section 20.48.090 Food Service (no late hours) (4)(5) P/MUP P/MUP P/MUP P/MUP Section 20.48.090 Food Service (with late hours) (4) CUP CUP CUP CUP Section 20.48.090 Take -Out Service —Fast -Casual (up to 20 seats) P/MUP P/MUP P/MUP P/MUP Section 20.48.090 (5) 12-665 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2023-019 Paae 8 of 12 A portion of Table 2-9 in Section 20.22.020 (Mixed -Use Zoning Districts Land Uses and Permit Requirements) of the NBMC is amended to read as follows: Mixed -Use Zoning Districts Permit Requirements P Permitted by Right CUP Conditional Use Permit TABLE 2-9 (Section 20.52.020) ALLOWED USES AND PERMIT REQUIREMENTS MUP Minor Use Permit (Section 20.52.020) Limited Term Permit LTP (Section 20.52.040) — Not allowed Land Use See Part 7 of this title for land use definitions. MU-W1 MU-W2 Specific Use Regulations (5)(6) See Chapter 20.12 for unlisted uses. Eating and Drinking Establishments Accessory Food Service (open to public) P P Section 20.48.090 Fast Food (no late hours) (3)(4) P/MUP P/MUP Section 20.48.090 Fast Food (with late hours) (3) MUP MUP Section 20.48.090 Food Service (no alcohol, no late hours) (3)(4) P/MUP P/MUP Section 20.48.090 Food Service (no late hours) (3) MUP MUP Section 20.48.090 Food Service (with late hours) (3) CUP CUP Section 20.48.090 Take -Out Service —Fast -Casual (up to 20 seats) (3) (4) P/MUP P/MUP Section 20.48.090 12-666 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2023-019 Paae 9 of 12 Portions of Table 3-10 (Off -Street Parking Requirements) in Section 20.40.040 (Off -Street Parking Spaces Required) of the NBMC is amended to read as follows: TABLE 3-10 OFF-STREET PARKING REQUIREMENTS Land Use Parking Spaces Required Eating and Drinking Establishments Accessory (open to public) 1 per each 3 seats or 1 per each 75 sq. ft. of net public area, whichever is greater Bars, Lounges, and Nightclubs 1 per each 4 persons based on allowed occupancy load or as required by conditional use permit Food Service with/without alcohol, with/without late hours 1 per 100 sq. ft., and 1 per 150 sq. ft. for outdoor dining areas Food Service —Fast food 1 per 50 sq. ft., and 1 per 100 sq. ft. for outdoor dining areas Take -Out Service —Fast -Casual (up to 20 seats) 1 per 250 sq. ft., including outdoor dining areas Wine Tasting Room 1 per each 4 persons based on allowed occupancy load or as required by conditional use permit Section 20.40.060 (Parking Requirements for Food Service Uses) of the NBMC is stricken and removed in its entirety as follows: 20.40.060 Reserved. Section 20.40.110 (Adjustments to Off -Street Parking Requirements) is amended as follows: The number of parking spaces required by this chapter may be reduced only in compliance with the following standards and procedures. A. ADA Compliance. The Director may administratively reduce parking requirements due to a loss of parking spaces because of ADA requirements associated with tenant improvements. B. Reduction of Required Off -Street Parking. Residential and nonresidential off-street parking requirements may be reduced with the approval of a conditional use permit in compliance with Section 20.52.020 (Conditional Use Permits and Minor Use Permits) and in compliance with the following conditions: 12-667 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2023-019 Paae 10 of 12 1. The applicant has provided sufficient data, including a parking study if required by the Director, to indicate that parking demand will be less than the required number of spaces or that other parking is available (e.g., City parking lot located nearby, on -street parking available, greater than normal walk in trade, mixed -use development); and 2. A parking management plan shall be prepared in compliance with subsection (C) of this section (Parking Management Plan). C. Parking Management Plan. When a parking management plan to mitigate impacts associated with a reduction in the number of required parking spaces is required by this chapter, the parking management plan may include, but is not limited to, the following when required by the review authority: 1. Restricting land uses to those that have hours or days of operation so that the same parking spaces can be used by two or more uses without conflict; 2. Restricting land uses with high parking demand characteristics; 3. Securing off -site parking in compliance with Section 20.40.100 (Off -Site Parking); 4. Providing parking attendants and valet parking; and 5. Other appropriate mitigation measures. D. Reduction of Required Off -Street Parking by Director. Nonresidential off-street parking requirements may be reduced by a maximum of 20 percent with the approval of the Director using any combination of the following: 1. The applicant has provided sufficient data, including a parking study if required by the Director, to indicate that parking demand will be less than the required number of spaces or that other parking is available (e.g., City parking lot located nearby, on -street parking available, greater than normal walk in trade, mixed -use development). 2. On -Site Bicycle Facilities. Required nonresidential off-street parking may be reduced where there is a demonstrated use of bicycles as a mode of transportation. The Director may reduce the number of required parking spaces by one space for every three bicycle parking spaces provided on the same site 12-668 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2023-019 Paae 11 of 12 they serve, up to five percent of the total requirement in compliance with the following conditions: a. The applicant has provided sufficient evidence to substantiate that there exists a demand for bicycle parking; and b. The bicycle parking spaces are located completely within the private property they serve. c. An additional five percent reduction may be allowed when enhanced end -of - trip facilities are provided on the same site they serve, including, but not limited to showers and locker facilities. 3. Space for Shared Mobility. Required nonresidential off-street parking may be reduced by up to ten percent in compliance with the following conditions: a. Exclusive of curb space needed for emergency access purposes (e.g., a fire lane), the development includes at least 20 linear and contiguous feet of onsite dedicated curb -space located entirely on private property; or b. There is one off-street parking space designated and with proper signage for the use of shared -mobility vehicles and/or pick-up/drop-off located on private property and on the same site it is intended to serve. E. Joint Use of Parking Facilities. Required nonresidential off-street parking may be reduced where two (2) or more nonresidential uses on the same site have distinct and differing peak parking demands (e.g., a theater and a bank). The Director may grant a joint use of parking spaces between the uses that results in a reduction in the total number of required parking spaces in compliance subject to the following conditions: 1. The most remote space is located within a convenient distance to the use it is intended to serve; 2. The amount of reduction is no greater than the number of spaces required for the least intensive of the uses sharing the parking; 3. The probable long-term occupancy of the structures, based on their design, will not generate additional parking demand; 4. The applicant has provided sufficient data, including a parking study if required by the Director, to indicate that there is no conflict in the peak parking demand for the uses proposing to make joint use of the parking facilities; and 12-669 DocuSign Envelope ID: 68982DC6-0510-4B3B-A036-EE12BE28C34B Planning Commission Resolution No. PC2023-019 Paae 12 of 12 5. A parking management plan shall be prepared in compliance with subsection (C) of this section (Parking Management Plan). F. Required Data. In reaching a decision to allow a reduction of required parking spaces, the review authority shall consider data submitted by the applicant or collected/prepared at the applicant's expense. The definition of "Take-out service, limited" in Section 20.70.020 (Definitions of Specialized Terms and Phrases) of the NBMC is amended as follows: 8. "Take-out service —Fast -casual" means an establishment that sells food or beverages and that has all of the following characteristics: a. Sales are primarily for off -site consumption; b. Customers order and pay for food at either a counter or service window; c. No more than a total of 20 seats, including seats in interior areas and seats in outdoor dining areas, may be provided for on -site consumption of food or beverages; and d. Alcoholic beverages are not sold, served, or given away on the premises. Typical uses include bakeries, candy, coffee, nut and confectionery stores, ice cream and frozen dessert stores, small delicatessens, small restaurants, and similar establishments. 12-670 Attachment G Planning Commission Draft Minute Excerpts, Dated April 20, 2023 12-671 ITEM NO. 3 FRACTIONAL OWNERSHIP CODE AND LCP AMENDMENT (PA2022-0202) Site Locations: Citywide Summary: Amendments to Sections 20.48.220 (Time Share Facilities) and 20.70.020 (Definitions of Specialized Terms and Phrases) of Title 20 (Planning and Zoning Code) of the Newport Beach Municipal Code (NBMC), and to Sections 21.48.025 (Visitor Accommodations) and 21.70.020 (Definitions of Specialized Terms and Phrases) of Title 21 (Local Coastal Program Implementation Plan) of the NBMC. The proposed amendments would modify the definition of time shares to clearly include fractional homeownership units. As a time share use, fractional ownership would be prohibited in all residential zoning districts and only allowed in certain commercial and mixed -use zoning districts subject to existing time share regulations. Recommended Action: 1. Conduct a public hearing; 2. Find this project exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15060(c)(2) of the CEQA Guidelines, because it would not result in a direct or reasonably foreseeable indirect physical change in the environment; 3. Adopt Resolution No. PC2023-017 recommending the City Council adoption of a Code Amendment thereby to Section 20.48.220 (Time Share Facilities) and Section 20.70.020 (Definitions of Specialized Terms and Phrases) of the Newport Beach Municipal Code related to time shares (PA2022-0202); and 4. Adopt Resolution No. PC2023-018 recommending the City Council authorize submittal of a Local Plan Amendment to the California Coastal Commission requesting to amend Sections 21.28.025 (Visitor Accommodations) and 21.70.020 (Definitions of Specialized Terms and Phrases) of the Newport Beach Municipal Code related to time shares (PA2022-0202). Principal Planner Murillo utilized a presentation to facilitate the Planning Commission's formal review and recommendation of a Zoning Code and Local Coastal Program (LCP) amendment related to the time share regulations in Newport Beach. The presentation includes an overview and background of the topic, previous directionand dialogues, City Council direction on March 14, 2023, locations of 12 fractional ownershipunits in City, proposed amendment to modify all time share related definitions (Title 20 and 21), current definition of "time share project," proposed definition update, proposed amendment to modify the time share regulations in Title 20 and visitor accommodations regulations in Title 21, and recommended action. In response to Commissioner Lowrey's question, Assistant City Attorney Summerhill stated that code violations are subject to civil and criminal penalties and suspected entities would have an interest in maintaining compliance with applicable laws for licensing. In response to Vice Chair Rosene's question, Principal Planner Murillo indicated that fractional ownership properties existing prior to an ordinance adoption will be allowed to remain as existing legal nonconforming properties, which include the 12 fractional ownership properties listed. Commissioners Barto and Harris reported ex parte communications with a Pacaso representative, and all other Commissioners reported none. Vice Chair Rosene opened the public hearing. Denys Oberman thanked staff and the Planning Commission for their effort on this matter and requested adding an explicit provision that prohibits the advertising, marketing, and sale of time share and fractional ownership interests. Page 1 of 3 12-672 Planning Commission Meeting April 20, 2023 Karen Carlson thanked the Planning Commission for resolving this matter and inquired about a moratorium on fractional ownership sales until the ordinance is finalized and timing out existing fractional ownership properties. Paul Watkins supported the recommended action by staff and asked the Planning Commission to support it. Jim Mosher supported the recommendation to include banning the advertisement of fractional ownership sales, questioned the effective date of changes to Title 20, and suggested that the modified definitions align with the wording in part two of the zoning code that describes the planning district uses and simplified wording be considered. Purvi Doshi, Senior Public Affairs Manager for Pacaso, shared background on the company, collaboration efforts with the City, and co -ownership practices, statistics, and property rights, suggested the City consider the consequences of imposing limitations on housing stock, disagreed with the City's approach to the issue, noted potential consequences to banning or eliminating fractional ownership, suggested thoughtful consideration and collaborative solutions, and asked the Planning Commission to defer the item to a later date to find solutions together. Maureen Cotton, Central Newport Beach Community Association, thanked staff and the Planning Commission for their effort and expressed appreciation for the direction of this matter. Gina Cruz thanked Principal Planner Murillo for his hard work, expressed a distrust for Pacaso, and suggested the City proceed with caution. Community Development Director Jurjis noted that the City Council considered a moratorium twice and could not make the findings, the Planning Commission can recommend to the City Council language banning advertising, no enforcement inside the Coastal Zone can take place until Title 21 is approved by the Coastal Commission, Title 20 is enforceable outside the Coastal Zone upon Council adoption, and staff is comfortable with the code language recommended. Vice Chair Rosene closed the public hearing. Commissioner Lowrey expressed concern for current fractional ownership structures in residential areas, and in response to his questions, Assistant City Attorney Summerhill indicated that agreements require a contract between parties and the triggers and criteria for the timeshare definition. Commissioner Lowrey expressed concern about not defining time share to exclude family and friends and current ownership structures and suspected future problems and lawsuits. In response to Commissioner Langford's question, Assistant City Attorney Summerhill stated that if one of the owners has the exclusive right to exclude others for less than a year then it would be captured by this amendment. Vice Chair Rosene recommended staff explore adding language to ban fractional ownership advertising, shared Commissioner Lowrey's concerns, and entrusted staff with word smithing. Commissioner Lowrey recommended a 30-day review of the recommended language and offered to be part of an effort to explore more specific language. In response to Secretary Klaustermeier's question, Assistant City Attorney Summerhill indicated that the item can be approved with a recommendation to modify the language. Commissioner Lowrey stated that he cannot support this item because it does not protect current private property ownership. In response to Commissioner Barto's question, Assistant City Attorney Summerhill indicated that the Planning Commission does not need to provide specific language in the recommendation to Council and can include a recommendation for an exception within the definition. Page 2 of 3 12-673 Planning Commission Meeting April 20, 2023 Commissioner Lowrey emphasized his long-standing concern for protecting ownership structures. Assistant City Attorney Summerhill clarified that staff understands that the time share definition is to be modified to reflect a potential exception to ensure there are no unintended consequences for those who are not using the property for an "exclusive use." Commissioner Barto shared Commissioner Lowrey's concern, noted families effected with a multi -generational house, suggested greater clarity of what is not intended in the time share plan, and in response to his question, Assistant City Attorney Summerhill clarified that the ban on fractional ownership advertising applies to prospective sales. Commissioner Langford thought there are City and State laws for advertising for illegal uses, did not want to hold up the process, and noted code violations for advertising can be added later. Motion made by Secretary Klaustermeier and seconded by Commissioner Barto to approve the item with direction to staff to carefully study the language used to define timeshare and exclude multi -generational housing or tenants in common. AYES: Barto, Harris, Klaustermeier, Langford, Lowrey, and Rosene NOES: None ABSTAIN: None ABSENT: Ellmore Page 3 of 3 12-674 Attachment H Proposed Code Text Changes (Redlined) 12-675 TITLE 20 - PLANNING AND ZONING SECTION 20.20.020 Commercial Zoning Districts Land Uses and Permit Requirements Commercial Retail Zoning Districts Permit Requirements TABLE 2-5 P Permitted by Right ALLOWED USES CUP Conditional Use Permit (Section 20.52.020) AND PERMIT REQUIREMENTS MUP Minor Use Permit (Section 20.52.020) LTP Limited Term Permit (Section 20.52.040) — Not allowed* Land Use See Part 7 of this title for Specific land use CC CG CM CN CV CV-LV Use definitions. Regulations See Chapter 20.12 for unlisted uses. Visitor Accommodations Time Shares — CUP — — CUP — Section P,(=*140P; 20.48.220 CHAPTER 20.48 TABLE OF CONTENTS Chapter 20.48 STANDARDS FOR SPECIFIC LAND USES Sections: 20.48.010 Purpose. 20.48.020 Adult -Oriented Businesses. 20.48.030 Alcohol Sales. 20.48.040 Animal -Keeping. 20.48.050 Animal Sales and Services. 20.48.060 Bed and Breakfast Inns. 20.48.070 Day Care Facilities (Adult and Child). 20.48.080 Drive -Through and Drive -Up Facilities 20.48.090 Eating and Drinking Establishments. 20.48.100 Emergency Shelters. 20.48.110 Home Occupations. 20.48.120 Massage Establishments and Services 12-676 20.48.130 Mixed -Use Projects. 20.48.140 Outdoor Storage, Display, and Activities. 20.48.150 Personal Property Sales in Residential Districts. 20.48.160 Recycling Facilities. 20.48.170 Residential Care Facilities. 20.48.180 Residential Development Standards and Design Criteria. 20.48.190 Satellite Antennas and Amateur Radio Facilities. 20.48.200 Accessory Dwelling Units. 20.48.205 SB 9 Housing Developments and Urban Lot Splits in Single -Unit Residential Zoning Districts. 20.48.210 Service Stations. 20.48.220 Time Share Uses Facilities. 20.48.230 Tattoo Establishments. SECTION 20.48.220 TIME SHARE F"r'�PS USES A. No time share use or time share unit shall be established or permitted in any zoning district except as authorized in the Code. Unless authorized by this Code, no person including, but not limited to, an owner of a time share unit, an agent, or a broker shall: 1. Develop or establish a timeshare use in the City; 2. Convert a property or unit in the City to a time share use or time share unit; 3. Advertise or cause to be printed, published, or disseminated in any way and through any medium, the availability for sale, in its entirety or a fraction thereof: (a) any property or unit in the City that is used for a time share use or as a time share unit; or (b) any entity where the ownership thereof, in whole or in part, entitles the owner thereof to use a property or unit in the City for a time share use; and/or 4. Manage a unit or property in the City that is being used for a time share use or as a time share unit. The subsection shall not apply to any time share use that was lawfully established prior to the effective date of Ordinance No. 2023- BA. This subsection provides regulations for time share uses authorized in this Code. 1. Development Standards. a. -1—. Property Development Standards. A time share pfejeet-use shall comply with the standards for the zoning district in which it is located. 12-677 b. 3- Minimum Number of Units. Each time share prejeet-property shall have a minimum of one hundred (100) time share units. Time share prejeets properties consisting of less than one hundred (100) units, but developed or converted in conjunction with a resort hotel complex of three hundred (300) or more units, shall be considered to be in compliance with this requirement 2. & Required Amenities. Time share IaFejee uses shall be developed with substantial recreational amenities (e.g., golf courses, tennis courts, swimming pools, etc.). 3. C--. Permit and Review Requirements. a.4�. Plan Submittals. In addition to the application requirements in Section 20.52.020 (Conditional Use Permits and Minor Use Permits), an application for a time share p-r e .use -shall include the following documents: A sales plan shall address the times, areas and methods that will be used to sell the time share pFejeElm-property. Factors to be defined in the plan shall include the location, length, and marketing methods that will be used, distinguishing on -site and off -site marketing and signage; and an estimate of the potential numbers of individuals and automobiles expected during various stages of the sales effort. The plan also shall describe measures that will be implemented to reduce traffic during peak hours. ii. b-. An operating plan shall address the terms of the time share plan timeshare r eFt „ ~ship iRt r s , the types of private unit and common amenities, and the general financing, maintenance, and management arrangements of the resort that benefit the unit owners. A management plan shall describe the methods employed by the applicant to guarantee the future adequacy, stability, and continuity of a satisfactory level of management and maintenance of a time share project property . iv. d- A contingency plan shall address the actions to be taken by the applicant if the time share project is an economic failure or fails to sell fifty (50) percent of the time share estates eF uses intervals within two years of receiving a permit to occupy the first unit. b.2-. Development Agreement. The City and the time share prejeet use operator shall enter into a development agreement in compliance with Chapter 15.45 (Development Agreements). 12-678 c.-3-. Modification or Waiver. The review authority may modify or waive any of the standards contained in this section if strict compliance with the standards is determined to be unnecessary to achieve the purpose and intent of this section. SECTION 20.70.020 DEFINITIONS OF SPECIALIZED TERMS AND PHRASES T. "T" Definitions. Time Share Paeility (Land Use). See "Visitor accommodations." V. "V" Definitions. Visitor Accommodations (Land Use) "Time share accommodations" shall have a separate meaning from "visitor accommodation(s)." "Time share accommodations" as used in the definition of "time share instrument," "time share interval," "time share property," and "time share use" shall mean any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other or structure constructed for residential use and occupancy, including, but not limited to, a single -unit dwelling, two -unit dwelling, multi -unit dwelling. 1. "Bed and breakfast inn" means a dwelling unit that offers guest rooms or suites for a fee for less than thirty (30) days, with incidental eating and drinking service provided from a single kitchen for guests only. 2. "Hotel" means an establishment that provides guest rooms or suites for a fee to transient guests for sleeping purposes. Access to units is primarily from interior lobbies, courts, or halls. Related accessory uses may include conference and meeting rooms, restaurants, bars, and recreational facilities. Guest rooms may or may not contain kitchen facilities for food preparation (i.e., refrigerators, sinks, stoves, and ovens). Hotels with kitchen facilities are commonly known as extended stay hotels. A hotel operates subject to taxation under Revenue and Taxation Code Section 7280. 3. "Motel" means an establishment that provides guest rooms for a fee to transient guests for sleeping purposes. Guest rooms do not contain kitchen facilities. A motel is distinguished from a hotel primarily by direct independent access to, and adjoining parking for, each guest room. A motel operates subject to taxation under Revenue and Taxation Code Section 7280. 4. "Recreational vehicle (RV) park" means a lot upon which two or more recreational vehicle sites are located, established, or maintained for occupancy for a rental fee by recreational vehicles of the general public as temporary living quarters for recreation or vacation purposes. 5. "Short-term lodging" means a dwelling unit that is rented or leased as a single housekeeping unit (see "Single housekeeping unit") for a period of less than thirty (30) days, subject to the 12-679 requirements of Chapter 5.95 (Short Term Lodging Permits) and any additional standards required by the City Manager. 6. "Single room occupancy, residential hotels (SRO)" means buildings with six or more guest rooms without kitchen facilities in individual rooms, or kitchen facilities for the exclusive use of guests, and which are also the primary residences of the hotel guests. 0�9M 11=11' =1 BONN Ili I 7. "Time share instrument" means one or more documents, by whatever name denominated, creating a time share plan or governing the operation of a time share plan, and includes the declaration dedicating time share accommodations to the time share plan. -98. "Time share interval" means the period or periods of time when the purchaser in a time share plan is afforded the opportunity to use the time share accommodations of a time share Ip an. TeHgth of time ef eeeupaRey iR a time r 9. "Time share Dian" means anv arraneement. plan. scheme. or similar device. whether b membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property, or any portion thereof, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A time share plan shall be deemed to exist whenever such recurring rights of exclusive use to the real property, or portion thereof, are created, regardless of whether such exclusive rights of use are a result of a grant of ownership rights, possessory rights, membership rights, rights pursuant to contract, or ownership of a fractional interest or share in the real property, or portion thereof, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time share plan. 10. "Time share property" means one or more time share accommodations subject to the same time share instrument, together with any other property or rights to property appurtenant to those time share accommodations. 12-680 1011. "Time share unit" means the time share property or portion of a time share property in which a time share interval exists and that is designated for separate use. each p tiGR of the 3412. "Time share use" means the use of one or more time share accommodations or any part thereof, as a time share property. a'ie.^.ps^ er M-Fa A-i-lal ^r Fight f TITLE 21 - LOCAL COASTAL PROGRAM IMPLEMENTATION PLAN SECTION 21.20.020 Commercial Coastal Zoning Districts Land Uses Commercial Coastal Zoning Districts TABLE 21.20-1 A Allowed ALLOWED USES — Not Allowed* Land Use See Part 7 of this Specific Implementation Plan for land CC CG CM (3) CN CV (3) CV-LV OG Use use definitions. (3) Regulations See Chapter 21.12 for unlisted uses. Visitor Accommodations Time Shares Fae,s — A — — A — — Section 21.48.025 SECTION 21.48.025 VISITOR ACCOMMODATIONS. A. Applicability. The provisions of this section shall apply to applications involving the development or creation of new visitor accommodations or the expansion, reduction, redevelopment, demolition, conversion, closure, or cessation of existing visitor accommodations. The conversion of property that was not used as a visitor accommodation into a time share accommodation shall constitute the development or creation of a new visitor accommodation. As used herein, "time share accommodation(s)" shall have a separate meaning from visitor accommodation(s)." For purposes of this section, "time share accommodations" shall mean any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other or structure constructed for residential use and occupancy, including, but not limited to, a single -unit dwelling, two -unit dwelliniz. multi -unit dwelling. B. Considerations. The review authority shall consider: 12-681 1. The development's ability to protect, encourage, or provide low cost visitor -serving and recreational facilities on the project site or in the immediately adjacent area; and 2. The development's impact to, and ability to provide, public recreational opportunities; 3. The feasibility to rehabilitate existing low cost accommodations to meet a minimum acceptable level of comfort and hospitality while maintaining the ability to provide low cost visitor accommodations; and 4. The range of room types and room rates Citywide. C. Protection of Low Cost Visitor Accommodations. 1. Low, Moderate, and High Cost Visitor Accommodations Defined. For purposes of this subsection, visitor accommodations shall be defined as low, moderate, or high cost as follows: a. Low Cost. The average daily room rate of all economy hotels and motels in the City that have room rates that are below the Statewide average daily room rate or lower. Economy hotels and motels are AAA -rated one or two diamond hotels, or equivalent. Moderate Cost. The average daily room rate is between low cost and high cost. c. High Cost. The average daily room rate is one hundred twenty (120) percent of the Statewide average daily room rate or greater. For purposes of this section, room rate shall include the equivalent rental rate for campgrounds, recreational vehicle parks, hostels, and similar visitor accommodations. 2. Feasibility Analysis Required. An analysis of the feasibility of providing lower cost visitor accommodations shall be required for any application involving the expansion, reduction, redevelopment, demolition, conversion, closure, or cessation of any project involving visitor accommodations, with the exception of short-term lodging. If the proposed rates are not lower cost, the feasibility study shall explain why providing lower cost accommodations as part of the project is not feasible. This explanation shall address: the land value; development costs; a breakdown of the estimated annual revenues (including average daily rate and occupancy rates); a breakdown of the estimated operating costs; and any other information necessary to address the feasibility of providing lower cost accommodations on site. The feasibility analysis shall be prepared at the applicant's expense. 3. Impact Analysis Required. An analysis of a development's impact on the availability of lower cost visitor accommodations in the City shall be required for any application involving: 12-682 a. The expansion, reduction, redevelopment, demolition, conversion, closure, or cessation of any project involving visitor accommodations, with the exception of short-term lodging; or b. New or limited use overnight visitor accommodations. The impact analysis shall be prepared at the applicant's expense. 4. Impact Defined. The proposed development would result in the decrease in the available supply of existing lower cost visitor accommodations, or would fail to provide a range of affordability, including at least twenty-five (25) percent of the rooms as low cost accommodations, or fail to use land suitable for lower cost accommodations for that purpose with the exception of short-term lodging. 5. Mitigation. If the review authority determines that the development will impact existing lower cost visitor -serving accommodations, or provide only high or moderate cost visitor accommodations or limited use overnight visitor accommodations such as time share uses T fr-,r+i^"^' e;.AiReFship and condominium -hotels, then mitigation commensurate with the impact shall be provided by one of more of the following: a. Replacement of low cost rooms lost shall be provided at a one-to-one ratio either on site or a suitable off -site location within the City; b. Payment of an in -lieu fee commensurate with the impact shall be required; c. Programmatic components that provide low cost overnight visitor accommodations; or d. Other form of mitigation addressing cost of stay. The review authority may authorize deviations from development standards that provide economic incentives to the development to maintain affordability. 6. In -Lieu Fee Program. Specific detailed information regarding calculation and use of any required in -lieu fees as part of a mitigation program shall be included as a condition of approval of the Coastal Development Permit for the visitor accommodations. 7. Rate Control and Income Eligibility Requirements Prohibited. In no event shall a development as mitigation be required: a. To provide overnight room rental be fixed at an amount certain; or b. To establish any method for the identification of low or moderate income persons for the purpose of determining eligibility for overnight room rentals in any such facilities. 12-683 8. Protection of Short -Term Lodging. Most short-term lodging units meet the low cost definition when maximum occupancy is taken into account. Short-term lodgings can accommodate more people than a typical hotel room. They also provide full-sized, equipped kitchens allowing families or larger groups to reduce the overall cost of a visit by allowing them to prepare meals as an alternative to dining out. The City shall continue to permit short-term lodgings as a means of providing lower cost overnight visitor accommodations while continuing to prevent conditions leading to increased demand for City services and adverse impacts in residential areas and coastal resources. D. Conversion to LUOVA Prohibited. The conversion of any hotel or motel unit or similar visitor accommodation for which a certificate of occupancy has been issued on or before July 14, 2009, to a limited use overnight visitor accommodations (LUOVA) shall be prohibited, except as provided in subsection (D)(1) of this subsection. 1. Exceptions to Conversion Prohibitions. A LUOVA project shall be permitted on the hotel resort property located at 1107 Jamboree Road, subject to a coastal development permit conditioned with the following requirements: a. LUOVA units shall be provided together with traditional overnight, hotel visitor accommodations; and b. A minimum of three hundred ninety-one (391) traditional hotel units shall remain available for transient overnight use by the general public year round and no more than eighty-eight (88) of the total four hundred seventy-nine (479) units planned may be LUOVA units; and c. Owner use of LUOVA units shall not exceed a maximum of ninety (90) days per calendar year with a maximum of twenty-nine (29) days of use during any sixty (60) day period; and d. LUOVA units shall be maintained by the management of the hotel facility and shall be remain available for transient overnight use by the general public when not occupied by the owner; and e. The hotel owner/operator shall retain control and ownership of all land, structures, recreational amenities, meeting space, restaurants, and other non -guest room/units; and f. The proposed LUOVA project shall comply with the provisions of subsection (C) of this section. E. Conversion of Existing Dwelling Units Prohibited. The conversion of existing residential dwelling units into a time share use shall be prohibited. 12-684 €F. Tsunami Information and Evacuation Plans. Visitor -serving accommodations in areas identified as susceptible to tsunami inundation shall be required to provide guests with information on tsunami information and evacuation plans. SECTION 21.70.020 DEFINITIONS OF SPECIALIZED TERMS AND PHRASES L. "L" Definitions "Limited use overnight visitor accommodations (LUOVA)" See "Time share use" i segmeRt ef Feal ieF pFepeoy, the has bee.p divided- iRelude, but Ret- be te, time iRterval pFE)jeet- aAd- Shall .1imited share estate, vaeatieR lease, membeFship, time i i elub share use, hEAeI/GE)RdE)RgiR* Rq i r� of -, similar Pat ir., T. "T" Definitions. Time Share (Land Use). See "Visitor accommodations." V. "V" Definitions. Visitor Accommodations (Land Use) "Time share accommodations" shall have a separate meaning from "visitor accommodation(s)." "Time share accommodations" as used in the definition of "time share instrument," "time share interval," "time share property," and "time share use" shall mean any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other or structure constructed for residential use and occupancy, including, but not limited to, a single -unit dwelling, two -unit dwelline. multi -unit dwelline. 1. "Bed and breakfast inn" means a dwelling unit that offers guest rooms or suites for a fee for less than thirty (30) days, with incidental eating and drinking service provided from a single kitchen for guests only. 2. "Campground" means a lot upon which one or more sites are located, established, or maintained for rent as an overnight tenting or camping area for recreation or vacation purposes. 3. "Hostel" means establishments offering supervised overnight sleeping accommodations, primarily for travelers who use nonmotorized transportation or commercial or public transportation. Such sleeping accommodations are designed, intended to be used and are used, 12-685 rented or hired out as temporary or overnight accommodations for guests in which daily services of linen change, towel change, soap change and general cleanup are provided by the management. If kitchen or eating facilities are provided, they are communal in nature. 4. "Hotel" means an establishment that provides guest rooms or suites for a fee to transient guests for sleeping purposes. Access to units is primarily from interior lobbies, courts, or halls. Related accessory uses may include conference and meeting rooms, restaurants, bars, and recreational facilities. Guest rooms may or may not contain kitchen facilities for food preparation (i.e., refrigerators, sinks, stoves, and ovens). Hotels with kitchen facilities are commonly known as extended stay hotels. A hotel operates subject to taxation under Revenue and Taxation Code Section 7280. 5. "Motel" means an establishment that provides guest rooms for a fee to transient guests for sleeping purposes. Guest rooms do not contain kitchen facilities. A motel is distinguished from a hotel primarily by direct independent access to, and adjoining parking for, each guest room. A motel operates subject to taxation under Revenue and Taxation Code Section 7280. 6. "Recreational vehicle (RV) park" means a lot upon which two or more recreational vehicle sites are located, established, or maintained for occupancy for a rental fee by recreational vehicles of the general public as temporary living quarters for recreation or vacation purposes. 7. "Short-term lodging" means a dwelling unit that is rented or leased as a single housekeeping unit (see "Single housekeeping unit") for a period of less than thirty (30) days. 8. "Single room occupancy, residential hotels (SRO)" means buildings with six or more guest rooms without kitchen facilities in individual rooms, or kitchen facilities for the exclusive use of guests, and which are also the primary residences of the hotel guests. 9. "Time share instrument" means one or more documents, by whatever name denominated creating a time share plan or governing the operation of a time share plan, and includes the declaration dedicating time share accommodations to the time share plan. 12-686 3410. "Time share interval" means the period or periods of time when the purchaser in a time share plan is afforded the opportunity to use the time share accommodations of a time share Ip a n . TeRgth of time ef eeebipaRey iR a -time Share upit. 11. "Time share plan" means anv arrangement. plan. scheme, or similar device. whether membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property, or any portion thereof, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A time share plan shall be deemed to exist whenever such recurring rights of exclusive use to the real property, or portion thereof, are created, regardless of whether such exclusive rights of use are a result of a grant of ownership rights, possessory rights, membership rights, rights pursuant to contract, or ownership of a fractional interest or share in the real property, or portion thereof, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time share plan. 12. "Time share property" means one or more time share accommodations subject to the same time share instrument, together with any other property or rights to property appurtenant to those time share accommodations. 3-9-.13."Time share unit" means the time share property or portion of a time share property in which a time share interval exists and that is designated for separate use. each peFtie^ ^f the real property er real property improvement iR a project that PlilgiPIPPI 0 3-1—.14."Time share use" means the use of one or more time share accommodations or any part thereof, as a time share property. a^r er .m-hership Fight of eeeupaRcy 12-687