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HomeMy WebLinkAboutSS3 - Fiscal and Economic SustainabilityCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. SS3 February 27, 2007 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Manager's Office Sharon Wood, Assistant City Manager 949 -644 -3222, swood @city.newport- beach.ca.us SUBJECT: Draft Strategic Plan for Fiscal and Economic Sustainability RECOMMENDATION: Review draft plan, and provide direction to staff and the Economic Development Committee (EDC). BACKGROUND: When the City Council decided to do a comprehensive update of the General Plan, they wanted to consider the fiscal and economic impacts of land use decisions in the new General Plan. In addition, the Council decided to prepare an Economic Development Strategic Plan concurrently with the General Plan. The consulting firm of Applied Development Economics (ADE) was retained, and developed a fiscal impact model, which was used to evaluate land use alternatives and the final land use plan. ADE also prepared studies of retail markets in Newport Beach and the economic and fiscal impacts of visitor serving uses and marine uses, Guiding Principles for Economic Development, and the first draft of the Economic Development Strategic Plan. DISCUSSION: A subcommittee of the EDC has made substantial revisions to the strategic plan to make it more focused and action oriented. They also gave the plan a new name, the Strategic Plan for Fiscal and Economic Sustainability, which better reflects the goal of Newport Beach's economic development program to provide sustainability for the community. The draft plan is attached for preliminary review by the City Council. It includes a short introduction and a series of eight goals, each accompanied by objectives to attain the goal. The plan does not yet include specific actions for each goal and objective, as the EDC wanted the City Council to provide feedback on the general direction of the plan before staff and the EDC develop more specific provisions. Although the work of Draft Strategic Plan for Fiscal and Economic Sustainability February 27, 2007 Page 2 preparing detailed action steps has not been completed, staff has included a first effort at a "commitment plan," which is shown in gray highlight throughout the document. This is to provide the Council with a preliminary idea of what would be involved in each objective, including estimates of staff and financial resources when possible. The Plan as recommended by the EDC includes a very brief introduction on the visioning process that preceded the General Plan and Strategic Plan, the portion of the Vision Statement that deals with economic development and the role of the City in economic development. This introduction is complemented by a note on additional references which provide more detailed information, at the end of the document. The draft of the plan prepared by ADE included an introduction of several pages, which summarizes findings of the visioning process and economic and fiscal studies. Staff believes that this additional information is typical for a community economic development plan, and is useful in understanding both the reason and the intent of the goals and objectives in the plan. We have included it for the City Council's consideration as Attachment 2. The EDC and staff are requesting that the City Council provide feedback on the draft Strategic Plan: ■ Do the goals and objectives address the economic issues of greatest importance and are they appropriate for Newport Beach? ■ Are the go als and objectives consistent with the City Council's priorities for committing staff and financial resources? ■ Are there different or additional goals or objectives that the City Council wishes us to pursue? ■ Does the Council wish to include the shortened or full introduction section? address the economic issues of greatest importance in t Submitted by: 4hr ZnW o odge 6 r er Assistant City Manager a Pro ram Manag Attachments: 1. Draft Strategic Plan for Fiscal and Economic Sustainability 2. Alternative Introduction Section CITY OF NEWPORT BEACH (DRAFT) STRATEGIC PLAN FOR FISCAL AND ECONOMIC SUSTAINABILITY Including Preliminary Commitment Outline February, 2007 TABLE OF CONTENTS I. INTRODUCTION ............................................................... ............................... 3 TheVisioning Process ................................................ ............................... 3 II. STRATEGIC PLAN FOR FISCAL & ECONOMIC SUSTAINABI LITY ........................................................... ............................... 4 VISION STATEMENT ...................... 0 THE ROLE OF THE CITY ............................................ ............................... 4 GOALS, OBJECTIVES AND ACTION PLANS .... ............................... 6 Goal 1: The City shall facilitate the revitalization of older commercialareas .................................................... ............................... 6 Goal 2: The City shall support business efforts to optimize retail sales capture in the community ......................9 Goal 3: The City shall facilitate the development, attraction and retention of a variety of businesses that strengthen the vitality of the local economy, particularly businesses that capitalize on market and demographic changes and opportunities that emerge in key economic centers of the community ................................... .............................11 Goal 4: The City shall facilitate an economically viable concentration of marine uses, and enhance the maritime viability of Newport Harbor ................................. .............................13 Goal 5: The City will enhance the boating services of NewportHarbor ........................................................ .............................16 Goal 6: The City shall support the careful expansion of visitor-serving businesses and facilities .... .............................18 Goal 7: The City will seek to minimize the economic impact of traffic congestion and will take affirmative steps to improve traffic flow ........................................... .............................20 Goal 8: The City will administer its development review and permitting processes in an efficient, solution oriented and customer friendly manner ......................... .............................22 NOTE ON ADDITIONAL REFERENCES .................... .............................23 .A I. INTRODUCTION The Strategic Plan for Fiscal and Economic Sustainability is designed to serve as a work program for the City Council, City staff, the City Economic Development Committee (EDC) and other civic leaders to promote and sustain fiscal and economic vitality in Newport Beach. It is intended, in part, as a companion document for the General Plan, to assist the City in implementing portions of the General Plan that affect economic development in the City. Beyond City land use and development policy, however, the Strategic Plan for Fiscal and Economic Sustainability includes goals and objectives to enhance the business climate in the community. The Strategic Plan for Fiscal and Economic Sustainability focuses on a shorter time frame than does the General Plan, since economic conditions and priorities can change more rapidly than do planning goals related to community character and land use patterns. The work program included here contemplates at most a five -year time horizon, and it is assumed that annual reviews of progress and re- assessments of priorities will be undertaken as a prelude to the City's annual budget process. The Preliminary Commitment Outline elements embedded within the main document are staff estimates for commitments that may be necessary to undertake the objectives, as well as cost estimates that may be associated with those commitments as are available at this time IThese °comments are hi hh hted�m ra ;l 9 9 . 9 _y The Visioning Process The City initiated a Visioning Process in January of 2002, ahead of its effort to update the General Plan, which culminated in publication of the Community Directions for the Future report in January 2003. The Visioning Process included a series of events, meetings and public information gathering programs and resulted in a vision statement for Newport 0 Beach and substantial public input on a wide range of issues for consideration in the General Plan Update. Based on public input, a vision for the future of Newport Beach was developed by the citizen General Plan Advisory Committee (GPAC), which describes the City's desired 'end state' and what the community hopes to have achieved by 2025. Under the heading, "Growth Strategy, Land Use and Development," the vision states in part, "[W]e have a conservative growth strategy that emphasizes residents' quality of life — a strategy that balances the needs of the various constituencies and that cherishes and nurtures our estuaries, harbor, beaches, open spaces and natural resources. Development and revitalization decisions are well conceived and beneficial to both the economy and our character...." The process also ascertained the public's input on a range of more specific issues. There was broad community consensus on some economic issues, and more diverse opinion on others. The full detail of the vision developed by GPAC is contained in the report noted above. II. STRATEGIC PLAN FOR FISCAL & ECONOMIC SUSTAINABILITY VISION STATEMENT Newport Beach shall maintain and enhance its local economy, a high quality of life, economic opportunities for its citizens and the sustained fiscal health of the City, while respecting and supporting the residential and waterfront character of the community and its natural resources and amenities. THE ROLE OF THE CITY An important purpose of this plan is to help focus limited City resources on activities that are most cost- effective and address squarely the City's priorities for economic development. The private sector is the primary engine for economic progress in Newport Beach. The City is fortunate to enjoy sustained periods of relative prosperity during which little government involvement is warranted 4 beyond providing clear land use policies and an efficient, predictable entitlement process. It is also important for the City to sustain economic and fiscal health throughout the ups and downs of the business cycle. Typically, cities can play a role in several areas to support economic development, as follows: 1. Land Use and Development Policy The City's main effort recently has been to update the General Plan, and the implementation of new land use and development policies in various areas of town will have a significant impact in supporting economic development. 2. Infrastructure Regarding infrastructure, the City has made strategic investments in public improvements, such as the streetscape work in the Balboa Village, Corona del Mar, Marine Avenue and Mariner's Mile commercial districts, but in general it has only limited resources to invest in new infrastructure. The City must instead focus on implementing policies to ensure that new development pays for new infrastructure and that the fiscal balance of the developing land use mix can sustain the City's ability to operate and maintain the existing infrastructure. To the extent the City can address infrastructure improvements, improvements in circulation and parking facilities will benefit the economic growth of the community most. 3. Incentives The City can offer incentives to development such as shared parking opportunities, in -lieu parking fees, tax - exempt financing, and sales tax sharing. These kinds of incentives can improve the market feasibility of desired kinds 3 of improvement in the economic environment without necessarily requiring expenditures of existing public funds. GOALS, OBJECTIVES AND ACTION PLANS The Strategic Plan for Fiscal and Economic Sustainability for the City of Newport Beach includes eight major goals for economic development in the City: • Goal 1: Facilitate revitalization of the City's older commercial areas; • Goal 2: Support efforts to optimize retail sales capture; • Goal 3: Facilitate the development of businesses that strengthen the vitality of the local economy; • Goal 4: Facilitate an economically viable and vital Newport Harbor; • Goal 5: Enhance the boating services of Newport Harbor; • Goal 6: Support careful expansion of visitor - serving businesses and facilities; • Goal 7: Seek methods to improve traffic flow and minimize the economic impact of traffic congestion; • Goal 8: Administer the development review and permitting processes in an efficient and customer friendly manner.. The following discussion briefly outlines these goals, along with the more detailed objectives and implementation actions associated with each goal. Goal 1: The City shall facilitate the revitalization of older commercial areas Objective 1.1 — Improve the business mix of older commercial districts, especially regarding their resident serving usefulness, through improvement in the quality, breadth and sales tax generation of such areas, taken as a whole by [DATE]. Identified areas include Balboa Village and other Balboa Peninsula commercial districts, as well as Marine Avenue, Old Newport Boulevard and West Newport. 11 Lead Economic' Development staff ; Objective 1.2 — Mixed -Use Development: The City shall adopt flexible zoning regulations to implement General Plan mixed -use development policies in the commercial districts by [DATE]. ,Lead_Plamm�g Departure "nt Support_ifPlanni_ng,Courm sswn City Council Financia' Resources Included.in Zoning Code_re- write.1 Obiective 1.3 — Parking Facilities: In cooperation with merchants and commercial property owners, the City shall establish a plan to facilitate the improvement of parking in specified areas by [DATE]. The City may use various mechanisms to facilitate this, e.g., public /private partnerships, tax exempt financing, parking management districts and/or in -lieu fees. Objective 1.4 — Improvement Plans: The City shall continue to support, and participate in as appropriate, efforts of Business Improvement Districts (BIDs) and other business and /or property owner groups to complete improvements and other voluntary business support activities within their areas. 9 Objective 1 m — Campus Tract: With its proximity to the John Wayne Airport and the potential availability of larger sites, the City shall focus its initial planning efforts through [DATE] on opportunities for the Campus Tract area. Lead_Planming Department Staff Goal 2: The City shall support business efforts to optimize retail sales capture in the community. Obiective 2.1 — Commercial Zoning: The City shall adopt flexible zoning in support of General Plan policies for commercial development by [DATE]. t Lead Planning. Department staff t., I Pl -- r Support:. anning; Commission City. Council Obiective 2.2 — Newport Center: The City shall facilitate efforts by Fashion Island and Newport Center to evolve their design and retail mix to capture maximum retail sales. E firiancial Resobr a ces: Staff time to review proposals will_be paid throughldevelopment review, feeslJ Objective 2.3 — Airport Area: The City shall encourage and facilitate the development of attractive retail and commercial uses that maximize retail sales capture in the Airport Area, commensurate with new General Plan land use designations and policies related to mixed use and residential development. property `owners, and' deuelopersr as��'they come in projects, and provide apps nate,guidarice and assistan achieve General 'Plan goals focused on enco'urag'ing tax generafion- and capture in Mixed _.use as'_ we' eommer0al projects] R ,Lead 'Pla_'nning Department staff Objective 2.4 — Auto Sales: The City shall encourage the development of auto sales facilities as a means of maximizing sales tax capture. to] Objective 2.5 — Leading Indicators: The City shall improve its ability to track retail trends within Newport Beach by contracting for a more comprehensive sale tax audit service and by providing regular reports to the City Council and the EDC on sales tax performance by sub -area and business type, by [DATE]. Support: Economic D ve elopment staff- jconsultants Goal 3: The City shall facilitate the development, attraction and retention of a variety of businesses that strengthen the vitality of the local economy, particularly businesses that capitalize on market and demographic changes and opportunities that emerge in key economic centers of the community. Objective 3.1 — Master Plan for the West Newport Mesa Area: By [DATE], work with property owners to develop a master plan for properties that are related to and support Hoag Hospital including medical, medical - supporting, commercial, residential and industrial uses. 11 Lead: °"Planing D'epartmenf staff Support: City Council, Eco`nomic_Reveldpment staff. Objective 3.2 — Flexible Zoning: By [DATE], the City shall implement Zoning Code reform to increase the definition of non - residential uses and to create flexibility in its zoning code to allow projects representing innovative market or development opportunities to proceed with fewer restrictions. Lead: Planning D'epartment.Staff Objective 3.3 — Business Assistance Clearinghouse: The City shall coordinate with the Newport Beach Chamber of Commerce to establish a business assistance clearinghouse and business outreach program to help facilitate new business ventures and business expansions in Newport Beach by [DATE]. Lead�Newport Beach Chamber of'Commerce staff; Financial Resources: As__yet undetermined 12 Objective 3.4 — Leading Indicators: The City shall provide annual reports [beginning with a report for the fiscal year ending June 30, 2007] on business establishments and employment changes by detailed business types to the City Council and the EDC for the purpose of tracking business development trends in the City. Comment: The City wil6 address employment and; business trends through ,the. use °of State of California EDD data updates , (quarferly and annual), ,and by., having ADE, Inc:( (and %r other consultants) provide lnterpre'tive guidance via additional data loa and °inferpreti,ve memoranda r Lead Economic Dev elopment staff_, Support;:_ADEIne other c no sultants Financial Resources Approximately $12,000 annu Goal 4: The City shall facilitate an economically viable concentration of marine uses, and enhance the maritime viability of Newport Harbor. Objective 4.1 — Water- Dependent Marine Businesses: The City shall implement land use and related zoning regulations by [DATE] to encourage the preservation of water dependent marine business uses as re- development occurs over time. ;Lead _Plan ning_Department staff ode,' Objective 4.2 — Non-Water- Dependent Marine Businesses: The City shall implement land use and related zoning regulations by [June, 2008] to provide for the preservation of existing non -water dependent marine businesses in the West Newport Mesa area, as well as development of incentives by [DATE] to facilitate the relocation of such businesses to that area from economically unsustainable water front locations. Lead P arming Departm_e'nt staff d Financial' Resources This`sRould be included i `the Zoning Code revisions project that is already underway:; Objective 4.3 — The City shall implement a plan to provide for the dredging of lower Newport Bay to its design depth to allow safe navigation for vessels that use the harbor by [DATE], working with the federal government, the Army Corps of Engineers and other appropriate governmental agencies. ,Lead Harbor.Resources D,ivislonsta'ff 14 Objective 4.4 — Regulatory Compliance: As part of its business assistance clearinghouse program, the City shall establish by [DATE] a program for assisting water - dependent businesses with information to aid in complying with state and federal regulations pertaining to air and water quality, among others. Lead: - Hatbor Resources D'ivisidn staff Support Harbor Comrnssion „gay- _Issues Committe_e''; Financial Resources: A CIP .budget item for eelgra Objective 4.5 — The City will invite proposals for the implementation of a privately owned and operated summer water transportation service by [DATE], with funding supplemented by grants, private, contributions and public monies. )r Corrimission °has established a. priority, task: list 7trfiesl';surntner ,water transportation. a8 4'b' critical sking Newport Bay more, accessible to visitors and 'Notably, Los Angeles `County° has ,developed a my water taxi program in Marina del, Rey that vide a model for Newport Bay. Public and p'rivate assistance is,. needed.'' `to _ make this - water tion system viab__le.! ;Lead. Ha7bor.Resburces;Diivision staff_ Goal 5: The City will enhance the boating services of Newport Harbor. Objective 5.1 — The City will develop or convert at least 40 additional guest boat slips by [DATE], and annually study the demand for additional guest slips. Lead; Harbor R'esourcesr ivision -staff! Public Works staff, ;Supporfi Harb'or;Cornmisson of 1 Objective 5.2 — Where feasible, the City will develop more capacity for tying up small boats at the Balboa Village area, Balboa Island area, Marinapark, the Rhine Channel area and the Mariner's Mile area by [DATE]. Lead: _Harbor Re§ources'sfaff / Public'Works staff 16 Objective 5.3 - The City will review its dingy docking regulations annually to provide docking spaces for temporary docking which best suit the needs of the boating public. K Council.` Implementation.of an effective and enforcement program has proven t to implementation W Objective 5.2, will review 'the 'extenf- to which `the rn lL ad_;,HarborLLf esourcessDivision�.staff Support�Orange= ;County Shanff`s_Harbor Patrol staff Objective 5.4- The City will develop a policy by [DATE] that allows visiting boaters to leave their boats unattended at anchor for some period of time. Such policy will be subject to annual review. avv�n.uc�� }. irua w Nano,, v cni�uiiy "?a.rvr, ;r.,�c. Division work program. 'If a vessel7s deemed opera seaworthy, then .,the Orange County= Sheriffs Narb,o+ h d as develope a trial program that'will "allow visiting k leave their vessels, unattended provided they leave 17 Goal 6: The City shall support the careful expansion of visitor - serving businesses and facilities. Obiective 6.1 – Small Scale Lodging: The City shall identify by [DATE] an economically feasible program for encouraging the development of small scale lodging and bed and breakfast establishments in Newport Beach, including incentives to encourage such development consistent with the General Plan policies. Obiective 6.2 - Vacation Rentals: The City shall review and revise its existing policies governing vacation rentals by [DATE] to acknowledge and enhance the economic benefit to the City of such establishments and recommend by [DATE] a program to maintain and enhance the quality level of them. rentals of a "seal` of', approval" type, program to i maintenance and_ quality of housesa Lead.'.Flannii . g _Department Staff Support: Revenue Diyisio.n Economic Development In Objective 6.3 — Marketing and Promotion: The City shall continue its strong relationship with the Newport Beach Conference and Visitors Bureau to enhance the effectiveness of marketing and promotion undertaken by the City and the Bureau. Lead ^City Manager s Offic" Financial Resources: Annual financial commitments from General Fund to;the .CUB and,Jhe events and activities promoting the` City,; approximately, 20Q± hours annually, of staff Ume:1, Objective 6.4 -- Beach / Bay Activities Promotion: The City shall promote and encourage activities and events in and near the beaches and the bay that generate retail sales, e.g., boat shows, sports tournaments, etc., consistent with the Local Coastal Plan. Lead Recreation &Senior Services _De partmentsta_ff_, iarbor Commission;° City Ma'i as, staff; PIO off s Dmision); personnel; CVB W Financi_a'I'', Resources Staff time, partially reimbursed through SEP fees and payment for actual services costs (e.g., street closure, traffic control). Goal 7: The City will seek to minimize the economic impact of traffic congestion and will take affirmative steps to improve traffic flow. Objective 7.1 — Develop and implement by [DATE] a master plan to modernize traffic control systems and technology throughout the City. Lead Public UVorKs Departmert staff Support: City Council Transpo art tion Subcommittee; Financial Resources: $263,215 for Master Plan only. Objective 7.2 — By [DATE], the City will improve synchronization of traffic signals and improve traffic flow along the Mariner's Mile, Newport Boulevard from 15th Street to the 55 Freeway in Costa Mesa (working cooperatively with that City), Jamboree Road and on Balboa Peninsula along Newport Boulevard from Main Street to Pacific Coast Highway, as well as other roadways and intersections. Lead Pu61tc Works Department staff Support;. City_Council Transportation subcommittee FjnancialyResources Unknown at this time. Objective 7.3 — In conjunction with its approved capital plan and annual budgeting process, the City will implement key roadway and intersection improvements identified in the General Plan Update by [DATE]. 20 Lead:;Public Works Department staff Unknown at this time Objective 7.4 — The City will strongly advocate the construction of the 19th Street Bridge in Costa Mesa, and other critical regional traffic improvements. Comment:; Lead �.Ci y until 'Support:'City Manager;uFubhc Work`s Department staffff,', Financial Resources:; Unknown at this time. Objective 7.5 — The City shall create a plan by [DATE] to encourage and foster the development of privately owned and operated alternative transportation services, such as bus shuttles, to service the various commercial, retail and recreation areas in Newport Beach, in at least partial substitution for additional parking, with funding supplemented by grants, private contributions, and public monies. Staff time, possible consultant costs. Objective 7.6 The City shall work cooperatively with adjacent cities and jurisdictions to complete key roadway and traffic synchronization projects that will help improve the flow of traffic within the boundaries of Newport Beach. ;Comment:; Lead Ci;ty,Council Support,Cdp Ma nager,, PublicryWorks Department staff_ Financial' Resources:! Unknown at this time. 21 Goal 8: The City will administer its development review and permitting processes in an efficient, solution oriented and customer friendly manner. Obiective 8.1 — The City will implement the recommendations of the Evaluation of the Development Review and Plan Checking Processes, dated August 2006, including the following: 1. Increased inter-departmental coordination; 2. Use of project managers with primary responsibility for major projects; rr 3. Full use of Permits Plus and/or other database systems; 4. Established performance standards for4 project review; 5. Adequate staffing to meet performance standards and serve the public counter; 6. Availability of up-to-date public information materials on application requirements and processes; 7. Standardization of plan check correction checklists to the maximum extent possible; 8. Increased quality control for outside plan check services; 9. Use of existing standard designs whenever possible, to minimize the need for project-specific engineering. Assistant' City ager _ i J Fi n--a*n—cial Resources. Staff time 22 Objective 8.2 — Staff will provide for enhanced communication with applicants, both earlier and more consistently throughout the process by [DATE]. S;,upport FinancialResources� Staff time, reimbursed through application fees. Objective 8.3 — The City will assure that staff receives receive regular training on maintaining a high quality of customer service and positive attitude. Financial be ources% Unknown at this time. Objective 8.4 — The City will implement changes in the Zoning Ordinance and other regulatory codes to make the process more streamlined by [DATE]. Financiab;_R se ounces Unknown at this time. NOTE ON ADDITIONAL REFERENCES To support the Visioning Process and to provide background material for the GPAC to consider in its development of policies to be included in the General Plan update, the City contracted with the firm of Applied Development Economics, Inc. (ADE) for studies 23 related to current economics and future fiscal impacts. ADE prepared a commercial market study published in December 2002 entitled "Newport Beach General Plan Update Retail Commercial Market Analysis," and a fiscal impact analysis entitled `Fiscal Impact Analysis and Model, Newport Beach General Plan Update," published in revised form in January 2004. Please refer to the detailed reports cited above, in addition to the final General Plan Update adopted by the City Council on July 25. 2006, and ratified by the voters in November, 2006, for further background. 24 I. INTRODUCTION The Strategic Plan for Fiscal and Economic Sustainability is designed to serve as a work program for the City Council, City staff, the City Economic Development Committee (EDC) and other civic leaders to promote and sustain fiscal and economic vitality in Newport Beach. It is intended, in part, as a companion document for the General Plan, to assist the City in implementing portions of the General Plan that affect economic development in the City. Beyond City land use and development policy, however, the Strategic Plan for Fiscal and Economic Sustainability includes activities to enhance the business climate in the community. The Strategic Plan for Fiscal and Economic Sustainability focuses on a shorter time frame than does the General Plan, since economic conditions and priorities can change more rapidly than do planning goals related to community character and land use patterns. The work program included here contemplates at most a five -year time horizon, and it is assumed that annual reviews of progress and re- assessments of priorities will be undertaken as a prelude to the City's annual budget process. SUMMARY OF ECONOMIC AND FISCAL ISSUES The Visioning Process The City initiated a Visioning Process in January of 2002, ahead of its effort to update the General Plan, which culminated in publication of the Community Directions for the Future report in January 2003. The Visioning Process included a series of events, meetings and public information gathering programs and resulted in a vision statement for Newport Beach and substantial public input on a wide range of issues for consideration in the General Plan Update. The summary information presented here is limited to statements and issues related to economic development or the fiscal health of the City. A vision for the future of Newport Beach was developed by the citizen General Plan Advisory Committee (GPAC), which describes the City's desired 'end state' and what the community hopes to have achieved by 2025. Under the heading, "Growth Strategy, Land Use and Development," the vision states in part, `(wje have a conservative growth strategy that emphasizes residents' quality of life — a strategy that balances the needs of the various constituencies and that cherishes and nurtures our estuaries, harbor, beaches, open spaces and natural resources. Development and revitalization decisions are well conceived and beneficial to both the economy and our character.... " The process also ascertained the public's input on a range of more specific issues. There was broad community consensus on some economic issues, and more diverse opinion on others. Those issues upon which consensus were gained include the following: • The vast majority of residents view Newport Beach as primarily a residential beach town. While most recognize the City's attractiveness to tourists, they were less interested in defining the City's identity as a tourist destination. • In a survey of business owners, the City's location within the County, its physical beauty, and the purchasing power of the community are listed as exceptionally attractive attributes. • General consensus exists that the City's harbors and beaches must be protected and enhanced as the most cherished resources. GPAC members posited that as harbors and beaches are improved as recreational areas, visual and economic benefits would follow. • People are in general agreement that certain areas of the City need revitalization, including Balboa Village, Mariner's Mile, Old Newport Blvd., Cannery Village, Central Balboa Peninsula, West Newport, and the mixed residential/industrial area above Hoag Hospital (West Newport Mesa). GPAC members agree that the City should be proactive in creating a revitalization vision to help guide future private development. • A couple of the visioning events raised the issue of mixed use, integrating housing and commercial or office space. Areas deemed appropriate for mixed use include Balboa Village, Mariner's Mile, Cannery Village, Lido Marina Village, McFadden Square, the Airport Business Area and Newport Center. • Visioning process participants agreed that the City should consider re- zoning excess and underutilized commercial lands. However, a divergence of opinion existed on the following economic development issues. • People expressed mixed opinions about the potential impact of economic development on the City; with business owners being slightly more in favor of economic development than residents. The concern here is whether economic development will detract from residents' quality of life. However, when asked if the City should encourage growth in the local economy to help pay for municipal services, 67 percent (224) of those who responded to the newsletter questionnaire said yes, although there was disagreement about how that should be done. • Participants were divided on whether the City should continue to accommodate job growth. Many felt it is a question of the type of jobs and associated impacts. Those who did express support for growth state that the City should "accommodate" but not "promote" additional employment opportunities. • Participants in the visioning program events were overall in favor of tourism, but divided on providing more tourist accommodations, including lodging. However, if new hotels are to be built, most respondents agreed they should be concentrated in the Airport Business Area and Newport Center. • While people want the City to set firm constraints on development, including expansion of employment centers and hotels, additional development may be acceptable in certain areas under certain conditions. 1. Fashion Island: A majority of residents and businesses support keeping retail space at current levels, but many are still willing to back expansion of existing stores and moderate increases for new businesses. 2. Newport Center: A majority of residents and businesses support little or no change to office development in Newport Center. But some are willing to allow growth for existing companies. 3. Airport Business Area: Participants are split on support for development, but some agreement exists over the appropriate types of development. People are comfortable with low -rise office buildings, but would not like to see high -rise offices or more industrial development. The groups were split about adding more retail space, including "big box' stores, in this area. Synopsis of Economic and Fiscal Studies To support the Visioning Process and to provide background material for the GPAC to consider in its development of policies to be included in the General Plan update, the City contracted with the firm of Applied Development Economics, Inc (ADE) for studies related to current economics and future fiscal impacts. ADE prepared a commercial market study, published in December 2002, and a fiscal impact analysis, published in revised form in January 2004. In this process, ADE also interviewed a number of business people in the community. The following is a synopsis of key findings gained from this work. Key Findings: Retail Commercial • As an overall conclusion, it can be fairly stated that the City does very well in serving the retail shopping needs of both residents and visitors. Although the balance between demand and sales is very close, the city actually captures large amounts of spending in some categories from the surrounding region, while losing local spending in other categories. • The City's retail base is particularly strong in boats, autos, restaurants, furniture, apparel and specialty retail stores. • Conversely, relatively large sales leakages occur in other general merchandise, family clothing, discount department stores and home improvement store categories. Most of these spending categories represent "big box" or "mass merchandiser" retail store categories that require larger tracts of land and seek more central locations than coastal areas. Such uses could possibly be located in the Airport Area, along with additional service commercial /flex space and car dealerships. • The commercial centers in the coastal area largely serve the visitor market and do not capture a large proportion of residents' spending, with the exception of Corona del Mar, which has the broadest base of local- serving retailers. • Except for the Balboa Village area, most of the coastal commercial centers perform adequately in terms of sales per square foot among existing businesses. In Balboa Village, the average is relatively low in a number of the visitor - serving store type categories, reflecting the less accessible location and attractiveness of this older commercial area. In response to this finding, the updated General Plan reduces the amount of commercially - zoning property in this area. • In terms of opportunities for new retail establishments in the coastal sub - areas, the focus should be on retail categories that have sales leakage throughout all of Newport Beach and would also be at the appropriate scale of commercial development. Certain specialty retail categories such as music and bookstores would fit these criteria. • In Mariners Mile, there may be some pressure to transition sites devoted to boat sales to more intensive uses. The updated General Plan provides for some mixed use development in this area. • Lido Marina Village may see pressure for redevelopment as current retail uses underperform. Key Findings: Hotels /Motels • While Newport Beach has a variety of meeting facilities, major convention centers are mainly concentrated in Anaheim. More recently, Huntington Beach's new waterfront development poses competition for Newport Beach at the small to mid -size business meeting scale. The lack of larger facilities in Newport Beach limits the City's business trade potential. Key Findings: Marine Industry • Economic pressure continues to replace shipyards and non -water dependent manufacturing /repair services with other commercial and residential uses. • Marine proponents would like to see greater use of limited public shore access sites to maintain a "working" harbor. Along these lines, the Harbor and Bay Element of the updated General Plan includes goals preserve the diverse uses of the Harbor and waterfront that provide needed support for boaters and to retain water - dependent and water - related uses on Harbor fronting properties. Key Findings: Office /Industrial Uses • Potential exists for transition of older properties in the Airport Area to more intensive use, as well as the addition of major retail uses in the Airport Area on sites currently occupied by industrial or office uses. The updated General Plan includes a new "AO" land use designation for the Campus Tract, and also allows conversion of some office and industrial development to residential use. • Economic pressure threatens the viability of light industrial uses in the West Newport area. • There may be the possibility for expansion of medical uses in the hospital area, particularly medical R &D and offices. The updated General Plan provides for more medical office development and redevelopment. • The City would benefit from an economic transition in existing office and industrial spaces toward businesses that generate greater sales tax through off- site product sales. The sales tax is such an important component of the City's fiscal picture, it would be important to consider ways to encourage firms that generate taxable non - retail sales and taxable business -to- business transactions. Key Findings: Fiscal Analysis • The fiscal analysis estimates the current cost/revenue balance generated by existing broad land use categories. In general, existing residential, office and public land uses represent net cost centers for City government, while retail, lodging and marine industry land uses generate excess public revenues and help the City maintain an overall fiscal balance. It should be noted that much of the adverse fiscal impact of existing residential units stems from the fact that their assessed values are depressed well below market value due to limits imposed by Proposition 13. New residential units, or even most existing units that are resold in the current market, do pay sufficient property taxes to cover City service costs. This was demonstrated in a focused analysis of Newport Coast mentioned below. The report also points out that the residential population supplies much of the purchasing power that generates sales tax from retail businesses, and the office-based businesses and industrial uses create much of the household income that also feeds this economic activity. Therefore, the bottom line fiscal cost/revenue balance should not be viewed as the only economic dimension for evaluating the City land use mix. • The analysis of the Newport Coast development illustrates the fact that many residential neighborhoods with sufficiently high property values can be positive fiscal contributors to the City. Although only Newport Coast received a special area analysis, similar results could be expected in other neighborhoods with high property values. • Visitor - serving land uses overall generate a positive fiscal benefit for the City, primarily due to increased sales tax and TOT revenues from visitors. This analysis factors in the added cost to the City of maintaining services to the beach areas, as well as demand for other services generated by tourists. • The projection of fiscal impacts for buildout of the existing City General Plan indicates that the potential exists for substantial increases in commercial uses, generating a more favorable fiscal balance than exists currently. II. THE VISION FOR FISCAL & ECONOMIC SUSTAINABILITY Newport Beach shall maintain and enhance its local economy, a high quality of life, economic opportunities for its citizens and the sustained fiscal health of the City, while respecting and supporting the residential and waterfront character of the community and its natural resources and amenities. THE ROLE OF THE CITY An important purpose of this plan is to help focus limited City resources on activities that are most cost - effective and address squarely the City's priorities for economic development. The private sector is the primary engine for economic progress in Newport Beach. The City is fortunate to enjoy sustained periods of relative prosperity during which little government involvement is warranted beyond providing clear land use policies and an efficient, predictable entitlement process. It is also important for the City to sustain economic and fiscal health throughout the ups and downs of the business cycle. Typically, cities can play a role in several areas to support economic development, as follows: 1. Land Use and Development Policy The City's main effort recently has been to update the General Plan, and the implementation of new land use and development policies in various areas of town will have a significant impact in supporting economic development. 2. Infrastructure Regarding infrastructure, the City has made strategic investments in public improvements, such as the streetscape work in the Balboa Village, Corona del Mar, Marine Avenue and Mariner's Mile commercial districts, but in general it has only limited resources to invest in new infrastructure. The City must instead focus on implementing policies to ensure that new development pays for new infrastructure and that the fiscal balance of the developing land use mix can sustain the City's ability to operate and maintain the existing infrastructure. To the extent the City can address infrastructure improvements, improvements in circulation and parking facilities will benefit the economic growth of the community most. 3. Incentives The City can offer incentives to development, such as design standard flexibility, shared parking opportunities, in -lieu parking fees, tax - exempt financing, and sales tax sharing. These kinds of incentives can improve the market feasibility of desired kinds of improvement in the economic environment without necessarily requiring expenditures of existing public funds. GOALS, OBJECTIVES AND ACTION PLANS The Strategic Plan for Fiscal and Economic Sustainability for the City of Newport Beach includes eight major goals for economic development in the City: • Continue the revitalization of the City's older commercial areas and villages; • Support business efforts to optimize retail sales capture; • Facilitate the development, attraction and retention of a variety of businesses that strengthen the vitality of the local economy; • Facilitate an economically viable and vital Newport Harbor; • Enhance the visitor boating services of Newport Harbor; • Support visitor - serving businesses and facilities; • Seek methods to minimize the economic impact of traffic congestion; • Administer the development review and permitting processes efficiently. The following discussion briefly outlines these goals, along with the more detailed objectives and implementation actions associated with each goal.