Newport Beach City Council
May 9, 2023

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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.

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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.

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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.

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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

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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

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October 20, 2022,
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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

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Planning Commission Regular Meeting Agenda
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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.

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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:

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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,

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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

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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)

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March 14, 2023, City
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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.

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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.

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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.

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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.

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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
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Attachment E
Planning Commission Resolution No. PC2023-018
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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.
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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.
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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.
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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.
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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

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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.
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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
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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

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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.
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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

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U."Time share use" means the use of one or more accommodations or any part thereof, as a time share property.
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Attachment F
Planning Commission Resolution No. PC2023-019
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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

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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).
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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.
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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

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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
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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)
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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)
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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
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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:
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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

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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

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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.

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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.

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

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
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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