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c�<,FORN'P City Council Staff Report
May 23, 2023
Agenda Item No. 3
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Seimone Jurjis, Community Development Director - 949-644-3232, [email protected]
PREPARED BY: Jaime Murillo, Principal Planner, [email protected] PHONE: 949-644-3209
TITLE: Ordinance Nos. 2023-4 and 2023-5: Code Amendments Related to Time Shares (PA2022-0202)
ABSTRACT:
For the City Council's consideration is the adoption of Ordinance Nos 2023-4 and 2023- 5 to amend Title 20 (Planning and Zoning) and Title 21 (Local Coastal Program Implementation Plan) of the Newport Beach Municipal Code (NBMC) modifying the definition of time share to clearly include fractional ownership units. As a time share use, fractional homeownership would be prohibited in all residential zoning districts and only allowed in certain commercial and mixed -use zoning districts subject to existing time share regulations. The attached ordinance was introduced and considered at the May 9, 2023 City Council meeting.
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a) Find proposed amendments to Titles 20 and 21 of the NBMC are not subject to the California Environmental Quality Act (CEQA) pursuant to Section 15060(c)(2) and 15061(b)(3) of the CEQA Guidelines, because it would not result in a direct or reasonably foreseeable indirect physical change in the environment and is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Additionally, the proposed amendments to Titles 20 and 21 of the NBMC are categorically exempt pursuant to Section 15308 because the ordinances involve regulatory actions to assure protection of the environment;
b) Conduct second reading and adopt Ordinance No. 2023-4, An Ordinance of the City Council of the City of Newport Beach, California, Approving an Amendment to Title 20 (Planning and Zoning) of the Newport Beach Municipal Code Related to Time Shares (PA2022-0202), and
c) Conduct second reading and adopt Ordinance No. 2023-5, An Ordinance of the City Council of the City of Newport Beach, California, Approving and Authorizing Submittal of a Local Coastal Program Amendment to the California Coastal Commission Amending Title 21 (Local Coastal Program Implementation Plan) of the Newport Beach Municipal Code Related to Time Shares (PA2022-0202). 3-1
Ordinance Nos. 2023-4 and 2023-5: Code Amendments Related to Time Shares May 23, 2023
DISCUSSION:
The proposed amendments to Title 20 and Title 21 of the NBMC would modify time share related definitions (i.e., time share accommodation, time share project, time share estate, time share instrument, time share interval, time share plan, time share property, time share unit, and time share use) to clearly include fractional ownership arrangements.
While the proposed amendments include minor clean-up revisions to the existing time share regulations for consistency with the modified definitions, no significant changes to the manner in which time shares are approved or development standards are proposed.
Time shares uses would continue to be prohibited in all residential zoning districts and permitted in certain commercial and mixed -use zoning districts, subject to certain criteria.
On May 9, 2023, the City Council introduced Ordinance Nos. 2023-4 and 2023-5, revising time share related definitions and regulations as discussed above. The attached ordinances include revisions made to draft Ordinance No. 2023-4 at the hearing related to prohibition of advertisements.
California Coastal Commission Review (Title 21 Amendments) To expedite the approval of the Title 21 amendment, Ordinance No. 2023-5 adopts the Local Coastal Program (LCP) amendment and authorizes staff to submit the LCP amendment to the Coastal Commission. The Coastal Commission is the final decision -making authority on amendments to the certified LCP; however, the City retains the ability to reject an LCP amendment in its entirety if the Coastal Commission includes suggested modifications. If the Coastal Commission approves the LCP Amendment as submitted, the ordinance would immediately go into effect without the need to return for further City Council approval. Should the Coastal Commission make any suggested modifications, staff will then return to the City Council to accept any suggested modifications and adopt a new ordinance incorporating the modifications.
FISCAL IMPACT:
There is no fiscal impact related to this item.
ENVIRONMENTAL REVIEW
Staff recommends the City Council find this action is not subject to the California Environmental Quality Act (CEQA) pursuant to Section 15060(c)(2) and 15061(b)(3) of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, because the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment and is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. This code amendment would clarify that fractional ownership uses are classified as time shares, which are currently regulated by the NBMC. This amendment does not alter the manner in which time shares are regulated and therefore would not result in a physical change in the environment. Additionally, the proposed amendments to Titles 20 and 21 of the NBMC are categorically exempt pursuant to Section 15308 because the ordinances involve regulatory actions to assure protection of the environment. 3-2
Ordinance Nos. 2023-4 and 2023-5: Code Amendments Related to Time Shares May 23, 2023
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item).
ATTACHMENTS:
Attachment A — Ordinance No. 2023-4: Adopting Title 20 Code Amendment Attachment B — Ordinance No. 2023-5: Adopting Title 21 LCP Amendment and Authorizing Submittal to the California Coastal Commission 3-3
ATTACHMENT A
ORDINANCE NO.2023-4
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
NEWPORT BEACH, CALIFORNIA, APPROVING AN
AMENDMENT TO TITLE 20 (PLANNING AND ZONING) OF
THE NEWPORT BEACH MUNICIPAL CODE RELATED TO
TIME SHARES (PA2022-0202)
WHEREAS, Article XI Section 7 of the California Constitution authorizes cities to make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws;
WHEREAS, California Government Code Section 65850 et seq. authorizes a city to adopt ordinances that regulate land uses as a valid exercise of its police powers; WHEREAS, Section 200 of the City of Newport Beach ("City") Charter vests the City Council with the authority to make and enforce all laws, rules, and regulations with respect to municipal affairs subject only to the restrictions and limitations contained in the Charter and the State Constitution, and the power to exercise, or act pursuant to any and all rights, powers and privileges, or procedures granted or prescribed by any law of the State of California;
WHEREAS, in 1982, the City Council adopted Ordinance No. 82-14, which is attached hereto as Exhibit 'A," and incorporated herein by reference prohibiting the development of time share projects within Newport Beach to protect against unique problems associated with transient occupancy;
WHEREAS, in 1996, the City Council adopted Ordinance 96-7 which is attached hereto as Exhibit "B," and incorporated herein by reference providing a narrow exception to allow time share projects in commercial districts subject to a conditional use permit but continuing to prohibit the use of residential property for time shares; WHEREAS, the City is a popular tourist destination known for its beaches and temperate weather;
WHEREAS, over the past three years, Newport Beach and cities that serve as tourist destinations, have experienced a wave of purchases of single -unit residences, which are then re -sold to persons purchasing fractional shares; WHEREAS, for example, over the past 15 months, the number of fractional - owned residences has nearly tripled with at least 12 fractionally owned homes in Newport Beach;
3-4
Ordinance No. 2023-4
WHEREAS, under this model, the ownership of the residence is usually divided into eight shares and sold to different persons with stays ranging from two to fourteen nights in duration, with back-to-back stays prohibited, resulting in frequent turnover of the properties' occupants and its commercial management; WHEREAS, a representative of a commercial management company who manages this type of use, Pacaso, Inc. ("Pacaso"), has stated in correspondence to the California Department of Real Estate, which is attached hereto as Exhibit T," and incorporated herein by reference, that Pacaso homes are sold as time share interests as defined in Business and Professions Code Section 11212(z) ; WHEREAS, fractionally owned homes create impacts on the City's housing supply and character of residential neighborhoods by converting dwelling units from a full-time owner -occupied residence to a frequent rotation of vacation stays of less than a month;
WHEREAS, public has testified that this change in the use of dwelling units results in an increase in traffic and noise in residential neighborhoods, as well a change to the fabric of the community due to the short-term nature of the stays; WHEREAS, with respect to the housing supply, Governor Gavin Newsom declared a housing crisis in the State of California and called for the development of
3.5 million new homes to be built by 2025, to meet the population's housing needs; WHEREAS, as a result, the State of California has adopted a number of housing bills such as Senate Bill Nos. 8, 9, 10, 35 and 330, and an aggressive Regional Housing Needs Assessment ("RHNA") for the 6th Cycle Housing Element covering the period 2021-2029 ("611 Cycle Housing Element"); WHEREAS, the City's RHNA for the 6th Cycle Housing Element is 4,845 new housing units, which units are intended to meet the housing needs of existing and future residents within the jurisdictional boundaries of Newport Beach; WHEREAS, according to the 6th Cycle Housing Element, which is attached hereto as Exhibit "D," and incorporated herein by reference, the median home price in the State of California was $579,770 as of 2020, the median home value of single - unit homes and condominiums in Newport Beach was $2,407,454; 3-5
Ordinance No. 2023-4
WHEREAS, the fractional ownership of single -unit residences as a second home further exacerbates the housing supply in Newport Beach making it harder to meet housing demand;
WHEREAS, in accordance with Ewing v. _Carmel -by -the -Sea, (1991) 234 Cal.
App. 3d 1579, which upheld the City of Carmel-by-the-Sea's right to impose zoning restrictions on short-term rentals, the Newport Beach City Council adopted Ordinance No. 92-13 which is attached hereto as Exhibit "E," and incorporated herein by reference on May 11, 1992, establishing regulations for the operation of short-term lodging units to mitigate the impact of this use on the residents of the City; WHEREAS, on May 11, 2004, the City Council adopted Ordinance No. 2004-6, which is attached hereto as Exhibit "IF," and incorporated herein by reference, prohibiting the issuance of new short-term lodging permits after June 1, 2004, to any dwelling unit on a parcel zoned as a single -unit residence or designated for single-family residential use as part of a Planned Community Development Plan, Specific Area Plan or Planned Residential District;
WHEREAS, in 2020 and 2021, the City Council adopted Ordinance Nos. 2020- 15, 2020-26, and 2021-28, which are attached hereto as Exhibits "G" — "I," and incorporated herein by reference amending the City's short-term lodging regulations based upon evidence and documentation attesting to the need to further regulate and control short-term lodging units in residential zones to ensure that, among other things, short-term lodging units are regulated in a way to maintain harmony with surrounding uses;
WHEREAS, due to the proliferation of short-term rentals and their impact on neighborhoods and long-term housing, Ordinance No. 2021-28 placed a cap of 1,550 on the number of short-term lodging permits allowed in the City; WHEREAS, fractionally owned homes are a time share and operate much like short-term lodgings in that they limit occupancy by owners of a fractional interest in a property to less than 30 consecutive days;
WHEREAS, on November 16, 2021, the City Council conducted a study session to address concerns raised by the public regarding impacts of fractional homeownership;
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Ordinance No. 2023-4
WHEREAS, during this study session public testimony was given that these homes operate as short-term lodging with residents expressing displeasure with the impacts that these homes were causing including an increase in the noise and traffic in the residential neighborhood;
WHEREAS, on September 13, 2022, the City Council conducted a second study session, to discuss the fractional ownership uses and was presented with a report, which is attached hereto as Exhibit "J," and incorporated herein by reference that 15 of the 22 jurisdictions surveyed classify fractional ownership uses as a time share; WHEREAS, additional public testimony included concerns about increases in traffic, noise, and trash, as well as fractional ownership uses having an adverse impact on the character of the existing residential neighborhoods consistent with the impacts identified by the cities of Carmel -by -the Sea, Hermosa Beach, Palm Desert, Sonoma and St. Helena whose ordinances regulating and evidence in support of such ordinances are attached hereto and incorporated herein by reference as Exhibits "K" - "O"; WHEREAS, on September 27, 2022, the City Council adopted Resolution 2022- 61, initiating code amendments to Title 20 (Planning and Zoning) ("Zoning Code Amendment No. PA2022-0202") and Title 21 (Local Coastal Program Implementation Plan) ("Local Coastal Program Amendment No. 2020-0202") of the NBMC and directed staff to work with the Planning Commission to develop regulations related to fractional ownership uses in the best manner that would protect the character of residential neighborhoods;
WHEREAS, on October 6, 2022, the Planning Commission conducted a study session to discuss fractional ownership uses and receive public testimony; WHEREAS, public testimony included fractional owners who were in favor of allowing the use and neighbors who expressed frustration with the increased impacts caused by the operation of fractional ownership homes;
WHEREAS, at the conclusion of study session, the Planning Commission expressed the desire to form an ad -hoc committee to work closely with staff to formulate appropriate regulations to ensure that they were able to thoroughly investigate the appropriate approach to fractional ownership uses;
3-7
Ordinance No. 2023-4
WHEREAS, on October 20, 2022, the Planning Commission formed an Ad -Hoc Committee to evaluate potential amendments to Title 20 and Title 21 of the NBMC related to fractional ownership uses within the City;
WHEREAS, the Ad -Hoc Committee met a total of seven times, during which the Committee discussed potential regulatory schemes with the Community Development Department, City Attorney's Office, representatives from Pacaso and several concerned citizens to ensure the Committee members_ had a full understanding of the issue; WHEREAS, during this process, Pacaso proposed an ordinance, which is attached hereto as Exhibit "P," and incorporated herein by reference, regulating, Pacaso- managed homes by way of a regulatory permit with a cap of 500 on the number of regulatory permits the City would be required to issue to such fractionally owned homes;
WHEREAS, on February 3, 2023, the Ad -Hoc Committee presented their findings to the Planning Commission making two recommendations to the City Council including the preferred recommendation which was to broaden the definition of time shares to include fractional ownership uses, and an alternative recommendation of creating a separate regulatory scheme to allow. fractional ownership uses in all zones, except the Single -Unit Residential (R-1) Zoning Districts;
WHEREAS, on March 14, 2023, the City Council considered the Planning Commission's recommendations and, after receiving further public testimony, the City Council directed staff to move forward with the Planning Commission's preferred option of broadening the definition of time share;
WHEREAS, the Planning Commission held a public hearing on April 20, 2023, in the City Council Chambers, located at 100 Civic Center Drive, Newport Beach, California A notice of time, place and purpose of the hearing was given in accordance with California Government Code Section 54950 of seq. ("Ralph M. Brown Act") and Chapter 20.62 (Public Hearings) of the NBMC. Evidence, both written and oral, was presented to, and considered by, the Planning Commission at this hearing; WHEREAS, at the conclusion of the hearing, the Planning Commission adopted Resolution No. PC2023-017 by a unanimous vote (6 ayes — 0 nays) recommending approval of the amendment to Title 20 of the NBMC to the City Council; WK
Ordinance No. 2023-4
WHEREAS, the City Council held a public hearing on May 9, 2023, in the City Council Chambers located at 100 Civic Center Drive, Newport Beach, California. A notice of time, place and purpose of the public hearing was given in accordance with the Ralph M. Brown Act, and Chapter 20.62 (Public Hearings) of the NBMC. Evidence, both written and oral, was presented to, and considered by, the City Council at this public hearing; and
WHEREAS, the City Council and Planning Commission agenda item and supporting evidence, are attached hereto as Exhibits "Q" — "V" and incorporated herein by reference.
NOW, THEREFORE, the Newport Beach City Council does hereby ordain as follows:
Section 1: The City Council of the City of Newport Beach does hereby approve the Zoning Code Amendment No. PA2022-0202 to amend Title 20 (Planning and Zoning) of the Newport Beach Municipal Code related to time shares as set forth in Exhibit "W," which is attached hereto and incorporated herein by reference. This decision is made based upon the evidence in the record and is consistent with the General Plan Land Use Policies set forth in Exhibit "X," which is attached hereto and incorporated herein_ by reference.
Section 2: The recitals provided in this ordinance are true and correct and are incorporated into the substantive part of this ordinance.
Section 3: If any section, subsection, sentence, clause or phrase of this ordinance is for any reason held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this ordinance. The City Council hereby declares that it would have passed this ordinance, and each section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases may be declared invalid or unconstitutional.
3-9
Ordinance No. 2023-4
Section 4: The City Council of the City of Newport Beach finds Zoning Code Amendment No. PA2022-0202 is not subject to environmental review under the California Environmental Quality Act ("CEQX) pursuant to Section 15060(c)(2) and 15061(b)(3) of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, which states that an activity is not subject to CEQA if the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment or will not have the potential for causing a significant effect on the environment. Time share uses are not permitted in residential zones, however, the City has seen a trend in the fractional use of residences wherein. the property is usually divided into eight shares and sold to different persons with stays ranging from two to fourteen nights in duration with back- to-back stays prohibited resulting in frequent turnover of the properties' occupants and its commercial management. This Zoning Code Amendment would not result in a direct or indirect physical change to the environment nor does it have the potential for causing a significant effect on the environment since it would simply clarify that fractional ownership uses are classified as time shares, which are currently regulated by the NBMC.
This Zoning Code Amendment does not alter the manner in which time shares are regulated and therefore would not result in a physical change in the environment.
Additionally, the Zoning Code Amendment is categorically exempt pursuant to Section 15308 because the ordinance involves regulatory actions to assure protection of the environment.
Section 5: Except as expressly modified in this ordinance, all other sections, subsections, terms, clauses and phrases set forth in the Newport Beach Municipal Code shall remain unchanged and shall be in full force and effect. 3-10
Ordinance No. 2023-4
Section 6. The Mayor shall sign, and the City Clerk shall attest to the passage of this ordinance. The City Clerk shall cause the ordinance, or a summary thereof, to be published pursuant to City Charter Section 414. This ordinance shall be effective thirty calendar days after its adoption. This code amendment will not take effect in the coastal zone until Local Coastal Program Amendment No. PA2022-0202 is approved by the California Coastal Commission and adoption, including any modifications suggested by the California Coastal Commission.
This ordinance was introduced at a regular meeting of the City Council of the City of Newport Beach field on the 9th day of May, 2023, and adopted on the 23rd day of May, 2023, by the following vote, to wit:
AYES:
NAYS:
ABSENT:
NOAH BLOM, MAYOR
ATTEST:
LEILANI I. BROWN, CITY CLERK
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
1 1 n-;
AARQp C. HARP, CI ,ATTORNEY
Attachment(s):
Exhibit A - July 26, 1982, City Council Meeting Minutes and Ordinance No. 82-14
3-11
Ordinance No. 2023-4
Exhibit B - March 11, 1996, City Council Meeting Minutes and Ordinance No. 96-7
Exhibit C - Correspondence from Pacaso to the California Department of Real Estate
Exhibit D - 6kh Cycle Housing Element
Exhibit E - April 27, 1992, City Council Meeting Minutes and Ordinance No. 92-13
Exhibit F - April 27, 2004, City Council Agenda Item No. 3 Adopting Ordinance No. 2004-6 and Supporting Material
Exhibit G - June 23, 2020, City Council Agenda Item No. 19 Adopting Ordinance No. 2020-15 and Supporting
Material
Exhibit H - October 13, 2020, City Council Agenda Item No. 18 Adopting Ordinance No. 2020-26 and Supporting
Material
Exhibit I - November 30, 2021, City Council Agenda Item No. 26 Adopting Ordinance No. 2021-28 and Supporting
Material
Exhibit J - Sage Crest Planning + Environmental Report
Exhibit K - City of Carmel -by -the Sea Time Share Ordinance and Supporting Evidence
Exhibit L - City of Hermosa Beach Time Share Ordinance and Supporting Evidence
Exhibit M - City of Palm Desert Time Share Ordinance and Supporting Evidence
Exhibit N - City of Sonoma Time Share Ordinance and Supporting Evidence
Exhibit O - City of St. Helena Time Share Ordinance and Supporting Evidence
Exhibit P - Ordinance Proposed by Pacaso Adding Chapter 5.98 Exhibit Q - September 13, 2022, City Council Agenda Item No. SS2 Exhibit R - September 27, 2022, City Council Agenda Item No. 1 Exhibit S - October 6, 2022, Planning Commission Agenda Item No. SS.2
Exhibit T - October 20, 2022, Planning Commission Agenda Item No. 6
Exhibit U - February 23, 2023, Planning Commission Agenda Item No. 6
Exhibit V - March 14, 2023, City Council Agenda Item No.12 Exhibit W - Zoning Code Amendment PA2022-0202
Exhibit X - General Plan Consistency Finding in Support of Zoning Code Amendment PA2022-0202
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Exhibit A
July 26, 1982, City Council Meeting Minutes and Ordinance No. 82-14 hft s://ecros.new ortbeachca. ov/WEB/DocView.as x?id=21155&dbid=0&re o=CNB hft s:Hecros.new ortbeachca. ov/WEB/DocView.as x?id=35606&dbid=0&re o=CNB 3-13
Exhibit B
March 11, 1996, City Council Meeting Minutes and Ordinance No. 96-7 httt sa/ecros.newportbeachca.gov/WEB/DocView.aspx?id=22280&dbid=0&repo=CNB https://ecros.newportbeachca.govNVEB/DocView.aspx?id=36439&dbid=O&repo=CNB 3-14
Exhibit C
Correspondence from Pacaso to the California Department of Real Estate 3-15
Exhibit C
From: Andy Sirkin
Sent: Saturday, July 24, 2021 10:19 AM
To: Aiu, Joseph@DRE
Cc: Bruce, David@DRE ; Neri, Chris@DRE ;
Patrick Abell ; David J. Willbrand
Subject: Re: Pacaso (DRE No. 121-0701-006)
{�AUTION: THIS EMAIL ORIGINATED OUTSIDE THE DEPARTMENT OF REAL ESTATE! DO NOT. click !inks or open attachments unless you know the content is safe.
NEVER. provide credentials on websites via a clicked link in an Email.
Dear Mr. Aiu,
Yes, I confirm that Pacaso Homes are within that exemption. We sincerely appreciate your prompt response and attention.
All the best,
Andy Sirkin
SirkinLaw APC
+ 1-415-462-5925 (US)
On Jul 24, 2021, at 5:37 PM, Aiu, Joseph@DRE Closeph.Aiundre.ca.gov> wrote:
Dear Mr. Sirkin,
Thank you for your email response and explanation dated 7/21/21. Based on your response and explanation, we understand that your clients, Pacaso Inc. and Pacaso Homes, are selling time-share interests as defined in B&P Code section 11212(z), but are exempt from needing to file for a time-share public report since they fall below the reporting threshold of 11 or more units. Please confirm. Thank you.
Sincerely,
Joseph Aiu
Investigations & Compliance
From: Andy Sirkin
Sent. Wednesday, July 21, 2021 2:28 AM
To: Aiu, Joseph@DRE
Cc. Bruce, David@DRE ; Neri, Chris@DRE
3-16
; Patrick Abell ; David J. Willbrand
Subject: Re: Pacaso (DRE No. 121-0701-006)
CAUTION THIS EMAIL ORIGINATED OUTSIDE THE DEPARTMENT OF REAL ESTATE! ❑O NOT click lions ❑r open attadwienr,- unless you know the content is safe.
NEVER pro hide crederitWon websites via a clicked link in an Email.
Dear Mr. Aiu,
I received an email late yesterday from David Bruce saying that, since an investigation has been initiated by the Department, all correspondence should be routed to you. He also mentioned that I was welcome to "cc" him on that correspondence, so I will continue to do SO.
Although you may already have a basic understanding of Pacaso's business, I will begin with a brief explanation of the key elements. Pacaso only organizes group purchases of single- family residences. Each owner gets a 1 /8th share along with the right to use the home for 1/8th of each year indefinitely. During each owner's usage period, that owner has exclusive use of the entire house. All rentals are prohibited; only owners and their guests are permitted to use the house. Each owner pays regular assessments to fund the operating costs of the home and maintenance reserves. Once all eight ownership slots are filled, the eight owners own and control the house; Pacaso retains no ownership interest.
B&P Code Section 11212(z) defines "Time -Share Plan" as any "arrangement ... whereby a purchaser, in exchange for consideration, receives ownership rights in or the right to use accommodations for a period of time less than a full year during any given year, on a recurring basis for more than one year." This description matches exactly the arrangement among owners of a Pacaso home. Specifically, each purchaser gets the right to use the home for 1/Sth of each year on a recurring basis every year for as long as he/she is an owner.
However, since each Pacaso offering involves only eight interests, each home is below the threshold for needing a Time -Share public report under Section 11211.5(b)(1).
B&P Code Section 11004.5(g) provides that "time-share plans ... are not "subdivisions" or "subdivided lands" subject to this chapter." Based on this language, I had always assumed that Time -Share offerings, regardless of size, did not require a subdivision public report under B&P Code Section 11000 et seq.; rather, large Time -Share offerings (more than 10 interests) require a Time -Share public report, and small Tune -Share offerings (10 or fewer interests) require no public report.
Your communications suggest that Time -Share offerings too small to require a Time -Share public report instead need a subdivision public report. I am having difficulty understanding the logic of this position. As you may know, prior to 2004, California law required a Time - Share public report only for projects involving more than 12 interests. When the legislature enacted the Vacation Ownership and Time -Share Act Of 2004, it reduced the threshold from 12 to 10. This change shows that the legislature specifically considered the appropriate threshold for when a Time -Share offering needs a public report. The legislature did not choose nine, or eight, or six for the threshold; it specifically chose 10.
The idea that Time -Share offerings too small to require a Time -Share public report instead need a subdivision public report seems contrary to this legislative intent. What meaning could the 10-share threshold in Section 1121 1.5(b)(I) have if an offering below the threshold still had to obtain a subdivision public report'?
Moreover, when the legislature enacted the Vacation Ownership and Time -Share Act Of 2004, the legislature could have said that Time -Share offerings require a subdivision public report under B&P Code Section 11000 et seq., and that the application for a Tune -Share public report should be the same as the application for a subdivision public report. Instead, the legislature carefully specified the types of information it deemed appropriate for DRE to obtain and consider when "vetting" a proposed Time -Share offering. The application submittal for a Time -Share public report makes sense in the context of what a Time -Share offering is and what the purchasers buy.
3-17
If, as you suggest, Time -Share offerings too small to require a Time -Share public report instead need a subdivision public report, it would mean that the public report application for a small Time -Share offering would ignore the carefiilly-crafted specifics of the Time -Share law (which make perfect sense in the context of a Time -Share offering), and instead comply with the public report application requirements for a subdivision (which make no sense in the context of a Time -Share offering).
To illustrate this point with just one of many examples, consider B&P Code Section 11234(c), under which a Time -Share public report requires "a description of the type of interest and usage rights the purchaser will receive" and "a representation about the percentage of useable time authorized for sale, and if that percentage is 100 percent, then a statement describing how adequate periods of time for maintenance and repair will be provided." This requirement is perfectly logical for a Time -Share public report, since the fairness and adequacy of the usage assignment structure is absolutely critical from a consumer protection standpoint. So, why would the subdivision public report you suggest is needed for a small Time -Share offering not require this critical information? Is this information suddenly less important if the offering involves 10 or fewer Time -Share interests?
For all of these reasons, I respectfully suggest that Pacaso offerings do not require a Public Report. My assertion is based specifically on B&P Code Sections 11211.5(b)(1) and 11004.5(g), and on the legislative history and context of the Vacation Ownership and Time - Share Act Of 2004. To simplify your job when responding, you can ignore the other arguments made in my client's letter of.luiy 9.
Cordially,
Andy Sirkin
SirkinLaw APC
+1-415-462-5925 (US)
On Jul 17, 2021, at 1:28 AM, Aiu, Joseph(a?DRE
wrote:
Dear Mr. Sirkin,
Your request for an extension to the deadline imposed in my "Notice to show cause was taken under consideration and you are granted an extension until July 23, 2021, Please note the following. The Department of Real Estate (ORE), investigates violations of the Real Estate Low (Licensees), the Subdivided Lands Act (Subdividers), the Vacation Ownership and Time Share Act (Developers), and endeavors to safeguard the public interests in real estate matters.
In your initial response, your letter alluded to 11001,[a](b)(2), 11004.5(g), 11212.5(b)(1), and Pacaso Homes purchases are resales. Please be aware that your marketing concept is alsa under consideration.
Sincerely,
Joseph Aiu
Investigations and Compliance
From: Andy Sirkin
Sent: Friday, July 16, 2021 3:04 PM
To: Aiu, Joseph@DRE
Cc: Bruce, David@DRE ; Neri, Chris@DRE
; Patrick Abell ; David J.
Willbrand
Subject: Pacaso (DRE No. 121-0701-006)
3-18
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NEVER: provide credentials on web ites via a clicked link in an Email.
Mr. Aiu,
Our office has been engaged by Pacaso in connection with your inquiry. Over the past four days, I have been corresponding with David Bruce about my analysis of the situation and potential options to move forward in a manner that would be satisfactory to DRE. 1 had hoped to provide a formal response to your email by this afternoon in accordance with your deadline. However, I have not yet received Davids's response to my most recent email (sent late yesterday), and I would very much like to get that before responding to you. Might I ask your indulgence in getting a short extension so that I might complete my interchange with David? I will commit to keeping you advised on the progress of that exchange.
Please be assured that resolving this matter to the satisfaction of DRE is Pacaso's highest priority. We are in no way interested in delaying a resolution; however, we want to make sure to proceed in the manner most likely to lead to a mutually acceptable outcome. Thank you in advance for your consideration.
All the best,
Andy Sirkin
SirkinLaw APC
+1-415-462-5925 (o)
+1-415-350-6296 (m)
---------- Forwarded message ---------
From: Aiu, JosephA?a DRE
Date: Fri, Jul 9, 2021 at 11:42 AM
Subject: RE: Pacaso response to DRE notice letter (DRE No. 121- 0701-006)
To: Patrick Abell
Cc: David Willbrand , Charlie Tanner
Dear Mr. Abell,
Thank you for your letter explaining the position of Pasea Homes as to its sales of "1/Sth undivided interests in o residential homes." The key phrase in our letter is the sale of undivided interest. Please refer to Section 11000.1 of the Code. Further, your fetter appear to allude to the "Exemption" pursuant to Subsection 11000.1(b)(2), which requires satisfactory evidence presented to DRE — this has not been done. Hence, Section 11010 is applicable.
Please respond by July 16, 2021 as to whether Pacaso Homes and its affiliates will comply with applying for a Public Report, since advertising the sales must have a Preliminary Public Report.
Sincerely,
Joseph Aiu
Statewide Subdivisions
Investigations & Compliance
3-19
(213) 576-6927 Direct
(213) 576-6942 Fax
Department of Real Estate
320 W. 4th Street, Suite 350
Los Angeles, CA 90013
joseph.aiu(a4dre.ca.guu
3-20
Exhibit D
611 Cycle Housing Element
hft sJleems.new ortbeachca. ov/WEB/DocView.as x?id=2833796&dbid=0&re o=CNB 3-21
Exhibit E
April 27, 1992, City Council Meeting Minutes and Ordinance No. 92-13 htt s://ecros.new ortbeachca. ov/WEB/DocView.as x?id=21921&dbid=0&re o=CNB htt s://ecros.new ortbeachca. ovNVEB/DocView.as x?id=36004&dbid=0&re o=CNB 3-22
Exhibit F
April 27, 2004, City Council Agenda Item No. 3 Adopting Ordinance No. 2004-6 and Supporting Material
htt s://ecros.new ortbeachca. ovNVEB/DocView.as x?id=68969&dbid=0&re o=CNB htt s.Hecros.new ortbeachca. ov/WEB/DocView.as x?id=36708&dbid=0&re o=CNB 3-23
Exhibit G
June 23, 2020, City Council Agenda Item No. 19 Adopting Ordinance No. 2020-15 and Supporting Material
htt s://eems.new ortbeachca. ovNVEB/DocView.as x?id=2538440&dbid=0&re o=CNB Correspondence
htt s://ecros.new ortbeachca. ov/WEB/DocView.as x?id=2538635&dbid=0&re o=CNB Ad Hoc Committee Recommendations PowerPoint
htt s://ecros.new ortbeachca. ov/VVEB/DocView.as x?id=2538700&dbid=0&re o=CNB Corona del Mar Residents Association Short -Term Lodging Survey PowerPoint htt s://ecros.new ortbeachca. ovANEB/DocView.as x?id=2538702&dbid=0&re o=CNB Newport Island Community Association Survey Highlights PowerPoint htt s://eems.new ortbeachca. ovANEB/DocView.as x?id=2538703&dbid-0&re o=CNB Ordinance No. 2020-15
htt s://ecros.new ortbeachca. ovNVEB/DocView.as x?id=2544635&dbid=0&re o=CNB 3-24
Exhibit H
October 13, 2020, City Council Agenda Item No. 18 Adopting Ordinance No. 2020-26 and Supporting Material
htt s://ecros.new ortbeachca. ovNVEB/DocView.as x?id=2605151&dbid=0&re o=CNB Correspondence
htt s://ecros.new ortbeachca. ov/VVEB/DocView.as x?id=2605188&dbid=0&re o=CNB Notice of Public Hearing
htt s://ecros.new ortbeachca.q ovIVVEB/DocView.as x?id=2605206&dbid=0&re o=CNB Ordinance No. 2020-26
htt s://ecros.new ortbeachca. ovMEB/DocView.as x?id=2609797&dbid=0&re o=CNB 3-25
Exhibit I
November 30, 2021, City Council Agenda Item No. 26 Adopting Ordinance No. 2021-28 and Supporting Material
htt s://ecros.new ortbeachca. ovNVEB/DooView.as x?id=2797314&dbid=0&re o=CNB Correspondence
htt s://ecros.new ortbeachca. ovANEB/DocView.as x?id=2797686&dbid=0&re o=CNB Short Term Lodging LCP Amendments PowerPoint
htt s://eems.new ortbeachca. ov/WEB/DocView.as x?id=2797391&dbid=0&re o=CNB Notice of Public Hearing
htt s://ecros.new ortbeachca. ov/WEB/DocView.as x?id=2797689&dbid=0&re o=CNB Ordinance No. 2021-28
htt s://ecros.new ortbeachca. ov/VVEB/DocView.as x?id=2800356&dbid=0&re o=CNB 3-26
Exhibit J
Sage Crest Planning + Environmental Report
3-27
FRACTIONAL HOMEOWNERSHIP
� WA°Rm. Prepared For:
City of Newport Beach
Community Development Department
August 29, 2022
111111111111�1. IIIIIIIIIIIII lllllllllllll
Table of Contents
EXECUTIVESUMMARY ............ ............................................................. ........................... I ............. ................ 1 BACKGROUND...............................................................................................................................................1 Known/Suspected Properties in Newport Beach..................................................................................... 1 BENEFITS AND IMPACTS OF FRACTIONAL HOUSING....................................................................................2 Fractional Housing Benefits......................................................................................................................2 Fractional Housing Impacts .......................
COMMUNITYSURVEY...................................................................................................................................4 Cityof Beverly Hills, CA.............................................................................................................................5 Cityof Carlsbad, CA...................................................................................................................................5 Cityof Carmel by the Sea, CA.................................................................................................................... 5 Cityof Encinitas, CA ..................................... ............ ............ ........... ............... .................... I ..... ...1............. 5 Cityof Fort Lauderdale, FL........................................................................................................................ 6 Cityof Hermosa Beach, CA....................................................................................................................... 6 Cityof Indian Wells, CA............................................................................................................................. 6 Countyof Monterey, CA................................................................................................................. ... 6 Cityof Napa, CA........................................................................................................................................6 Villageof North Haven, NY.......................................................................................................................7 Cityof Oceanside, CA...........................................................................................................................
Cityof Pacific Grove, CA............................................................................................................................ 7 Cityof Palm Desert, CA............................................................................................................................. 7 Cityof Palm Springs, CA............................................................................................................................ 7 Cityof Park City, UT..................................................................................................................... ........ 8 Cityof Santa Barbara, CA.......................................................................................................................... 8 Cityof Santa Cruz, CA...............................................................................................................................8 Cityof South Lake Tahoe, CA.................................................................................................................... 8 Cityof Sonoma, CA.. ...................... ................... ........................................................................ ........... — 9 Cityof St. Helena, CA................................................................................................................................9 Townof Truckee, CA................................................................................................................................. 9 Cityof Vail, CO........................................................................................................................................10
FRACTIONAL HOUSING
City or i'�e 1 dort Beach 5S2.5
3-29
APPENDICES............. .................... ........... ......... .................................. .................... .................................... 10 Appendix A— Pacaso Economic Impact Analysis, prepared by EBP........................................................A1 Appendix B — City of Beverly Hills Urgency Ordinance...........................................................................
B1
Appendix C— City of Carlsbad Timeshare ordinance...............................................................................
C1
Appendix D—City of Carmel by the Sea Cease and Desist Order...........................................................D1 Appendix E—City of Hermosa Beach Planning Commission Resolution ................................................
E1
Appendix F — County of Monterey Cease and Desist Order................................................................... F1 Appendix G — Village of North Haven Code Amendment........................................................................
G1
Appendix H — City of Palm Desert Ordinance........................................................................................
HI
Appendix I — City of Palm Springs Cease and Desist Order......................................................................11 AppendixJ — Park City Notice of Amendment.........................................................................................J1 Appendix K — City of Santa Cruz Ballot Initiative......................................................................................
K1
Appendix L — City of South Lake Tahoe Cease and Desist Order.............................................................
L1
Appendix M -- City of Sonoma Ordinance..............................................................................................M1 Appendix N -City of St. Helena Ordinance..... .............. ........ I ............................. I ..... I .................... I ......
N1
Appendix0 — Pacaso Inc. v. City of St. Helena....................................................................................... 01 Appendix P —Town of Truckee Ordinance...............................................................................................
P1
Cover Photo by nex Ezekiel on Unsplash
FRACTIONAL. HOUSING
CARY of NeWport Beach
SS2-6
3-30
EXECUTIVE SUMMARY
The City of Newport Beach (City) is beginning to see the rise of fractional homeownership of single-family houses. Fractional homeownership is when multiple owners purchase a property and split the allowed time at the property through a formal arrangement, as compared to multiple owners who occupy the residence full-time or have no formal arrangement for occupancy. In the fractional model, the allotted time for each owner is based on their percentage of ownership. In reviewing available data on fractional homeownership, there appears to be at least ten such properties within the City but there could be more.
The City is receiving complaints from residents that these properties function similarly to short-term rental vacation homes and result in significant noise, traffic, and other impacts to residential neighborhoods. As a result of these concerns, the City asked Sagecrest PlanningfEnvironmental (Sagecrest) to investigate how other jurisdictions are dealing with fractional housing and the companies that promote them. Based on this investigation, it appears that other communities are adopting moratoriums and pursuing operators of fractional housing companies through code enforcement actions.
BACKGROUND
Fractional homeownership (sometimes called co -ownership) is an emerging trend in real estate where ownership of properties is equally shared among multiple owners (typically between four and 12 owners).
The amount of time the owner may spend at the property correlates to the fraction of ownership (e.g., a 'Is share owner would be allotted 45 days per year). This time allotment is not typically used consecutively, but rather one or two weeks at a time. In addition to the cost to purchase their share of the home, the owners are responsible for their share of the maintenance, property management fees, HOA fees, cleaning costs, utilities, taxes, insurance, and payment into a reserve fund to cover long-term repairs, such as replacement of the roof. Fractional owners maintain an ownership interest, benefit from a change in property value due to appreciation and have the potential to generate income through short- term rentals, although the City would maintain authority on short-term rentals. It should also be noted that some fractional homeownership companies prohibit short-term rentals in their management agreement.
Companies such as Pacaso, Sharetini, Ember, Equity Estates, and others facilitate the purchase of properties and provide the necessary maintenance, furnishments, property management, and cleaning services in exchange for a monthly fee. Many of these companies utilize ownership models that purchase and hold the properties under entities, such as limited liability companies, to avoid the need for a real estate transaction each time an owner sells their share. Alternatively, an ownership group could forego using a management company and self -govern the access to fractional housing.
Known/Suspected Properties in Newport Beach
Sagecrest reviewed the listings on various sites to identify properties in Newport Beach. Additionally, Sagecrest reviewed the City's database to find properties with mailing addresses that match the fractional home ownership companies. The following table lists the properties that are either known or suspected to be fractional ownership properties.
FRACTIONAL HOUSING
-1-
SS2-7
3-31
117 25th Street
Listed on Pacaso
121 Emerald Avenue
Listed on Pacaso
305 Grand Canal
Listed on Pacaso
315 East Bay Avenue
Listed on Ember
506 West Oceanfront
Listed on Pacaso
1703 Plaza del Sur
Listed on www,compass.com
2137 Miramar Drive
Listed on Ember
2628 Ocean Boulevard
City database mailing address match to Pacaso
3803 Marcus Avenue
City database mailing address match to Pacaso
4106 River Avenue
Listed on Pacaso
BENEFITS AND IMPACTS OF FRACTIONAL HOUSING
Fractional Housing Benefits
The primary benefit of fractional homeownership is to own a second home at a more affordable price.
According to county records, the home at 506 W Oceanfront sold on March 14, 2022, for $6,800,000. A 1/g share of this house is currently being offered on Pacaso for $1,098,000.
According to Equity Estates, a vacation home investment firm, the benefits of fractional housing are: l • it's more affordable - Perhaps a $4M home is out of reach, but $1M is right in your wheelhouse.
Fractional ownership lets you get the home you want in the most desirable location at the price you can afford. This goes for home upkeep and maintenance, too. By sharing the costs of upkeep, fractional ownership makes long-term ownership a much more realistic possibility. • The home will get some love - No home should sit vacant 48 weeks out of the year. By sharing the ownership, the home will be opened up at regular intervals. Opening and closing windows and doors, running the water, turning on the AC and heater, and using amenities like the hot tub and pool —all of these are essential to maintaining the home. it provides an opportunity to identify issues early on and preserve the home's long-term value. • Peace of Mind - Fractional ownership also means sharing the burden of homeownership. Rather than a single point of failure (i.e., you), you essentially have a group that shares accountability, schedules maintenance, checks on the home, and divides the work and chores that would otherwise be left to a single owner.
Another fractional housing company, Pacaso, claims that its model reduces demand in the housing market. Specifically, they state, "This demand on top of short supply has driven up home prices to unprecedented levels. instead of eight second home buyers buying eight separate median -priced homes, which drives up prices even further, Pacaso consolidates those eight buyers into just one luxury home, which alleviates pressure at the median -priced tier."' To address concerns that they do not provide a benefit, Pacaso commissioned an economic impact analysis (Appendix A), which found that the average fractional ownership house generates an average of $48,390 in annual spending compared with the 1 https:/leguityestatesfund.com/the-pros-and-cons-of-fractional-ownership, retrieved August 16, 2022 Z https://www.pacaso.com/blog/economic-impact-study retrieved August 16, 2022
FRACTIONAL HOUSING
City of Newport Bea
ss2-s
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average second home. The study further found that fractional housing generates an average of $3,780 additional revenue in local and state tax dollars over the average second home.
Fractional dousing Impacts
Notwithstanding the aforementioned benefits, many communities have received complaints from their residents that fractional housing creates adverse impacts on the neighborhoods in which they are located and the City as a whole. Jurisdictions that have taken a proactive approach to preventing fractional housing in their communities all have expressed concerns about the following:
Fractional housing adversely impacts the affordability of full-time homes in the community. As more homes are taken out of the primary housing market and converted to vacation homes, the available housing stock is reduced. Even though the fractional housing companies focus on the high -end market, any loss in available housing supply results in increase costs across the entire market.
Due to the high turn -over of occupants, fractional housing could adversely impact long-term residents in the surrounding neighborhood. Given that vacations typically last for short periods of time, these properties would have similar impacts as short-term rentals, such as noise, loss of privacy, loss of community buy -in, and decline in property values.
The operation of the fractional homeownership companies within residential areas would result in the commercialization of residential neighborhoods. Several communities that Sagecrest spoke with noted that the operations of these companies would require a business license as they are establishing a commercial use.
Sagecrest discussed concerns with fractional housing with a major opponent to fractional housing, Stop Pacaso Now'. This organization consists of volunteers who provide resources to residents to oppose fractional housing from being established in their community. This includes providing sample yard signs, sample letters, and volunteer coordination guidance. In discussing the effectiveness of their outreach, Stop Pacaso Now stated that they have had great success in communities in which residents have organized. Stop Pacaso Now has sponsored four petitions on change,org (Sonoma§, Dry Creek Valley', St.
Helena', and a nationwide petition') against fractional housing with a total of 7,411 signatures.
The Mitchell Hamline Law Journal of Public Policy and Practice published a journal article$ that found that "The increasing commodification of single-family homes has had cascading effects on housing and on communities in general." Fractional housing is shared among various owners, as a result, an increase in a https://stoppacasonow.com/
https://www.change.ore/p/sonoma-county-pla nning-commission-pacaso-ti me-shares-don-t-belong-in-sonoma- neighborhoods, retrieved August 16, 2022
5 https://www.change,org/p/pacaso-time-shares-don-t-belong-in-dry-creek-valley-s-agricultural-zoning-and- farmlands, retrieved August 16, 2022
' https://www.change.org/p/mderosa-cityofsthelena-org-gellsworth-cityofsthelena-org-stop-pacaso-from- commercializing-our-residential-neighborhoods, retrieved August 16, 2022 ' https://www.change.org/p/pacaso-stop-pacaso-s-tal https://open.mitchelihamline.edu/poIicypractice/vo143/iss2/1
FRACTIONAL HOUSING
-3-
SS2-9
3-33
the number of units could decrease the demand for hotel rooms. This would likely result in a reduction in the amount of transient occupancy tax accrued by the City.
COMMUNITY SURVEY
Sagecrest researched other communities that have fractional ownership properties to determine if there is a concern with these properties and how the community is addressing these concerns. A summary of the actions is contained in the table below, followed by a description of each community.
Notes
(a) Code Amendment in Process
(b) City Council is split on whether or not fractional housing is a timeshare
FRACTIONAL HOUSING
-4-
SS2-90
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City of Beverly Hills, CA
On July 15, 2021, the City of Beverly Hills adopted an urgency ordinance establishing a 45-day moratorium on fractional ownerships of residential and commercial properties. In the staff report, the City expressed concerns that the properties would impact the residents in the surrounding neighborhood since they would operate as vacation rental homes. The City noted these properties would likely "experience high turnover rates of occupants, and result in impacts related to their operation such as noise, loss of privacy, loss of community buy -in, and decline in property values." In addition to these impacts, the City expressed concerns that converting homes to fractional housing would remove permanent housing from the housing market. Notwithstanding this prohibition, the moratorium does allow the City Council to approve a fractional ownership dwelling if they adopt a finding that "the fractional ownership of a property will not disturb the stability of a residential neighborhood or residential building and will not adversely impact future development, redevelopment, safety, and proper maintenance of the property" during a duly noticed public hearing.
The moratorium was extended for ten months and 15 days on August 17, 2021 and extended again for a second year on June 14, 2022. The moratorium is now set to expire on July 14, 2023. The moratorium intends to allow the City staff time to study the issue and any potential impacts fractional housing may have on the health, safety, and welfare of those who live in surrounding homes and on the City as a whole.
A copy of the urgency ordinance and staff report is included in Appendix B.
City of Carlsbad, CA
The City of Carlsbad noted that the use of fractional properties constitutes a timeshare. They have an existing timeshare ordinance (Appendix C), which they would enforce if they received a complaint. The City has not had an issue with operation of the fractional homes.
City of Carmel by the Sea, CA
The City is aware of fractional ownership companies and their assertation that they sell and manage properties, not timeshares. The City disagrees with this position and is of the opinion that any fractional housing has the same impacts on surrounding residential areas as short-term vacation rentals. Not only is it unlawful for any fractional ownership company to commence or carry on any kind of business in the City without first procuring a business license and pay the applicable business license tax, but any such business would be in violation of the City's prohibition of timeshares. The City noted that their regulations on transient commercial use of residential property have been previously adjudicated.' Carmel by the Sea has issued a cease -and -desist order (Appendix D), ordering Pacaso to stop all advertising and sale of fractional ownership of residential properties within the City and will proceed through its code enforcement authority to obtain compliance.
City of Encinitas, CA
The City is aware of the fractional ownership model and that other communities are working on regulations. Since Encinitas has not had any issues with fractional homeownership, they are not working on any code updates or taking enforcement actions.
9 Ewing v. City of Carmel -by -the -Sea (1991) 234 Cal.App.3d 1579 FRACTIONAL. HOUSING
-5
SS2-11
3-35
City of Fort Lauderdale, FL
The City of Fort Lauderdale does not regulate fractional housing since they are considered transient lodging. Within the State of Florida, transient lodging is regulated by the State. Provided the fractional housing is within any zone which permits transient lodging, it would be allowed.
City of Hermosa Beach, CA
The City of Hermosa Beach classifies fractional housing as a timeshare. They are concerned that the operation of the fractional housing and timeshares could change the character of residential neighborhoods as the guest of the units may naturally stay out later, entertain more, and gather in larger numbers while on vacation. Currently, the Hermosa Beach Municipal Code does not regulate timeshares, but the City is processing a code amendment to prohibit timeshares in residential zones, If approved, the code amendment would allow timeshares in commercial zones with approval of a Conditional Use Permit.
The Planning Commission conducted a public hearing on the code amendment on April 19, 2022, at which the Commission adopted a resolution (Appendix E) to recommend the City Council approve the code amendment. This amendment is currently scheduled for a public hearing before the Council on September 27, 2022.
City of Indian Wells, CA
The City of Indian wells does not currently regulate fractional housing but has received complaints from residents regarding impacts being created. The City Council discussed the matter on May 19, 2022, at which time the City Council was split if fractional housing constituents a timeshare or not. They expressed concerns about taking legal action on the fractional ownership companies due to the ongoing litigation in other jurisdictions. The City Council directed the City Attorney to return with options for them to consider on how to proceed. At this time, it is not known when this discussion will be taken back to the City Council.
County of Monterey, CA
Within areas of Monterey County that fall under the County's zoning jurisdiction, fractional ownerships are classified as timeshares. Pursuant to the Monterey County Municipal Code, timeshare projects are only allowed in zones where a hotel, motel, or similar visitor accommodation use would be permitted, and in such cases a Use Permit or a Coastal Development Permit would be required.
Monterey County is aware of certain homes advertised as fractional housing that are located in the Carmel Highlands and the Del Monte Forest. Both areas are within the County`s zoning jurisdiction and are within residential zones. Monterey County has issued a cease -and -desist order (Appendix F), ordering Pacaso to stop all advertising and sale of fractional ownership of residential properties within these areas and will proceed through its code enforcement authority to obtain compliance.
City of Napa, CA
The City of Napa does not have an ordinance regulating fractional ownership citywide but does have a Master Development Plan (MDP) for the Stanly Ranch area. This MDP requires fractional ownership properties to pay a transient oriented tax for stays more than 14 days, but research indicates that no fractional ownership property has paid the TOT. In 2021, the City Council conducted a hearing to discuss the matter, during which residents complained of not wanting their neighborhoods to turn into a business venture for the wealthy. There has been no further discussion regarding fractional ownership.
FRACTIONAL HOUSING
C ty of Newport Beau
552-92
3-36
Village of North Haven, NY
The Board of Trustees of the Village of North Haven enacted a prohibition on fractional ownership, timesharing, and interval uses in single-family homes in January 2022 (Appendix G). The Board found that the needs of transients are adverse to the interest that protect and preserve single-family homes.
Furthermore, the prohibition was deemed necessary to prevent the unwarranted commercialization of residential areas. In a discussion with the Town staff, the ordinance would be enforced through code enforcement if they receive a complaint, but they were unable to confirm if action had been taken on any existing units.
City of Oceanside, CA
The City of Oceanside is not aware of any specific issues surrounding single-family homes used as fractional ownerships. The City does allow fractional ownership in their Downtown District as it pertains to traditional timeshare listings, provided a Conditional Use Permit is approved for the use. Given that most of these fractional ownership listings resemble short-term rental models, staff would consider fractional housing has short-term rentals in single-family homes, which would require the issuance of a short-term rental permit.
City of Pacific Grove, CA
Currently the City of Pacific Grove prohibits timeshares throughout the City. The City Council accepted public comment on fractional housing and timeshares on May 18, 2022, at the conclusion of which the Council directed staff to review the City's current timeshare ordinance and recommend changes to better effectuate the City's prohibition of timeshare projects, including fractional housing. The City anticipates having the draft ordinance to their Planning Commission in October 2022 and to the City Council by the end of year.
City of Palm Desert, CA
In November 2021, the City Council discussed the emergence of fractional ownership businesses within the City. In the Staff Report, the City Attorney opined that the fractional homeownership "model fits within that definition of "time- share plan" as co -owners receive ownership right's to use a property for less than a year on a recurring basis" (Appendix H). The City only allows timeshares in the Planned Residential, General Commercial, and Planned Commercial Resort zones. On May 12, 2022, the City Council adopted an ordinance updating the timeshare provisions of the Palm Desert Municipal Code. The updates include expanding the definition of timeshare that includes the shared use of any property, where the owners have the right of occupancy for less than full year during any given year. The ordinance also established enforcement procedures for violations of the timeshare ordinance.
City of Palm Springs, CA
The City of Palm Springs regulates where timeshares can be located within the City and taxes occupancy of timeshares. Timeshares are only permitted in zoning districts where hotel uses are permitted and with approval of a Conditional Use Permit. Notably, timeshares are not permitted in single-family zones.
Furthermore, the City's business license ordinance requires any party that is transacting any business within the City to first procure a business license and pay the applicable business license tax.
Although the fractional ownership companies claim that they only purchase and sell luxury homes, and therefore they do not impact the availability of affordable housing. However, the City believes the basic laws of supply and demand dictate that every home that is made unavailable to a full-time resident,
FRACTIONAL HOUSING
City of Newport Beach
SS2-13
3-37
whether "luxury" or not, necessarily reduces the supply of homes, and therefore reduces the affordability of housing in the City. In addition to the loss of housing, fractional ownership companies who involve multiple investors will result in their guests rotating the occupancy of the dwelling throughout the year.
Although the fractional owners are not technically renters, the City believes the neighbors can expect the property to have many of the same secondary impacts that are caused by vacation rentals.
The City of Palm Springs has issued a cease -and -desist order (Appendix 1), ordering Pacaso to stop all advertising and sale of fractional ownership of residential properties within the City and will proceed through its code enforcement authority to obtain compliance.
City of Park City, UT
Park City, Utah allows fractional ownership in single-family homes provided the ownership obtains approval of a Conditional Use Permit. The areas in which the City allows fractional ownership are identified in the City's General Plan and consists of areas that support the resort economy. These are the same areas that allow timeshares and private residential clubs. The fractional ownership properties must comply with specific prohibitions such as on -street parking, nightly rentals, the outdoor display of goods and merchandise, and signage. Additionally, the fractional housing must obtain approval of a management plan that outlines a satisfactory level of management and maintenance of the fractional housing.
The City is currently preparing a code amendment which would prohibit fractional ownership in most single-family zones. The amendments would allow fractional housing in zones where timeshares and private residential clubs are currently permitted. The amendment would also require a business license for fractional ownerships, submittal of a management plan, and prohibition of nightly rentals, on -street parking, outdoor display of goods, signs, and commercial uses (Appendix J). On August 30, 2022, the Planning Commission and City Council are scheduled to conduct a joint work session on the proposed amendments.
City of Santa Barbara, CA
The City of Santa Barbara does not have any regulation for fractional ownership. The City has received complaints regarding fractional housing in single-family residential area. The Planning Commission and City Council have conducted hearings on the matter but have not given staff direction for future research to regulate these ownerships.
City of Santa Cruz, CA
Even with fractional homes being offered within city limits, City staff was not aware of this type of ownership model. The City does not currently regulate fractional ownership or timeshares.
Notwithstanding this, the City Council has placed a ballot initiative on the November election to establish a tax on residential properties that are occupied less than 120-days a year (Appendix K).
City of South Lake Tahoe, CA
The City stated that a property sale or deed that results ownership rights in or the right to use accommodations for a period of time less than full year during any given year is considered timeshare.
Even though timeshares ten or fewer units are not subject to the Vacation Ownership and Timeshare Act of 200411, they are still subject to local authority. In fact, Section 11280(b) of the Business and Professions 10 California Business and Professions Code §§1121-11288
FRACTIONAL HOUSING
City of New- port Beach SS2-94
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Code expressly preserves the authority of local jurisdictions to regulate timeshares through "zoning, subdivision, or building code or other real estate use law, ordinance, or regulation." South Lake Tahoe has issued a cease -and -desist order (Appendix L), ordering Pacaso to stop all advertising and sale of fractional ownership of residential properties within the City until such time they comply with the City's timeshare ordinance.
City of Sonoma, CA
On January 19th, 2022, the Sonoma City Council voted unanimously to adopt an urgency ordinance to prohibit timeshares and fractional housing. The Council adopted the urgency ordinance due to concerns that these uses threaten to reduce the housing supply in the City by turning long-term housing in the City into vacation rentals and reducing the affordable housing stock in the City. Furthermore, there are concerns that timeshare and fractional housing interest uses increase traffic and noise impacts as they have the same character as commercial hotels, motels, and other transient occupancy uses making them inappropriate for residential zones. On June 15, 2022, the Sonoma City Council adopted an ordinance (Appendix M) to amend the code to prohibit all timeshares and fractional housing in the City.
City of St. Helena, CA
Within St. Helena, timeshares are only permitted in Service Commercial District and Central Business District. The City Council recently updated the timeshare ordinance to specifically prohibit co -ownership of residential properties (Appendix N). The ordinance updated the definition of a timeshare to broaden its applicability to incorporate fractional housing and limits timeshares uses to their Service Commercial and Central Business District zone. The ordinance also bolsters the City's enforcement authority by including a specific prohibition on timeshare uses in most zones, but also outlines the enforcement process and mechanisms. The enforcement provision was modeled after the City's short-term rental ordinance to which they note has been very effective.
It is important to note that Pacaso filed a lawsuit against the City in federal court11 (Appendix 0). Pacaso seeks to stop the City from enforcing their timeshare ordinance against Pacaso and other fractional ownership properties because they feel the timeshare ordinance is invalid and enforcement of said ordinance violates the fractional homeowners and Pacaso's due process protection afforded by the 141n amendment to the U,S. Constitution. Pacaso had also claimed that the City's enforcement actions constituted an intentional interference with prospective economic advantage; however, the Court rejected this portion of the claim, The lawsuit remains pending.
Town of Truckee, CA
In May 2022 the Town of Truckee adopted a general zoning code cleanup ordinance (Appendix P). Among the various amendments included in the ordinance, the Town Council approved changes to the Town's timeshare uses. This includes outlining the application process, development standards and enforcement and violation protocols fortime-share uses; as well as clarifying that timeshare properties are only allowed within existing legal nonconforming single-family residences in the CG (General Commercial) and CN (Neighborhood Commercial) zones.
tt Pacaso Inc_ v. City of St. Helena, 21-cv-02493-WHO (N.D. Cal. Jul. 15, 2021)
FRACTIONAL HOUSING
pity of Ne port Roach
SS2-15
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City of Vail, CO
The City does not have regulations regarding fractional ownership. Explaining the concerns of the business model, the City Attorney would agree it resembles a timeshare model but does not see how any City ordinance would be able to regulate it since it is the ownership of a property rather than a use in a portion of a building.
APPENDICES
FRACTIONAL HOUSING
-10-
SS2-9 6
3-40
Appendix A — Pacaso Economic Impact Analysis, prepared by EBP
FRACTIONAL HOUSING
-Al-
3-41
Exhibit K
City of Carmel -by -the Sea Time Share Ordinance and Supporting Evidence 3-42
4/27/23, 9:01 AM Coversheet
,�6`t-Tkf-SF
CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL
Zo
Staff Report
February 7, 2023
PUBLIC HEARINGS
TO:
Honorable Mayor and City Council Members
SUBMITTED BY:
Brandon Swanson, Community Planning & Building Director APPROVED BY:
Chip Rerig, City Administrator
Consider Ordinance No. 2022-007 (first reading) amending Carmel Municipal Code (CMC) Sections
17.14.040, 17.28,010, and 17.70.020, to prohibit timeshare and fractional interest uses, as well as SUBJECT:
advertising and sale thereof, in a manner fully in conformity with the California Coastal Act (CA Section 30510) - Continued from December fi, 2022, and January 10, 2023
1. Request the City Attorney to read the title of Ordinance 2022-007.
2. Waive further reading and introduce draft ordinance 2022-007 amending Carmel municipal code (CMC) sections 17.14.040,
17.28,010, and 17.70.020, to prohibit timeshare and fractional interest uses, as well as advertising and sale thereof, in a manner fully in conformity with the California Coastal Act (CA section 30510).
EXECUTIVE SUMMARY
The Carmel -by -the -Sea Municipal Code prohibits timeshares. The proposed ordinance confirms the existing prohibition of time shares, and adds new prohibitions with respect to advertisement and sale of timeshares and fractional interest ownerships. The City's Planning Commission has recommended adoption of these amendments, with an additional recommendation for Council to have a policy level discussion in the future about whether or not timeshares should continue to be prohibited in the Village.
BACKGROUND
Existing provisions of the Carmel -by -the -Sea Municipal Code prohibit timeshare uses. Specifically, timeshares are prohibited in all zoning districts of the City, and are defined in Section 17.28.010 to include any land use that is a "timeshare project", "time share program," or "time share occupancy." These are defined in Section 17.70.020 as follows:
Time -Share Occupancy. An occupancy related to the situation wherein a purchaser receives the right or entitlement in perpetuity, for life, or for a term of years or other extended term, to the recurrent, exclusive use or occupancy of a lot, parcel, unit, room(s), hotel or portion thereof, or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy periods into which the time-share project which is involved has been divided. The right or entitlement to occupancy may attach in advance to a specific lot, parcel, unit, room(s) or portion of a hotel, or segment of real property, or may involve designation or selection of the same at a future time or times, Time -Share Prograin. Any arrangement for a project whereby the use, occupancy, or possession of real property has been made subject to a time-share estate, use, or occupancy, whereby such use, occupancy, or possession circulates among purchasers of the time-share intervals according to a fixed or floating time schedule on a periodic basis for a specific period of time during any given year, but not necessarily for consecutive years.
Time -Share Project. A project in which a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel, unit, or segment of real property, annually or on some other periodic basis, for a period of time that has been or will be allotted for the use or occupancy periods into which the project has been divided.
As a result of recent enforcement efforts related to timeshares, City staff have reviewed the existing city code provisions and recommend that they be revised to confirm the existing prohibition, and additionally, that new prohibitions be added with respect to advertisement and sale of timeshares and fractional interest ownerships, which are treated identically under the existing City code.
On October 12th, 2022, the Planning Commission was presented these draft amendments, and received testimony from the public.
Following discussion, the Commission approved a resolution recommending that the City Council adopt the ordinance as drafted by staff. The Commission also crafted an additional recital recommending that Council have a policy discussion in the near future to explore whether or not timeshares should still be prohibited in the City of Carmel -by -the -Sea. This additional recommendation arose from deliberations during the hearing, in which the Commissioners discussed the number of vacant homes in the Village and whether https:llcarmel.novusagenda.com/agendapublic/CoverSheet.aspx?ItemID=4958&Meeting[D=1340 1 /2 3-43
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Coversheet
a form of timeshare use could present a solution to filling them. The Commission's additional recommendation is for Council to hold a separate hearing in the near future to have a policy level discussion and decide whether or not to refer an item back to the Planning Commission to remove or modify the prohibition on timeshares in Carmel -by -the -Sea.
STAFF ANALYSIS
The changes proposed by the ordinance include:
Section 17.70.020 is modified to simplify the City's existing definitions with respect to timeshares. The City's existing definitions include definitions of time-share estate, time-share use, time-share occupancy, and time-share property, which are based on similar definitions in state law (the Vacation Ownership and Time -Share Act of 2004, as set forth in Business and Professions Code section 11210 et seq.). However, the existing definitions with respect to timeshares in 17.70.020 are multiple and reference each other, and introduce unnecessary complexity into the City's zoning regulations. While not a substantive change in the scope of the City's regulations, the proposed ordinance would simplify definitions to prohibit the use of real property under a "time-share plan."
The definition of "time-share plan" would mean "any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right to use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years," The code would specify that a time share plan exists "whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are a result of a grant of ownership rights, possessory rights, membership rights, rights pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the properly subject to the time-share plan."
The code would be revised to make clear that a prohibited timeshare is created whenever any right is established for exclusive use of the property that is periodic on a recurring basis, regardless of the form. The definition of "timeshare plan" would now specifically mention that fractional ownership is one way a timeshare can be created, which is also not a substantive change. "Time-share use" and "fractional interest use" are defined to mean exactly same thing, so that it is clear to all potential violators that there is no difference between a fractional interest use and a timeshare use.
17.14.040, prohibiting timeshares in commercial zones, is modified to use the updated definitions. • 17.28.010.A, prohibiting timeshares in all city zoning districts, is updated to use the updated definitions. Additional subsections are added to this section to make advertisement of timeshares subject to criminal penalties as well as the City's administrative civil penalty process. The code also specifies that each day a violation occurs is a separate offense, for purposes of deterring violations by increasing the visibility of potential consequences.
While the existing municipal code prohibits fractionalized interest ownership, as a timeshare is created based on the allocation of exclusive rights of use to real property, the proposed code amendments would clarity the prohibition and strengthen enforcement efforts.
Additionally, the proposed ordinance would expressly prohibit the advertisement and sale of timeshares and fractional interest uses; this would allow for proactive enforcement by the City against those involved in the creation, advertisement, and sale of such prohibited land uses, rather than just the purchaser or owner of a timeshare or fractional interest use.
The staff time associated with processing this ordinance amendment is captured in the FY2022/2023 Community Planning and Building Budget, None.
Attachment 11 PC Resolution 2022-0313-PC Recommending Approval Attachment 2) Draft Ord. 2022-007 REDLINE
Attachment 3) Draft Ord. 2022.007 CLEAN
https:ucannel.novusagenda. coralagendapubliclCoverSheet.aspx?ltemlD=4958&MeetingID=1340 2/2 3-44
CITY OF CARM EL -BY -THE -SEA
PLANNING COMMISSION
RESOLUTION NO.2022-036-PC
A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA
RECOMMENDING CITY COUNCIL ADOPT ORDINANCE AMENDING MUNICIPAL CODE SECTIONS
17.14.040, 17.28.010, AND 17.70.020, TO PROHIBIT TIMESHARE AND FRACTIONAL INTEREST
USES, AS WELL AS ADVERTISING AND SALE THEREOF
WHEREAS, existing provisions of the Carmel -by -the -Sea Municipal Code prohibit timeshare uses. Specifically, timeshares are prohibited in all zoning districts of the City, and regulated by Sections 17,28.010, 17.70.020 and 17.14.040; and WHEREAS, as a result of enforcement efforts, City staff have reviewed the existing city code provisions and recommend that they be revised to confirm the existing prohibition, and additionally, that new prohibitions be added with respect to advertisement and sale of timeshares and fractional interest ownerships, which are treated identically under the existing City code; and
WHEREAS, notice of a public hearing of the Planning Commission was published on September 301h, 2022 in compliance with State law (California Government Code 65091); and WHEREAS, on October 12, 2022, the Planning Commission held a public hearing to consider draft Ordinance 2022-007 amending regulations pertaining to timeshares and receive public testimony, including without limitation, information provided to the Planning Commission by City staff and through public testimony; and
WHEREAS, the Planning Commission found that the draft Ordinance 2022-007 was consistent with the City's General Plan, Local Coastal Plan, and all other relevant City and State codes and regulations.
WHEREAS, the California Environmental Quality Act (California Public Resources Code §§ 21000, et seq., "CEQA"), together with State Guidelines (14 California Code Regulations §§ 15000, et seq., the "CEQA Guidelines") and City Environmental Regulations (CMC 17.60) require the review of certain projects for environmental impacts and preparation of environmental documents; and
WHEREAS, the Planning Commission finds that pursuant to CEQA regulations, the project will have no impact on the environment and is not considered a project requiring compliance with the California Environmental Quality Act (Section 21065 of the California Public Resources Code); and
WHEREAS, the facts set forth in the recitals are true and correct and are incorporated herein by reference.
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NOW, THEREFORE, BE IT RESOLVED, THAT THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA DOES HEREBY recommend the City Council amend municipal code sections
17.14.040, 17.28.010, and 17.70.020, to prohibit timeshare and fractional interest uses, as well as advertising and sale thereof and adopt the Update in a manner fully in conformity with the Coastal Act (CA Section 30510).
BE IT FURTHER RESOLVED, THAT THE PLANNING COMMISSION OF THE CITY OF CARMEL- BY-THE-SEA DOES ALSO recommend the City Council hold a separate hearing in the near future to have a policy level discussion and decide whether or not to refer an item back to the Planning Commission to remove or modify the prohibition on timeshares in Carmel -by -the -Sea.
PASSED, APPROVED, AND ADOPTED BY THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA this 12th day of October, 2022, by the following vote:
AYES: Delves, Allen, Bolton, LePage, Locke
NOES:
ABSENT:
ABSTAIN:
APPROVED:
Michael LePage, Chair
ATTEST:
Leah Young, Planning Commission Secretary
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CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL
ORDINANCE NO, 2022-007
AN ORDINANCE AMENDING THE CARMEL-BY-THE-SEA MUNICIPAL CODE TO
PROHIBIT TIMESHARE AND FRACTIONAL INTEREST USES, AS WELL AS
ADVERTISING AND SALE THEREOF IN A MANNER FULLY IN CONFORMITY WITH THE COASTAL ACT (CA PUBLIC RESOURCES CODE SECTION 30510 ET SEQ.) WHEREAS, timeshares involve the division of the exclusive rights to use, possess, and occupy any real property between multiple persons, pursuant to a fixed or floating time schedule; and
WHEREAS, since at least 1988, the City of Carmel -by -the -Sea has prohibited the establishment of timeshares within the City; and
WHEREAS, the Housing Element of the City's General Plan specifically recognizes that the City seeks to protect the stability of residential neighborhoods by promoting year-round occupancy, and to avoid depletion of residents and associated impacts on the community, City services, Goal G3-4 of the City's Housing Element specifically requires the enforcement of the prohibitions on short-term, transient rentals and timeshares in residential dwellings; and WHEREAS the Planning Commission of the City of Carmel -by -the -Sea reviewed the ordinance, and on October 12 2022 determined the ordinance was consistent with the City's General Plan Local Coastal Plan and all other relevant City and State codes and re uiaticns, and having reviewed the Planning Commsssion's recommendations and the relevanl nrovissons of the General Plan. the Citv Council finds that the ordinance is consistent with the City's General Plan, and
WHEREAS, recent increases in the development and sale of fractional interest ownerships have made it appropriate for the City to revisit its municipal code to clarify that fractional interest ownerships are prohibited timeshares and to also expressly prohibit the advertising and sale of prohibited timeshares and fractional interest uses.
WHEREAS, notice of the public hearing was published on November 25, 2022 in compliance with State law (California Government Code 65091), indicating the date and time of the public hearing; and
WHEREAS, on December 6, 2022, the City Council opened the a public hearing to receive public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony, and continued the hearing to a date certain of January 10, 2023; and
WHEREAS. on January 10, 2023 the City Council re -convened the PUblic hearing to receive further public testimony regarding the draft ordinance inclucljnq without limitation information provided by City staff and public testimony; and OAK 44875-3304-401? v?
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WHEREAS, this decision is made based upon evidence presented to the City Council at its December 6, 2022 and January 11 2023 hearings including, without limitation, the staff report submitted by the Community Planning and Building Department and public testimony; and
WHEREAS, the City Council did hear and consider all said reports, recommendations, attachments and testimony herein above set forth and used their independent judgement to evaluate the ordinance; and
WHEREAS, the proposed amendments are in full conformity with the City's Local Coastal Plan and the California Coastal Act (GA Public_ Resources Code Section 30510 ei �e
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DOES ORDAIN AS FOLLOWS:
SECTION 1, CEQA Review. The City Council exercises its independent judgment and finds that this ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to the State CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, Sections. 15060(c)(2), because the proposed ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment; 15061(b)(3) because the proposed ordinance is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment; and 15308 because the proposed ordinance involves regulatory actions to assure protection of the environment. Therefore, the adoption of this ordinance is exempt from CEQA and no further environmental review is necessary.
SECTION 2. Amendment to the CIVIC.
1, Subsection A of Section 17.14.040 is amended and restated as follows:
17.14.040 Additional Use Regulations.
A. All Uses.
1. No new structure or modification to an existing structure shall be permitted nor shall any business license be issued that would allow the creation of publicly accessible retail space occupying fewer than 200 square feet or more than 5,000 square feet unless approved through a use permit and pursuant to the adoption of findings per CIVIC
17.64.200, Retail Space of Less Than 200 Square Feet or Greater Than 5,000 Square Feet.
2. No timeshare uses or fractional interest uses shall be established or permitted in any zone.
3. Except in restaurants, not more than five persons in any one individually licensed business shall be engaged in the production, repair or manufacturing of goods.
4. No use shall be permitted and no process, equipment, or materials shall be employed which is found by the Planning Director or by the Planning Commission to be OAK 418 75-330 4--40l _2 v?
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objectionable to persons residing or working in the vicinity by reason of odor, fumes, noise, vibration, illumination, glare, unsightliness, dust, cinders, dirt, refuse, water - carried wastes or heavy truck traffic, or involve any hazard of fire or explosion.
2. Section 17.28,010 is amended and restated as follows:
17.28.010 Timeshare and Fractional Interest Uses.
A. Timeshare uses and fractional interest uses are prohibited uses within all of the zoning districts within the City.
B. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.16 (General Penalty).
C. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is subject to administrative fines and/or penalties as set forth in Chapter 18.04 (Municipal Code and Ordinance Enforcement).
D. Each day a violation of this section occurs shall constitute a separate offense, and the remedies under this section are cumulative and in addition to any and all other remedies available at law and equity.
3. "Time -Share Definitions" of Section 17.70,020 is amended to repeal the definitions of "Time -Share Estate," "Time -Share Occupancy," "Time -Share Program," "Time -Share Project," and "Vacation -Time Sharing Project," and restated to enact the definitions of "Time -Share Plan," "Time -Share Use" and "Fractional Interest Use" to read as follows:
17.70.020 Definitions.
The words, terms, and phrases defined in this chapter shall, for all purposes connected with this title, be construed as having the meanings respectively set forth in this chapter.
Time -Share Definitions.
"Time -Share Plan" means any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right -to -use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A timeshare plan shall be deemed to exist whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are OAT{ 94675-3304-4012 v2
3-49
a result of a grant of ownership rights, possessory rights, membership rights, rights pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time-share plan. "Time -Share Use" and "Fractional Interest Use" means the use of real property or any part thereof, pursuant to a timeshare plan.
SECTION 3. Severability. If any section, subsection, phrase, or clause of this ordinance is for any reason held to be unconstitutional, such a decision shall not affect the validity of the remaining portions of this ordinance.
The City Council hereby declares that it would have passed this Ordinance and each section, subsection, phrase, or clause thereof irrespective of the fact that any one or more sections, subsections, phrases, or clauses be declared unconstitutional.
SECTION 4. Publication, The City Clerk shall publish or post this ordinance in the manner required by law.
SECTION 5. Effective Date. This ordinance shall be effective 30 days after its adoption and after approval by the California Coastal Commission.
PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE- SEA this XX day of XX 2022, by the following vote:
AYES'
NOES:
ABSENT:
ABSTAIN:
APPROVE:
ATTEST:
Dave Potter, Mayor Nova Romero, MMC, City Clerk
OAk 4 4573-3304-4U 1 v'
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CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL
ORDINANCE NO-. 2022-007
AN ORDINANCE AMENDING THE CARMEL-BY-THE-SEA MUNICIPAL CODE TO
PROHIBIT TIMESHARE AND FRACTIONAL INTEREST USES, AS WELL AS
ADVERTISING AND SALE THEREOF IN A MANNER FULLY IN CONFORMITY WITH THE COASTAL ACT (PUBLIC RESOURCES CODE SECTION 30510 ET SEQ.) WHEREAS, timeshares involve the division of the exclusive rights to use, possess, and occupy any real property between multiple persons, pursuant to a fixed or floating time schedule; and
WHEREAS, since at least 1988, the City of Carmel -by -the -Sea has prohibited the establishment of timeshares within the City; and
WHEREAS, the Housing Element of the City's General Plan specifically recognizes that the City seeks to protect the stability of residential neighborhoods by promoting year-round occupancy, and to avoid depletion of residents and associated impacts on the community, City services, Goal G3-4 of the City's Housing Element specifically requires the enforcement of the prohibitions on short-term, transient rentals and timeshares in residential dwellings; and WHEREAS, the Planning Commission of the City of Carmel -by -the -Sea reviewed the ordinance, and on October 12, 2022, determined the ordinance was consistent with the City's General Plan, Local.Coastal Plan, and all other relevant City and State codes and regulations, and having reviewed the Planning Commission's recommendations and the relevant provisions of the General Plan, the City Council finds that the ordinance is consistent with the City's General Plan; and
WHEREAS, recent increases in the development and sale of fractional interest ownerships have made it appropriate for the City to revisit its municipal code to clarify that fractional interest ownerships are prohibited timeshares and to also expressly prohibit the advertising and sale of prohibited timeshares and fractional interest uses.
WHEREAS, notice of the public hearing was published on November 25, 2022 in compliance with State law (California Government Code 65091), indicating the date and time of the public hearing; and
WHEREAS, on December 6, 2022, the City Council opened the public hearing to receive public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony, and continued the hearing to a date certain of January 10, 2023; and
WHEREAS, on January 10, 2023, the City Council re -convened the public hearing to receive further public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony; and OAK P4875-3304-4012 v2
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WHEREAS, this decision is made based upon evidence presented to the City Council at its December 6, 2022 and January 10, 2023 hearings including, without limitation, the staff report submitted by the Community Planning and Building Department and public testimony; and
WHEREAS, the City Council did hear and consider all said reports, recommendations, attachments and testimony herein above set forth and used their independent judgement to evaluate the ordinance; and
WHEREAS, the proposed amendments are in full conformity with the City's Local Coastal Plan and the California Coastal Act (Public Resources Code Section 30510 et seq.)
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DOES ORDAIN AS FOLLOWS:
SECTION 1. CEQA Review. The City Council exercises its independent judgment and finds that this ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to the State CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, Sections. 15060(c)(2), because the proposed ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment; 15061(b)(3) because the proposed ordinance is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment; and 15308 because the proposed ordinance involves regulatory actions to assure protection of the environment. Therefore, the adoption of this ordinance is exempt from CEQA and no further environmental review is necessary.
SECTION 2. Amendment to the CIVIC.
1. Subsection A of Section 17.14.040 is amended and restated as follows:
17.14.040 Additional Use Regulations.
1. No new structure or modification to an existing structure shall be permitted nor shall any business license be issued that would allow the creation of publicly accessible retail space occupying fewer than 200 square feet or more than 5,000 square feet unless approved through a use permit and pursuant to the adoption of findings per CIVIC
17.64.200, Retail Space of Less Than 200 Square Feet or Greater Than 5,000 Square Feet.
2. No timeshare uses or fractional interest uses shall be established or permitted in any zone.
3. Except in restaurants, not more than five persons in any one individually licensed business shall be engaged in the production, repair or manufacturing of goods.
4. No use shall be permitted and no process, equipment, or materials shall be employed which is found by the Planning Director or by the Planning Commission to be objectionable to persons residing or working in the vicinity by reason of odor, fumes, OAK 44875-3304-4012 W2.
3-52
noise, vibration, illumination, glare, unsightliness, dust, cinders, dirt, refuse, water - carried wastes or heavy truck traffic, or involve any hazard of fire or explosion.
2. Section 17.28.010 is amended and restated as follows:
17.28.010 Timeshare and Fractional Interest Uses.
A. Timeshare uses and fractional interest uses are prohibited uses within all of the zoning districts within the City.
B. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.16 (General Penalty).
C. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is subject to administrative fines and/or penalties as set forth in Chapter 18.04 (Municipal Code and Ordinance Enforcement).
D. Each day a violation of this section occurs shall constitute a separate offense, and the remedies under this section are cumulative and in addition to any and all other remedies available at law and equity.
3. "Time -Share Definitions" of Section 17.70.020 is amended to repeal the definitions of "Time -Share Estate," "Time -Share Occupancy," "Time -Share Program," "Time -Share Project," and "Vacation -Time Sharing Project," and restated to enact the definitions of "Time -Share Plan," "Time -Share Use" and "Fractional Interest Use" to read as follows:
17.70.020 Definitions.
The words, terms, and phrases defined in this chapter shall, for all purposes connected with this title, be construed as having the meanings respectively set forth in this chapter.
Time -Share Definitions.
"Time -Share Plan" means any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right -to -use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A timeshare plan shall be deemed to exist whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are a result of a grant of ownership rights, possessory rights, membership rights, rights OAK 94875-3304-4012 v2
3-53
pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time-share plan. "Time -Share Use" and "Fractional Interest Use" means the use of real property or any part thereof, pursuant to a timeshare plan.
SECTION 3. Severability. If any section, subsection, phrase, or clause of this ordinance is for any reason held to be unconstitutional, such a decision shall not affect the validity of the remaining portions of this ordinance.
The City Council hereby declares that it would have passed this Ordinance and each section, subsection, phrase, or clause thereof irrespective of the fact that any one or more sections, subsections, phrases, or clauses be declared unconstitutional.
SECTION 4. Publication. The City Clerk shall publish or post this ordinance in the manner required by law.
SECTION 5. Effective Date. This ordinance shall be effective 30 days after its adoption and after approval by the California Coastal Commission.
PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE- SEA this XX day of XX 2022, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
APPROVE:
ATTEST:
Dave Potter, Mayor Nova Romero, MMC, City Clerk
OAK 94875-3304-4012 v2
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Coversheet
TQ:
SUBMITTED BY:
APPROVED BY
SUBJECT:
CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL
Staff Report
March 7, 2023
ORDERS OF BUSINESS
Honorable Mayor and City Council Members
Brandon Swanson, Community Planning & Building Director Chip Rerig, City Administrator
Second Reading and Adoption of Ordinance No. 2022-007 - Amending Carmel Municipal Code (CMC) Sections 17.14.040, 17.28.010, and 17.70.020, to prohibit timeshare and fractional interest uses, as well as advertising and sale thereof, in a manner fully in conformity with the California Coastal Act (CA Section 30510)
1. Request the City Attorney to read the title of Ordinance 2022-007.
2. Waive further reading and ADOPT ordinance 2022-007 amending Carmel municipal code (CMC) sections 17.14.040, 17.28.010, and 17.70.020, to prohibit timeshare and fractional interest uses, as well as advertising and sale thereof, in a manner fully in conformity with the California Coastal Act (CA section 30510).
EXECUTIVE SUMMARY
The Carmel -by -the -Sea Municipal Code prohibits timeshares. The proposed ordinance confirms the existing prohibition of time shares, and adds new prohibitions with respect to advertisement and sale of timeshares and fractional interest ownerships. The City's Planning Commission has recommended adoption of these amendments, with an additional recommendation for Council to have a policy level discussion in the future about whether or not timeshares should continue to be prohibited in the Village.
BACKGROUND
Existing provisions of the Carme[-by-the-Sea Municipal Code prohibit timeshare uses. Specifically, timeshares are prohibited in all zoning districts of the City, and are defined in Section 17.28.010 to include any land use that is a "timeshare project", "time share program," or "time share occupancy." These are defined in Section 17.70.020 as follows:
Time -Share Occupancy. An occupancy related to the situation wherein a purchaser receives the right or entitlement in perpetuity, for life, or for a term of years or other extended term, to the recurrent, exclusive use or occupancy of a lot, parcel, unit, room(s), hotel or portion thereof, or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy periods into which the time-share project which is involved has been divided. The right or entitlement to occupancy may attach in advance to a specific lot, parcel, unit, room(s) or portion of a hotel, or segment of real property, or may involve designation or selection of the same at a future time or times, Time -Shale Program. Any arrangement for a project whereby the use, occupancy, or possession of real property has been made subject to a time-share estate, use, or occupancy, whereby such use, occupancy, or possession circulates among purchasers of the time-share intervals according to a fixed or Floating time schedule on a periodic basis for a specific period of time during any given year, but not necessarily for consecutive years.
Time -Share Project. A project in which a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel, unit, or segment of real property, annually or on some other periodic basis, for a period of time that has been or will be allotted for the use or occupancy periods into which the project has been divided.
As a result of recent enforcement efforts related to timeshares, City staff have reviewed the existing city code provisions and recommend that they be revised to confirm the existing prohibition, and additionally, that new prohibitions be added with respect to advertisement and sale of timeshares and fractional interest ownerships, which are treated identically under the existing City code.
On October 12th, 2022, the Planning Commission was presented these draft amendments, and received testimony from+ the public.
Following discussion, the Commission approved a resolution recommending that the City Council adopt the ordinance as drafted by staff. The Commission also crafted an additional recital recommending that Council have a policy discussion in the near future to explore whether or not timeshares should still be prohibited in the City of Carmel -by -the -Sea. This additional recommendation arose from deliberations during the hearing, in which the Commissioners discussed the number of vacant homes in the Village and whether https:licarmel.nGvusagenda.com/agendapublic/CoverSheet.aspx?ltemlD=5020&Meetingl❑=1341 IFA
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4/27/23, 9:03 AM
Coversheet
a form of timeshare use could present a solution to filling them. The Commission's additional recommendation is for Council to hold a separate hearing in the near future to have a policy level discussion and decide whether or not to refer an item back to the Planning Commission to remove or modify the prohibition on timeshares in Carmel -by -the -Sea.
STAFF ANALYSIS
The changes proposed by the ordinance include:
• Section 17.70.020 is modified to simplify the City's existing definitions with respect to timeshares. The City's existing definitions include definitions of time-share estate, time-share use, time-share occupancy, and time-share property, which are based on similar definitions in state law (the Vacation Ownership and Time -Share Act of 2004, as set forth in Business and Professions Code section 11210 et seq.). However, the existing definitions with respect to timeshares in 17.70.020 are multiple and reference each other, and introduce unnecessary complexity into the City's zoning regulations. While not a substantive change in the scope of the City's regulations, the proposed ordinance would simplify definitions to prohibit the use of real property under a "time-share plan."
• The definition of "time-share plan" would mean "any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right to use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years." • The code would specify that a time share plan exists "whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are a result of a grant of ownership rights, possessory rights, membership rights, rights pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time-share plan."
• The code would be revised to make clear that a prohibited timeshare is created whenever any right is established for exclusive use of the property that is periodic on a recurring basis, regardless of the form. The definition of "timeshare plan" would now specifically mention that fractional ownership is one way a timeshare can be created, which is also not a substantive change. "Time-share use" and "fractional interest use" are defined to mean exactly same thing, so that it is clear to all potential violators that there is no difference between a fractional interest use and a timeshare use, • 17.14.040, prohibiting timeshares in commercial zones, is modified to use the updated definitions. • 1728.010.A, prohibiting timeshares in all city zoning districts, is updated to use the updated definitions. Additional subsections are added to this section to make advertisement of timeshares subject to criminal penalties as well as the City's administrative civil penalty process. The code also specifies that each day a violation occurs is a separate offense, for purposes of deterring violations by increasing the visibility of potential consequences.
While the existing municipal code prohibits fractionalized interest ownership, as a timeshare is created based on the allocation of exclusive rights of use to real property, the proposed code amendments would clarify the prohibition and strengthen enforcement efforts.
Additionally, the proposed ordinance would expressly prohibit the advertisement and sale of timeshares and fractional interest uses; this would allow for proactive enforcement by the City against those involved in the creation, advertisement, and sale of such prohibited land uses, rather than just the purchaser or owner of a timeshare or fractional interest use.
During the February 7, 2023 discussion on this item, the City Council directed staff to Inquire with appropriate Monterey County offices about the tax implications of a Limited Liability Corporation (LLC) owning and disposing of fractional ownership interests.
Monterey County Counsel advised that reassessment of fractional ownership real property interests in an LLC does not occur until transfer of 50 percent or more of said interests occurs. Reporting of such is incumbent on the LLC tiling appropriate documentation with the Internal Revenue Service which, in turn, relays such information to a state's real property taxing authority (a County in the case of the State of California).
The staff time associated with processing this ordinance amendment is captured in the FY2022/2023 Community Planning and Building Budget, Ordinance 2022-007 was introduced (first reading) on February 7, 2023 at a Regular City Council Meeting Attachment 1) PC Resolution 2 22-036-PC Recommending Approval Attachment 2) Draft Ord. 2022-007 REDLINE
Attachment 3) Draft Ord. 2022.007 CLEAN
https:llcarmel.novusagenda.com/agendapublic/Coversheet_aspx?ItemID=5020&MeetingID=1341 2/2 3-56
CITY OF CARMEL-BY-THE-SEA
PLANNING COMMISSION
RESOLUTION NO.2022-036-PC
A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA
RECOMMENDING CITY COUNCIL ADOPT ORDINANCE AMENDING MUNICIPAL CODE SECTIONS
17.14.040, 17.28.010, AND 17.70.020, TO PROHIBIT TIMESHARE AND FRACTIONAL INTEREST
USES, AS WELL AS ADVERTISING AND SALE THEREOF
WHEREAS, existing provisions of the Carmel -by -the -Sea Municipal Code prohibit timeshare uses. Specifically, timeshares are prohibited in all zoning districts of the City, and regulated by Sections 17.28.010, 17.70.020 and 17.14.040; and WHEREAS, as a result of enforcement efforts, City staff have reviewed the existing city code provisions and recommend that they be revised to confirm the existing prohibition, and additionally, that new prohibitions be added with respect to advertisement and sale of timeshares and fractional interest ownerships, which are treated identically under the existing City code; and
WHEREAS, notice of a public hearing of the Planning Commission was published on September 30th, 2022 in compliance with State law (California Government Code 65091); and WHEREAS, on October 12, 2022, the Planning Commission held a public hearing to consider draft Ordinance 2022-007 amending regulations pertaining to timeshares and receive public testimony, including without limitation, information provided to the Planning Commission by City staff and through public testimony; and
WHEREAS, the Planning Commission found that the draft Ordinance 2022-007 was consistent with the City's General Plan, Local Coastal Plan, and all other relevant City and State codes and regulations.
WHEREAS, the California Environmental Quality Act (California Public Resources Code §§ 21000, et seq., "CEQA"), together with State Guidelines (14 California Code Regulations §§ 15000, et seq., the "CEQA Guidelines") and City Environmental Regulations (CMC 17.60) require the review of certain projects for environmental impacts and preparation of environmental documents; and
WHEREAS, the Planning Commission finds that pursuantto CEQA regulations, the project will have no impact on the environment and is not considered a project requiring compliance with the California Environmental Quality Act (Section 21065 of the California Public Resources Code); and
WHEREAS, the facts set forth in the recitals are true and correct and are incorporated herein by reference.
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NOW, THEREFORE, BE IT RESOLVED, THAT THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA DOES HEREBY recommend the City Council amend municipal code sections
17.14,040, 17.28.010, and 17.70.020, to prohibit timeshare and fractional interest uses, as well as advertising and sale thereof and adopt the Update in a manner fully in conformity with the Coastal Act (CA Section 30510).
BE IT FURTHER RESOLVED, THAT THE PLANNING COMMISSION OF THE CITY OF CARMEL- BY-THE-SEA DOES ALSO recommend the City Council hold a separate hearing in the near future to have a policy level discussion and decide whether or not to refer an item back to the Planning Commission to remove or modify the prohibition on timeshares in Carmel -by -the -Sea.
PASSED, APPROVED, AND ADOPTED BY THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA this 12th day of October, 2022, by the following vote:
AYES: Delves, Allen, Bolton, LePage, Locke
NOES:
ABSENT:
ABSTAIN:
APPROVED:
ATTEST:
Michael LePage, Chair Leah Young, Planning Commission Secretary 3-58
CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL
ORDINANCE NO. 2022-007
AN ORDINANCE AMENDING THE CARMEL-BY-THE-SEA MUNICIPAL CODE TO
PROHIBIT TIMESHARE AND FRACTIONAL INTEREST USES, AS WELL AS
ADVERTISING AND SALE THEREOF IN A MANNER FULLY IN CONFORMITY WITH THE COASTAL ACT (CA PUBLIC RESOURCES CODE SECTION 30510 ET SEQ.) WHEREAS, timeshares involve the division of the exclusive rights to use, possess, and occupy any real property between multiple persons, pursuant to a fixed or floating time schedule; and
WHEREAS, since at least 1988, the City of Carmel -by -the -Sea has prohibited the establishment of timeshares within the City; and
WHEREAS, the Housing Element of the City's General Plan specifically recognizes that the City seeks to protect the stability of residential neighborhoods by promoting year-round occupancy, and to avoid depletion of residents and associated impacts on the community, City services, Goal G3-4 of the City's Housing Element specifically requires the enforcement of the prohibitions on short-term, transient rentals and timeshares in residential dwellings; and WHEREAS, the Planning Commission of the City of Carmel -by -the -Sea reviewed the ordinance and on October 12 2022 determined the ordinance was consistent with the Cit 's General Plan Local Coastal Plan and ail other relevant City and State codes and regulations. and having reviewed the Planning Commission's recommendations and the relevant provisions of the General Plan the City Council finds that the ordinance is consistent with the Citv's General Plan and
WHEREAS, recent increases in the development and sale of fractional interest ownerships have made it appropriate for the City to revisit its municipal code to clarify that fractional interest ownerships are prohibited timeshares and to also expressly prohibit the advertising and sale of prohibited timeshares and fractional interest uses.
WHEREAS, notice of the public hearing was published on November 25, 2022 in compliance with State law (California Government Code 65091), indicating the date and time of the public hearing; and
WHEREAS, on December 6, 2022, the City Council opened the a public hearing to receive public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony, and continued the hearing to a date certain of January 10. 2023; and
WHEREAS on JanuarV 10, 2023 the Clty Council re -convened the jpublsc hearing to receive further public testimony reqarding the draft ordinance, including without limitation. information Provided bV City staff and public testimony; and OAK 94375-3304-4011- v7
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WHEREAS, this decision is made based upon evidence presented to the City Council at its December 6, 2022 and January 10, 202,� hearings including, without limitation, the staff report submitted by the Community Planning and Building Department and public testimony; and
WHEREAS, the City Council did hear and consider all said reports, recommendations, attachments and testimony herein above set forth and used their independent judgement to evaluate the ordinance; and
WHEREAS, the proposed amendments are in full conformity with the City's Local Coastal Plan and the California Coastal Act (CA Public Resources Code Section 30510 et se
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DOES ORDAIN AS FOLLOWS:
SECTION 1. CEQA Review. The City Council exercises its independent judgment and finds that this ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to the State CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, Sections. 15060(c)(2), because the proposed ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment- 15061(b)(3) because the proposed ordinance is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment; and 15308 because the proposed ordinance involves regulatory actions to assure protection of the environment. Therefore, the adoption of this ordinance is exempt from CEQA and no further environmental review is necessary.
SECTION 2. Amendment to the CIVIC.
1. Subsection A of Section 17.14.040 is amended and restated as follows
17.14.040 Additional Use Regulations.
1=
1. No new structure or modification to an existing structure shall be permitted nor shall any business license be issued that would allow the creation of publicly accessible retail space occupying fewer than 200 square feet or more than 5,000 square feet unless approved through a use permit and pursuant to the adoption of findings per CMC
17.64.200, Retail Space of Less Than 200 Square Feet or Greater Than 5,000 Square Feet.
2. No timeshare uses or fractional interest uses shall be established or permitted in any zone.
3. Except in restaurants, not more than five persons in any one individually licensed business shall be engaged in the production, repair or manufacturing of goods.
4. No use shall be permitted and no process, equipment, or materials shall be employed which is found by the Planning Director or by the Planning Commission to be 0_-VK 4= 08-331_14-4012 ,,
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objectionable to persons residing or working in the vicinity by reason of odor, fumes, noise, vibration, illumination, glare, unsightliness, dust, cinders, dirt, refuse, water - carried wastes or heavy truck traffic, or involve any hazard of fire or explosion.
2. Section 17.28.010 is amended and restated as follows:
17.28.010 Timeshare and Fractional Interest Uses.
A. Timeshare uses and fractional interest uses are prohibited uses within all of the zoning districts within the City.
B. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.16 (General Penalty).
C. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is subject to administrative fines and/or penalties as set forth in Chapter 18.04 (Municipal Code and Ordinance Enforcement).
D. Each day a violation of this section occurs shall constitute a separate offense, and the remedies under this section are cumulative and in addition to any and all other remedies available at law and equity.
3. "Time -Share Definitions" of Section 17.70.020 is amended to repeal the definitions of "Time -Share Estate," "Time -Share Occupancy," "Time -Share Program," "Time -Share Project," and "Vacation -Time Sharing Project," and restated to enact the definitions of "Time -Share Plan," "Time -Share Use" and "Fractional Interest Use" to read as follows:
17.70.020 Definitions.
The words, terms, and phrases defined in this chapter shall, for all purposes connected with this title, be construed as having the meanings respectively set forth in this chapter.
Time -Share Definitions.
"Time -Share Plan" means any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right -to -use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A timeshare plan shall be deemed to exist whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are OAK #4975-3304-4012 v2
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a result of a grant of ownership rights, possessory rights, membership rights, rights pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time-share plan. "Time -Share Use" and "Fractional Interest Use" means the use of real property or any part thereof, pursuant to a timeshare plan.
SECTION 3. Severability. If any section, subsection, phrase, or clause of this ordinance is for any reason held to be unconstitutional, such a decision shall not affect the validity of the remaining portions of this ordinance.
The City Council hereby declares that it would have passed this Ordinance and each section, subsection, phrase, or clause thereof irrespective of the fact that any one or more sections, subsections, phrases, or clauses be declared unconstitutional - SECTION 4. Publication. The City Clerk shall publish or post this ordinance in the manner required by law.
SECTION 5. Effective Date. This ordinance shall be effective 30 days after its adoption and after approval by the California Coastal Commission.
PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE- SEA this XX day of XX 2022, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
APPROVE:
ATTEST:
Dave Potter, Mayor Nova Romero, MMC, City Clerk
o,ar 94875_33u4-4012 �1_
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CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL
ORDINANCE NO. 2022-007
AN ORDINANCE AMENDING THE CARMEL-BY-THE-SEA MUNICIPAL CODE TO
PROHIBIT TIMESHARE AND FRACTIONAL INTEREST USES, AS WELL AS
ADVERTISING AND SALE THEREOF IN A MANNER FULLY IN CONFORMITY WITH THE COASTAL ACT (PUBLIC RESOURCES CODE SECTION 30510 ET SEQ.) WHEREAS, timeshares involve the division of the exclusive rights to use, possess, and occupy any real property between multiple persons, pursuant to a fixed or floating time schedule; and
WHEREAS, since at least 1988, the City of Carmel -by -the -Sea has prohibited the establishment of timeshares within the City; and
WHEREAS, the Housing Element of the City's General Plan specifically recognizes that the City seeks to protect the stability of residential neighborhoods by promoting year-round occupancy, and to avoid depletion of residents and associated impacts on the community, City services, Goal G34 of the City's Housing Element specifically requires the enforcement of the prohibitions on short-term, transient rentals and timeshares in residential dwellings; and WHEREAS, the Planning Commission of the City of Carmel -by -the -Sea reviewed the ordinance, and on October 12, 2022, determined the ordinance was consistent with the City's General Plan, Local Coastal Plan, and ail other relevant City and State codes and regulations, and having reviewed the Planning Commission's recommendations and the relevant provisions of the General Plan, the City Council finds that the ordinance is consistent with the City's General Plan; and
WHEREAS, recent increases in the development and sale of fractional interest ownerships have made it appropriate for the City to revisit its municipal code to clarify that fractional interest ownerships are prohibited timeshares and to also expressly prohibit the advertising and sale of prohibited timeshares and fractional interest uses.
WHEREAS, notice of the public hearing was published on November 25, 2022 in compliance with State law (California Government Code 65091), indicating the date and time of the public hearing; and
WHEREAS, on December 6, 2022, the City Council opened the public hearing to receive public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony, and continued the hearing to a date certain of January 10, 2023; and
WHEREAS, on January 10, 2023, the City Council re -convened the public hearing to receive further public testimony regarding the draft ordinance, including without limitation, information provided by City staff and public testimony; and OAK 44875-3304-4012 v2
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WHEREAS, this decision is made based upon evidence presented to the City Council at its December 6, 2022 and January 10, 2023 hearings including, without limitation, the staff report submitted by the Community Planning and Building Department and public testimony; and
WHEREAS, the City Council did hear and consider all said reports, recommendations, attachments and testimony herein above set forth and used their independent judgement to evaluate the ordinance; and
WHEREAS, the proposed amendments are in full conformity with the City's Local Coastal Plan and the California Coastal Act (Public Resources Code Section 30510 of seq.)
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DOES ORDAIN AS FOLLOWS:
SECTION 1. CEQA Review. The City Council exercises its independent judgment and finds that this ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to the State CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, Sections. 15060(c)(2), because the proposed ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment; 15061(b)(3) because the proposed ordinance is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment; and 15308 because the proposed ordinance involves regulatory actions to assure protection of the environment. Therefore, the adoption of this ordinance is exempt from CEQA and no further environmental review is necessary.
SECTION 2. Amendment to the CIVIC.
1. Subsection A of Section 17.14.040 is amended and restated as follows:
17.14.040 Additional Use Regulations.
A. All Uses.
1. No new structure or modification to an existing structure shall be permitted nor shall any business license be issued that would allow the creation of publicly accessible retail space occupying fewer than 200 square feet or more than 5,000 square feet unless approved through a use permit and pursuant to the adoption of findings per CMC
17.64.200, Retail Space of Less Than 200 Square Feet or Greater Than 5,000 Square Feet.
2. No timeshare uses or fractional interest uses shall be established or permitted in any zone.
3. Except in restaurants, not more than five persons in any one individually licensed business shall be engaged in the production, repair or manufacturing of goods.
4. No use shall be permitted and no process, equipment, or materials shall be employed which is found by the Planning Director or by the Planning Commission to be objectionable to persons residing or working in the vicinity by reason of odor, fumes, OAK #4975-3304-4012 v2
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noise, vibration, illumination, glare, unsightliness, dust, cinders, dirt, refuse, water - carried wastes or heavy truck traffic, or involve any hazard of fire or explosion.
2. Section 17.28.010 is amended and restated as follows:
17.28.010 Timeshare and Fractional Interest Uses.
A. Timeshare uses and fractional interest uses are prohibited uses within all of the zoning districts within the City.
B. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this chapter. Such violation shall be punishable pursuant to Chapter 1.16 (General Penalty).
C. Any responsible person, including but not limited to an owner of a time-share interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published advertised, or disseminated in any way and through any medium, the availability for sale or use of real property in violation of this section is subject to administrative fines and/or penalties as set forth in Chapter 18.04 (Municipal Code and Ordinance Enforcement).
D. Each day a vioiation of this section occurs shall constitute a separate offense, and the remedies under this section are cumulative and in addition to any and all other remedies available at law and equity.
3. "Time -Share Definitions" of Section 17.70.020 is amended to repeal the definitions of "Time -Share Estate," "Time -Share Occupancy," "Time -Share Program," "Time -Share Project," and "Vacation -Time Sharing Project," and restated to enact the definitions of "Time -Share Plan." "Time -Share Use" and "Fractional Interest Use" to read as follows:
17.70.020 Definitions.
The words, terms, and phrases defined in this chapter shall, for all purposes connected with this title, be construed as having the meanings respectively set forth in this chapter.
Time -Share Definitions.
"Time -Share Plan" means any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right -to -use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A timeshare plan shall be deemed to exist whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are a result of a grant of ownership rights, possessory rights, membership rights, rights OAK 44875-3304-4012 v2
3-65
pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time-share plan. "Time -Share Use" and "Fractional Interest Use" means the use of real property or any part thereof, pursuant to a timeshare plan.
SECTION 3. Severability. if any section, subsection, phrase, or clause of this ordinance is for any reason held to be unconstitutional, such a decision shall not affect the validity of the remaining portions of this ordinance.
The City Council hereby declares that it would have passed this Ordinance and each section, subsection, phrase, or clause thereof irrespective of the fact that any one or more sections, subsections, phrases, or clauses be declared unconstitutional.
SECTION 4. Publication. The City Clerk shall publish or post this ordinance in the manner required by law.
SECTION 5. Effective Date. This ordinance shall be effective 30 days after its adoption and after approval by the California Coastal Commission.
PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE- SEA this XX day of XX 2022, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
APPROVE:
ATTEST:
Dave Potter, Mayor Nova Romero, MMC, City Clerk
OAK 14875-3304-4012 v2
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Exhibit L
City of Hermosa Beach Time Share Ordinance and Supporting Evidence 3-67
4/27123, 9:17 AM City of Hermosa Beach - File #: REPORT 22-0586 Sign In
CITY OF
HERMOSA BEACH
UK -
Legislation I Calendar City Council Departments People
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Detalis POFStaff Report
File #: REPORT 2Z-0586 Version: 1 Name:
Type: Action Item Status: Public Hearing
File created: 9/19/21)22 In control: gty Council
On agenda: 9/28/20Z2 Final action:
INTRODUCTION OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17,40.23D (TIMESHARE USES) TO TITLE 17 (ZONING), AND Title: AMENDING SECTION 17.26.030 TO PERMITTIMESHARE USES 1N SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (Community Development Director3eannie Naughton)
Attachments: 1. 1. SUPPLEMENTAL Draft Ordinance, 2. 2. Resolution P.C. 22-07 3. 3. Link to Aonl 19, 2022 Planning Commission Staff RepJrt 4.
SUPPLEMENTAL Email from Scott Hayes Re item 13. c.. 5. SUPPLEMENTAL ecomments for item 13. c Staff Report Text
Honorable Mayor and Members of the Hermosa Beach City Council Regular Meeting of September 28, 2022
Title
INTRODUCTION OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT 1S EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (Community Development Director Jeannie Naughton)
Body
Recommended Action.
Recommendation
Staff recommends City Council consider waiving full reading and introduce by title only an Ordinance of the City of Hermosa Beach, California, amending Chapter 17.40 (Conditional Use Permit and Other Permit Standards) to add Section 17.40.230 (Timeshare Uses) to Title 17 (Zoning) and amending Section 17.26.030 to permit timeshare uses in specified commercial zones pursuant to a Conditional Use Permit and determining that the project is exempt from the California Environmental Quality Act (Attachment 1).
Body
Executive Summary_
The City of Hermosa Beach Municipal Code (HBMC) does not currently include regulations governing the use of timeshares within the City, nor any regulations that would explicitly address these emerging businesses offering "fractional ownership" of a property in a way that operates like a timeshare. If left unregulated, these types of uses in the residential zones could limit the City's existing housing stock for use as long-term residency and impair the overall character of the City's residential areas.
The proposed draft ordinance (Attachment 1) would permit timeshare uses in +e C-1 and G-2-commercial zones within the City pursuant to a Conditional Use Permit (CUP), and prohibit the use in all other zones within the City.
Background:
The City of Hermosa Beach is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents, those who work in the City, and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy.
Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance. The City has commercial zones, iAefidding the G 1 and G 2 eammeFeliall zenes that provide for uses that serve both visitors and the local community. These commercial uses include: restaurants; retail shops; and visitor -serving hotels and motels. The City also has residential zones, at varying densities, that provide a diversity of housing types for those who live in the community.
The City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. At its April 18. 2022 meeting, the Planning Commission reviewed and recommended approval of the proposed ordinance to permit timeshare uses in specified commercial zones pursuant to a Conditional Use Permit by adopting Resolution P.C. 22-07 (Attachment 2).
Past Planning Commission Actions
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City of Hermosa Beach - File #: REPORT 22-0586
Meeting Hate
Description
pril 18, 2022
Planning Commission reviewed the proposed ordinance and adopted Resolution F.C. 22-07
City Housing
The most recent U.S. Census data lists the median value of owner -occupied homes in Hermosa Beach as $1,542,900 for the 2015-2019 period, while the Zillow Home Value Index estimates median home values in Hermosa Beach to be approximately $2,174,879 as of January 31, 2022. According to the Zillow Home Value Index, home values in the City have gone up 10.1 percent over the past year In contrast, the median household income in Hermosa Beach from 2015-2019 was $136,702 and the median income for a four -person household in Los Angeles County for 2021 was approximately $80,000. The cost of homes currently in Hermosa Beach are in excess of what median income residents of Hermosa Beach can afford, and certainly over the median income residents of Los Angeles County generally.
The conversion of homes in the City's residential neighborhoods to these timeshare -like uses would eliminate residential dwelling units that would otherwise be available for long-term residential use, thereby further exacerbating the lack of long-term available housing in the City. A home that is used for timeshare purposes would no longer be available for households to use as their long-term residence.
Impacts to Character of the City's Residential Districts Timesharing projects have the same character as commercial hotels, motels, and other transient occupancy uses due to the multiple short- term occupancies by those participating in timesharing projects. For this reason, the activity is better suited in commercial or quasi - commercial zones. The use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods.
The intensity of the activity is a significant reason why these uses can change the character of a residential neighborhood. Long-term residents, whether owners or renters, occasionally have guests and parties, but timeshare homes are used exclusively by people who are coming to the City on a short-term basis -most likely for vacation or leisure, increasing the likelihood of frequent gatherings and parties generating noise in excess of what the neighborhood normally generates.
Timeshare owners and visitors will most likely stay out later, entertain more, and gather in larger numbers while on vacation. Timeshare uses can change the character of a residential neighborhood by having it serve not only as a residential area, but also a visitor lodging area and subjecting the neighborhood to the impacts that come with the more intense land use.
Further, the nature of the timeshare use itself can impact the residential character of the City's residential zones because they ensure that the timeshare users can only use their property for a limited amount of time each year. Each co-owner is in the unit on a short-term basis, SG they do not have the time to participate in activities or build the relationships that create the fabric of a community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents.
Emerging Businesses
Recently, certain businesses have emerged which purport to sell "co -ownership" shares in residential property. These businesses, as staff understands the business model, start by purchasing homes or entering contracts to purchase homes in tourist destinations in desirable locations like Hermosa Beach. These businesses then form a limited liability company ("LLC"), which owns title to the residential home.
The "co -owners" each purchase a one -eighth share and are entitled to use the residential property for a certain number of days per year according to their share of ownership in the LLC. The one -eighth interest entities the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special day" (Fourth of July, Thanksgiving, Christmas, etc.).
The stays are reserved on an app, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, the business continues to manage the homes, including providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners of the LLC.
The Ordinance
The City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. The purpose of any ordinance should be to ensure that the City is able to maintain its existing and limited housing stock for use in long-term residency, and to maintain the character of its residential zones.
Completely banning "fractional ownership," joint tenancies, or ownership by business entities such as LLC is not advisable. There are numerous properties in the City's residential zones currently owned by numerous owners or by LLCs. Thus, the ordinance is geared toward the specific impacts of the at -issue uses -timeshare -like uses organized and run by third parties for a fee. The proposed ordinance (Attachment 1) does not target or single out any business or ownership structure.
The proposed ordinance allows for these types of timeshare uses in the City's C-1 afd-6-2--zones, subject to a Conditions Use Permit.
Timeshare uses would be prohibited in all other zones. In order to avoid an over -inclusive ordinance that prohibits joint tenancies or other type of ownership structure that do not have the same deleterious impacts. the proposed ordinance focuses on the actual use of the property, as compared to the ownership structure, and in pertinent regulates this "timeshare use" subject to a "timeshare plan." Timeshare plan is defined as:
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City of Hermosa Beach - File #: REPORT 22-0586
"Any arrangement, plan, scheme, or similar- device, facilitated, offered, or organized by a third -party non -purchaser; whether by membership agreement, bylaws, shareholder agreement partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby purchasers, in exchange for consideration, receives the right to exclusive use of at] accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, Fora period of time less than a full year during any given year. on a recurring basis for more than one year but not necessarily for consecutive years. " At its April 18, 2022 meeting, the Planning Commission reviewed and recommended approval of the proposed ordinance by adopting Resolution P.C. 22-07 (Attachment 2)
Environmental Determination:
The proposed ordinance is not subject to CEQA because the adoption of this ordinance is not a "project' pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in Lhe C-1 and G 2 commercial zones within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment.
General Plan Consistency,
The proposed text amendment has been evaluated for consistency with the City's General Plan, Relevant Policies are listed below:
Land Use and Design dement
Goal 1. Create a sustainable urban form and land use patterns that support a robust economy and high qualify of life for residents.
Policies:
• 1.5 Balance resident and visitor needs. Ensure land uses and business provide for the needs of residents as well as visitors. • 1.7 Compatibility of uses. Ensure the placements of new uses does not create or exacerbate nuisances between different types of land uses.
Goal 2. Neighborhoods provide for diverse needs of residents of all ages and abilities and are organized to support healthy and active lifestyles.
Policies:
• 2.4 Single density neighborhoods. Preserve and maintain the Hermosa Hills, Eastside, Valley, North End and Hermosa View neighborhoods as predominantly single-family residential neighborhoods • 2.5 Neighborhood preservation. Preserve and enhance the quality of residential neighborhoods by avoiding or abating the intrusion of disruptive, nonconforming buildings and uses.
Fiscal Impact:
There is no fiscal impact associated with the recommended action Attachments:
1. Draft Ordinance
2. Resolution P.C. 22-07
3. Link to April 19, 2022 Planning Commission Staff Report Respectfully Submitted by: Patrick Donegan, Assistant City Attorney Concur: Jeannie Naughton, Community Development Director Noted for Fiscal Impact: Viki Copeland, Finance Director Legal Review: Patrick Donegan, Assistant City Attorney
Approved: Suja Lowenthal, City Manager
Staff Retort updated on 9/27/2022 - See Track Changes
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ORDINANCE NO.
AN ORDINANCE OF THE CITY OF HERMOSA BEACH.
AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND
OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230
(TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING
SECTION 17.26.030 TO PERMIT TIMESHARE USES IN
SPECIFIED COMMERCIAL ZONES PURSUANT TO A
CONDITIONAL USE PERMIT AND DETERMINING THAT THE
PROJECT IS EXEMPT FROM THE CALIFORNIA
ENVIRONMENTAL QUALITY ACT.
The City of Council of the City of Hermosa Beach does hereby ordain as follows:
Section 1. Findings.
A. The City of Hermosa Beach ("City") is a scenic beachfront city, known for its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue.
B. Preserving the City's costal resource and the quality and character of the City has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's current General Plan.
C. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy.
D. The City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses.
E. The City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City.
F. According to the U.S. Census Bureau, the current median household income in the City is $136,702, while the estimated value of owner -occupied housing units from 2015-2019 was approximately $1,542,900 with current real estate listings 3-71
suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City.
G. The conversion of existing residential units to uses other than long-term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community.
H. The City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses.
The high impact use associated with timeshares, combined with the frequent turnover and commercial management involved in timeshare properties is not consistent with the purpose and nature of residential districts in the City. Rather, they are commercial in nature, in that these timeshare uses are structured as a short-term, tourist oriented, visitor serving use of the subject properties. The use of properties as timeshares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City.
J. The use of residential properties for timeshare uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for timeshare uses of residential properties.
K. This encroachment of tourist oriented, visitor serving uses in residential neighborhoods is likely to compromise the character of residential areas within the City, and further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City- L. The City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad authority to regulate the development and use of real property within its jurisdiction to promote the public welfare.
M. Pursuant to and in accordance with this authority, the City Council desires to prohibit timeshare uses in residential areas, and only allow them in the C-1 commercial zone within the City, pursuant to a conditional use permit. 3-72
N. The City's Planning Commission held a duly noticed public hearing on April 19, 2022, as required by law to consider all the information presented by staff, and public testimony presented in writing and at the meeting.
O. On April 19, 2022, the City's Planning Commission recommended that the City Council adopt this Ordinance amending the City's Municipal Code as described herein.
P. On September 28, 2022, the City Council held a duly noticed public hearing, accepting testimony from the public, and discussed the proposed amendments and staff's recommended approval of this Ordinance.
Q. The proposed zoning amendments are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the character of the City; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply.
Section 2. The above recitals are hereby incorporated as though set forth in this section.
Section 3. Section 17.40.230 (Time Share Uses) is hereby added to Chapter 17.40 (Conditional Use Permit and Other Permit Standards) of Title 17 (Zoning) of the City of Hermosa Beach Municipal Code, to read as follows:
Section 17.40.230 Timeshare Uses
A. Purpose and Findings.
There is a critical shortage of permanent, long-term housing in the City of Hermosa Beach ("City"). A limited supply of suitable vacant land, land values, and market demand for land for other uses, have limited the construction of additional housing in the City.
The City is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy.
Timeshare uses are not an appropriate land use in the City's residential zones due to the multiple occupancy of timeshare properties, the short-term, tourist oriented use of such property and commercial management of timeshare facilities, all of which create increased traffic generation, excessive noise, disruption to residential communities through commercial -level maintenance of the timeshare facilities, and therefore are appropriately confined to commercial zones.
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Conversion of permanent housing to timeshare facilities removes existing housing units from the City's existing stock and exacerbates an already severe housing shortage.
It is therefore in the public interest to prohibit conversions of existing housing units into timeshare facilities, as to do so eliminates needed housing stock by diverting those units to a tourist -oriented, commercial use.
B. Definitions.
For purposes of this Section, the following words and phrases shall have the meaning respectively ascribed to them by this Section:
"Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.040.
"Building" shall have the meaning ascribed to it by Section 17.04.040. "Dwelling unit" shall have the meaning ascribed to it by Section 17.04.040. "Managing entity" means the person who undertakes the duties, responsibilities and obligations of the management of a timeshare plan.
"Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof. "Timeshare instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a timeshare plan and includes the declaration dedicating accommodations to the timeshare plan.
"Timeshare interest" means the right to exclusively occupy a timeshare property for a period of time on a recurring basis pursuant to a timeshare plan, regardless of whether or not such right is coupled with a property interest in the timeshare property or a specified portion thereof.
"Timeshare plan" means any arrangement, plan, scheme, or similar device, facilitated, offered, or organized by a third -party non -purchaser, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby purchasers, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. "Timeshare property" means one or more accommodations subject to the same timeshare instrument, together with any other property or rights to property appurtenant to those accommodations.
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"Timeshare use" means the use of one or more accommodations or any part thereof, as a timeshare property pursuant to a timeshare plan.
C. Timeshare Uses Restricted to C-1 Commercial Zone.
Timeshare uses are conditional uses within the City's C-1 Commercial Zone, subject to approval of a conditional use permit applied for and approved in conformance with this Section. Timeshare uses are not permitted in any other Zones in the City.
D. Application Process and Development Standards.
A. Application Process. Approval of a conditional use permit for timeshare uses in the C-1 Commercial Zone within the City shall be required in accordance with the requirements of Chapter 17.40. In addition to the requirements contained in Chapter
17.40, an application for a timeshare use shall be accompanied by the following documents which shall be subject to the approval of the Community Development Director:
1. Management Plan. A management plan shall describe the methods employed by the applicant to guarantee the future adequacy, stability, and continuity of a satisfactory level of management and maintenance of the time share use.
2. Application Requirements. In addition to any application requirements established by this section and any other applicable requirements of this code, the following information shall be submitted as part of any application to develop or establish a timeshare use:
a. Typical floor plans for each accommodation.
b. The phasing of the construction of the accommodations on the timeshare property, if applicable.
C. A description of any ancillary uses which are proposed in conjunction with the time share use.
d. A description of the method of management of the time share use and indication of the management entity for the time-share property. e. Any restrictions on the use or occupancy of the accommodations. f. Any other information or documentation the applicant, City staff or commission deems reasonably necessary to the consideration of the timeshare use, including any required environmental documents.
B. Development Standards and Operational Requirements. Notwithstanding any other provision of this Section, the following conditions must be met by any timeshare use in any conditionally permitted zone. Additional requirements may be attached to a 3-75
conditional use permit or development agreement if found to be necessary to assure that the timeshare use meets the intent of this Section:
1. Timeshare uses developed in the C-1 Commercial Zone within the City shall be limited to accommodations in upper floors in conjunction with a mixed -use project.
2. No existing residential use in the C-1 Commercial Zone within the City shall be converted to a timeshare use.
3. Development Standards, The timeshare use shall comply with all development standards for the zone in which it is located.
4. Parking. Parking shall be provided as follows:
a. For accommodations of two or fewer bedrooms, one parking space shall be provided for each accommodation.
b. For accommodations of three or more bedrooms, two parking spaces shall be provided for each accommodation.
5. Modification or Waiver of Standards. The Planning Commission may modify or waive one or more of the regulations contained in this Section if it determines that strict compliance is not necessary to achieve the purpose and intent of this Section.
E. Violations, Enforcement and Civil Penalties.
1. Any responsible person, including but not limited to an owner of a timeshare interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in any way and through any medium, the availability for sale or use of an accommodation in violation of this Section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this Section. Such violation shall be punishable pursuant to Section 1.04.020 of the City of Hermosa Beach Municipal Code.
2. Timeshare use, and/or advertisement for timeshare use, of an accommodation in violation of this Section is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance. Any such nuisance may be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 8.28 except that the civil penalty for a violation shall be one thousand dollars ($1,000.00). Each day the violation occurs shall constitute a separate offense
3. Any responsible person who violates this Section shall be liable and responsible for a civil penalty of one thousand dollars ($1,000.00) per violation per day such violation occurs. The City may recover such civil penalty by either civil action or administrative citation. Such penalty shall be in addition to all other costs incurred by the City, including without limitation the City's staff time, investigation expenses and attorney's fees.
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a. Where the City proceeds by civil action, the court shall have discretion to reduce the civil penalty based upon evidence presented by the responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the court should consider the purpose of this Section to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the responsible person's enrichment or profit as a result of the violation of this Section. In any such civil action the City also may abate and/or enjoin any violation of this Section.
b. Where the City proceeds by administrative citation, the City shall provide the responsible person notice of the right to request an administrative hearing to challenge the citation and penalty, and the time for requesting that hearing.
The responsible person shall have the right to request the administrative hearing within forty-five (45) days of the issuance of the administrative citation and imposition of the civil penalty. To request such a hearing, the responsible person shall notify the City clerk in writing within forty-five (45) days of the issuance of the citation. The appeal notification shall include all specific facts, circumstances and arguments upon which the appeal is based. ii. The City Manager is hereby authorized to designate a hearing officer to hear such appeal. The City hearing officer shall conduct a hearing on the appeal within ninety (90) days of the request for the hearing unless one of the parties requests a continuance for good cause. The hearing officer shall only consider those facts, circumstances or arguments that the property owner or responsible person has presented in the appeal notification.
iii. The hearing officer shall render a decision in writing within thirty (30) days of the conclusion of the hearing. The hearing officer shall have discretion to reduce the civil penalty based upon evidence presented by the property owner or responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the hearing officer should consider the purpose of this Section to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the property owner's or responsible person's enrichment or profit as a result of the violation of this Section.
iv. Any aggrieved party to the hearing officer's decision on the administrative appeal may obtain review of the decision by filing a petition for writ of mandate with the Los Angeles County Superior 3-77
Court in accordance with the timelines and provisions set forth in Government Code Section 53069A.
v. If, following an administrative hearing, appeal, or other final determination, the owner of the property is determined to be the responsible person for the civil penalty imposed by this section, such penalty, if unpaid within forty-five (45) days of the notice of the final determination, shall become a lien to be recorded against the property on which the violation occurred pursuant to Chapter 8.28.
Such costs shall be collected in the same manner as county taxes, and thereafter the property upon which they are a lien shall be sold in the same manner as property now is sold for delinquent taxes
4. Any violation of this Section may also be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 8.28 except that the civil penalty under Chapter 8.28 for a violation shall be one thousand dollars ($1,000.00).
Each day the violation of this Section occurs shall constitute a separate offense. The remedies under this Section are cumulative and in addition to any and all other remedies available at law and equity.
Section 3. Section 17.26.030 of Chapter 17.26 (Cl, C2 and C3 Commercial Zones) of Title 17 (Zoning) is amended to add the following entry to the chart of land use regulations USES
C1
C2
C3
See Section
Timeshares
U
17.40.230
Section 4. CEQA. This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in the C-1 commercial zone within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment.
Section 5. Effective Date. Pursuant to California Government Code section 36937, this Ordinance shall take effect thirty (30) days after its final passage.
Section 6. Certification. The City Clerk is directed to certify the passage and adoption of this Ordinance; cause it to be entered into the City's book of original ordinances; make a note of the passage and adoption in the records of this meeting; and, 3-78
within fifteen (15) days after the passage and adoption of this Ordinance, cause it to be published or posted in accordance with California law.
PASSED, APPROVED and ADOPTED this 28th day of September, 2022.
VOTE: AYES:
NOES:
ABSTAIN:
ABSENT:
Michael Detoy, Mayor
PRESIDENT of the City Council and MAYOR of the City of Hermosa Beach, CA ATTEST:
Myra Maravilla
City Clerk
APPROVED AS TO FORM:
Michael Jenkins
City Attorney
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RESOLUTION P.C. 22-07
A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF
HERMOSA REACH RECOMMENDING CITY COUNCIL APPROVAL OF TEXT
AMENDMENTS TO THE CITY OF HERMOSA BEACH MUNICIPAL CODE
AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT
TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A
CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT.
The Planning Commission of the City of Hermosa Beach does hereby resolve as follows:
SECTION 1. Findings.
A. The Planning Commission held a duly noticed public hearing on April 19, 2022 to consider a text amendments to the City of Hermosa Beach Municipal Code, Title 17 (Zoning), as described in the proposed ordinance attached as Exhibit A.
B. The City of Hermosa Beach {"City") is a scenic beachfront city, known for its many diverse restaurants, local retailers and popular commercial areas like its downtown area and Pier Avenue.
C. Preserving the City's costal resource and the quality and character of the City has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's current General Plan.
D. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy.
E. The City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to, the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses.
F. The City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City. 3-81
G. According to the U.S. Census Bureau, the current median household income in the City is $136,702, while the estimated value of owner -occupied housing units from 2015-2019 was approximately $1,542,900 with current real estate listings suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City.
H. The conversion of existing residential units to uses other than long-term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community.
1. The City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses.
I This high impact use associated with timeshares, combined with the frequent turnover and commercial management involved in timeshare properties is not consistent with the purpose and nature of residential districts in the City. Rather, they are commercial in nature, in that these timeshare uses are structured as a short- term, tourist oriented, visitor serving use of the subject properties. The use of properties as timeshares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City.
K. The use of residential properties for timeshare uses will further reduce the availability of housing stock for long-term residential usc, and create a new demand for timeshare uses of residential properties.
L. This encroachment of tourist oriented, visitor serving uses in residential neighborhoods is likely to compromisc the character of residential areas within the City, and further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City.
M. The City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad authority to regulate the development and use of real property within its jurisdiction to promote the public welfare.
N. Pursuant to and in accordance with this authority, the Planning Commission desires to prohibit timeshare uses in residential areas, and certain commercial zones and to 3-82
update the language of the Zoning Code to provide consistency with the terminology used to define timeshare uses in State law. Further, the City desires to provide greater clarity as to the zones which timeshare uses are permitted as conditional uses, and the standards pursuant to which they will be reviewed in those zones.
O. On April 19, 2022, the Planning Commission held a duly -noticed public hearing and considered the staff report, recommendations by staff, and public testimony concerning the proposed ordinance.
.SECTION 2. This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in specified zones within the City pursuant to a conditional use permit, and prohibits them in all other zones, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment.
Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment.
SECTION 3. The Planning Commission finds that the proposed amendments to the Municipal Code to permit timeshares in specified zones within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the character of the City; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply.
SECTION 4. Based on the entire record before the Planning Commission, and all written and oral evidence presented, the Planning Commission hereby finds that the proposed ordinance is consistent with the City's adopted General Plan and does not conflict with any of the General Plan's goals or policies.
SECTION 5. The Planning Commission hereby recommends that the City Council adopt the attached proposed ordinance entitled, "AN ORDINANCE OF THE CITY OF HERMOSA BEACH. AMENDING CHAPTER 17.40 (CONDITIONAL USE
PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION
17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL
ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING 3-83
THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA
ENVIRONMENTAL QUALITY ACT.
I HEREBY CERTIFY that the foregoing recommendation to the City Council was duly and regularly approved by the Planning Commission of the City of Hermosa Beach at a regular meeting of said Planning Commission held on April 19, 2022, by the following roll call vote:
VOTE:
AYES: 5 - Chair Pedersen, Vice Chair Izant, Commissioner Saemann, Commissioner Hoffman, and Commissioner Rice
NOES: None
ABSTAIN: None
ABSENT: None
CERTIFICATION
I hereby certify that the foregoing Resolution P.C. 22-07 is a true and complete record of the action taken by the Planning Commission of the City of Hermosa Beach, California, at its regular meeting of April 19, 2022.
11�4
Dave Pedersen, Chairperson
-7/),115Z
Date
Anadfa Crespi, Secretary
3-84
4127123. 9:22 AM City of Hermosa Beach - File #: REPORT 22-0249 Sign In
CITY OF
HERMOSA BEACH
Legislation Calendar I City Council I Departments PeopiJl 10 13'S75hare iEtR55 yAlerts
Details 'I P13F Staff Repart
File *k REPORT 22-UZ49 Version: 1 Name:
Type: Action Item Status: Passed
File created: 4/14/2022 In control: Planning Commission On agenda: 4/19/2022 Final action: 4/19/2022
TA 22-01 ZONE TEXT AMENDMENT TO AMEND THE HERMOSA BEACH MUNICIPAL CODE CHAPTER 17.40 TO ADD SECTION 17.40.230 AND Title: AMEND SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES AND DETERMINE THAT THE PROTECT IS
EXEMPT FROM THE CALIFORNIA ENVIRINMENTAL QUALITY ACT (CEQA) Attachments: 1. 1. Draft Resolution 22-07 Timeshare Ordinance. 2. 2. Hermosa Beach Draft Ordinance Staff Report Text
Honorable Chairman and Members of the Hermosa Beach Planning Commission Regular Meeting of April 19, 2022
Title
TA 22-01 ZONE TEXT AMENDMENT TO AMEND THE HERMOSA BEACH MUNICIPAL CODE CHAPTER 17.40 TO ADD SECTION
17.40.230 AND AMEND SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES AND DETERMINE THAT THE PROJECT 15 EXEMPT FROM THE CALIFORNIA ENVIRINMENTAL QUALITY ACT (CEQA) Recommendation
Recommended Action:
Staff recommends the Planning Commission adopt Resolution No. 22-07 (Attachment 1) recommending that the City Council approve Zone Text Amendment TA 22-01. thereby amending Chapter 17.40 to add section 17,40.230 and amend section 17.26.030 to permit timeshare uses in specified commercial zones and determine that the project is exempt from the California Environmental Quality Act (CEQA).
Body
Background:
The City of Hermosa Beach ("City") does not currently have regulations in place governing the use of timeshares within the City, nor any regulations that would explicitly address these emerging businesses offering "fractional ownership" of a property in a way that operates like a timeshare. These types of uses in the City's residential zone could limit the City's existing housing stock for use as a long-term residency and impair the character of the City's residential zones.
At its March 15, 2022 meeting, the Planning Commission directed staff to bring forward a zone text amendment addressing these types of uses.
Analysis:
The City is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers, and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents, those who work in the City, and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy.
Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance, The City has commercial zones including the C-1 and C-2 commercial zones that provide for uses that serve both visitors and the local community such as: restaurants; retail shops; and visitor serving hotels. The City also has residential zones that provide housing forthose who live in the community, at varying densities in order to provide a diversity of housing types.
My Nou-s-og
The most recent census data lists the median value of owner -occupied homes in Hermosa Beach as $1,542,900 for the period of 2015- 2019, while the Zillow Home Value Index estimates medial home values in Hermosa Beach to be approximately $2,174,879 as of January 31, 2022. According to the Zillow Home Value Index, homes values in the City have gone up 10.1 percent over the past year. In contrast, the median household income in Hermosa Beach from 2015-2019 was $136,702, and the median income for a four -person household in Los Angeles County for 2021 is approximately $80,000. The cost of homes currently in Hermosa Beach are more than what median income residents of Hermosa Beach can afford, and certainly over the median income residents of Los Angeles County generally. https:1/herinosabeach.legistar.com/LegistationDetail.aspx?ID-5557241 &GUID=8OA64A8C-E51 A-4C26-B2D2-3046537C93D5 1/3 3-85
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The conversion of homes in the City's residential neighborhoods to these timeshare -like uses would eliminate residential dwelling units that would otherwise be available for long-term residential use, thereby further exacerbating the lack of long-term available housing in the City. A home that is used for timeshare purposes would no longer be available for households to use as their long-term residence.
Impacts to Character of the Citv's Residential Districts Timesharing projects have the same character as commercial hotels, motels, and other transient occupancy uses due to their transient nature and to the multiple short-term occupancies by those participating in timesharing projects. This use is better suited in commercial or quasi -commercial zones and is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods.
The intensity of this use is a significant reason that these uses can change the character of a residential neighborhood. Long-term residents, whether owners or renters, occasionally have guests or parties, but these timeshare homes are used exclusively by people who are coming to the City on a short-term basis - most likely for vacation or leisure. As a result, those users may naturally stay out later, entertain more, and gather in larger numbers while on vacation. Timeshare uses can change the character of a residential neighborhood by having it serve not only as a residential area, but also a visitor lodging area, and subjecting it to the impacts that come with that more intense land use.
Further, the nature of the timeshare use itself can impact the residential character of the City's residential zones because it would ensure that the time share users can only use their property for a limited amount of time each year. Each co-owner is in the unit on a short-term basis, and without the time to participate in the types of activities or build the relationships that create the fabric of a community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents.
Emergg Businesses
Recently, certain businesses have emerged which purport to sell "co -ownership shares in residential property. These businesses, as staff understands the business model, start by purchasing homes or entering into contracts to purchase homes in tourist destinations in desirable locations like the City. These businesses then form a limited liability company ("LLC"), which owns title to the residential home. The "co - owners" each purchase a one -eighth share and are entitled to use the residential property for a certain number of days per year according to their share of ownership in the LLC. The one -eighth interest entitles the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special day" (Fourth of July, Thanksgiving, Christmas, etc.). The stays are reserved on a mobile application, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, the business continues to manage the homes, including providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners of the LLC.
Time Share Ordinance
As mentioned above, the City does not currently have regulations in place.governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. The purpose of any ordinance should be to ensure that it the City is able to maintain its existing and limited housing stock for use in long term residency and to maintain the character of its residential zones.
Completely banning "fractional ownership," joint tenancies, or ownership by business entities such as LLC is not advisable. There are numerous properties in the City's residential zones currently owned by numerous owners or by LLCs. Thus, any ordinance should be geared toward the specific impacts of the at -issue uses - timeshare like uses organized and ran by third parties for a fee. The proposed ordinance (Attachment 2) does not target or single out any business or ownership structure.
Environmental Determination:
The proposed ordinance is not subject to CEQA because the adoptions of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in C-1 and C-2 commercial zones within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment.
General Plan Consistency:
The proposed text amendment has been evaluated for consistency with the City's General Plan and is consistent with the following Goals and Policies of Plan Hermosa:
Land Use and Design dement
Goal 1 Create a sustainable urban form and land use patterns that support a robust economy and high quality of life for residents.
Policies:
• 1.5 Balance resident and visitor needs. Ensure land uses and business provide for the needs of residents as well as visitors. • 1.7 Compatibility of uses. Ensure the placements of new uses does not create or exacerbate nuisances between different types of land uses.
Goal 2 Neighborhoods provide for diverse needs of residents of all ages and abilities, and are organized to support healthy and active lifestyles.
Policies:
• 2.4 Single density neighborhoods. Preserve and maintain the Hermosa Hills, Eastside, Valley, North End and Hermosa View neighborhoods as predominantly single-family residential neighborhoods https:llhermosabeach.legistar.com/LegislationL)etall.aspx?I D=5557241 &G UID=80A64A8C-E51 A-4C26-B2D2-3046637C93D5 213 3-86
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City of Hermosa Beach - File #: REPORT 22-0249
• 2.6 Neighborhood preservation. Preserve and enhance the quality of residential neighborhoods by avoiding or abating the intrusion of disruptive, nonconforming buildings and uses.
Attachments:
1. Draft Resolution 22-07 Timeshare Ordinance
2. Hermosa Beach Draft Ordinance
Respectfully Submitted by: Carlos Luis, Senior Planner
Legal Review: Patrick Donegan, Deputy City Attorney
Approved: Angela Crespi, Interim Community Development Director httpsi//hermosabeach.legistar.com/LogislatioiiDetaii.aspx?ID=5557241 &GUID=SOA64ABC-E51A-4C26-B2D2-3046537C93175 313 3-87
From: Scott Hayes
Sent: Tuesday, September 27, 2022 3:19 PM
To: City Council ; Suja Lowenthal ; Ann
Yang
Cc: Jeannie Naughton ; DG_PlanningCommission
; Patrick Donegan
; [email protected]
Subject: Agenda Item XIII, c (Report 22-0586) - Timeshares Mayor, Mayor Pro Tem, and Councilmembers.
am writing to express my strong opposition Council Agenda Item XIII, c (Report 22-0586)_ Inadequate Noticing
First, I believe that the residents adjacent to C-1 Zones should have been directly noticed about this potential change to the zoning code. As stated in the staff report, timesharing projects have increased "likelihood of frequent gatherings and parties generating noise in excess of what the neighborhood normally generates." Since staff acknowledges that there will be neighborhood impacts as a result of the proposed timeshare projects, I feel that the City should have gone over and above the minimum legal public noticing requirements. I respectfully request that this item be continued until such time that the neighbors are properly noticed.
If this item is not continued please consider the following argument against the proposed zoning changes.
Section 17.40.230, A of the proposed ordinance states `Timeshare uses are not an appropriate land use in the City's residential zones due to the multiple occupancy of timeshare properties, the short- term, tourist oriented use of such property and commercial management of timeshare facilities, all of which create increased traffic generation, excessive noise, disruption to residential communities." What the ordinance fails to recognize is that those exact same concerns also make timeshares unsuitable for the C-1 Neighborhood Commercial Zone.
Timeshares are Hotels
Timeshares are almost always vacation properties. As such, they are essentially hotels which is a disruptive use when adjacent to a residential neighborhood. Our municipal code does not allow hotels in the C-1 zone and timeshares should be excluded as well. Municipal Code Section
17.26.020, B, 1 specifically states that the purpose of the C-1 Neighborhood Commercial Zone is "to provide sites for a mix of small local businesses appropriate for, and serving the daily needs of 3-88
nearby residential neighborhoods; while establishing land us regulations that prevent significant adverse effects on abutting residential uses." I do not see how a timeshare serves the daily needs of nearby residential neighborhoods but I can easily see how these neighborhoods would suffer significant adverse effects from timeshares.
Timeshares are STVRs
People generally stay at timeshares for 1-2 weeks. As a result, they have nearly the same impact on neighborhoods as short term vacation rentals. Hermosa Beach only allows STVRs on commercially zoned parcels with non -conforming residential uses. Why are timeshares being treated any differently? Timeshares will have the same traffic and noise impacts as STVRs so they should be restricted to the same areas.
Additionally, there is no language in the ordinance to prohibit utilizing the timeshare as a short term vacation rental. If timeshares are approved, it will only be a matter of time before we start seeing the timeshare units showing up on Airbnb and VRBO.
Timeshares Take Potential Housing Stock
The ordinance states that timeshares must be built above commercial space as part of a mixed use project. Why wouldn't we require that the upper floors of mixed use developments be residential space to help the City meet its housing goals? Allowing this space to be used as timeshare vacation homes makes no sense. I would much prefer to have new neighbors contributing to the community that having to deal with new transient residents every week or 2.
Enforcement Challenges
The City is currently unable to do anything about the quality of life issues brought about by the MANY illegal short term vacation rentals in Hermosa Beach. I am concerned that timeshares will just add to the number of quality of life issues that the City will not be able to enforce. I happen to live nearby some of these illegal STVRs and no matter how frequently I report them to the City, new renters keep showing up. A quick search of Airbnb shows that there are dozens of STVRs that are advertising for stays of less than 30 days. If the stay is increased to 30 days the number grows to over 100. The City is just not able to do anything to contain these issues and I am worried that the City will not be able to do anything about the potential problems with timeshares.
Potential Solutions
I believe that there are a few different ways that Council should deal with this issue:
1. Allow timeshares in locations where hotels are permitted. If timeshares are strictly considered a residential use this may not be possible until the zoning code is changed to allow residential in mixed use projects in C-2 and C-3. The Beach House is a form of timeshare but nobody minds it because it is in the C-2 zone. I think that it is worth waiting for the zoning code update to properly deal with the timeshare issue.
2. Define timeshares in the municipal code as hotels or motels. This would allow them in zones where hotel use is allowed.
3. Allow timeshares at commercially zoned parcels with non -conforming residential uses similar to legal STVRs.
4. Prohibit timeshares anywhere in Hermosa Beach.
3-89
Please do not allow timeshares to further degrade our neighborhoods the way that STVRs already have.
Thank you for your consideration.
Scott Hayes
■o=
Hermosa Beach, CA 90254
3-90
City Council Adjourned Regular Hybrid Meeting (Closed Session - 5:00 PM Open Session - 6:00 PM
09-28-22 17:00
Agenda Name
Comments auppurt
c) REPORT 22-0586 INTRODUCTION OF AN ORDINANCE OF THE 2
CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA
AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND
OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230
(TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING
SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED
COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT
AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE
CALIFORNIA ENVIRONMENTAL QUALITY ACT
(Community Development Director Jeannie Naughton)
Sentiments for All Agenda Items
The following graphs display sentiments for comments that have location data. Only locations of users who have commented will be shown.
Overall Sentiment
In Suppaft$%f
cppose(l00` )
Naulral{U%.
No RasponsojO%)
J Iaa Item: eComments for c) REPORT 22-0586 INTRODUCTION OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17,26.030 TO
PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND
DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (Community Development Director Jeannie Naughton)
Overall Sentiment
�PPase; I tl0'i;,)
Naulral(Q°,L}
No Raspansu(0%)
Scott Hayes
Location:
Submitted At: 3:30pm 09-27-22
1 am writing to express my strong opposition to Agenda Item Xlll, c 3-91
First, I believe that the residents adjacent to C-1 Zones should have been directly noticed about this potential change to the zoning code. As stated in the staff report, timesharing projects have increased "likelihood of frequent gatherings and parties generating noise in excess of what the neighborhood normally generates:' Since staff acknowledges that there will be neighborhood impacts as a result of the proposed timeshare projects, I feel that the City should have gone over and above the minimum legal public noticing requirements. I respectfully request that this item be continued until such time that the neighbors are properly noticed.
If this item is not continued please consider the following argument against the proposed zoning changes.
Section 17.40.230, A of the proposed ordinance states "Timeshare uses are not an appropriate land use in the City's residential zones due to the multiple occupancy of timeshare properties, the short-term, tourist oriented use of such property and commercial management of timeshare facilities, all of which create increased traffic generation, excessive noise, disruption to residential communities" What the ordinance fails to recognize is that those exact same concerns also make timeshares unsuitable for the C-1 Neighborhood Commercial Zone.
Timeshares are almost always vacation properties. As such, they are essentially hotels which is a disruptive use when adjacent to a residential neighborhood. Our municipal code does not allow hotels in the C-1 zone and timeshares should be excluded as well. Municipal Code Section 17.26.020, B, 1 specifically states that the purpose of the C-1 Neighborhood Commercial Zone is "to provide sites for a mix of small local businesses appropriate for, and serving the daily needs of nearby residential neighborhoods; while establishing land use regulations that prevent significant adverse effects on abutting residential uses:' I do not see how a timeshare serves the daily needs of nearby residential neighborhoods but I can easily see how these neighborhoods would suffer significant adverse effects from timeshares.
People generally stay at timeshares for 1-2 weeks. As a result, they have nearly the same impact on neighborhoods as short term vacation rentals. Hermosa Beach only allows STVRs on commercially zoned parcels with non -conforming residential uses. Why are timeshares being treated any differently? Timeshares will have the same traffic and noise impacts as STVRs so they should be restricted to the same areas.
Additionally, there is no language in the ordinance to prohibit utilizing the timeshare as a short term vacation rental. If timeshares are approved, it will only be a matter of time before we start seeing the timeshare units showing up on Airbnb and VRBO.
The ordinance states that timeshares must be built above commercial space as part of a mixed use project. Why wouldn't we require that the upper floors of mixed use developments be residential space to help the City meet its housing goals? Allowing this space to be used as timeshare vacation homes makes no sense. l would much prefer to have new neighbors contributing to the community that having to deal with new transient residents every week or 2.
The City is currently unable to do anything about the quality of life issues brought about by the MANY illegal short term vacation rentals in Hermosa Beach. I am concerned that timeshares will just add to the number of quality of life issues that the City will not be able to enforce. I happen to live nearby some of these illegal STVRs and no matter how frequently I report them to the City, new renters keep showing up. A quick search of Airbnb shows that there are dozens of STVRs that are advertising for stays of less than 30 days. If the stay is increased to 30 days the number grows to over 100. The City is just not able to do anything to contain these issues and I am worried that the City will not be able to do anything about the potential problems with timeshares.
I believe that there are a few different ways that Council should deal with this issue:
1. Allow timeshares in locations where hotels are permitted. If timeshares are strictly considered a residential use this may not be possible until the zoning code is changed to allow residential in mixed use projects in C-2 and C-
3. 1 think that it is worth waiting for the zoning code update to properly deal with the timeshare issue.
2. Define timeshares in the municipal code as hotels or motels. This would allow them in zones where hotel use is allowed.
3. Allow timeshares at commercially zoned parcels with non -conforming residential uses similar to legal STVRs.
4. Prohibit timeshares anywhere in Hermosa Beach.
3-92
Please do not allow timeshares to further degrade our neighborhoods the way that STVRs already have.
Rachel Hayes
Location: 90254-5103, Hermosa Beach
Submitted At: 8:55am 09-27-22
While I am glad to see that the city is being proactive to prevent timeshare ownership of properties in the residential areas, I am not happy with the request to change the use of properties in zone C1 which is directly adjacent to residential properties.
For the same reason that you don't want one in your neighborhood, we don't want one in our neighborhood.
Please note that timeshares do not operate the way it was sold to the planning commission. Timeshare salesmen are very good sales people, and they have sold you a pack of lies. Think about what they are selling you. Eight families sharing one house. Eight families would get one week every other month. Who do you know who has six weeks of vacation time? And how many people want to use all six of those weeks to go to the same location? The eight families they are selling you on are "investors" in a property who will get their money back by renting the unit through the timeshare system.
The way timeshares work is owners either buy a designated week at one resort/location or they buy points which they can use to book a week at any of the timeshare's properties (owned or negotiated). People who own the same week can trade that week into the timeshare pool of units for a week at any other of the timeshare's properties. The timeshare companies pool their resources with other timeshare companies in order to offer more flexibility, as it helps generate more sales. So, what you think will be the same eight families using the unit, will end up becoming a short term rental with new tenants every single week. I belong to a timeshare and they use AirBnB as a selling point — seems they are getting into the business of subleasing out AirBnB's to their owners for points. The sales people will actually say "You don't have to stay at one of our resorts, we have contracts with AirBnBs all over. You can use your points to book one of those properties".
Avoidance of Taxes: Because allegedly only 'timeshare owners' will be using the unit, there will be no short term tax paid to the city for this unit. Timeshare fees are called maintenance fees (not rent), so technically they would not be subject to the short term tax like hotels or even AIrBnBS.
Short Term Rentals kill neighborhoods. There is an illegal short term rental across the street from us. Every single new tenant drives the wrong way down the one-way alley. Every single one.... They don't care about our neighborhood. Sometimes they park a car in the alley blocking access to our garage. When l call the city, I am told the city will not tow. So the city is protecting the short term renters at the expense of the residents? If the city cannot help us now, imagine what it will be like when there are several places with new tenants every single week (unmanaged tenants).
C1 zone: I live next to a bar. 1 have no problems with the bar. They have a CUP and they follow their CUP, so we have lived in harmony. The bar has a paid staff member on site to manage the property. This timeshare (just another name for short term rental) will not have a staff member present to manage the property. l would rather have a pot dispensary next to me than another short term rental. At least the pot dispensary will have staff on site, and it will have specific hours of operation. And the City will have the ability to correct any unwanted behaviors with the pot dispensary operators. How can the city correct behavior of tenants who change over every single week.
With a timeshare owned property, once you open pandora's box, you will not be able to fix it. Please say no to timeshare properties in our city. Please say no to timeshare properties in Zone C1 as it is too close to residential properties. For the same reason that you don't want one in your neighborhood, we don't want one in our neighborhood.
Rachel Hayes, resident 122 1st Street, Hermosa Beach, CA 3-93
4/27/23, 9729 AM City of Hermosa Beach - File #, REPORT 22-0643 Sign In
CITY OF
HERMOSA BEACH
Legi�Eatfon Calendar CltyCoun16 Departments People
11 7 LIShare _IRSS IYAlerts
Details PDF Staff Report
File #: REPORT 22-0643 Version: 1 Name:
Type: Action Item Status: Consent Calendar
File created: 10/4/2022 In control: City Council
On agenda: 10/11/7072 Final action:
ADOPTION OF AN ORDINANCE OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT Ttle: AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION
17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT (Community Development Director Jeannie Naughton)
Attachments 1. 1. Draft Ordinance. 2. 2. PC Resolution 22-07, 3. 3. Link to April 19, 2022 Planning Commission_ Staff Re op tr , 4. 4. Link to September 28, 2022 City. Council Staff Report
Staff Report Text
Honorable Mayor and Members of the Hermosa Beach City Council Regular Meeting of October 11, 2022
Title
ADOPTION OF AN ORDINANCE OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION
17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT (Community Development Director Jeannie Naughton)
Body
Recommended Action:
Recommendation
Staff recommends City Council:
1. Waive full second reading and adopt by title an Ordinance of the City of Hermosa Beach, California, amending Chapter 17.40 (Conditional Use Permit and Other Permit Standards) to add Section 17.40.230 (Timeshare Uses) to Title 17 (Zoning) and amending Section 17.26.030 to permit timeshare uses in specified commercial zones pursuant to a Conditional Use Permit (Attachment 1); and
2. Direct staff to print and publish the summary ordinance in a newspaper of general circulation within 15 days following adoption and post it on the City's bulletin for 30 days.
Body
Executive Summary_
The City of Hermosa Beach Municipal Code (HBMC) does not currently include regulations governing the use of timeshares within the City, nor any regulations that would explicitly address these emerging businesses offering "fractional ownership" of a property in a way that operates like a timeshare. If left unregulated, these types of uses in the residential zones could limit the City's existing housing stock for use as long-term residency and impair the overall character of the City's residential areas.
At its September 28, 2022 meeting, City Council held a public hearing and introduced and waived first reading of the ordinance with amendments to modify the authorized zone from the originally proposed C-1 (Neighborhood Commercial Zone) to the C-2 (Downtown Commercial Zone). Council further directed staff to incorporate the discussion into future Housing Element and Zoning Code update processes. The revised ordinance (Attachment 1) would permit timeshare uses in the C-2 Downtown Commercial Zone within the City pursuant to a Conditional Use Permit (CUP) and prohibit the use in all other zones within the City.
Background:
The City of Hermosa Beach is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, Iccal retailers and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents, those who work in the City, and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy.
Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance. The City has commercial zones, that provide for uses that serve both visitors and the local community. These commercial uses include: restaurants; retail shops; and visitor -serving hotels and motels. The City also has residential zones, at varying densities, that provide a diversity of housing types for those who live in the community.
The City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. At its April 18, 2022 meeting, the Planning Commission reviewed and recommended https:/lhermosabeach. legistar. comlLegislationDetail.aspx?ID=5866947&GUID=1 F32BD8F-48D8-4AE4-BC2A-F6EDOAB1146B 114 3-94
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approval of the proposed ordinance to permit timeshare uses in specified commercial zones pursuant to a Conditional Use Permit by adopting Resolution P.C. 22-07 (Attachment 2).
At its September 28, 2022 meeting, City Council received a staff presentation of the draft ordinance. Following the public hearing, City Council introduced and waived first reading of the ordinance with the following amendments: Section 2 was revised to replace all references of C-1 (Neighborhood Commercial Zone) with C-2 (Downtown Commercial Zone); and Section 3 was revised to shift the "U" from the C-1 column, to the C-2 column, indicating that timeshare uses would be permitted pursuant to a Conditional Use Permit in the C- 2 (Downtown Commercial Zone) and prohibit the use in the C-1 (Neighborhood Commercial Zone). City Council further directed staff to incorporate this discussion into future Housing Element and Zoning Code update processes.
Past Planning Commission and City Council Actions
April 18, 2022 IPlanning Commission reviewed the proposed ordinance and adopted Resolution P.C. 22-07
September 28, 2022 City Council introduced and waived first reading of an Ordinance with amendments to replace all references of C-1 (Neighborhood Commercial Zone) with C-2 (Downtown
Commercial Zone) in Section 2; and Section 3 was amended o shift the "U" from the C-1 column, to the C-2 column, indicating that timeshare uses would be permitted with a Conditional Use Permit in the C-2 (Downtown Commercial
one) and not permitted in the C-1 (Neighborhood
Commercial Zone). City Council further directed staff to incorporate this discussion into future Housing Element and Zoning Code update processes.
City Housing
The most recent U.S. Census data lists the median value of owner -occupied homes in Hermosa Beach as $1,542,9000) for the 2015-2019 period, while the Zillow Home Value Index estimates median home values in Hermosa Beach to be approximately $2,174,879(2) as of January 31, 2022. According to the Zillow Home Value Index, home values in the City have gone up 10.1 percent over the past year(3) In contrast, the median household income in Hermosa Beach from 2015-2019 was $136,702f4) and the median income for a four -person household in Los Angeles County for 2021 was approximately $80,000P. The cost of homes currently in Hermosa Beach are in excess of what median income residents of Hermosa Beach can afford, and certainly over the median income residents of Los Angeles County generally..
The conversion of homes in the City's residential neighborhoods to these timeshare -like uses would eliminate residential dwelling units that would otherwise be available for long-term residential use, thereby further exacerbating the lack of long-term available housing in the City. A home that is used for timeshare purposes would no longer be available for households to use as their long-term residence.
Impacts to Character of the City's Residential Districts Timesharing projects have the same character as commercial hotels, motels, and other transient occupancy uses due to the multiple short- term occupancies by those participating in timesharing projects. For this reason, the activity is better suited in commercial or quasi - commercial zones. The use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods.
The intensity of the activity is a significant reason why these uses can change the character of a residential neighborhood. Long-term residents, whether owners or renters, occasionally have guests and parties, but timeshare homes are used exclusively by people who are coming to the City on a short-term basis -most likely for vacation or leisure, increasing the likelihood of frequent gatherings and parties generating noise in excess of what the neighborhood normally generates. hlrrm ww census. ov ickfads fact table ttermosabeach[ ealtiornla1H5o410219 htwj llwy2 lfaw_tamlhe_rrnasa•beach calhomr voluta!
https jlwwvt t111ow tomb+ermosa beachtelhome-valucsL
`h[tas //.vww_census eov/cui[kfacts/fact/table/isermosaheath[itv�alilorn la/HSD4102t9. ' hr s- www_#�cd ca. av'oranu-fundin iinmme-limits state-and-re'3eral-sntame-limits dors incarne-limits-�02I. df Timeshare owners and visitors will most likely stay out later, entertain more, and gather in larger numbers while on vacation. Timeshare uses can change the character of a residential neighborhood by having it serve not only as a residential area, but also a visitor lodging area and subjecting the neighborhood to the impacts that come with the more intense land use. https:[email protected]€star.comlLeg islationDetail.aspx?ID=5866947&GUID=1 F32B138F-48D8-4AE4-BC2A-F6EDOAB1146B 214 3-95
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Further, the nature of the timeshare use itself can impact the residential character of the City's residential zones because they ensure that the timeshare users can only use their property for a limited amount of time each year. Each co-owner is in the unit on a short-term basis, so they do not have the time to participate in activities or build the relationships that create the fabric of a community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents.
Emerging Businesses
Recently, certain businesses have emerged which purport to sell "co -ownership" shares in residential property(6). These businesses, as staff understands the business model, start by purchasing homes or entering contracts to purchase homes in tourist destinations in desirable locations like Hermosa Beach. These businesses then form a limited liability company ("LLC"), which owns title to the residential home.
The "co -owners" each purchase a one -eighth share and are entitled to use the residential property for a certain number of days per year according to their share of ownership in the LLC. The one -eighth interest entitles the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special day" (Fourth of July, Thanksgiving, Christmas, etc.).
The stays are reserved on an app, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, the business continues to manage the homes, including providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners of the LLC.
The Ordinance
The City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use, The purpose of any ordinance should be to ensure that it the City is able to maintain its existing and limited housing stock for use in long-term residency, and to maintain the character of its residential zones. c These types of businesses are merely used as an example. The Ordinance Is not directed at any Individual business or businesses; but rather regulate the specific use.
Completely banning "fractional ownership," joint tenancies, or ownership by business entities such as LLC is not advisable. There are numerous properties in the City's residential zones currently owned by numerous owners or by LLCs. Thus, the ordinance is geared toward the specific impacts of the at -issue uses -timeshare like uses organized and run by third parties for a fee. The proposed ordinance (Attachment 1) does not target or single out any business or ownership structure.
As revised, the ordinance allows for these types of timeshare uses in the City's C-2 Downtown Commercial zone, subject to a Conditions Use Permit. Timeshare uses would be prohibited in all other zones. In order to avoid an over -inclusive ordinance that prohibits joint tenancies or other type of ownership structure that do not have the same deleterious impacts, the proposed ordinance focuses on the actual use of the property, as compared to the ownership structure, and in pertinent regulates this "timeshare use" subject to a "timeshare plan." Timeshare plan is defined as:
Any arrangement, plan, scheme, or similar device, facilitated, offered, or organized by a third -party non -purchaser, whether by membership agreement, bylaws, shareholder agreement partnership agreement, sale, lease, deed, license, right to use agreement or by any other means, whereby purchasers, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years." Environmental Determination:
The proposed ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in C-2 Downtown Commercial zone within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment.
General Plan Consistency-
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This report and associated recommendation have been evaluated for their consistency with the City's General Plan, Relevant Policies are listed below:
Land Use and Design Element
Goal 9. Create a sustainable urban form and land use patterns that support a robust economy and high quality of life for residents.
Policies:
• 1.5 Balance resident and visitor needs. Ensure land uses and business provide for the needs of residents as well as visitors. • 1.7 Compatibility of uses. Ensure the placements of new uses does not create or exacerbate nuisances between different types of land uses.
Goal 2. Neighborhoods provide for diverse needs of residents of all ages and abilities and are organized to support healthy and active lifestyies.
Policies:
• 2.4 Single density neighborhoods. Preserve and maintain the Hermosa Hills, Eastside, Valley, North End and Hermosa View neighborhoods as predominantly single-family residential neighborhoods • 2.5 Neighborhood preservation. Preserve and enhance the quality of residential neighborhoods by avoiding or abating the intrusion of disruptive, nonconforming buildings and uses.
Fiscal Impact:
There is no fiscal impact associated with the recommended action.
Attachments:
1. Draft Ordinance
2. PC Resolution 22-07
3. Link to April 19, 2022 Planning Commission Staff Report 4, Link to September 28, 2022 City Council Staff Report Respectfully Submitted by: Patrick Donegan, Assistant City Attorney Concur: Jeannie Naughton, Community Development Director Noted for Fiscal Impact: Viki Copeland, Finance Director Legal Review: Patrick Donegan, Assistant City Attorney
Approved: Suja Lowenthal, City Manager
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CITY OF HERMOSA BEACH
ORDINANCE NO. XX
AN ORDINANCE OF THE CITY OF HERMOSA BEACH. AMENDING
CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT
STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO
PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES
PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING
THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA
ENVIRONMENTAL QUALITY ACT.
THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH DOES HEREBY ORDAIN AS FOLLOWS:
Section 1. Findings.
A. The City of Hermosa Beach ("City") is a scenic beachfront city, known for its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue.
B. Preserving the City's costal resource and the qualify and character of the City has been a focal point of the City's iand use planning for decades, and remains a primary focus in the City's current General Plan.
C. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy.
D. The City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses.
E. The City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City.
F. According to the U.S. Census Bureau, the current median household income in the City is $136,702, while the estimated value of owner - occupied housing units from 2015-2019 was approximately $1,542,900 with current real estate listings suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City.
G. The conversion of existing residential units to uses other than long-term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community.
H. The City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses.
I. The high impact use associated with timeshares, combined with the frequent turnover and commercial management involved in timeshare properties is not consistent with the purpose and nature of residential districts in the City. Rather, they are commercial in nature, in that these timeshare uses are structured as a short-term, tourist oriented, visitor serving use of the subject properties. The use of properties as timeshares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City.
J. The use of residential properties for timeshare uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for timeshare uses of residential properties.
K. This encroachment of tourist oriented, visitor serving uses in residential neighborhoods is likely to compromise the character of residential areas within the City, and further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City.
L. The City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad 3-99
authority to regulate the development and use of real property within its jurisdiction to promote the public welfare.
M. Pursuant to and in accordance with this authority, the City Council desires to prohibit timeshare uses in residential areas, and only allow them in the C- 2 commercial zone within the City, pursuant to a conditional use permit.
N. The City's Planning Commission held a duly noticed public hearing on April 19, 2022, as required by law to consider all the information presented by staff, and public testimony presented in writing and at the meeting.
O. On April 19, 2022, the City's Planning Commission recommended that the City Council adopt this Ordinance amending the City's Municipal Code as described herein.
P. On September 28, 2022, the City Council held a duly noticed public hearing, accepting testimony from the public, and discussed the proposed amendments and staff's recommended approval of this Ordinance and adopted on first reading the Ordinance.
Q. On October 11, 2022, the Ordinance was brought back for a second reading and adopted by the City Council.
R. The proposed zoning amendments are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the character of the City; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply.
Section 2. The above recitals are hereby incorporated as though set forth in this section.
Section 3. Section 17.40.230 (Time Share Uses) is hereby added to Chapter 17.40 (Conditional Use Permit and Other Permit Standards) of Title 17 (Zoning) of the City of Hermosa Beach Municipal Code, to read as follows:
Section 17.40.230 Timeshare Uses
A. Purpose and Findings.
There is a critical shortage of permanent, long-term housing in the City of Hermosa Beach ("City"). A limited supply of suitable vacant land, land values, 3-100
and market demand for land for other uses, have limited the construction of additional housing in the City.
The City is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy.
Timeshare uses are not an appropriate land use in the City's residential zones due to the multiple occupancy of timeshare properties, the short-term, tourist oriented use of such property and commercial management of timeshare facilities, all of which create increased traffic generation, excessive noise, disruption to residential communities through commercial -level maintenance of the timeshare facilities, and therefore are appropriately confined to commercial zones.
Conversion of permanent housing to timeshare facilities removes existing housing units from the City's existing stock and exacerbates an already severe housing shortage. It is therefore in the public interest to prohibit conversions of existing housing units into timeshare facilities, as to do so eliminates needed housing stock by diverting those units to a Tourist -oriented, commercial use.
B. Definitions.
For purposes of this Section, the following words and phrases shall have the meaning respectively ascribed to them by this Section:
"Accommodation" means any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for residential use and occupancy, including but not limited to a single-family dwelling, or unit within a two family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as defined in Section 17.04.040. "Building" shall have the meaning ascribed to it by Section 17.04.040. "Dwelling unit" shall have the meaning ascribed to it by Section 17.04.040. "Managing entity" means the person who undertakes the duties, responsibilities and obligations of the management of a timeshare plan.
"Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, or other legal entity, or any combination thereof.
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"Timeshare instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a timeshare plan and includes the declaration dedicating accommodations to the timeshare plan. "Timeshare interest" means the right to exclusively occupy a timeshare property for a period of time on a recurring basis pursuant to a timeshare plan, regardless of whether or not such right is coupled with a property interest in the timeshare property or a specified portion thereof.
"Timeshare plan" means any arrangement, plan, scheme, or similar device, facilitated, offered, or organized by a third -party non -purchaser, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby purchasers, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years.
"Timeshare property" means one or more accommodations subject to the some timeshare instrument, together with any other property or rights to property appurtenant to those accommodations.
"Timeshare use" means the use of one or more accommodations or any part thereof, as a timeshare property pursuant to a timeshare plan.
C. Timeshare Uses Restricted to C-2 Downtown Commercial Zone.
Timeshare uses are conditional uses within the City's C-2 Downtown Commercial Zone, subject to approval of a conditional use permit applied for and approved in conformance with this Section. Timeshare uses are not permitted in any other Zones in the City.
D. Application Process and Development Standards.
A. Application Process. Approval of a conditional use permit for timeshare uses in the C-2 Downtown Commercial Zone within the City shall be required in accordance with the requirements of Chapter 17.40. In addition to the requirements contained in Chapter 17.40, an application for a timeshare use shall be accompanied by the following documents which shall be subject to the approval of the Community Development Director:
1. Management Flan. A management plan shall describe the methods employed by the applicant to guarantee the future adequacy, stability, and 3-102
continuity of a satisfactory level of management and maintenance of the time share use.
2. Application Requirements. In addition to any application requirements established by this section and any other applicable requirements of this code, the following information shall be submitted as part of any application to develop or establish a timeshare use:
a. Typical floor plans for each accommodation.
b. The phasing of the construction of the accommodations on the timeshare property, if applicable.
C. A description of any ancillary uses which are proposed in conjunction with the time share use.
d. A description of the method of management of the time share use and indication of the management entity for the time-share property. e. Any restrictions on the use or occupancy of the
accommodations.
f. Any other information or documentation the applicant, City staff or commission deems reasonably necessary to the consideration of the timeshare use, including any required environmental documents.
B. Development Standards and Operational Requirements.
Notwithstanding any other provision of this Section, the following conditions must be met by any timeshare use in any conditionally permitted zone. Additional requirements may be attached to a conditional use permit or development agreement if found to be necessary to assure that the timeshare use meets the intent of this Section:
1. Timeshare uses developed in the C-2 Downtown Commercial Zone within the City shall be limited to accommodations in upper floors in conjunction with a mixed -use project.
2. No existing residential use in the C-2 Downtown Commercial Zone within the City shall be converted to a timeshare use.
3. Development Standards. The timeshare use shall comply with all development standards for the zone in which it is located.
4. Parking. Parking shall be provided as follows:
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a. For accommodations of two or fewer bedrooms, one parking space shall be provided for each accommodation.
b. For accommodations of three or more bedrooms, two parking spaces shall be provided for each accommodation.
5. Modification or Waiver of Standards. The Planning Commission may modify or waive one or more of the regulations contained in this Section if it determines that strict compliance is not necessary to achieve the purpose and intent of this Section.
E. Violations, Enforcement and Civil Penalties.
1. Any responsible person, including but not limited to an owner of a timeshare interest, management entity, agent, or broker who uses, or allows the use of, or advertises or causes to be printed, published, advertised or disseminated in anyway and through any medium, the availability for sale or use of an accommodation in violation of this Section is guilty of a misdemeanor for each day in which such accommodation is used, allowed to be used, or advertised for sale or use in violation of this Section. Such violation shall be punishable pursuant to Section 1.04.020 of the City of Hermosa Beach Municipal Code.
2. Timeshare use, and/or advertisement for timeshare use, of an accommodation in violation of this Section is a threat to public health, safety or welfare and is thus declared to be unlawful and a public nuisance. Any such nuisance may be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 8.28 except that the civil penalty for a violation shall be one thousand dollars ($1,000.00). Each day the violation occurs shall constitute a separate offense
3. Any responsible person who violates this Section shall be liable and responsible for a civil penalty of one thousand dollars ($1,000.00) per violation per day such violation occurs. The City may recover such civil penalty by either civil action or administrative citation. Such penalty shall be in addition to all other costs incurred by the City, including without limitation the City's staff time, investigation expenses and attorney's fees.
a. Where the City proceeds by civil action, the court shall have discretion to reduce the civil penalty based upon evidence presented by the responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the court should consider the purpose of this Section to prevent and deter violations and whether the reduction 3-104
of civil penalties will frustrate that purpose by resulting in the responsible person's enrichment or profit as a result of the violation of this Section. In any such civil action the City also may abate and/or enjoin any violation of this Section.
b. Where the City proceeds by administrative citation, the City shall provide the responsible person notice of the right to request an administrative hearing to challenge the citation and penalty, and the time for requesting that hearing.
i. The responsible person shall have the right to request the administrative hearing within forty-five (45) days of the issuance of the administrative citation and imposition of the civil penalty. To request such a hearing, the responsible person shall notify the City cleric in writing within forty-five (45) days of the issuance of the citation. The appeal notification shall include all specific facts, circumstances and arguments upon which the appeal is based.
ii. The City Manager is hereby authorized to designate a hearing officer to hear such appeal. The City hearing officer shall conduct a hearing on the appeal within ninety (90) days of the request for the hearing unless one of the parties requests a continuance for good cause. The hearing officer shall only consider those facts, circumstances or arguments that the property owner or responsible person has presented in the appeal notification.
iii. The hearing officer shall render a decision in writing within thirty (30) days of the conclusion of the hearing. The hearing officer shall have discretion to reduce the civil penalty based upon evidence presented by the property owner or responsible person that such a reduction is warranted by mitigating factors including, without limitation, lack of culpability and/or inability to pay. Provided, however, that in exercising its discretion the hearing officer should consider the purpose of this Section to prevent and deter violations and whether the reduction of civil penalties will frustrate that purpose by resulting in the property owner's or responsible person's enrichment or profit as a result of the violation of this Section.
iv. Any aggrieved party to the hearing officer's decision on the administrative appeal may obtain review of the decision by filing a petition for writ of mandate with the Los Angeles County 3-105
Superior Court in accordance with the timelines and provisions set forth in Government Code Section 53069.4,
v. If, following an administrative hearing, appeal, or other final determination, the owner of the property is determined to be the responsible person for the civil penalty imposed by this section, such penalty, if unpaid within forty-five (45) days of the notice of the final determination, shall become a lien to be recorded against the property on which the violation occurred pursuant to Chapter 8.28. Such costs shall be collected in the some manner as county taxes, and thereafter the property upon which they are a lien shall be sold in the some manner as property now is sold for delinquent taxes
4. Any violation of this Section may also be abated and/or restored by the enforcement official and also may be abated pursuant to Chapter 8.28 except that the civil penalty under Chapter 8.28 for a violation shall be one thousand dollars ($1,000.00). Each day the violation of this Section occurs shall constitute a separate offense. The remedies under this Section are cumulative and in addition to any and all other remedies available at law and equity.
Section 3. Section 17.26.030 of Chapter 17.26 (C], C2 and C3 Commercial Zones) of Title 17 (Zoning) is amended to add the following entry to the chart of land use regulations
USES
I C1
C2
C3
See Section
Timeshares
I
U
17.40.230
Section 4. CEQA. This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c) (2) and 15060(c) (3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in the C-2 Downtown Commercial zone within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b) (3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment.
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Section 5. Effective Date. Pursuant to California Government Code section 36937, this Ordinance shall take effect thirty (30) days after its final passage.
Section 6. Certification. The City Clerk is directed to certify the passage and adoption of this Ordinance; cause it to be entered into the City's book of original ordinances; make a note of the passage and adoption in the records of this meeting; and, within fifteen (15) days after the passage and adoption of this Ordinance, cause it to be published or posted in accordance with California law.
PASSED, APPROVED and ADOPTED this 11th day of October, 2022.
Michael Detoy, Mayor
PRESIDENT of the City Council and MAYOR of the City of Hermosa Beach, CA ATTEST:
Myra Maravilla
City Clerk
APPROVED AS TO FORM:
Michael Jenkins
City Attorney
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RESOLUTION P.C. 22-07
A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF
HERMOSA BEACH ]RECOMMENDING CITY COUNCIL APPROVAL OF TEXT
AMENDMENTS TO THE CITY OF HERMOSA BEACH MUNICIPAL CODE
AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT
TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A
CONDITIONAL USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT.
The Planning Commission of the City of Hermosa Beach does hereby resolve as follows:
SECTION 1. Findings.
A. The Planning Commission held a duly noticed public hearing on April 19, 2022 to consider a text amendments to the City of Hermosa Beach Municipal Code, Title 17 (Zoning), as described in the proposed ordinance attached as Exhibit A.
B. The City of Hermosa Reach ("City") is a scenic beachfront city, known for its many diverse restaurants, local retailers and popular commercial areas like its downtown area and Pier Avenue.
C. Preserving the City's costal resource and the quality and character of the City has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's current General Plan.
D. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy.
E. The City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses.
F. The City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City. e �s
G. According to the U.S. Census Bureau, the current median household income in the City is $136,702, while the estimated value of owner -occupied housing units from 2015-2019 was approximately $1,542,900 with current real estate listings suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City, H. The conversion of existing residential units to uses other than long-term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community,
I. The City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than longterm residential uses.
J. This high impact use associated with timeshares, combined with the frequent turnover and commercial management involved in timeshare properties is not consistent with the purpose and nature of residential districts in the City. Rather, they are commercial in nature, in that these timeshare uses are structured as a short- term, tourist oriented, visitor serving use of the subject properties. The use of properties as timeshares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City,
K. The use of residential properties for timeshare uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for timeshare uses of residential properties.
L. This encroachment of tourist oriented, visitor serving uses in residential neighborhoods is likely to compromise the character of residential areas within the City, and further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City.
M. The City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad authority to regulate the development and use of real property within its jurisdiction to promote the public welfare.
N. Pursuant to and in accordance with this authority, the Planning Commission desires to prohibit timeshare uses in residential areas, and certain commercial zones and to 3-109
update the language of the Zoning Code to provide consistency with the terminology used to define timeshare uses in State law, Further, the City desires to provide greater clarity as to the zones which timeshare uses are permitted as conditional uses, and the standards pursuant to which they will be reviewed in those zones.
O. On April 19, 2022, the Planning Commission held a duly -noticed public hearing and considered the staff report, recommendations by staff, and public testimony concerning the proposed ordinance.
SECTION 2. This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines (the Guidelines), and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in specified zones within the City pursuant to a conditional use permit, and prohibits them in all other zones, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment.
Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment.
SECTION 3. The Planning Commission finds that the proposed amendments to the Municipal Code to permit timeshares in specified zones within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the character of the City; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply.
SECTION 4.. Based on the entire record before the Planning Commission, and all written and oral evidence presented, the Planning Commission hereby finds that the proposed ordinance is consistent with the City's adopted General Plan and does not conflict with any of the General Plan's goals or policies.
SECTIONS. The Planning Commission hereby recommends that the City Council adopt the attached proposed ordinance entitled, "AN ORDINANCE OF THE CITY OF HERMOSA BEACH. AMENDING CHAPTER 17.40 (CONDITIONAL USE
PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION
17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL
ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING 3-110
THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA
ENVIRONMENTAL QUALITY ACT.
I HEREBY CERTIFY that the foregoing recommendation to the City Council was duly and regularly approved by the Planning Commission of the City of Hermosa Beach at a regular meeting of said Planning Commission held on April 19, 2022, by the following roll call vote:
VOTE:
AYES: 5 - Chair Pedersen, Vice Chair Izant, Commissioner Saemann, Commissioner Hoffman, and Commissioner Rice
NOES: None
ABSTAIN: None
ABSENT: None
CERTIFICATION
I hereby certify that the foregoing Resolution P.C. 22-07 is a true and complete record of the action taken by the Planning Commission of the City of Hermosa Beach, California, at its regular meeting of April 19, 2022.
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Dave Pedersen, Chairperson
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Date
*Angq-api, Secretary
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TA 22-01 ZONE TEXT AMENDMENT TO AMEND THE HERMOSA BEACH MUNICIPAL CODE CHAPTER 17.40 TO ADD SECTION 17.40.230 AND Title: AMEND SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES AND DETERMINE THAT THE PROJECT IS
EXEMPT FROM THE CALIFORNIA ENVIRINMENTAL QUALITY ACT (CEQA) Attachments: 1. 1. Draft Resolution 22-07 Tmeshare Ordinance. 2, 2. Hermosa Beach Draft Ordinance Staff ReportText
Honorable Chairman and Members of the Hermosa Beach Planning Commission Regular Meeting of April 19, 2022
Title
TA 22-01 ZONE TEXT AMENDMENT TO AMEND THE HERMOSA BEACH MUNICIPAL CODE CHAPTER 17.40 TO ADD SECTION
17.40.230 AND AMEND SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES AND DETERMINE
THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRINMENTAL QUALITY ACT (CEQA) Recommendation
Recommended Action:
Staff recommends the Planning Commission adopt Resolution No. 22-07 (Attachment 1) recommending that the City Council approve Zone Text Amendment TA 22-01, thereby amending Chapter 17.40 to add section 17.40.230 and amend section 17.26.030 to permit timeshare uses in specified commercial zones and determine that the project is exempt from the California Environmental Quality Act (CEQA).
Body
Background:
The City of Hermosa Beach ("City") does not currently have regulations in place governing the use of timeshares within the City, nor any regulations that would explicitly address these emerging businesses offering "fractional ownership" of a property in a way that operates like a timeshare. These types of uses in the City's residential zone could limit the City's existing housing stock for use as a long-term residency and impairthe character of the City's residential zones.
At its March 15, 2022 meeting, the Planning Commission directed staff to bring forward a zone text amendment addressing these types of uses.
Analysis:
The City is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers, and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents, those who work in the City, and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy.
Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance. The City has commercial zones including the C-1 and C-2 commercial zones that provide for uses that serve both visitors and the local community such as: restaurants; retail shops; and visitor serving hotels. The City also has residential zones that provide housing for those who live in the community, at varying densities in order to provide a diversity of housing types.
City Housing
The most recent census data lists the median value of owner -occupied homes in Hermosa Beach as $1,542,900 for the period of 2015- 2019, while the Zillow Home Value Index estimates medial home values in Hermosa Beach to be approximately $2,174,879 as of January 31, 2022. According to the Zillow Home Value Index, homes values in the City have gone up 10.1 percent over the past year. In contrast, the median household income in Hermosa Beach from 2015-2019 was $136,702, and the median income for a four -person household in Los Angeles County for 2021 is approximately $80,000. The cast of homes currently in Hermosa Beach are more than what median income residents of Hermosa Beach can afford, and certainly over the median income residents of Los Angeles County generally. https:Ithermosabeach.legistar.comlLegislationDetail.aspx?ID-5557241 &GUID=80A64A8C-E51 A-4C26-B2D2-3046537C93D5 1I3 3-112
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The conversion of homes in the City's residential neighborhoods to these timeshare -like uses would eliminate residential dwelling units that would otherwise be available for long-term residential use, thereby further exacerbating the lack of long-term available housing in the City. A home that is used for timeshare purposes would no longer be available for households to use as their long-term residence.
Impacts to Character of the Gity's Residential Districts Timesharing projects have the same character as commercial hotels, motels, and other transient occupancy uses due to their transient nature and to the multiple short-term occupancies by those participating in timesharing projects. This use is better suited in commercial or quasi -commercial zones and is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods.
The intensity of this use is a significant reason that these uses can change the character of a residential neighborhood. Long-term residents, whether owners or renters, occasionally have guests or parties, but these timeshare homes are used exclusively by people who are coming to the City on a short-term basis - most likely for vacation or leisure. As a result, those users may naturally stay out later, entertain more, and gather in larger numbers while on vacation. Timeshare uses can change the character of a residential neighborhood by having it serve not only as a residential area, but also a visitor lodging area, and subjecting it to the impacts that come with that more intense land use.
Further, the nature of the timeshare use itself can impact the residential character of the City's residential zones because it would ensure that the time share users can only use their property for a limited amount of time each year. Each co-owner is in the unit on a short-term basis, and without the time to participate in the types of activities or build the relationships that create the fabric of a community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents.
R e[ging Businesses
Recently, certain businesses have emerged which purport to sell "co -ownership" shares in residential property. These businesses, as staff understands the business model, start by purchasing homes or entering into contracts to purchase homes in tourist destinations in desirable locations like the City. These businesses then form a limited liability company ("LLC"), which owns title to the residential home. The "co - owners" each purchase a one -eighth share and are entitled to use the residential property for a certain number of days per year according to their share of ownership in the LLC. The one -eighth interest entities the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special day" (Fourth of July, Thanksgiving, Christmas, etc.). The stays are reserved on a mobile application, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, the business continues to manage the homes, including providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners of the LLC.
Time Share Ordinance
As mentioned above, the City does not currently have regulations in place governing the use of timeshares within the City or other businesses/arrangements that are identical or similar to a timeshare use. The purpose of any ordinance should be to ensure that it the City is able to maintain its existing and limited housing stock for use in long term residency and to maintain the character of its residential zones.
Completely banning "fractional ownership," joint tenancies, or ownership by business entities such as LLC is not advisable. There are numerous properties in the City's residential zones currently owned by numerous owners or by LLCs. Thus, any ordinance should be geared toward the specific impacts of the at -issue uses - timeshare like uses organized and ran by third parties for a fee. The proposed ordinance (Attachment 2) does not target or single out any business or ownership structure.
Environmental Determination:
The proposed ordinance is not subject to CEQA because the adoptions of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in C-1 and C-2 commercial zones within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment.
General Ian Consistency_
The proposed text amendment has been evaluated for consistency with the City's General Plan and is consistent with the following Goals and Policies of Plan Hermosa:
Land Use and Design Element
Goal 1 Create a sustainable urban form and land use patterns that support a robust economy and high quality of life for residents.
Policies:
• 1.5 Balance resident and visitor needs. Ensure land uses and business provide for the needs of residents as well as visitors. • 1.7 Compatibility of uses. Ensure the placements of new uses does not create or exacerbate nuisances between different types of land uses.
Goal 2 Neighborhoods provide for diverse needs of residents of all ages and abilities, and are organized to support healthy and active lifestyles.
Policies,
• 2.4 Single density neighborhoods. Preserve and maintain the Hermosa Hills, Eastside, Valley, North End and Hermosa View neighborhoods as predominantly single-family residential neighborhoods https:/Ihermosaboach.legistar.com/LegislationDetail.aspx? I D=555724i &GU I D=8OA64A8C-E51 A-4C26-B2D2-3046537C93D5 213 3-113
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• 2.5 Neighborhood preservation. Preserve and enhance the quality of residential neighborhoods by avoiding or abating the intrusion of disruptive, nonconforming buildings and uses.
Attachments:
1. Draft Resolution 22-07 Timeshare Ordinance
2. Hermosa Beach Draft Ordinance
Respectfully Submitted by. Carlos Luis, Senior Planner
Legal Review: Patrick Donegan, Deputy City Attorney
Approved: Angela Crespi, Interim Community Development Director https:llhermosabeach.legistar.comlLegis[ationDetai[.aspx?]D=5557241 &GUID=80A64A8C-E51A-4C26-B2D2-3046537C93D5 313 3-114
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File #: REPORT 27-0586 Version: 1 Name:
Type: Action Item Status: Public Hearing
File created: 9/19/2022 In control• City Council
On agenda: 9/78/2022 Final action:
INTRODUCTION OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND Title: AMENDING SECTION 17,26,030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING THAT THE PR03ECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (Community Development Director Jeannie Naughton)
Attachments; 1. 1. SUPPLEMENTAL Draft Ordinance 2. 2. Resolution P.C. 22-07, 3. 3. Link to A rip I I9, 2022 Planning Commission Staff Report 4.
SUPPLEMENTAL Emall from Scott Hayes Re Item 13. c.. 5. SUPPLEMENTAL eCamments for Item 13. c Staff Report Text
Honorable Mayor and Members of the Hermosa Beach City Council Regular Meeting of September 28, 2022
Title
INTRODUCTION OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA AMENDING CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES PURSUANT TO A CONDITIONAL
USE PERMIT AND DETERMINING THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (Community Development Director Jeannie Naughton)
Body
Recommended Action:
Recommendation
Staff recommends City Council consider waiving full reading and introduce by title only an Ordinance of the City of Hermosa Beach, California, amending Chapter 17.40 (Conditional Use Permit and Other Permit Standards) to add Section 17.40.230 (Timeshare Uses) to Title 17 (Zoning) and amending Section 17.26.030 to permit timeshare uses in specified commercial zones pursuant to a Conditional Use Permit and determining that the project is exempt from the California Environmental Quality Act (Attachment 1).
Body
Executive Summary_
The City of Hermosa Beach Municipal Code (HBMC) does not currently include regulations governing the use of timeshares within the City, nor any regulations that would explicitly address these emerging businesses offering "fractional ownership" of a property in a way that operates like a timeshare. If left unregulated, these types of uses in the residential zones could limit the City's existing housing stock for use as long-term residency and impair the overall character of the City's residential areas.
The proposed draft ordinance (Attachment 1) would permit timeshare uses in the C-1 and R ommercial zones within the City pursuant to a Conditional Use Permit (CUP), and prohibit the use in all other zones within the City.
Background:
The City of Hermosa Beach is a popular tourist destination known for its scenic beachfront location, its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue. Maintaining the balance between the quality of life for residents, those who work in the City, and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy.
Like most communities throughout California, one of the key means that the City utilizes to maintain this balance is through its Zoning Ordinance. The City has commercial zones, inelueling the G 11 and G 2 WRIFFIeFemal ZeReS, that provide for uses that serve both visitors and the local community. These commercial uses include: restaurants; retail shops; and visitor -serving hotels and motels. The City also has residential zones, at varying densities, that provide a diversity of housing types for those who live in the community.
The City does not currently have regulations in place governing the use of timeshares within the City or other businesseslarmngements that are identical or similar to a timeshare use. At its April 18, 2022 meeting, the Planning Commission reviewed and recommended approval of the proposed ordinance to permit timeshare uses in specified commercial zones pursuant to a Conditional Use Permit by adopting Resolution P.C. 22-07 (Attachment 2)_
Past Planning Commission Actions
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Meeting Date
IDescription
Aril 18, 2022
IP12nning Commission reviewed the proposed ordinance and adopted Resolution P.C. 22-07
City Housing
The most recent U.S. Census data lists the median value of owner -occupied homes in Hermosa Beach as $1,542,900 for the 2015-2019 period, while the Zillow Home Value Index estimates median home values in Hermosa Beach to be approximately $2,174,879 as of January 31, 2022. According to the Zillow Home Value Index, home values in the City have gone up 10.1 percent over the past year In contrast, the median household income in Hermosa Beach from 2015-2019 was $136,702 and the median income for a four -person household in Los Angeles County for 2021 was approximately $80,000. The cost of homes currently in Hermosa Beach are in excess of what median income residents of Hermosa Beach can afford, and certainly over the median income residents of Los Angeles County generally.
The conversion of homes in the City's residential neighborhoods to these timeshare -like uses would eliminate residential dwelling units that would otherwise be available for long-term residential use, thereby further exacerbating the lack of long-term available housing in the City. A home that is used for timeshare purposes would no longer be available for households to use as their long-term residence.
Impacts to Character of the City's Residential Districts Timesharing projects have the same character as commercial hotels, motels, and other transient occupancy uses due to the multiple short- term occupancies by those participating in timesharing projects. For this reason, the activity is better suited in commercial or quasi - commercial zones. The use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods.
The intensity of the activity is a significant reason why these uses can change the character of a residential neighborhood. Long-term residents, whether owners or renters, occasionally have guests and parties, but timeshare homes are used exclusively by people who are coming to the City on a short-term basis -mast likely for vacation or leisure: increasing the likelihood of frequent gatherings and parties generating noise in excess of what the neighborhood normally generates.
Timeshare owners and visitors will most likely stay out later, entertain more, and gather in larger numbers while on vacation. Timeshare uses can change the character of a residential neighborhood by having it serve not only as a residential area, but also a visitor lodging area and subjecting the neighborhood to the impacts that come with the more intense land use.
Further, the nature of the timeshare use itself can impact the residential character of the City's residential zones because they ensure that the timeshare users can only use their property for a limited amount of time each year. Each co-owner is in the unit on a short-term basis, so they do not have the time to participate in activities or build the relationships that create the fabric of a community. Given the City's desire to strike a balance between the demands of the City's visitor and tourist economy, and retaining its character and quality of life, the City has an interest in maintaining housing stock in its residential districts for long-term residents.
Emerging Businesses
Recently, certain businesses have emerged which purport to sell "co -ownership" shares in residential property. These businesses, as staff understands the business model, start by purchasing homes or entering contracts to purchase homes in tourist destinations in desirable locations like Hermosa Beach. These businesses then form a limited liability company ("LLC"), which owns title to the residential home.
The "co -owners" each purchase a one -eighth share and are entitled to use the residential property for a certain number of days per year according to their share of ownership in the LLC. The one -eighth interest entitles the purchaser to stay at the property for up to 45 days per year in increments of 2-14 days, including one "special day" (Fourth of July, Thanksgiving, Christmas, etc.).
The stays are reserved on an app, and while each co-owner is prohibited from renting the home as a short-term rental, they are permitted to allow other guests to stay there during their allotted days. Once shares in an LLC are sold, the business continues to manage the homes, including providing landscaping and pool maintenance, furnishing the homes, and paying all expenses, which are then passed through to the co -owners of the LLC.
The Ordinance
The City does not currently have regulations in place governing the use of timeshares within the City or other businesseslarrangements that are identical or similar to a timeshare use. The purpose of any ordinance should be to ensure that the City is able to maintain its existing and limited housing stock for use in long-term residency, and to maintain the character of its residential zones.
Completely banning "fractional ownership," joint tenancies, or ownership by business entities such as LLC is not advisable. There are numerous properties in the City's residential zones currently owned by numerous owners or by LLCs. Thus, the ordinance is geared toward the specific impacts of the at -issue uses -timeshare -like uses organized and run by third parties for a fee. The proposed ordinance (Attachment 1) does not target or single out any business or ownership structure.
The proposed ordinance allows for these types of timeshare uses in the City's C-1 and-G-2-zones, subject to a Conditions Use Permit.
Timeshare uses would be prohibited in all other zones. In order to avoid an over -inclusive ordinance that prohibits joint tenancies or other type of ownership structure that do not have the same deleterious impacts, the proposed ordinance focuses on the actual use of the property, as compared to the ownership structure, and in pertinent regulates this "timeshare use" subject to a "timeshare plan." Timeshare plan is defined as:
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"Any arrangement, plan, scheme, or similar device, facilitated, offered, or organized by a third -party non -purchaser, whether by membership agreement, bylaws, shareholder agreement, partnership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby purchasers, in exchange for consideration, receives the right to exclusive use of an accommodation or accommodations, whether through the granting of ownership rights, possessory rights or otherwise, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years." At its April 18, 2022 meeting, the Planning Commission reviewed and recommended approval of the proposed ordinance by adopting Resolution P.C_ 22-07 (Attachment 2)
Environmental Determination:
The proposed ordinance is not subject to CEQA because the adoption of this ordinance is not a "project" pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the California Code of Regulations. Specifically, this ordinance permits timeshares in the C-1 and G2 commercial zones within the City pursuant to a conditional use permit, and prohibits them in all other zones within the City, and authorizes administrative and implementation activities which will not result in a direct or reasonably foreseeable indirect physical change in the environment. Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is exempt from the requirements of CEQA because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment.
General Plan Consistency_
The proposed text amendment has been evaluated for consistency with the City's General Plan. Relevant Policies are listed below Land Use and Design Element
Goal 1. Create a sustainable urban form and land use patterns that support a robust economy and high quality of life for residents.
Policies
• 1.5 Balance resident and visitor needs. Ensure land uses and business provide for the needs of residents as well as visitors. • 1.7 Compatibility of uses. Ensure the placements of new uses does not create or exacerbate nuisances between different types of land uses.
Goal 2. Neighborhoods provide for diverse needs of residents of all ages and abilities and are organized to support healthy and active lifestyles.
Policies:
• 2.4 Single density neighborhoods. Preserve and maintain the Hermosa Hills, Eastside, Valley, North End and Hermosa View neighborhoods as predominantly single-family residential neighborhoods • 2.5 Neighborhood preservation. Preserve and enhance the quality of residential neighborhoods by avoiding or abating the intrusion of disruptive, nonconforming buildings and uses.
Fiscal Impact:
There is no fiscal impact associated with the recommended action.
Attachments:
1. Draft Ordinance
2. Resolution P.C. 22-07
3. Link to April 19, 2022 Planning Commission Staff Report Respectfully Submitted by: Patrick Donegan, Assistant City Attorney Concur: Jeannie Naughton, Community Development Director Noted for Fiscal Impact: Viki Copeland, Finance Director Legal Review: Patrick Donegan, Assistant City Attorney
Approved: Suja Lowenthal, City Manager
Staff Repari Updated on 9/27/2022 - See Track Changes
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CITY OF HERMOSA BEACH
ORDINANCE NO.22-1453
AN ORDINANCE OF THE CITY OF HERMOSA BEACH. AMENDING
CHAPTER 17.40 (CONDITIONAL USE PERMIT AND OTHER PERMIT
STANDARDS) TO ADD SECTION 17.40.230 (TIMESHARE USES) TO TITLE 17 (ZONING), AND AMENDING SECTION 17.26.030 TO
PERMIT TIMESHARE USES IN SPECIFIED COMMERCIAL ZONES
PURSUANT TO A CONDITIONAL USE PERMIT AND DETERMINING
THAT THE PROJECT IS EXEMPT FROM THE CALIFORNIA
ENVIRONMENTAL QUALITY ACT.
THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH DOES HEREBY ORDAIN AS FOLLOWS:
Section 1. Findings.
A. The City of Hermosa Beach ("City") is a scenic beachfront city, known for its many diverse restaurants, local retailers and popular commercial areas like its Downtown area and Pier Avenue.
B. Preserving the City's costal resource and the quality and character of the City has been a focal point of the City's land use planning for decades, and remains a primary focus in the City's current General Plan.
C. Maintaining the balance between the quality of life for residents and those who work in the City and the visitors who help to sustain the City's tourist economy is key to maintaining a sustainable community and a stable economy.
D. The City values and welcomes all visitors to the City and recognizes their contributions to the City's economy, but finds that in order to maintain the City's long term viability as a community where people not only come to visit, but also live, work and contribute to the long term betterment of the community through participation in the City's schools, local community groups, civic government and local serving businesses, the City must maintain a balance between residential land uses and visitor serving uses.
E. The City's existing housing stock is significantly impacted, with demand outweighing supply, resulting in extremely high housing prices as detailed in the accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land costs, and limitations in the City's existing infrastructure, among other factors, have limited the construction of additional housing in the City.
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DocuSign Envelope ID: A34F711O-E406-434D-A977-DC81BED8558E F. According to the U.S. Census Bureau, the current median household income in the City is $136,702, while the estimated value of owner - occupied housing units from 2015--2019 was approximately $1,542,900 with current real estate listings suggesting that prices are increasing significantly, meaning that homes in the City are not affordable to the median household in the City.
G. The conversion of existing residential units to uses other than long-term residential use will further reduce the City's existing long-term housing supply, causing further imbalance between the demand for housing in the City and the existing supply, not only altering the character of the City's residential neighborhoods, but also presenting further challenges to the City's efforts to provide affordable housing within the community.
H. The City additionally has, for many years, worked to preserve its existing housing stock for long term residential use, both to maintain the character of its residential neighborhoods and prevent residential districts from becoming visitor and tourist serving districts, and to ensure that it would not be converted to uses other than long-term residential uses.
1. The high impact use associated with timeshares, combined with the frequent turnover and commercial management involved in timeshare properties is not consistent with the purpose and nature of residential districts in the City. Rather, they are commercial in nature, in that these timeshare uses are structured as a short-term, tourist oriented, visitor serving use of the subject properties. The use of properties as timeshares adds excessive noise and traffic to residential districts by using these properties for high impact tourist oriented uses more appropriately located in commercial districts of the City.
J. The use of residential properties for timeshare uses will further reduce the availability of housing stock for long-term residential use, and create a new demand for timeshare uses of residential properties.
K. This encroachment of tourist oriented, visitor serving uses in residential neighborhoods is likely to compromise the character of residential areas within the City, and further increase the costs for housing in the City, undermining the City's efforts to provide a balance of housing for all income levels in the City.
L. The City's authority to enact zoning ordinances is based on the powers accorded cities and counties under the State constitution to make and enforce police regulations. This police power grants the City broad
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DocuSign Envelope ID: A34F7110-E406-434D-A977-DC81BED8558E authority to regulate the development and use of real property within its jurisdiction to promote the public welfare.
M. Pursuant to and in accordance with this authority, the City Council desires to prohibit timeshare uses in residential areas, and only allow them in the C- 2 commercial zone within the City, pursuant to a conditional use permit.
N. The City's Planning Commission held a duly noticed public hearing on April 19, 2022, as required by law to consider all the information presented by staff, and public testimony presented in writing and at the meeting.
O. On April 19, 2022, the City's Planning Commission recommended that the City Council adopt this Ordinance amending the City's Municipal Code as described herein.
P. On September 28, 2022, the City Council held a duly noticed public hearing, accepting testimony from the public, and discussed the proposed amendments and staff's recommended approval of this Ordinance and adopted on first reading the Ordinance.
Q. On October 11, 2022, the Ordinance was brought back for a second reading and adopted by the City Council.
R. The proposed zoning amendments are consistent with the General Plan goals, policies and implementation programs as the Ordinance will continue to preserve the character of the City; will preserve the City's residential districts for residential uses; and will help to preserve the City's existing housing stock for long term residential uses, to avoid further exacerbating the existing impacts on the City's housing supply.
Section 2. The above recitals are hereby incorporated as though set forth in this section.
Section 3. Section 17.40.230 (Time Share Uses) is hereby added to Chapter 17.40 (Conditional Use Permit and Other Permit Standards) of Title 17 (zoning) of the City of Hermosa Beach Municipal Code, to read as follows:
Section 17.40.230 Timeshare Uses
A. Purpose and Findings.
There is a critical shortage of permanent, long-term housing in the City of Hermosa Beach ("City"). A limited supply of suitable vacant land, land values,