Attachment A
May 21, 2026 Planning Commission Staff Report
CITY OF NEWPORT BEACH
PLANNING COMMISSION STAFF REPORT
May 21, 2026
Agenda Item No. 4
SUBJECT: Results of the REAP 2.0 Mixed-Use Study (PA2025-0257)
PLANNERS:
Liz Westmoreland, AICP, Principal Planner
949-644-3234 or [email protected]
Jerry Arregui, Assistant Planner
949-644-3249 or [email protected]
SUMMARY
On January 13, 2026, the City Council authorized participat ion in the Regional Early Action Planning (REAP) 2.0 Program in partnership with the Orange County Council of Governments (OCCOG) . The REAP 2.0 Program provided the City with grant-funded consultant assistance to complete Housing Element Policy Action 4H (Review Mixed-Use Zones), primarily intended to identify and reduce regulatory barriers to housing development in the City’s existing mixed-use zoning districts (Study).
Since January 2026, staff has been working with OCCOG’s selected consultant, Houseal Lavigne, to prepare the Study including recommendations for potential changes to the Newport Beach Municipal Code, Local Coastal Program, and General Plan that would reduce barriers and incentivize mixed-use development. The City is not obligated to make any amendments based on the findings of the Study. On June 23, 2026, staff will present the findings of the Study, including any comments from the Planning Commission, to the City Council at a study session.
RECOMMENDATION
Receive the presentation and provide direction regarding the recommendations of the Study.
DISCUSSION
Background
The REAP 2.0 Program is a state grant program that is administered by the California Department of Housing and Community Development (HCD) in partnership with regional planning agencies, such as the Southern California Association of Government (SCAG) to assist local and regional agencies in advancing housing production. SCAG issued grant funds to the Orange County Council of Governments (OCCOG) to establish a technical consultant bench that would support OCCOG member agencies in completing
Results of the Mixed-Use Zoning Study (PA2025-0257)
Planning Commission, May 21, 2026
Housing Element Implementation Programs. Specifically, the support was intended to implement programs that would meet the objectives of REAP 2.0 including accelerating infill development that facilitates housing supply, choice, and affordability; affirmatively furthering fair housing; and reducing vehicle miles traveled.
Therefore, i n March 2025, the City applied to OCCOG for technical assistance to complete Housing Element Policy Action 4H (Review Mixed -Use Zones ), which is intended to review and identify opportunities to improve existing mixed-use zoning districts regulations. Specifically, Policy Action 4H helps ensure that mixed -use opportunities are maximized, by reviewing established mixed-use land use categories and corresponding zoning regulations in the City and recommend ing policy or code changes to the City Council that reduce regulatory barriers and incentivize mixed -use residential development.
In May 2025, OCCOG selected the City to receive technical assistance to help complete this Policy Action by preparing a mixed-use study (Study). OCCOG issued a request for proposals to its consultant benc h and, in October 2025, identified Houseal Lavigne (Consultant) as best suited to provide services to the City.
In January 2026, the City Council authorized the receipt of the grant funds, which allowed staff to work with the Consultant on completing the Study and produce a series of deliverables including recommendations to the Planning Commission and the City Council.
As a requirement of the REAP 2.0 Program and the City’s award, the Consultant’s workplan and contract shall be completed by June 30, 2026. Importantly, the City is not obligated to amend its Zoning Code or General Plan based on the Study’s findings.
However, the City is committed to sharing the results with the Planning Commission and City Council at individual study sessions.
Thus, this study session presents the results of the Study, including:
1. Evaluation of the City’s existing mixed-use zoning districts;
2. Three conceptual plan test studies to examine the feasibility of development under current zoning standards;
3. Economic feasibility analysis to determine if existing or proposed zoning regulations can produce a financially viable project; and
4. Recommendations regarding zoning changes that could reduce physical and economic constraints on mixed -use development and promote residential development.
Existing Mixed-Use Zoning Districts
The City’s 2006 General Plan (General Plan) introduced new mixed-use land use categories and policies related to mixed-use districts. As part of the City’s Comprehensive Results of the Mixed-Use Zoning Study (PA2025-0257)
Planning Commission, May 21, 2026
Zoning Code Update in 2010 , several mixed-use zoning districts were created to implement the General Plan land use categories. Five of the six mixed-use zoning districts are located within the Coastal Zone. The standards for mixed-use districts are contained within Chapters 20.22 (Mixed-Use Zoning Districts (MU -V, MU -MM, MU -DW, MU - CV/15th St., MU -W1, MU-W2) and 21.22 (Mixed-Use Coastal Zoning Districts (MU -V, MU-MM, MU-CV/15th St., MU-W1, MU-W2) of the NBMC. Development standards and allowed uses identified in Titles 20 (Planning and Zoning) and 21 (Local Coastal Program Implementation Plan) are generally the same and are discussed interchangeably within this report for ease of discussion.
The City’s mixed-use zoning districts are as follows
• Mixed-Use Vertical (MU-V)
• Mixed-Use Mariners’ Mile (MU-MM)
• Mixed-Use Cannery Village and 15th Street (MU-CV/15th St.) • Mixed-Use Water (MU-W1)
• Mixed-Use Water (MU-W2)
• Mixed-Use Dover/Westcliff (MU-DW)
These districts are primarily located in and around the Newport Harbor, including Balboa Island and the Newport Peninsula, and are concentrated along commercial corridors such as Coast Highway, Newport Boulevard, Balboa Boulevard, and Marine Avenue, as shown in Figure 1 below. The MU-DW Zoning District is the only mixed-use zoning district located outside of the Coastal Zone and away from Newport Harbor . Other area s, including Newport Center and the Airport Area , are allowed mixed -use development as part of planned communities.
Figure 1, Mixed-Use Zoning Districts in Newport Beach
Results of the Mixed-Use Zoning Study (PA2025-0257)
Planning Commission, May 21, 2026
Despite the housing opportunity that was created in these areas in 2010, many of these sites remain underutilized with a single nonresidential use, such as retail or office. While there are many reasons for this, i t is evident the City’s existing development standards (e.g., setbacks, height, density, parking, dedications, etc.) related to mixed -use development may create constraints on the redevelopment of these properties.
Approved mixed-use development projects include, but are not limited to, the Cannery Village Lofts in the MU -CV/15th St. Zoning District, which was a large -scale multi-block development permitted under the prior Cannery Village/McFadden Square Specific Plan.
Under current zoning, a few smaller scale mixed-use developments have been approved in the MU-V Zoning District in the Balboa Village area, MU-CV/15th St. District in Cannery Village area, and in the MU -W2 District in the McFadden Square area. Some of these developments included the consolidation of lots and parking waivers for the commercial components. Lastly, in 2021, the City approved a mixed-use project on Mariner’s Mile in the MU-MM Zoning District that consolidate d multiple lots and included the construction of for-rent affordable housing.
For the Study, staff worked with the Consultant to evaluate the Mixed -Use Cannery Village and 15th Street (MU-CV/15th St.) District, Mixed-Use Water (MU-W2) District, and Mixed-Use Dover/Westcliff (MU -DW) District. The three Districts serve as a sufficient sample to understand regulatory and other constraints on housing. While the Study is included for review with this staff report as Attachment No. PC 1 , the following sections provide an overview and recommendations.
Initial Evaluation of Mixed-Use Districts
The Consultant reviewed the NBMC to identify development standards that could be potential barriers to mixed-use redevelopment. The Consultant also considered non- governmental factors, including market conditions, that could impact housing production in mixed-use zoning districts. The various factors were then tested on conceptual plan scenarios developed for each of the three mixed-use zoning districts evaluated in the Study (see Conceptual Plan Test Studies section below). The initial evaluation revealed concerns related to the review process for mixed-use projects, development standards of the NBMC, and non-governmental factors, as summarized below.
Review Process
Mixed-use development in the City requires a site development review (SDR) by the Zoning Administrator or Planning Commission 1, and apart from projects in the MU-DW Zoning District, a coastal development permit from the same review authority. The Consultant’s evaluation found that , while the City’s existing review framework includes measures intended to streamline the development review process, mixed-use projects are subject to multiple discretionary approvals that can introduce complexity, extend timelines, and reduce predictability for development. Of particular concern was the
1An SDR is subject to review by the Zoning Administrator unless it involves 5 or more dwelling units and/or nonresidential construction of 10,000 square feet or more of gross floor area, then the review authority is the Planning Commission.
Results of the Mixed-Use Zoning Study (PA2025-0257)
Planning Commission, May 21, 2026
potential requirement to obtain a conditional use permit (CUP) from the Planning Commission to waive parking, as the number of parking spaces that can be provided onsite is typically a critical part of the overall site design and not easily adjusted should the CUP be denied. The NBMC also provides a path for waiving up to 20% of parking by the Community Development Director ; however, mixed-use projects generally require more than a 20% parking waiver, rendering the CUP process the only viable option.
Development Standards
The Consultant identified several development standards of the NBMC that may constrain housing production within mixed-use districts, as follows: parking; density limits; floor area ratio (minimum for commercial, maximum for residential) ; h eight limits; op en space minimums; and locational requirements for residential.
These factors are described in more detail in the Conceptual Plan Test Studies and Recommendations sections of the report.
Nongovernmental Factors
Additionally, the Consultant recognized that nongovernmental factors outside of the City’s control, such as the small parcel sizes on the Peninsula and Balboa Island, land and construction costs, and financing constraints, also affect development feasibility.
Conceptual Plan Test Studies
Conceptual plans were developed for three mixed-use districts to test redevelopment scenarios under the existing district standards and to identify potential barriers to mixed- use development. The Consultant also prepared an economic feasibility analysis for each of the three concept plans to determine if the concept plans would be economically viable to develop under current standards. Individual properties within each mixed-use district were selected because they represent a standard lot within the district.
The complete conceptual plan test studies are included within Attachment No. PC 2.
Additionally, a 3-D “scene viewer” of the conceptual plans is accessible with the following link: https://experience.arcgis.com/experience/5b8411162e1b4424a7cd6fcb5719bd11 A detailed economic analysis is provided in Attachment No. PC 3. Summaries of each are provided below.
Mixed-Use Dover/Westcliff (MU-DW) Zoning District
The concept plan site located at 881 Dover Drive is a 56,564-square-foot lot, developed with a three-story office building surrounded by a large surface parking lot, as shown in Figure 2 below. The existing development does not reflect the mixed-use development envisioned by the MU-DW District and the property is representative of the existing development and size of other MU-DW lots. Although the MU-DW Zoning District includes Results of the Mixed-Use Zoning Study (PA2025-0257)
Planning Commission, May 21, 2026
the largest lots of all the mixed-use districts, none of the properties in the MU-DW Zoning District have been developed with mixed-use projects.
Figure 2, MU-DW District Concept Plan Site
Two concept plans were provided for this site . The first concept plan for the property meets all zoning standards including density, parking, and minimum nonresidential FAR and provides 31 residential units, approximately 14,100 square feet of office space, and 135 parking spaces. The analysis reveals that a zoning compliant project does not result in a financially viable project.
The second concept plan includes affordable housing within a two-story mixed -use building that includes 19,500 square feet of office space , 34 dwelling units and 132 parking spaces. The concept provides the maximum number of dwelling units allowed (without density bonus) and meets the minimum FAR for nonresidential space. This concept plan, however, requires 163 parking spaces , where only 135 spaces can be provided on the property . The analysis demonstrates that the site cannot reasonably achieve the full nor moderate development potential of the nonresidential component, without relying on an additional discretionary approval for a parking waiver . Further, height limits constrain the ability to add additional floors to the parking deck that could otherwise help meet the parking requirements. Increasing the height limit would require additional discretionary approvals. As discussed in more detail in the Economic Feasibility Analysis section below, funding mechanisms for affordable housing funding projects
Results of the Mixed-Use Zoning Study (PA2025-0257)
Planning Commission, May 21, 2026
typically do not cover the costs of construction for the nonresidential component, making mixed-use projects challenging for affordable housing developers.
Mixed-Use Cannery Village and 15th Street (MU-CV/15th)
The conceptual plan site at 510 and 512 31 st Street includes two properties; one developed with a one-story commercial building and no covered parking and the other with a two-story commercial building with three covered parking spaces , as shown in Figure 3 below . The existing development does not reflect the mixed -use development envisioned by the MU-CV/15th District. These two properties were selected for this concept plan because the existing lot sizes are small and lot consolidation projects have historically been proposed in this area. Additionally, the two properties are representative of the existing development on other lots in the MU-CV/15th Zoning District.
Figure 3, MU-CV/15th St. District Concept Plan Site
Two concepts were developed for this site. Both concept plans propose lot consolidation to create a 5,660-square-foot lot and development of a mixed-use building, which includes 1,326 square feet of retail space, 1,487 square feet of café space, three dwelling units, and seven parking spaces for the dwelling units . Both concept plans would require approval of a lot merger to consolidate the lots into a single building site. The two concept plans are the same except one includes a third story to provide more residential floor area
Results of the Mixed-Use Zoning Study (PA2025-0257)
Planning Commission, May 21, 2026
and fully maximize the development potential for the property. Both plans require a total of 19 parking spaces (12 for the nonresidential component and 7 for residential component). While the residential parking can be provided onsite though a tandem three- car garage and four-space carport, the analysis reveals that , due to the small lot sizes, providing an additional 12 parking spaces for the retail and café spaces is physically infeasible.
Therefore, the project would rely on an additional discretionary approval for a parking waiver. If the project were to be proposed on individual lots without a lot merger, the two smaller 2,792-square-foot lots yield only one dwelling unit each (due to minimum site area requirements), resulting in a less economically viable project. Additionally, if a smaller commercial space were proposed on a single lot, it would likely still require a parking waiver due to the smaller lot area available for parking.
Neither concept plan provides a sufficient return on the investment and the uncertainty of the conditional use permit for a parking waiver produces additional risk for a developer.
Mixed-Use Water (MU-W2) Zoning District
The conceptual plan site is located at 2212 and 2214 West Ocean Front, including two properties that are each developed with aging two -story residential duplex es and an attached two-car garage. The site is located adjacent to the public beach parking lot within McFadden Square area at the corner of West Ocean Front and 23 rd Street. Neither property provides the minimum amount of parking required (four spaces each) . The existing development does not reflect the mixed-use development envisioned by the MU- W-2 Zoning District. Two properties were selected within the MU-W2 District for this concept plan because lot consolidation projects have historically been submitted and approved in this area. Additionally, while the two properties are not representative of the larger lots in the MU-W2 Zoning District, the lots are representative of the many, smaller MU-W2 lots.
Figure 4, MU-W2 District Concept Plan Site
Results of the Mixed-Use Zoning Study (PA2025-0257)
Planning Commission, May 21, 2026
Similar to the concept plan s for MU -CV/15th, this concept plan proposes a lot consolidation project to create a 6,250-square-foot lot and develop a two-story mixed-use building, which includes 1,492 square feet of retail space, 1,282 square feet of café space, three dwelling units, and seven parking spaces for the dwelling units . The project maximizes development potential of the property. While residential parking can be accommodated onsite, the commercial parking remains physically infeasible due to the small lot sizes. This project would also require a parking waiver and lot merger .
Developing each individual lot would result in the same constraints as the prior study area.
The project would not be financially viable because only about 55% of the building is income generating rentable space. The remaining 45% of the building would be used for required parking, balconies, and common hall and service areas which do not typically produce revenue.
Economic Feasibility Analysis
As previously described in each concept plan above , the economic feasibility analysis (Attachment No. PC 3) concluded that none of the conceptual plans would result in an economically viable project for a developer. The analysis concluded that high parking minimums for the nonresidential component reduce project viability because they take up a significant portion of the site without generating income. Further, none of the projects result in a target return on investment that would make a project financiall y viable.
Uncertainty in entitlement outcomes for parking waivers (conditional use permits), coastal development permits, and site development reviews also put pressure on a project’s bottom line due to holding costs and the potential for denials or substantial modifications to plans. Lastly, for an affordable housing developer, the minimum nonresidential floor area requirement would present a substantial barrier as affordable housing funding programs generally require the residential component of a mixed -use project be financially self -sustaining and loan programs do not typically cover construction of nonresidential uses.
Recommendations
The Consultant provided a comprehensive list of recommendations aimed at reducing regulatory barriers and encouraging mixed-use residential development. It is important to note that the recommendations are focused on the production of housing consistent with the objectives of the REAP 2.0 Program and G rant. Table 1 includes the various recommendations from the Study including the Economic Feasibility Analysis.
Recommendations that are supported by staff for further evaluation are shown in green and recommendations that are not supported by staff at this time are labeled in orange. Staff believes the recommendations related to nonresidential parking requirement s and streamlined processing would result in the greatest impact on mixed-use development, as described in detail below.
Results of the Mixed-Use Zoning Study (PA2025-0257)
Planning Commission, May 21, 2026
Table 1: Study Recommendations
Standard/
Requirement Recommendation Basis
Site Development
Review
Remove requirement
for site development
review of mixed-use
projects with up
9,999 square feet of
nonresidential and
up to 4 dwelling units.
Streamlines a category of small, lower -impact
projects. A 9,999 sq. ft. commercial building and
4-unit building are both reviewed administratively
if proposed on their own, yet a mixed-use project
that combines both components requires a site
development review.
Projects in the coastal zone will still require a
coastal development permit and for-sale projects
will still require parcel maps for air -space
subdivisions.
Parking Establish residential
parking requirements
based on bedroom
count, similar to the
City’s Housing
Opportunity Overlay
Zoning District
standards.
Existing parking requirements are generally
derived from suburban standards and may not
reflect actual demand in mixed -use, walkable,
high-resource environments such as the
Peninsula and Balboa Island. This approach
would encourage smaller units that could
support workforce housing or units that are more
affordable by design (i.e. more studios/one -
bedroom units).
Waive nonresidential
parking requirements
for certain
nonresidential uses.
The test studies revealed that it is physically
infeasible to provide onsite nonresidential parking
on most parcels. Additionally, by providing
parking waivers for only certain uses, the City can
incentivize resident and visitor serving uses.
Neighborhood-wide parking solutions could be
provided to support overall parking supply for
nonresidential uses in a particular district.
Establish a base
reduction for parking
through an
administrative
process or reduce
parking standards
overall for
nonresidential uses
in mixed -use
projects.
Staff is more supportive of reducing
nonresidential parking requirements for preferred
land uses that foster a pedestrian friendly, vibrant,
and/or marine related (if in the coastal zone)
environment within already dense and walkable
areas that experience a high level of visitors. The
Balboa Village Parking Overlay District
Management Plan (PM-1) is a similar effort that
was implemented in 2021 for Balboa Village to
reduce parking requirements for certain
nonresidential uses. This overlay district includes
properties within the MU -V Zoning District. The
City also studied its nonresidential parking rates
Results of the Mixed-Use Zoning Study (PA2025-0257)
Planning Commission, May 21, 2026
Standard/
Requirement Recommendation Basis
in 2023, which included a survey of other similar
cities and adjustments to parking rates to align
with modern standards. Restaurants rates, in
particular, were adjusted to support small
businesses and take-out fast casual uses.
Remove residential
parking
requirements.
The m ajority of mixed -use zoning districts are
located in the coastal zone and waiving
residential parking presents concerns with public
access to the coast, as residents will likely park
on public property. The City has not historically
waived residential parking requirements,
especially for small-lot developments.
Density
Allow at least two
dwelling units per lot,
regardless of lot size.
Currently, a property needs to be at least 3,262
square feet to construct more than one residential
unit. Lots on Balboa Island and the Peninsula are
between 2,250 and 3,500 square feet. Therefore,
many properties are only permitted to construct
one dwelling unit, especially because the NBMC
does not allow developers to round up if the site
area yields slightly less than 2 units (e.g. 1.8 units
= 1 unit). This proposed standard is consistent
with an exception in the Two -Unit Residential
Zoning District (R -2) for historic lots, where a
minimum of two units are allowed regardless of lot
size.
Locational
Requirements for
Residential
Allow residential
units to front West
Coast Highway if
located above the 1st
floor in the MU -MM
Zoning District.
Residential development is currently subject to a
100-foot setback from West Coast Highway in the
MU-MM Zoning District. 2nd floor residential units
would be appropriate in this mixed -use context
and nonresidential development on the first floor
would still be required.
Common Open
Space
Only require
common open space
on projects with four
or more residential
units.
Common open space requirements, while
intended to enhance livability, may be inefficient
for smaller properties where three or fewer
residential units are proposed. Additionally, the
City’s mixed-use districts are generally located
in high resource areas with s ignificant outdoor
recreation opportunities such as the beach and
Back Bay. Private open space would still be
required.
Results of the Mixed-Use Zoning Study (PA2025-0257)
Planning Commission, May 21, 2026
Standard/
Requirement Recommendation Basis
FAR for
Residential
Increase or remove
FAR requirement for
residential.
From an economic standpoint, increasing the
residential FAR could prevent redundant
constraints on unit yields and produce additional
leasable space. However, w ithout a unique
incentive structure, it is anticipated that a higher
FAR would create larger dwelling units v ersus
more dwelling units overall.
Height Remove
discretionary review
for height increases.
This recommendation would r emove a layer of
review that helps ensure development is
compatible with area, especially within the coastal
zone.
Increase base height
in MU-DW to 55 feet
for flat roofs and 60
feet for sloped roofs
(with upper-floor step
backs) to allow for
higher density
without discretionary
action.
Properties in the MU -DW Zoning District are
outside of the coastal zone and are not located
within established residential neighborhoods.
Properties in this district front two streets and
views are not anticipated to be impacted. Further
analysis is needed.
Nonresidential
Uses
Redefine
“commercial” or
“nonresidential” for
affordable housing
projects to allow
resident-serving
uses such as
community rooms,
fitness centers,
resident services,
etc. on the ground
floor to meet
nonresidential
minimum
requirements.
This aligns with the operational mission of
affordable housing and from an economic
standpoint, it eliminates the financial drag of un-
leasable retail space that is challenging for
affordable housing developers to fund and
maintain. Staff is supportive of this change if
applied to affordable housing projects (not market
rate) and only for ground floor uses that reinforce
an active, pedestrian frontage, similar to
traditional nonresidential uses.
Summary and Next Steps
In conclusion, the Study revealed that , notwithstanding other factors outside the City’s control, there may be substantial regulatory barriers that have reduced the viability of mixed-use development within the City’s six mixed-use zoning districts. The most significant factors were determined to be the high nonresidential parking requirement and Results of the Mixed-Use Zoning Study (PA2025-0257)
Planning Commission, May 21, 2026
uncertainty in the overall discretionary review process. Staff recommends that additional analysis be conducted, including direct outreach with affected property owners, to further understand the recommendations that would have the greatest impact on the development of housing.
On June 23, 2026, staff will present the findings of the Study, including any comments from the Planning Commission, to the City Council at a study session. The City is not obligated to amend its Zoning Code or General Plan based on thes e findings and recommendations.
ENVIRONMENTAL REVIEW
Staff recommends the Planning Commission find this action is statutorily exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15262 (Feasibility and Planning Studies) of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, Article 18, because it has no potential for resulting in physical change to the environment, directly or indirectly.
PUBLIC NOTICE
The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the Planning Commission considers the item).
Prepared by:
____________________________
Liz Westmoreland, Principal Planner
Submitted by:
LW/ja
ATTACHMENTS
PC 1 Consultant Memorandum
PC 2 Conceptual Test Plans
PC 3 Economic Feasibility Analysis