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Newport Beach

Volume 6, Issue 83  | October 15, 2021


Commission denies appeal, debates definitions, Greenlight triggers, General Plan amendments

By SARA HALL

Newport Beach Planning Commission last week denied a local group’s appeal of a director’s determination that allows the conversion of up to approximately a third of the rooms at certain hotels into residential units, with conditions. Although it may not be the end of the line for the appeal process. 

After about an hour of discussion on July 8, commissioners voted 6-0 (Sarah Klaustermeier was absent) to deny the appeal from Still Protecting Our Newport (aka Stop Polluting Our Newport) and uphold the Community Development Director’s determination issued interpreting accessory residential as an allowed use within resort hotels.

Due to the process, the group had to appeal to the Planning Commission first, explained SPON President Charles Klobe in an email to Stu News Newport on Monday. 

“In the simplest terms, the city is not playing by the rules,” Klobe said. “The City Charter does not allow a staff person to amend the General Plan.”

The group didn’t expect them to understand this or the ramifications of the directive from City Council, so the next step would be to appeal directly to the council. However, since it costs to appeal to council, SPON is also exploring the possibility of appealing the ruling to the California Coastal Commission (which does not charge a fee to appeal). 

The CCC might view this as an amendment to the Local Coastal Program, Klobe explained. 

“The city claims it is not, but the CCC may disagree,” Klobe said. “Since appeals to the City Council cost money the path through the Coastal Commission may be best.”

SPON, a nonprofit public education organization, filed an appeal on May 14. 

Community Development Director Seimone Jurjis issued a determination on April 30 that residential uses are allowable as an “accessory use” to resort hotels under certain parameters. 

The director’s determination stems from goals of the recently adopted (on the March 9 City Council consent calendar) council policy K-4, “Reducing the Barriers to the Creation of Housing.” 

Policy K-4 includes “interpreting ambiguities” in the city’s General Plan, as well as other local regulating plans and code, and “directs city staff to develop, modify as necessary, and aggressively implement various strategies and action plans that are designed to accelerate housing production consistent with the policy, including encouraging and incentivizing the development of mixed-use hotels.”

On Thursday, Jurjis emphasized the need to support the local hotel industry.

“We’ve all experienced COVID, and different industries felt the effects differently,” Jurjis said. “The hotel industry has suffered from COVID.”

The recovery time for the different groups of tourism could be a very long time, he said. 

Commission Newport Center

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Photo by Sara Hall

Newport Center includes two hotels that would qualify for the director’s determination

“Because we’re trying to support the hotel industry and, at the same time, there’s a huge need to plan for housing,” Jurjis explained. “It’s not a blanket interpretation, there are conditions, there are caveats to this.”

The director’s determination allows a single hotel unit to be converted into residential on a one-to-one basis. A maximum of 30 percent of the approved hotel rooms at a hotel can be converted. 

It has to be a specific type of hotel with amenities that are considered “resort-style” that have restaurant uses and meeting room spaces and are a self-contained destination, Jurjis said. 

It’s also only applicable to resort hotels outside the California Coastal Commission appeal area.

A Conditional Use Permit would be required, forcing any hotel that wants to utilize this determination would need to come before the Planning Commission for approval of the CUP for the project. A Coastal Development Permit would be required for the one hotel within the coastal zone. The development agreement would address public access, affordable housing and loss of TOT. Adequate parking must also be provided.

The residential units could have part-time occupants or could be rented out. There is no language dictating that they have to be occupied by permanent residents. 

It is tied to room count, but a hotel could demolish and rebuild units for residential use. The residential units could be sold or leased, but not timeshares.

There’s no doubt that there is a need to support the hotel industry, Commissioner Mark Rosene said.

“This is creative thinking on the part of council and on the part of staff,” Rosene said. 

They heard that their decision is a violation, but if there is no project there is no violation, Rosene said. 

Since there is no submitted project related to this determination, it could have been handled through the current General Plan update and SPON would have likely supported it, Klobe explained in the email.

“We are at a loss as to why this seems so urgent that it can’t wait until later this year or early 2022 when the Housing Element is adopted,” Klobe said. 

SPON does not oppose or support the conversion of hotel rooms to dwelling units in general, but objects specifically to the process, said Michelle Black of Chatten-Brown, Carstens & Minteer, speaking at the meeting Thursday on behalf of SPON. There is also concern about the integrity of the city’s zoning code, General Plan and other planning documents.

“SPON takes no position on whether residential units ultimately belong in these areas; this can and it should be studied,” Black said. 

The concern is that it would essentially allow a staff person to effectively amend the city’s General Plan ahead of the larger update to meet Regional Housing Needs Allocation that is currently in progress, and it will improperly avoid the Greenlight tracking required by city charter.

Black also pointed out that interpretation is permitted, but only necessarily where there is ambiguity. However, there is no ambiguity as to whether residential uses are permitted in hotels, she said, quoting titles 20 and 21 of the city municipal code that state hotels provide guest rooms for a fee to transient guests. Residential uses, on the other hand, are for permanent residents.

“The plain meaning of that is very clear,” Black said. “It is not interpreting an ambiguity to read the land use to include the opposite of that, it’s redefining it.”

The city’s authority to interpret its code is not absolute and it does not extend to changing definitions, she said. The plans are meaningless if the words can be interpreted in ways that conflict with their intended meanings, she added.

“That is exactly what is proposed here,” Black said. 

Commission NB Marriott

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Photo by Werner Segarra Photography

Newport Beach Marriott Hotel & Spa is one of four hotels that qualify for accessory residential use under the director’s determination

In a letter to the commission, Black outlined several key points that she reiterated on Thursday, including two points that seemed to be the biggest areas of disagreement: Conversion of hotel rooms into dwelling units requires a General Plan amendment, and that it would trigger Greenlight. 

Greenlight (city charter section 423) forces a public vote if a proposed new development adds in excess of 100 peak-hour auto trips or 100 dwelling units or 40,000 square feet of floor space, and requires amending the city’s General Plan.

Jurjis reiterated last week that he doesn’t view the policy as circumventing Greenlight. His determination is that it is not a general plan amendment, he said, so the Greenlight measure does not apply. It only encourages housing and does not waive any code requirements; projects will still go to the commission or council. It’s simply recognizing an accessory land use, he said.

Also, the trip rates for converting a hotel unit to residential are similar or reduced, according to city staff.

“It’s awash, it doesn’t go up,” Jurjis said.

A handful of public speakers commented on the issue, mostly opposed to the determination (supported the appeal). Comments included that it is circumventing Greenlight, CCC, other agencies and the proper process, and that it’s undermining city code/charter. Others said it is just bad policy. 

As the lone public speaker in support of the determination and opposed to the appeal, Newport Beach & Company President and CEO Gary Sherwin said mixed-use hotels are an established trend and that the tourism industry is in need of help.

Some of the most dynamic hotel projects in the country include some form of residential, Sherwin said. 

“Without these residential units, most hotel projects today would have difficulty being financed,” he said. “This is the way new hotels will be built in the future, and how they can remain fresh and modern in the years ahead. This trend has taken hold and there is no turning back.”

Following the eligibility requirements, four resort hotels would qualify for the interpretation, two in Newport Center and two in the airport area.

There are currently 22 hotels in the city, of which 10 would qualify as a resort hotel. Of those, just one is located in the coastal zone, but outside the CCC appeal jurisdiction area, and three hotels are located outside the coastal zone. Therefore, this interpretation would apply to the following four resort hotel properties in the city: Renaissance Newport Beach at 4500 MacArthur Blvd.; Fashion Island Hotel at 690 Newport Center Dr.; Hyatt Regency John Wayne Airport at 4545 MacArthur Blvd.; and Newport Beach Marriot at 900 Newport Center Dr.     

It’s unlikely the four hotels included in the determination will provide affordable housing at all, Klobe said.

“But they will pay a hefty in-lieu fee to the city for the right to build luxury condos or apartments,” he added.

When/if these projects would come forward, they might propose affordable housing or they might not, said Deputy Community Development Director Jim Campbell. Through the development agreement process, they would negotiate what they could contribute to the in-lieu funds that the city could use to create affordable housing elsewhere in the city.

They still have the opportunity to add this to the draft housing element document before its approved early next year, Campbell said.

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