Updates made to Newport Beach city code for short-term rentals

If approved by the state Coastal Commission, new updates to city code in Newport Beach will now permit the existence of short-term rentals in two mixed-use zones and lift the maximum cap of properties permitted in the city following City Council action Tuesday night.

Definitions were updated as part of the motion as well.

New considerations were brought up in May by the dais, who directed city staff to seek and facilitate possible accommodations in the MU-W2 (Mixed-Use Water) and MU-CV/15th Street (Mixed-Use Cannery Village and 15th Street) zoning districts, which are located on the Mariners’ Mile corridor and upper Balboa Peninsula respectively. As part of that ask, council members stipulated that eligibility be limited to those with 20 or more units under common ownership in the area.

Those properties must also be managed professionally, include amenities and not cause significant parking impacts on surrounding residential neighborhoods.

In recent years, the city passed more stringent guidelines on short-term rentals as residents, fed up with noise, parking and what they say is a lack of enforcement, raised complaints to the City Council. They also recently tackled the matter of fractional homeownership, which city officials identified as a growing concern, by including them underneath the umbrella definition of timeshares.

City planning manager Jaime Murillo said during the meeting that the city’s planning commission held a study session in June before actually discussing possible options at an October meeting this year. Commissioners struck the 20 or more units under common ownership prerequisite in their October recommendations.

“The takeaway from that [June] meeting was that within these two mixed-use zones, hotels, motels and bed-and-breakfasts are already permitted with the approval of a conditional use permit, but what was missing was the ability to have short-term lodging,” Murillo said. “Short-term lodging used to be permitted in these mixed-use zones prior to the zoning code update in 2010, so we felt this was an opportunity to reintroduce short-term lodging in these mixed-use zones.”

A city staff report stated there are currently 546 applicants on the city’s waiting list for a short-term rental permit. Revisions approved Tuesday now adjust the permit cap to be split between residential and the two mixed-use districts — 1,475 for residential, 75 for the mixed-use zones — which totals in the 1,550 cap.

In his remarks, Mayor Pro Tem Will O’Neill said the initial eligibility requirement — 20 units or more — was mentioned with the intent of limiting the short-term rentals to more commercial areas than residential. O’Neill stated his intent to adopt alternative language to require those 20 or more units as opposed to one unit. Final action Tuesday included that 20-unit requirement.

During public comments, Still Protecting Our Newport president Charles Klobe said the organization was supportive of short-term rentals in mixed-use commercial zones as opposed to residential, but were not supportive of the proposal Tuesday.

“There will be an immediate increase in STLs and there will likely be a years-long decrease of them in residential neighborhoods. Also, we see no reason that this needs to be decided today and suggest that it be sent back with a council committee formed to better suggest a comprehensive plan to accommodate the desired change,” said Klobe, who noted they supported O’Neill’s position on requiring 20 or more units.

Other residents also voiced their support of having short-term rentals in mixed-use zones but raised concerns about the change in the permit caps.

“Our city has grappled with the short-term lodging and its impact on our residential communities for a lot of years and there have been revisions over the years to how we address this,” said Councilwoman Robyn Grant.

“To be sure, there’s a lot of very well-managed properties throughout the city and we welcome those very well-managed properties, but there are properties that are negatively affecting our residents there with respect to parking, trash and noise. This is a constant give-and-take and struggle to manage properly and make sure the residents and businesses are working together effectively,” Grant said. “This particular revision accomplishes a lot in advancing what I think is the primary responsibility of this body, and that is to protect the quality of life of our residents and to make sure that we have the proper business administration in our city.”

Grant said she was also in favor of generally lowering the permit cap and noted the change would benefit the regulations already in place. Councilman Joe Stapleton agreed but noted there had to be a balance between allowing people to visit Newport Beach and the preservation of neighborhoods.

“I see this as a pilot program. I see this as an opportunity to see how this works, see how we can remove these units from residential neighborhoods, put them in mixed-use and review,” Stapleton said.