After hearing from the developer of a luxury condominium community that meeting a 15% threshold for affordable units would be too costly, the Newport Beach City Council has agreed to reduce how much low-income and moderate-income housing has to be included in projects in one district near John Wayne Airport.
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To meet state mandates to plan for additional construction to address housing needs in California, Newport Beach leaders previously identified areas near John Wayne Airport and at Fashion Island as places where more development would be targeted, including affordable housing.
The 67-unit development by Intracorp Homes is within the 145-acre Newport Place Planned Community established in the former commercial and light industrial area along MacArthur Boulevard, Jamboree Road, Birch and Bristol streets. The area falls under a special housing overlay that was adopted in 2012 and initially required 30% affordable housing, but was later reduced in 2023 to 15%.
“Intracorps was one of the first projects that was for-sale, and they were approved using the Newport Place Planned Community overlay,” Jaime Murillo, the city’s director of community development, said, adding that they initially came in with a 15% affordable project, but then came back to the city to say it was too cost-prohibitive. “They asked the city to consider reducing it for for-sale projects, and we did an analysis and realized that 15% for a for-sale project is too high.”
The goal for an inclusionary requirement is not to deprive the property owner of a fair and reasonable return on investment, Murillo said.
The recent council decision regarding the Newport Place Planned Community reduces the requirements for housing that will be sold, not rented, to 6% of a project for low-income units and to 8% for moderate-income units.
Newport Beach is required by the state’s mandate to plan for the development of 4,485 units by 2029; of those, 1,456 should be for people with very-low income, 930 for low income, and 1,050 for those making a moderate income. The city doesn’t have to build the units, just create the zoning and planning atmosphere for developers to come in with projects meeting the housing needs.
The reduction of building low-income housing does not apply to four other projects in the same area that are approved to build rental units there, Murillo said. Those are still required to be at 15%.
Ten years ago, Murillo said almost all applications for affordable projects were for rental units; now, with the changed economic climate, he said, the city has been getting more applications from developers wanting to build for-sale properties under the city’s new zoning models.
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There are four more projects with for-sale units in the city’s pipeline, he said, but they are in another project area and would be subject to different zoning requirements.
Intracorp has not yet resubmitted an application for the new rate, Murillo said. If it does, it could take the number of affordable condos included from 10 to eight or six units, he said.
Several regular Newport Beach council watchers criticized the change to affordable housing requirements at the recent meeting.
“The way I see it, council bends over backwards to help developers not build affordable housing,” one resident said. “Some day, the chickens are going to come home to roost. There are still mandates for affordable housing that the city needs to build.”
In the future, someone is going to have to address the state mandate, he added. “It can’t just be put off and off.”
Another resident reminded the council that the city had designated the airport area as a place for affordable housing more than a decade ago, but said, “It’s slowly dawned on me that having the overlay has no requirement, even though it’s supposed to accomplish that.”
None of the councilmembers weighed in.
The council action follows an approval by the Planning Commission earlier this year and overrides an April 16 Orange County Airport Land Use Commission determination that the amendment is inconsistent with the previous 2008 plan for the area around the airport.
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