A healthy general fund balance, ADUs and more up for consideration by Newport Beach City Council

Newport Beach’s general fund ended the last fiscal year in better shape than earlier estimates had predicted, largely due to consistently high property values generating a healthy stream of tax revenue, according to a report for consideration by the City Council at their upcoming meeting Tuesday.

The general fund had accrued a $10.8 million surplus by the conclusion of the fiscal year that ended June 30, according to the report. That’s nearly $2 million more than the $8.9 million surplus projected by estimates conducted in May.

The surplus comes despite a 6.7% decrease in sales tax revenue compared to last year. Sales were down in Newport Beach across all industry groups except for restaurants and hotels, according to city staff. Automobile and transportation businesses in particular suffered due to high interest rates curbing access to credit.

The city collected $43.4 million in sales tax last fiscal year. It’s Newport Beach’s second largest source of general fund revenue, bringing in about 15% of the fund’s value.

About 50% of the Newport Beach’s revenue comes from property taxes, which generated over $146.1 million in the last fiscal year. The combined value of property in the city grew from $71.2 billion to $75.9 billion, and it has not seen a decline in the past 20 years, according to city staff. The median price of a single-family home in Newport Beach was $3,845,000 in 2023.

The city also saved about $9.6 million in expenditures. The unspent funds largely came from vacant staff positions and various contract services.

“Conservative budgeting and sound financial policies have resulted in a trend of General Fund operating surpluses and strong reserve levels for several years,” Deputy Finance Director Shelby Burguan wrote in the report. “The city is well positioned to continue delivering high levels of service to the community.”

Council to review language on ADUs

The City Council will revisit updates to ordinances pertaining to accessory dwelling units (ADUs, often called “granny flats”) and Junior Accessory Units (JADUs) at Tuesday’s meeting. The changes are designed to put Newport Beach’s municipal code in compliance with new laws signed by Gov. Gavin Newsom in September. They go into effect Jan. 1.

AB 2533 extends a provision that essentially grandfathers in unpermited ADUs built before a certain date, provided those comply with health and safety codes, by allowing the rule to apply to JADUs as well. It also extends the grace period by two years so that it now includes units built before 2020.

SB 1211 updates state laws preventing city officials from requiring applicants to identify replacement parking if the construction of an ADU results in the loss of a garage or carport to also apply to uncovered parking spaces. The law also increases the number of ADUs allowed on lots with existing multifamily structures from two to as many as eight.

The updates proposed to Newport Beach’s municipal code related to the new laws were reviewed by the California Coastal Commission. A version of the amendments that include the commission’s recommendations will be up for approval by the City Council at the meeting.

Initial designs for Collins Island Bridge replacement

The council will discuss the early phases of replacement for the Collins Island Bridge, which connects a small portion of land to the northwest tip of Balboa Island. The project began its design phase in 2022 and was subject to environmental review. Findings delivered this year and available for public consideration from July 23 through Aug. 21 did not reveal any significant negative impacts related to the bridge replacement.

The existing bridge was built in 1953 and is still functional but “approaching the end of its useful life,” according to city staff reports. The new Collins Island Bride will be wider to accommodate a foot travel lane, sidewalks and concrete barriers “to provide protection from projected sea level rise.” An extra seawall to compliment existing ones will also be built to further protect the area from high tides and storm surges.

The Newport Beach City Council will meet at 4 p.m. Tuesday in council chambers at City Hall, 100 Civic Center Drive.