By Robyn Grant | NB Indy
The Newport Beach Chamber of Commerce presented its signature annual event, Economic Forecast 2021, at the Balboa Bay Resort on Tuesday, October 5, to a sold-out ballroom filled with members of the business community hungry for information about the post-pandemic economy.
Many VIPs were in attendance, including Mayor Brad Avery, council members Diane Dixon and Joy Brenner, as well as former mayors Keith Curry and Rush Hill, former council members Leslie Daigle, Jeff Herdman and Tony Petros, and Chief of firefighters Jeff Boyles.
Steve Rosansky, President and CEO of the House, as well as a former mayor of Newport Beach, set the tone for the presentation by describing the past fiscal year with a quote from “A Tale of Two Cities” by Charles Dickens .
“It was the best of times, it was the worst of times,” Rosansky read. “It was the age of wisdom, it was the age of madness, it was the time of belief, it was the time of unbelief …”
Guest lecturer Christopher Schwarz holds two positions at the University of California, Irvine: Associate Professor of Finance at the Paul Merage School of Business and Faculty Director of the Center for Investment and Wealth Management.
Rosansky joked from the podium to Paul Merage Business School dean, Ian Williamson, who, since Schwarz has two positions, shouldn’t he be getting two paychecks?
Schwarz got down to business, partly entertaining with humorous movie videos and quotes, partly disastrous in his narrative, but somehow reassuring in his conclusions.
He described an economy that is currently in good shape but spoke cautiously about 2022 and beyond.
Schwarz said the Federal Reserve projects the 2022 economy will grow 3.8%. He called the forecast overly optimistic, noting that the economy has already shown a slowdown in the third quarter, to around 3.2%, and he predicts a continued downtrend.
Schwarz bases much of his reasoning on the dynamics of supply versus demand. Traditionally our economy has been focused on demand, but today we have an unprecedented supply problem – the supply of almost everything, including housing, cars, computer chips, and shortages due to related shutdowns. COVID-19 in overseas countries and supply chain disruptions.
Add to that the problems of shifts in the workforce, rising inflation, and high rents and house prices, and the result is a perfect storm that could last for many years to come.
How to fix the problem?
Schwarz predicts this will self-correct as production catches up with demand, but it takes time. âIt’s time to build more infrastructure, factories, houses, freighters, etc. What is interesting is that we are likely to overproduce as more and more âproducersâ rush to capitalize on shortages. “
Schwarz concluded that 2021 would be a good year for the economy, but expects a gradual decline through 2022 and beyond.
Newport Beach Community Development Director Simone Jurjis concluded the presentation with a discussion of the California Regional Housing Needs Allowance (RHNA) and Senate Bills 9 and 10.
Jurjis, like Schwarz, cited some sobering statistics. Only 17 percent of Orange County families can afford a home. California as a whole has a shortage of 3.5 million housing units. Soaring rents are not helping.
Jurjis described Sacramento as “the casino owner playing in his own casino putting all the chips on the slot”.
Beginning in 2022, RHNA requires planning for more than 180,000 additional housing units in Orange County, including 4,845 units for Newport Beach. This includes the requirements for very low, low, moderate and above moderate housing units in each municipality.
Keep in mind that cities only need to plan their RHNA allocations with zoning and property laws; private owners are relied on to build housing.
All of this housing requires more infrastructure: police, firefighters, medical services, roads, utilities, schools, libraries, retail stores and more.
According to Jurjis, âThis amount of housing and infrastructure in Newport Beach is not something city council wants, or what council thinks residents want, but the mandate comes from the state.
Jurjis then discussed Bills 9 and 10 recently passed by the Senate.
Under SB 9, a single-family zoned lot can be subdivided into two lots. On each lot a duplex can be built. And for each duplex, an accessory dwelling (sometimes called a âgranny flatâ) as well as a junior accessory dwelling can be added, with the potential result of eight dwellings on a single-family residential land previously zoned.
Parking is generally required to support each housing unit, but SB 9 does not require parking if the housing units are within half a mile of a through lane, resulting in a shutdown of bus.
âSingle-family zoning is gone,â Jurgis concluded.
SB 10 authorizes the construction of a ten-unit apartment building on single-family land, if the City ordinance allows it. Given that Newport Beach does not have such an ordinance and does not have one on the foreseeable horizon, according to Jurgis SB 10 is unlikely to have an impact on Newport Beach.
Interestingly, the SB 9 and 10 do not require affordable units like those found in the RHNA measure.
For more information on the Newport Beach Chamber of Commerce and upcoming events, visit www.NewportBeach.com.