"I'm less concerned that we provide affordable housing than we provide an economically vibrant gateway to the [Balboa] Peninsula," said Councilman Keith Curry.
With some of the highest housing costs in the country, Newport Beach is unaffordable to many of its workers and residents. A city report found that 22% of households are unable to make rent at most apartments in the city, and might be forced into mobile homes or subsidized apartments if they had to move.
State law may push the city to consider affordable apartments at the site, experts said.
The city is required to plan for the development of 1,914 affordable housing units before 2014, according to the city's 2010 Housing Element.
Also, if the site is deemed "surplus land" then the city may have to give affordable housing developers priority there — to either lease the land or buy it. Most council members said they wanted to retain ownership.
"It would be an opportunity for the city to meet its requirements," said Cesar Covarrubias, executive director at the Kennedy Commission, an advocacy group for affordable housing in Orange County.
Typically, the city would have to offer incentives for a developer to build affordable units on private land, such as waiving fees or funneling reserves taken from market-rate developments.
"This site is a city-owned site and they have a lot more control," Covarrubias said.
Affordable housing levels in Newport Beach are based on the median income in Orange County, which is about $86,000. A family of four making $74,000 would fall into the lower-income range.
Often cities plan senior housing to satisfy state requirements because it is more palatable to neighbors, said Julie Spezia, executive director of Housing California, a Sacramento nonprofit housing advocacy group.
"It's often a soft path that planners like to go to because they think they'll have less of a battle on their hands," she said.