HomeMy WebLinkAbout01 - Residential Piers�EW `Rr CITY OF
NEWPORT BEACH
City Council Staff Report
Agenda Item No. 1
November 28, 2012
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: City Manager's Office
Dave Kiff, City Manager
949 - 644 -3001, dkiff @newportbeachca.gov
PREPARED BY: Dave Kiff, City Manager
APPROVED: 0, /W
TITLE: Residential Piers
ABSTRACT:
The City of Newport Beach ( "City ") acts as the trustee of the State of California ( "State ")
in the administration of public tidelands property within Newport Harbor. In this
capacity, the City is effectively a landlord and is empowered by the 1978 Beacon Bay
Bill, as amended ( "Beacon Bay Bill "), to rent tidelands property to third parties for a
period of 50 years or less.
Historically, the City has followed the lead of the State and not charged rent for
residential piers located over tidelands. However, in 2011 the Governor signed into law
SB 152 (Pavley) which required the State Lands Commission to begin charging rent for
residential piers. Because the City is a trustee of the State in regards to tidelands
property, the City should comport its actions to that of the State and charge fair market
value rent for the use of tidelands by residential piers.
RECOMMENDATION:
a) Adopt Resolution No. 2012 -119 approving a model permit template for residential
piers;
b) Adopt Resolution No. 2012 -120 setting fair market value rent for residential piers;
c) Direct staff to prepare an ordinance amending the Newport Beach Municipal Code
( "NBMC ") to allow for the charging of fair market value rent; and
d) Discuss issues associated with residential piers and provide staff with direction, if
any.
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FUNDING REQUIREMENTS:
The current budget allows for the resources needed to implement these
recommendations. The City's income properties administration position as well as the
City Attorney and City Manager's office will handle permit implementation.
DISCUSSION:
A majority of the waterways in Newport Harbor are tidelands, owned by the State on
behalf of the people of California. The California Legislature through the Beacon Bay
Bill granted the City trusteeship of most of the tidelands within Newport Harbor (the
County of Orange also acts as trustee over some tidelands). The Beacon Bay Bill
authorizes the City to allow third parties to use the tidelands, for a term not to exceed 50
years. Both the Beacon Bay Bill and the NBMC require the City to receive fair market
rent as consideration for allowing a third party to use the tidelands. In practice, the City
has charged rent for commercial tidelands uses but has exempted residential piers from
rent charges. Due to a recent State law imposing rent on residential piers located over
tidelands, the City is revisiting its exemption and establishing a fair market rent charge
for residential piers located over tidelands.
Is it rent or is it a tax?
There is a fair amount of misinformation within the harbor community regarding the City
Council's review of residential pier rent (as well as the recent commercial tidelands
rent). As a starting point, the charge is rent, not a tax. This is a point recognized by the
Editor of the Daily Pilot in the November 17, 2012 editorial finding the increase in
commercial tidelands rent is reasonable. The distinction between a tax and rent is not
insignificant. A tax is a revenue raising mechanism that may be assessed without
regard to the specific benefit received by the person paying the tax, while rent, in this
instance, is money received in exchange for the exclusive use of public property (e.g.,
residential pier over tidelands). The public should receive remuneration when a private
individual excludes the public from public property (e.g., tidelands). The rent received
from a residential pier permittee will be spent solely on the tidelands to secure, improve,
and maintain the tidelands for the public.
There also appears to be confusion regarding the applicability of the proposed
residential pier rent (i.e., private water versus tidelands). The City is the trustee of
public tidelands property. The City may only charge rent for property it owns /manages.
To the extent a pier is located wholly over private land (even submerged private land)
the City is unable to charge rent. If a residential pier is located partially over private
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November 28, 2012
Page 3
land and partially over tidelands, the City may only charge rent for the portion of the pier
located over tidelands. Generally (with some exceptions), residential piers on the
following parts of Newport Bay are not subject to this rental proposal (the below is not
an exclusive listing):
• Dover Shores — Dover Shores' waters are private or County waterways;
• Linda Isle — The interior of the Linda Isle lagoon is private. The exterior of Linda
Isle is either private waterways or County tidelands. However, a small portion of the
waterways between Harbor Island Drive and Linda Isle are now held in fee by the
City, and may be subject to this rental proposal;
• Promontory Bay — Promontory Bay is a privately constructed waterway. The
recorded tract map for parcels adjacent to it — generally — dedicates the waterways
to the City "for public navigation purposes" subject to an easement appurtenant to
each of the lots within the tract for pier, mooring and maintenance purposes;
• Harbor Island — much of Harbor Island abuts County Tidelands; and
• Portions of Bayside Drive near China Cove — some of these parcels are over
County tidelands and private waterways.
Additionally, the City is not requiring a residential pier permittee to enter into a long term
lease with the City. Instead, the City will allow residential pier permittees to remain on
an annual permit. The annual permit would have terms and conditions as shown in
Attachment A.
Fair Market Rent Requirement
The Beacon Bay Bill, California Constitution Article 16, Section 6, and City Council
Policy F -7(D) require the City to receive fair market rent from residential piers located
over tidelands. Despite this requirement to charge fair market rent for residential piers,
the City has historically followed the lead of the State and not charged rent. NBMC
Section 17.35.010(J) provides, in part:
The imposing of tidelands rental or use fees shall not be extended
to include private residential piers and slips constructed and used
solely by the abutting uplands owner for noncommercial
recreational purposes, unless otherwise directed by State
mandate.
Chapter 585, Statutes of 2011 (SB 152, Pavley) became effective January 1, 2012.
This new law repealed section 6503.5 of the Public Resources Code, which had allowed
rent -free use of State -owned land by certain private parties for their recreational piers.
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The law replaced the former section with a new section 6503.5 which provides that the
State Lands Commission "shall charge rent for a private recreational pier constructed on
state lands."
This change in State law and the requirement the State charge rent for residential piers
located over tidelands has required the City to reevaluate its position on rental charges
for residential piers. Specifically, the City can no longer justify an exemption for rental
charges based upon the policy of the State and must now charge fair market rent for
residential piers located over City tidelands. As with commercial uses, the fair market
rent should be set by the City Council at an amount based upon an appraisal and
reflective of fair market value.
Proposed Fair Market Rental Rate and Phase -in
The City commissioned two separate appraisals to determine fair market rent for
residential piers. Mr. Netzer determined rent should be set at $0.55 a square foot of all
tidelands useable for a residential pier, bounded by property line, bulkhead line, and
pierhead line. In contrast, Mr. Rasmuson determined rent should be set at $0.50 a
square foot of all tidelands useable for a residential pier, bounded by property line,
bulkhead line, and pierhead line. A committee of council members assigned to address
the residential pier issue ( "Committee ") held a public workshop with residential pier
permittees on November 19, 2012 (staff presentation for that workshop is shown as
Attachment C). The Committee reviewed the two appraisals prepared by Mr.
Rasmuson and Mr. Netzer, input received from current residential pier permittees at the
workshop and following the workshop via e-mail, other materials and information, and
proposed the recommendations shown in Table 1.
One key thing that the Committee did was to choose to apply the rent not over the
entirety of the tidelands outside of a residential property but to the tidelands that are
both used and useable for docks, gangways, and vessels. For example, while the
appraisals suggested that a 40' by 50' water area be charged based on 2,000 SF, the
Committee looked at the dock, useable water for vessels, and gangway within the 2,000
SF. The example of this shown as the first example in Attachment D shows how this
interpretation results in a permitted SF of 1,560 SF versus 2,000 SF.
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Table 1
Subject
Initial
Revised
Recommendation
Splits the difference between two appraisals -
Rental Charge
$0.525/SF /year
No change
$0.50 /SF and $0.55/SF
Float + G a ngway +
If property line is t10' from sides, then
Float + Gangway +
Internal Slip (if any) +up
property line is determinative. City will
Area Subject to Rent
internal Slip (if any) + up
to 10' around float,
reviewwaterway useabilityon a permit-by-
to 10' around float.
unless "backside" not
permit basis - if some portion of the dock is
useable.
not useable, it won't be in permit area.
Similar to mooring rental increase (5
.
periods), not 8y8 rental increase (3 periods).
Phase -in of Increase
3 years -to 2015
5 years . -ta 2017
Phase -in amount would be adjusted by CPI
between 2014 and 2017.
By change in CPI, then re-
The $0.525/SF would be adjusted by CPI
Periodic Adjustments
set based in part on
No change
annually until such time asthe City Council
appraisal.
conducts another residential pier appraisal.
This is re: the 10' strip of waters around a
Square or curved
float. Workshop attendee noted that it should
Square Garners
Curved corners
turners
be curved around the float, not boxed around
it.
Should waters around
Appraisers on 11 -20 confirmed thatthe
Newport Island be the
yes
No change
valuesshould bethe same regardless of
same as rest of
where a dock is in the harbor.
Harbor?
$100 /year permit
fee's applicability to
Review fee, consider
City will review this with fee consultant in
No recommendation
private or County
reduction or deletion.
early 2013.
waters.
Terms Included in Written Permit
Permits would have
Require $1M of General
general statement
- Insurance
Liability
requiring insurancewJno
identified amount.
Perm its. n of tra nsfera b le
-Transferability
AI I ow tra nsfer.
if property is sold.
Re: notice of termination of permitfor unpaid
- Notice
7 days
30 days
rent.
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November 28, 2012
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Revisions to NBMC
The charging of fair market rent for residential piers necessitates a revision to NBMC
Section 17.35.0100) to remove the current exemption and to provide consistency in the
way fair market rent is established.
FOR MORE INFORMATION:
The appraisals, the City's process to date, as well as the November 19, 2012 workshop
are on the City's website ( http: / /www.newportbeachca.gov /) under "Projects and Issues"
then "Harbor Charges" for those who want to examine this process further.
ENVIRONMENTAL REVIEW:
City staff recommends the City Council find the approval of a model permit for
residential piers and the setting of fair market value rent for residential piers is not
subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections
15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect
physical change in the environment) and 15060(c)(3) (the activity is not a project as
defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title
14, Chapter 3, because it has no potential for resulting in physical change to the
environment, directly or indirectly. Alternatively, City staff recommends the City Council
find the approval of a model permit for residential piers and the setting of fair market
value rent for residential piers is entitled to a Class 1 Categorical Exemption pursuant to
CEQA Regulation Section 15301 because the rent and associated permit contemplates
the continued use of existing facilities, with no expansion of the proposed use. Further,
City staff recommends the City Council find the approval of a model permit for
residential piers and the setting of fair market value rent for residential piers is entitled to
a Statutory Exemption pursuant to CEQA Regulation Section 15273(a)(1) because the
fair market value rent established by the City Council and the associated permit will be
used to meet operating expenses within the tidelands. Lastly, staff recommends the
City Council find the approval of a model permit for residential piers and the setting of
fair market value rent for residential piers is not a project under CEQA Regulation
Section 15061(b)(3) because it has no potential for causing a significant effect on the
environment.
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November 28, 2012
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NOTICING:
In addition to the stakeholder input noted above, this agenda item has been noticed
according to the Brown Act (at least 72 hours in advance of the meeting at which the
City Council considers the item).
Submitted by:
`h. a"
O-he Kiff
City Manager
Attachments: A. Resolution No. 2012 -119
B. Resolution No. 2012 -120
C. Presentation made at 11 -19 -2012 Workshop
D. Examples of general and actual pier layouts
7
RESOLUTION NO. 2012-119
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF NEWPORT BEACH
APPROVING A MODEL PERMIT TEMPLATE
FOR RESIDENTIAL PIERS
LOCATED UPON TIDELANDS
WHEREAS, pursuant to the 1978 Beacon Bay Bill, as amended, ( "Beacon Bay
Bill ") the City of Newport Beach ( "City ") acts on behalf of the State of California as the
trustee of tidelands located within the City's limits, including Newport Harbor;
WHEREAS, the Beacon Bay Bill and Chapter 17.60 of the Newport Beach
Municipal Code ( "NBMC ") allow the City to authorize third parties to construct/maintain
residential piers upon tidelands;
WHEREAS, on July 27, 2010 the City Council formed the Council Ad Hoc
Committee on Harbor Charges ( "Committee ") and tasked the Committee with
performing a comprehensive review of tidelands uses;
WHEREAS, the Committee held a public outreach meeting with residential
tidelands users to solicit their input and participation in the tidelands review process and
this meeting afforded the public the opportunity to comment on this matter as well as
provided the public information relating to this matter;
WHEREAS, the City Council has considered all documents and comments in the
record in connection with this resolution; and
WHEREAS, after considering all public input, the Committee recommends
adoption of a model permit for residential piers located upon tidelands.
NOW, THEREFORE, the City Council of the City of Newport Beach resolves as
follows:
Section 1: The Recitals provided above are true and correct and are
incorporated into the substantive portion of this resolution.
Section 2: The City Council adopts the model residential pier tidelands permit
attached to this resolution, and incorporated by this reference, for use by residential pier
tidelands users. The City Council finds that the residential tidelands users subject to the
attached model permit are not subject to the open bid process found in City Council
Policy F -7 because redevelopment/reuse of the tidelands by a third party would require
excessive time, resources and costs which would outweigh other financial benefits.
-1- 8
Section 3: The City Council determines, even though it has discretion to make
determinations regarding the form of template permit and rental provisions therein, that
the evidence in the record constitutes substantial evidence to support the actions taken
and the findings made in this resolution, that the facts stated in this resolution are
supported by substantial evidence in the record, including, without limit, testimony
received at public hearings, the Staff presentations and Staff reports made in
connection with this matter, all materials in project files, and the Netzer and Rasmuson
appraisal reports. The City Council expressly declares that it considered all evidence
presented and reached these findings after due consideration of all evidence presented
to it and determines that evidence presented that was contrary to the findings made in
this resolution was not sufficient or substantial enough to outweigh the evidence
supporting this resolution.
Section 4: Notwithstanding City Council Policy F -7, the City Council authorizes
the City Manager or his /her designee to enter into the attached permit, in a form that is
substantially similar to the attached model permit with residential tidelands users. At
his /her discretion, the City Manager may refer any permit to the City Council for
consideration.
Section 5: The City Council finds the adoption of a model permit template for
residential pier tidelands uses is not subject to the California Environmental Quality Act
( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or
reasonably foreseeable indirect physical change in the environment) and 15060(c)(3)
(the activity is not a project as defined in Section 15378) of the CEQA Guidelines,
California Code of Regulations, Title 14, Chapter 3, because it has no potential for
resulting in physical change to the environment, directly or indirectly. Alternatively, the
City Council finds the adoption of a model permit template for residential pier tidelands
uses is entitled to a Class 1 Categorical Exemption pursuant to CEQA Regulation
Section 15301 because the permit contemplates the continued use of existing facilities,
with no expansion of the proposed use. Further, the City Council finds the setting of
rent for residential pier tidelands uses and the adoption of a model permit template for
residential pier tidelands uses to implement the rent is entitled to a Statutory Exemption
pursuant to CEQA Regulation Section 15273(a)(1) because the fair market value rent
established by the City Council and implemented by the permit will be used to meet
operating expenses within the tidelands. Lastly, the City Council finds the adoption of a
model permit template for residential pier tidelands uses is not a project under CEQA
Regulation Section 15061(b)(3) because it has no potential for causing a significant
effect on the environment.
Section 6: If any section, subsection, sentence, clause or phrase of this
resolution is, for any reason, held to be invalid or unconstitutional, such decision shall
not affect the validity or constitutionality of the remaining portions of this resolution. The
City Council hereby declares that it would have passed this resolution, and each
-2- s
section, subsection, clause or phrase hereof, irrespective of the fact that any one or
more sections, subsections, sentences, clauses and phrases be declared
unconstitutional.
Section 7: This resolution shall take effect immediately upon its adoption by
the City Council, and the City Clerk shall certify the vote adopting the resolution.
ADOPTED this day of 12012.
Nancy Gardner,
Mayor
ATTEST:
Leilani I. Brown,
City Clerk
Attachments: (1) Model Permit Template for Residential Piers
3 10
Residential Tidelands Pier Permit
(1) Permittee: This Permit is issued on to
( "Permittee ") to construct/maintain a residential pier located upon City of Newport Beach
( "City ") tidelands, as more particularly described and depicted in Attachment 1
( "Premises "), which is attached hereto and incorporated by reference. By acceptance of
this Permit, the Permittee agrees to be bound by the terms contained in this Permit.
(2) Term: This Permit shall be valid for a period of twelve (12) calendar months
beginning on March 1, 20_ and expiring on February _, 20_, unless terminated
earlier as provided herein.
(3) Rent: Rent shall be calculated pursuant to Resolution No. 2012 -_, or any
successor /amended resolution. Resolution No. 2012 -_ and any successor /amended
resolution are automatically incorporated by reference into this Permit, without any
further action by the parties, when adopted by the Newport Beach City Council.
(A) Periodic Payment of Rent: One -sixth (1/6) of annual rent for a particular
year shall be payable on the first (1st) day of every other month during the
term. Bi- monthly rent will be billed with the Permittee's City utility bill.
(B) Place for Payment of Rent: All payments of rent shall be made in lawful
money of the United States of America and shall be paid to City on line at
www.newportbeachca.gov, in person or by United States' mail, or
overnight mail service, at the Cashier's Office located at 3300 Newport
Boulevard, Newport Beach, CA 92658, or to such other address as City
may from time to time designate in writing to the Permittee. The Permittee
assumes all risk of loss and responsibility for late charges and
delinquency rates if payments are not timely received by the City
regardless of the method of transmittal.
(C) Late Charges: A ten percent (10 %) late charge, or the maximum rate
allowable under State law, shall be added to all payments due but not
received by City with fifteen (15) calendar days following the due date. In
addition, all unpaid amounts shall accrue at a delinquency rate of one and
a half percent (1'h %) per month or any portion of a month until paid in full.
(4) Utilities and Taxes: The Permittee is solely responsible for obtaining all utilities
and paying all taxes, fees and assessments for the Premises or improvements located
thereon.
(5) Possessory Interest Tax Notice: The City hereby gives notice to the Permittee,
pursuant to Revenue and Tax Code Section 107.6 that this Permit may create a
possessory interest that is the subject of property taxes levied on such interest, the
payment of which taxes shall be the sole obligation of the Permittee. The Permittee
shall advise in writing any sublessee, licensee, concessionaire or third party using the
Premises of the requirements of Section 107.6.
u
11
(6) Compliance With Applicable Laws: The Permittee is required at its sole expense
to comply with all applicable City, County, State and Federal laws, policies and
regulations.
(7) Maintenance: The Permittee assumes full responsibility for operation and
maintenance and repair of the Premises and associated improvements throughout the
term of this Permit at its sole cost, and without expense to the City.
(8) Transfer /Assignment: This Permit may be transferred or assigned by the
Permittee as provided in the Newport Beach Municipal Code.
(9) Termination: This Permit may be terminated for cause (e.g., failure to abide by
the terms of this Permit, etc.) by the City with no less than thirty (30) calendar days prior
written notice to the Permittee. In the event of termination under this section, the City
shall owe no compensation to the Permittee and the Permittee shall remove all
improvements from the Premises within ninety (90) calendar days. The Permittee shall
continue to pay rent to the City during the period in which the improvements are
removed. Alternatively, the Permittee, with the City's prior written consent, may
quitclaim all fixtures, equipment, and improvements on the Premises to the City.
Notwithstanding any other provision of this Permit as permitted by California Public
Resources Code Section 6312, or any successor statute, the parties agree that upon
expiration or earlier termination of this Permit the City shall have no liability or obligation
to pay compensation for any improvements made to the Premises.
(10) Indemnification: To the fullest extent permitted by law, Permittee shall indemnify,
defend (with counsel selected by the City) and hold harmless the City, its elected
officials, officers, employees, agents, attorneys, volunteers and representatives from
and against any and all claims, demands, obligations, damages, actions, causes of
action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses of every
kind and nature whatsoever (individually, a "Claim" or collectively, "Claims "), which may
arise from or in any manner relate (directly or indirectly) to this Permit. The Permittee's
obligations in this section shall not extend to the degree any Claim is proximately
caused by the sole negligence or willful misconduct of the City, subject to any
immunities which may apply to the City with respect to such Claims.
(11) Insurance: The Permittee shall maintain liability insurance for the Premises and
the improvements located thereon. The City may in its sole and absolute discretion
require a Permittee to produce written evidence of the insurance required under this
section.
2
12
Attachment 1
Description & Depiction of Premises
Premise's Address (or description of general location):
Premise's Square Footage:
Premise's Depiction:
3
13
RESOLUTION NO. 2012-1120
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF NEWPORT BEACH
SETTING RENT FOR RESIDENTIAL PIERS
LOCATED UPON TIDELANDS
WHEREAS, pursuant to the 1978 Beacon Bay Bill, as amended, ( "Beacon Bay
Bill ") the City of Newport Beach ( "City ") acts on behalf of the State of California as the
trustee of Tidelands located within the City's limits, including Newport Harbor;
WHEREAS, the Beacon Bay Bill and Chapter 17.60 of the Newport Beach
Municipal Code ( "NBMC ") allow the City to authorize third parties to construct/maintain
residential piers upon tidelands;
WHEREAS, on July 27, 2010 the City Council formed the Council Ad Hoc
Committee on Harbor Charges ( "Committee ") and tasked the Committee with
performing a comprehensive review of tidelands uses;
WHEREAS, the Beacon Bay Bill, California Constitution Article 16, Section 6,
and City Council Policy F -7(D) require the City to receive fair market value Rent from
third parties using the Tidelands;
WHEREAS, the City Council has the exclusive discretion to determine fair
market value Rent based upon the findings of a City - selected appraiser;
WHEREAS, an appraisal report by Rasmuson Appraisal Services, and an
appraisal report by Netzer & Associates, were prepared and delivered to the City and
have been reviewed and considered by the City Council, which reports are part of the
record for this matter;
WHEREAS, on November 19, 2012, the Committee held a public outreach
meeting with Residential Pier Permittees to solicit their input and participation in the
Tidelands review process and this meeting afforded the public the opportunity to
comment on this matter as well as allowing the Committee to provide to the public
information relating to this matter;
WHEREAS, the City Council has considered all documents and comments in the
record in connection with this resolution;
WHEREAS, all previous resolutions and actions regarding the fair market value
Rent for Residential Piers located upon Tidelands that are in conflict with the Rent
established by the City Council in this resolution are hereby repealed.
1- 14
NOW, THEREFORE, the City Council of the City of Newport Beach resolves as
follows:
Section 1: The Recitals provided above are true and correct and are
incorporated into the substantive portion of this resolution.
Section 2: The City Council finds that the Rent provisions contained in the
attached Residential Pier Tidelands Rent Calculations, which is incorporated by
reference, provide for the charging of fair market value Rent and that the rental rate
(and adjustments) in the attachment constitute fair market value Rent for Residential
Piers located upon Tidelands, which findings are made by the City Council in its
exclusive discretion but are based on the information in the appraisals of its City -
selected appraisers and, in addition, on other testimony and documents in the record for
this matter. The City Council further finds and determines the Rent for Residential Piers
located upon Tidelands, operating under an annual permit, shall be set in accordance
with the attached Residential Pier Tidelands Rent Calculations. The Rent established in
this resolution shall only be applicable to Permittees with a Residential Pier located over
Tidelands.
Section 3: The City Council finds the setting of Rent for residential piers
located upon Tidelands is not subject to the California Environmental Quality Act
( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or
reasonably foreseeable indirect physical change in the environment) and 15060(c)(3)
(the activity is not a project as defined in Section 15378) of the CEQA Guidelines,
California Code of Regulations, Title 14, Chapter 3, because it has no potential for
resulting in physical change to the environment, directly or indirectly. Alternatively, the
City Council finds the setting of Rent for residential piers located upon Tidelands is
entitled to a Class 1 Categorical Exemption pursuant to CEQA Regulation Section
15301 because the Rent contemplates the continued use of existing facilities, with no
expansion of the proposed use. Further, the City Council finds the setting of Rent for
residential piers located upon Tidelands is entitled to a Statutory Exemption pursuant to
CEQA Regulation Section 15273(a)(1) because the fair market value Rent established
by the City Council will be used to meet operating expenses within the Tidelands.
Lastly, the City Council finds the setting of Rent for residential piers located upon
Tidelands is not a project under CEQA Regulation Section 15061(b)(3) because it has
no potential for causing a significant effect on the environment.
Section 4: If any section, subsection, sentence, clause or phrase of this
resolution is, for any reason, held to be invalid or unconstitutional, such decision shall
not affect the validity or constitutionality of the remaining portions of this resolution. The
City Council hereby declares that it would have passed this resolution, and each
section, subsection, clause or phrase hereof, irrespective of the fact that any one or
2- 15
more sections, subsections, sentences, clauses and phrases be declared
unconstitutional.
Section 5: This resolution shall take effect immediately upon its adoption by
the City Council and the City Clerk shall certify the vote adopting the resolution.
ADOPTED this day of 12012.
Nancy Gardner,
Mayor
ATTEST:
Leilani I. Brown,
City Clerk
Attachment: Residential Pier Tidelands Rent Calculations
3- 16
Residential Pier Tidelands Rent Calculations
Residential Pier Rent
(1) Beginning on March 1, 2013, Residential Pier Permittees shall pay as
Rent Fifty -Two and One -Half Cents ($0.525) per square foot of the
Premises, as phased in and adjusted pursuant to this resolution. Two (2)
examples of the Rent calculation are provided below for illustrative
purposes (not to scale):
Rent= 1,560 SF($S19 /year)
• 35' by 45'= -1,500 SF+
• 4' by 25' =100 SF less
• 4' by 10' (overlap) =40 SF
40' z 50'
(2) To the extent a Residential Pier is shared by two (2) or more Permittees,
the Rent shall be apportioned equally among the Permittees (i.e., if a
Residential Pier is share by two (2) Permittees half (1/2) of the Rent shall
be billed to one (1) Permittee and the other half (1/2) of the Rent shall be
billed to the other Permittee). The Permittees shall be joint and severally
liable for the Rent. Each Permittee shall receive a permit from the City
indicating the percentage of the Premises apportioned to the Permittee.
4- 17
Periodic Adjustments of Rent And Phase In
Rent for Residential Piers provided by this resolution, shall be phased -in and
adjusted as follows in the table below. In the table, "A" represents the calculated rent
based on the known square footage under permit in 2012, multiplied by Fifty -Two and
One -Half Cents a square foot ($0.525/SF):
Fifty -Two and One -Half Cents ($0.525) Rent Phase -in Table and Adjustment
lff�Wplles
2012
2013
2014 111MUS
2016 JILAQ
General
([A
([A
([A- $100) /5)
(IA-
Fully
$ 100
$100] /5) +
$100] /5) +
$100j/5) +
Phased -in
Example
$100
2013 Rent
+ 2014 Rent
2015 Rent
Rent A
Example #1-
$ 100
$ 199
$ 299
$ 398
$ 498
$ 597
1,139 SF
Example #2 -
$ 100
$ 229
$ 358
$ 487
$ 616
$ 748
1,426 SF
Example #3 -
$ 100
$ 445
$ 790
$ 1,135
$ 1,480
$ 1,827
3,480
The table above reflects constant dollar values. As a result, the actual rent paid by
2017 and in each year previous to that shall be adjusted in accordance with the U.S.
Department of Labor, Bureau of Labor Statistics, Consumer Price Index for All Urban
Consumers ( "CPI "), Los Angeles- Riverside - Orange County region during the phase -in
period.
Following 2017 and indefinitely beyond, the rental rate shall continue to be adjusted by
the change in the CPI until such time as the City conducts a new appraisal of residential
pier rental rates in Newport Harbor. Following that appraisal, the new rental rate shall
be set at the rate selected by the City Council based on the appraisal(s) and other
information provided to the City Council at that time.
Definitions
Unless otherwise provided, the terms provided in the Newport Beach Municipal
Code ( "NBMC ") shall apply to this resolution. The singular of any term also includes the
plural.
(1) Permittee means a person who has a permit from the City to
construct/maintain a Residential Pier.
-5- 18
(2) Premises means those Tidelands which are subject to the applicable
permit and are more particularly described and depicted in the applicable
permit, excluding any Private Waterways and improvements owned by the
Permittee. The Premises shall include only the portion of the Tidelands
located under a Residential Pier plus up to ten feet (10') of boatable berth
space around the dock and float area. The ten feet (10') of boatable berth
space shall be reduced to the extent an adjacent property line projects
within the ten foot (10') area, or other obstructions that cause the ten foot
(10') area, in the sole and absolute discretion of the City Manager, to be
infeasible for purposes of the calculation.
(3) Private Waterways means privately owned submerged lands.
(4) Rent means the annual fair market rent charged on a square footage
basis for the use of the Premises.
(5) Residential Pier means a pier used by the owner or occupant(s) of the
abutting residentially zoned upland property. A Residential Pier shall
include the float, gangway landing, pier, pier platform and internal area of
a slip(s).
(6) Tidelands means certain tidelands and submerged land (whether filled or
unfilled), located in the City of Newport Beach, County of Orange, State of
California granted to the City of Newport Beach, as trustee, by the State of
California, pursuant to the Tidelands Grant.
(7) Tidelands Grant means uncodified legislation related to the State of
California's grant of certain rights in the Tidelands to the City of Newport
Beach, including, without limitation, the Beacon Bay Bill (Chapter 74 of the
Statutes of 1978, as amended [citations omitted]).
6- 19
RESIDENTIAL PIER
RENTAL RATES
Workshop — November 19, 2012
What We'll Cover
City's Obligation
Tidelands Trust
o Public Trust Doctrine
Background on Harbor Rents
Recommendation
Examples
Comments /questions
For more information
21
What are Tidelands?
Tide- and Submerged Lands are:
ri Publicly -held waterways (including land below the waters)
that are:
Owned by the people of California
Assigned to the City via specific legislation ( "Beacon Bay Bill ")
Chapter 74 of the Statutes of 1978, as amended
Operated by the City in accordance with:
■ CA Constitution
■ Beacon Bay Bill and Public Trust Doctrine
■ City Charter & Municipal Code
o Not all waterways in Newport Harbor are tidelands
o Many of the ocean beaches are tidelands
22
Tidelands in Lower Newport Bay
Tidelands SnrvON
_ � Nul. port llerhnr
0
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i F
P a
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'I
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I � rmnsmw� w�am. �.a....oe...,cvn, aN `4• `,'x �•�; ".A ld•`:•.•'O``.- WESr 'P� A Y
.��amrrMla. u,. ^•. +.nc�! \ .• f i____ oo.e: „ FASHION s +y
mr, A Tx ISLAND "
INwwn,q"mt..xri Q f/Jr xq,
.xd FMF.arYLLUr,ri •,`,�. ♦ / `'`i SE�� •` dEE " ��•� o
/ \'&wrwaH rm •.varaumi v ,` °1 �• verv�ry a .•L ��T �w.`�, CG +`OJ � w s
/.'= x.�x,.v,..°...,, %'" ,l. ,Wes » ` iI$ "o v `p �s °i.`:nJ- .__s►- e- '_,"_.'`':,h�@e +ub o°
iauxc, -;T
Managing Aganry xE ti
a
tM of him"d e.a,
_ .. a.n.x.,.m.euwi.la..w�en�w°.,ann c,nwn.,ar...�mmmbrn�E _•-s. rrnnan F \�S.
�Ira,e.a..zw..i muwdqu uyuwexym.au, uexnwt°arua.rarom.axneo � SAGBOAf ISLAND
Q cua iaeanx v FFIB0 ` •�`
_c ®mrou ne Rynry ° d tr O x
�ll Wawm°es+uenmuubuna Po `•Flyd `Lx x�`f 1P` T
_,aw Tiunadnwnissm �mi ���•. --••° 40.
i
Cou„ry of Oranpa F' EnST O i Px'
L- .'�m.a.esab,aw,...r.,"w�r dv P,ex "•`.•�. +� `,i i ° °a o'Po�
&aY alCYbmY v °ep 4G
PACIFIC OCEAN
a m t ol.o
x
N • I�
Len11kH,9 TtlNIMgnnbn p as 1 l
-ro a.ou...�uumre,Em.e.r "- j
Mfo. 1 cox°x.
meWra.awb,.v
County (and State) Tidelands
24
How Tidelands Are Managed
mq
People of California (all of us)
Owners of all tidelands
California State Legislature
Assign Tidelands to City via Beacon Bay Bill, California Constitution, Public Trust
Doctrine, etc.
;ity of Newport Beach
Manages State's tidelands as
Trustee per Beacon Bay Bill, Public Trust Doctrine
25
Public Trust Doctrine
...the Legislature has the power to delegate the
management responsibility of tidelands and
submerged lands to local governments. When it does
so, these lands are known as granted lands, and the
grantees that manage them must ensure that they are
used in ways that are consistent with the public trust
and with any other conditions the Legislature
imposes.... (emphasis added)
26
City's Obligation is to...
Comply with the Beacon Bay Bill, Public Trust Doctrine,
and CA Constitution, including:
Charge Fair Market Value (FMV) for use of the
tidelands.
a These are the State's lands
o Not charging FMV can be a Gift of Public Funds,
specifically prohibited by the California Constitution (Article
XVI, Section 6):
The Legislature shall have no power to ...to make any gift or
authorize the making of any gift, of any public money or thing
of value to any individual, municipal or other corporation
whatever.
27
New in 2011 & 2012
SB 152 (Pavley) Becomes Law (2012)
LEGISLATIVE COUNSEL'S DIGEST
B 152. pavley. Public lands: general leasing law: littoral landowners.
Existing lax - authorizes the leasing of lands owned by, the state and under
ti r
the jurisdiction of the State Lands C'onunission for purposes the commission
deems a& isahle. Existing lain requires the coninlissron to appraise lauds
and fix the aiumal rent or other consideration upon receipt of an application
to lease the land.
This hill would require the conunissron to charge rent for a priirate
recreational pier, as defined, constiucted on state lands and would require
the rent to he based on local conditions and local fair annual rental values,
The bill would except a lease rir effect oil .July 1, 2011, for the term of that
lease, and a lease for which the application and application fees were
submitted to the commission prior to N.-larch 31, 2011.
29
CA State Auditor Report #2010 -125
State Lands Commission: Because It Has Not
Managed Public Lands Effectively, the State Has Lost
Millions in Revenue for the General Fund
Audit Findings:
"The Commission Is Undervaluing Certain Types of
Leases"
"The Commission's Failure to Appraise Its Properties
Regularly May Cause Them to Be Undervalued"
o "The Commission Does Not Always Promptly Conduct
Rent Reviews"
30
City Council Effort to Date
�.a
Update Rents, Fees and Charges in Newport Harbor:
o Fees based on cost -of- service — completed November 2010
o Mooring rents — completed November 2010
o Balboa Yacht Basin rents (slips, apartments, garages) —
completed December 2011
0 Commercial Marinas — completed Nov 13, 2012
o Other Commercial uses (gas docks, shipyards, etc) — completed
November 13, 2012
o Residential Piers — currently
13 At conclusion, review all past work to ensure that it was fair and
equitable.
31
How to Set Rent
How to Set Rent
NBMC §17.60.020(E) ...rental or lease
...reflective of fair market value ...as established
by appraisal.
NBMC §17.60.060(D) Rent ...based upon fair
market value, as determined by the City Council.
Such determination ...based upon the findings of a
City - selected appraiser.
33
How to Set Rent (cont'd)
Council Policy F -7(A)
Whenever a lease .... is considered by the City, an
analysis shall be conducted to determine ...market
value of the property. This analysis ...conducted using
appraisals or other techniques to determine the highest
and best use of the property and the highest value of
the property.
34
Two Appraisals
Mr. Netzer - 2012:
o $0.55/SF of all tidelands useable for a residential
pier, bounded by property line, bulkhead line, and
pierhead line.
Mr. Rasmuson - 2012
a $0.50 /SF of all tidelands useable for a residential
pier, bounded by property line, bulkhead line, and
pierhead line.
Both appraisals on City website.
35
November 19, 2012
36
Rent Recommendation
Rent should be $0.525/SF /year.
But should NOT apply to all the tidelands off of a
private property.
Should apply only to:
Dock & Float area
I Waters of the internal slip (if any)
o Dockable/useable waters around the float ( <10 feet
generally — but adjacency of neighboring docks will reduce this)
Phase -in increases over three (3) periods (at 2015).
37
Other Recommendations
We will measure SF off of existing plans or existing
structure (not our GIS aerials)
Notices after 1-1 -1 3, specific arrangements made with pier
owners to measure. Done by 3-1-13.
Appeals process TBD
With your permit, you must:
o Maintain dock in good order
o Maintain appropriate insurance levels ($1 M General
Liability)
0 Hold harmless /indemnify City
Amend NBMC to make it legal to rent residential piers.
M
NOTE: Examples estimate SF using City's GIS
systems — more definitive measurements will be
done for each permittee.
39
General Example (not to scale)
Waters = 3,000 SF (50' x 60')
Float = 400 SF (20' by 20')
Gangway =
25')
100 SF (4' by
Berthing Area = 1,200 SF (10'
strip around float)
Rental Calculation:
• Float & Gangway = 500 SF
• Berthing area = 1,200 SF
0 Subtract berth area & gangway
overlap SF = (40 SF)
• Total SF = 11660 SF
Rent per SF = $0.525 /SF /year
• Rent = $872 /year
Appraisals suggested 3,000 SF x $0.50- $0.55 /SF = $1,500 - $1,650 /year 40
Example — Rialto/West Newport
Dock Area = 204 SF
Water Area = 700 SF
Total = 904 SF
Rent = $475/year
-.AMV
Examples estimate SF —more
definitive measurements needed
41
Example — E Bay Front /Little Balboa Island
Dock area = 515 SF
Water area = 910 SF
Total area = 1,425 SF
Rent = $748/yea r
Examples estimate SF —more
definitive measurements needed
42
Example — 125 E Bay Front (Little BI)
Float & Gangway = 1,190 SF
Exterior Waters = 11200 SF
Total SF = 21390
Rent = $1,255 /yea r
Split w/2 = $627 /year
Examples estimate SF —more
definitive measurements needed
In this shared pier example, there is at least
20' between piers.
43
Examples — S Bay Front, BI
Example — 13'" Street/ Balboa Peninsula
Dock area = 11257 SF
Water area = 860 SF
Total SF = 21117 SF
Rent = $1,1 1 1 /year
Examples estimate SF —more
definitive measurements needed
In this example, there is less than 20' between
piers. As a result, side water SF is less.
45
i
gar,
Yes.
4,
$920
$769
$805
$729
■
$3,586
357 sf
$1,019
46
■
Examples —Via Lido Soud
Examples — Channel Road
Bulkhead Line to Float -
Footprint of outline.
Float:
I 0' buffer of outline.
Rental Phase -In Examples
* The above is in current dollars (therefore assumes no change to CPI over the
period). Assuming about a 2.5 -3% CPI each year, the rental rate would be
somewhat higher (by CPI) as 2077 approaches.
M
Areas reflect our best understanding of specific
circumstances and may need follow -up verification.
The City cannot and will not charge rent where no
public asset is being rented.
50
Promontory Bay
Generally, residential properties around
Promontory Bay have recorded easements allowing
a dock. These may preclude rent.
• Bayside Drive (16)
• Harbor Island Drive (45)
k
-_ _
,f;
�rt a
51
Linda Isle
Interior of Lagoon is
private waterway
Much of exterior of
Lagoon is County
Tidelands
W1071,504
Harbor
Island
52
Dover Shores
All docks
either
are
private
waterways
County tidelands
53
For More Information
City Website:
0 neNA�nnrrtkp- rrrlirrt r-f^ a
a "Projects and Issues"
a "Harbor Charges" (both appraisals)
City Staff:
o Dave Kiff, City Manager
a dkiff&newportbeachca.gov or 949 - 644 -3001
Michael Torres, Assistant City Attorney
m for res@new Pori r eachcaxjov or 949-644-3131
Chris Miller, Harbor Resources Manager
■ cmiller(Cbnewportbeachca.ge or 949 - 644 -3043
54
Questions/Comments
From the CAR, page 61 — on City's Website
(Fiscal Year ending June 30, 2011 )
56
Tidelands Fund - Revenues
Revenues
Licenses and permits
Charges far services
Fines and forfeitures
Investment income
Net increase in fair value of investments
Property income
Total revenues
Budgeted Amounts
Original Final
1,370,000
62,000
500
75.000
1,370,000
62,000
500
80,967
8,506,752 9,595,318
Actual
1,485,375
151,284
2,935
38,321
42,646
8,740,351
Variance with
Final Budget
Positive
(Negative)
115,375
89,284
2,435
(42,646)
42,646
(854,967)
10,014,252 11,108,785 10,460,912 (647,873)
57
Tidelands Fund - Expenditures
Budgeted Amounts
Original Final
Expenditures
General government
Public safety
Public works
Community services
Community development
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues
over expenditures
Actual
-
489,926
489,926
-
17,452,950
17,452,950
838,620
3,707,463
3,544,245
2,235,438
1,900,842
1,446,925
6,162,270
6,868,084
1,269,870
195,080
195,080
195,080
41,982
41,982
41,982
9,473,390
30,656,327
24,440,978
540,862 (19,547,542)
Variance with
Final Budget
Positive
(Negative)
163,218
453,917
5,598 „214
6.215.349
M
Attachment D - Some Examples
1 - Basic concept: Generic Pier Setup (not to scale)
35'x
40' x 50'
Rent= 1,560 SF($819 /year)
• 35' by 45' = -1,500 SF +
• 4' by 25' =100 SF less
• 4' by 10' (overlap) =40 SF
2 - More complex concept: Pier over tidelands and private property, 300 SF of non - useable space,
side distance not enough for 10' each side (not to scale)
30' x 35'
30' x 40'
Tidelands Rent =785 SF ($412/year)
• 30' by 35' = -470 SF Tess
30' x 10' • 30' by 10' = -260 SF plus
Private I • 3' by 25' = 75 SF
59
3 — Actual Example from City's GIS Aerial: Pier with internal slip, narrow property line on W side,
and non - useable space towards beach — Via Lido Soud, Lido Isle.
.i
4 — Actual Example from City's GIS Aerial: Large pier with internal slip, wide property lines, and
non - useable space towards beach — South Bay Front, Balboa Island.
61
5 — Actual Examples from GIS Aerial: Piers over tidelands, with some private property, some
non - useable space, some property lines too narrow for 10' side use - Edgewater Place, Balboa
Peninsula.
62