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HomeMy WebLinkAbout08/25/1997 - Regular Meeting0 CITY OF NEWPORT BEACH City Council Minutes Regular Meeting August 25, 1997 - 7:00 p.m. INDEX - None RECESSED AND RECONVENED AT 7:00 P.M. FOR REGULAR MEETING ROLL CALL Present: O'Neil, Thomson, Edwards, Hedges, Glover, Noyes, Mayor Debay Absent: None Pledge of Allegiance - Council Member O'Neil. Invocation by Rev. Tom Pendell, Christ Church by the Sea, United Methodist. Presentation of Certificates of Appreciation too outgoing Board and ® Commission members: Ben Jackson, Library Board of Trustees; Cathy Anderson, City Arts Commission; and Gale Demmer and Pete Compton, Parks, Beaches and Recreation Commission. Supervisor Wilson made a presentation to the Council on various County issues. He updated the Council on the status of the Upper Bay dredging project, Mesa -Birch realignment and reconstruction in Santa Ana Heights, potential undergrounding of utility services on Cypress Street, traffic concerns near Bayview, San Diego Creek Watershed Study, Newport Coast annexation, the County's current budget process, and the El Toro airport issue. Following the presentation he answered questions posed by Council regarding the El Toro airport issue. Motion by Mayor Pro Tem Edwards to waive reading of the minutes of the Regular Meeting of August 11, 1997, approve as written and order filed; and waive reading of the ordinances and resolutions under consideration and direct the City Clerk to read by titles only. Without objection, the motion carried by acclamation. MATTERS WHICH COUNCIL MEMBERS WOULD LEKE PLACED ON A FUTURE AGENDA FOR DISCUSSION. ACTION OR REPORT (NON - DISCUSSION ITEM): • Council Member Hedges requested that the City -owned duplex on 44th Street be agendized to discuss disposition of the property. Volume 51 - Page 385 City of Newport Beach City Council Minutes August 25, 1997 III 1 ` RESOLUTIONS FOR ADOPTION 1. ADOPT RESOLUTION NO. 97 -68 REQUIRING VEHICLES Res 97 -68 TRAVELING ON WEST BAY AVENUE TO STOP AT 15TH STREET. Veh/ raffic (85) 2. ADOPT RESOLUTION NO. 97.69 ESTABLISHING 'NO PARKING" Res 97 -69 RESTRICTIONS ON DESIGNATED STREETS ON CERTAIN DAYS Parking /Street AND TIMES TO IMPROVE STREET SWEEPING EFFECTIVENESS Sweeping AND RESCINDING RESOLUTION NO. £16.79. Adopt resolution (85) establishing no parking restrictions for street sweeping from 8:30 a.m. to 12:30 p.m. every Wednesday on the west side of Rutland Road from 600 feet south of Mariners Drive to Westcliff Drive. CONTRACTS AND AGREEMENTS 3. CONSTRUCTION OF CURB, GUTTER A14D ROADWAY ON LA C -3119 JOLLA DRIVE FROM CLIFF DRIVE TO 300 FEET SOUTH OF CLIFF Street Imp DRIVE (C- 3119). Schedule a public hearing for 7:00 p.m. on LaJolla/Cliff September 8, 1997 on the 'Notice of Cost" for the construction of Drive curbs, gutters, driveway approaches and sidewalk along La Jolla (38) Drive from Cliff Drive to 300 feet south of Cliff Drive, under the procedure of Chapter 27 of the Municipal Improvement Act of 1911; accept the work; authorize the City Clerk to file a Notice of Completion; and authorize the City Clerk to release the bonds 35 days after the Notice of Completion has been recorded in accordance with applicable portions of the Cavil Code. 4. CONSTRUCTION OF AN ENTRANCE CANOPY FOR THE 2100 Permit - 2100 OCEANFRONT RESTAURANT ACROSS THE OCEAN FRONT Oceanfront SIDEWALK LOCATED IN MCFADDEN SQUARE ADJACENT TO Restaurant THE NEWPORT PIER (Owner - Rick Lawrence). Approve the (65) application subject to: 1) execution of an Encroachment Agreement for non - standard improvements - (a) authorize the Mayor and City Clerk to execute the agreement; and (b) authorize and direct the City Clerk to have the agreement recorded with the Orange County Recorder, and 2) issuance of an Encroachment Permit from the Public Works Department. 5. PORT SEABOURNE WAY TRAFFIC SLOW POINT AND ROAD Traffic BUMPS PROJECT - NEWPORT TMJ S. Approve plans and (85) specifications for the construction of a traffic slow point and road bumps on Port Seabourne Way in Newport Hills. MISCELLANEOUS ACTIONS 6. PLANNING COMMISSION AGENDA FOR AUGUST 21, 1997. (68) 7. APPROVAL OF BUDGET AMENDMENT (BA -012) TO RE- BA -012 (40) APPROPRIATE CERTAIN HAZARD MITIGATION PROJECTS Hazardous Volume 51 - Page 386 City of Newport Beach City Council Minutes August 25, 1997 eAPPROVED IN FISCAL YEAR 1996 -97 (NOT ENCUMBERED NOR EXPENDED BY .TUNE 30) FOR THE REMOVAL OF COMBUSTIBLE VEGETATION IN URBAN WH.DLAND INTERFACE AREAS OF NEWPORT BEACH ($258,656). MOTION BY MAYOR PRO TEM EDWARDS TO APPROVE THE CONSENT CALENDAR, EXCEPT FOR THOSE ITEMS REMOVED (None). Without objection, the motion carried by acclamation. ITEMS REMOVED FROM THE CONSENT CALENDAR - None Elaine Linhoff, 1760 E. Ocean Boulevard, voiced concerns about the sand loss at L Street and Ocean Front and requested that the sand be replenished prior to the predicted El Nino. PUBLIC HEARINGS S. PUBLIC HEARING REGARDING FEE FOR THE USE OF WASHINGTON STREET REFUSE BIN. General Services Director Niederhaus reported 'that staff is recommending ® the adoption of a resolution that will set fees for the Washington Street bin for 66 businesses. The 66 businesses were notified of this proposal approximately 45 days ago. This is a result of the passage of Measure Q and is the last piece of business that has to occur to get the City out of commercial collection of refuse. The resolution proposes that each of the businesses will be allowed to file for an exemption if they have a solid waste contract or a way of handling their trash other than using the Washington Street refuse bin. Staff has been working for over seven months trying to resolve this on a voluntary basis with the businesses in the area. Only 23 of the 66 businesses that staff believes are using the Washington Street bin have come forward and offered to pay for the service. Staff proposes that one - fourth of the annual cost, which is $14,400, be paid for by the City because of the residential use above the businesses that use the Washington Street bin. The remainder would be paid for by those businesses that use it or have no other way of disposing of their solid waste. He reported that the Balboa Merchants Association is supportive of staff and retaining the Washington Street bin as a very necessary public facility in order to keep the area clear of trash cans in the alley and any refuse left at street side. Thirty days ago the Council adopted an ordinance that states that no commercial trash can be place in public containers, therefore as of August 29, 1997, it will be against the law to place commercial trash anywhere, including Washington Street bin, unless authorization is provided by Council. Council Member Hedges verified that the City does not have any other collection sites or similar arrangement anywhere else in the City. He ® questioned whether the City can legally require someone to enter into a contract and also how staff proposes to enforce the provision of the resolution which exempts businesses from paying the monthly fee if they provide Volume 51 - Page 387 INDEX Res 97 -70 Refuse (44) Rates and Fees (40) J City of Newport Beach City Council Minutes August 25, 1997 110 01) evidence of having a one -year contract with a commercial hauler. Mr. Niederhaus explained that because of the competition amongst solid waste haulers, staff feels the haulers will notify the City if contracts are cancelled or if businesses close. He said that another alternative is to turn it over to the Association and let them operate it, however they don't want to operate it. Another alternative is to place it in the Business Improvement District (BID) system, however there are 139 businesses in the area and half of them already have a solid waste service and are paying a fee for those services. Council Member Hedges pointed out that Measure Q doesn't allow the City to pick up commercial refuse any longer, and even though he appreciates staffs work with the merchants to resolve this issue, it is basically the merchants responsibility to haul their own garbage. In response to Council Member Glover's question about the fee, Mr. Niederhaus explained that since the passage of Measure Q staff has been tracking the costs for collection at small businesses (once a week for three or four cans), and it now exceeds $40 per month. Council Member Glover said that if there are businesses that say they can't find someone to haul their trash then the City should give them the bin and ®they can form their own association and run it without the City's involvement. Mr. Niederhaus pointed out that the management of solid waste is something the City reserves for itself for health and safety reasons. He said this location has become somewhat of a dumping ground for commercial waste and occasionally hazardous waste. He noted that the City has the ultimate responsibility to keep that area clean. City Manager Murphy reported that the bin has been at that location for a long time as a common collection area because the area is so densely developed and there are so many different small businesses, many of which do not have a location for a bin. He said one option is for the City to say the operation of the bin location will cease, thus leaving them on their own. He said the City is responsible for refuse pickup for a number of residents in that area that. Some businesses may not have a place to put their refuse during the course of the work or during collections that wouldn't look very unattractive to that business district. He suggested that this alternative be tried and if it doesn't work, staff can come back to Council. Motion by Council Member O'Neil to adopt Resolution No. 97 -70 establishing a solid waste service fee for the use of the Washington Street waste bin. Mayor Debay opened the public hearing. Bob Black, Merchants Association Board of Directors, concurred with Mr. Murphy's comments and explained that there are 30 businesses that do not Volume 51 - Page 388 City of Newport Beach City Council Minutes August 25, 1997 INDEX ® have a place for trash cans because of the density. He said the alternative is to have the businesses put out trash cans on the sidewalk once a week. He said the Association has pushed to have the City administer the program they feel the City would be more effective in collecting the fees. He said that no one is against paying for the trash removal. The issue is having a place to put the trash and keeping it as clean as possible. Curtis Herberts, 2290 Channel Road, spoke in support of the proposal. He noted that there is no place to put garbage cans other than the standard dumping place that has been supported by the City for many years. The alternative would be to put the cans on the sidewalk, which would be disastrous. Butch Wilson, owner of Balboa Saloon, reported that his business desperately needs this kind of a service because there are no alleys or facilities for trash cans. He noted that the Washington bin is a central area for dumping of illegal trash, therefore it might be easier for the City to manage if this kind of dumping were kept to one :location. Madelene Arakelian, South Coast Refuse, reported that she met with these business owners when Measure Q was passed, and therefore knows it is a problem. She noted that this proposal basically puts the City in competition with the private haulers and questioned whether they will be charged the ®12% tax. Staff clarified that the actual collection will be clone by private contractors, and private contractors revenues are subject to the franchise fee, so they will be paying the tax. It was reported that bids were already accepted from haulers to provide this service. Mayor Debay closed the public hearing. In response to Council Member Hedges' concerns about the legality of the City requiring businesses to enter into a contract for trash hauling, City Attorney Burnham explained that the businesses have the option of either paying the fee or entering into a contract with a private hauler. Council Member Hedges said he will support the motion, however he doesn't feel it will work very well, staff will have a huge administrative burden of collecting the fees and over time it will revert to what it has been historically. Without objection, the motion carried by acclamation. CURRENT BUSINESS 9. PARKING ON 33RD STREET BETWEEN BALBOA BOULEVARD Parking -33rd St AND SEASHORE DRIVE (contd. from 8/11/97). between Balboa Balboa Blvd/ O Development Services Manager Edmonton reported that approximately a Seashore Dr year ago Ms. Maxine Cohen addressed the Council with a request to change (85) Volume 51 - Page 389 City of Newport Beach City Council Minutes August 25, 1997 RINITOR the parking on 33rd Street from the south side to the north side of the street. The matter was referred to the Traffic Affairs Committee (TAC) and it was discussed in November 1996 and January 1997. He said there were countering positions on the issue, therefore two petitions were circulated which indicated there were eight for and seven against the proposal. The TAC considered that, felt that there really wasn't a compelling reason to move the parking even though it did appear that one additional parking space might be gained by moving the parking. That was not considered to be compelling so the committee voted against the proposal and advised Ms. Cohen of her right to appeal to the City Council. Maxine Cohen, 118 - 33rd Street, said she is appealing the TAC's decision and believes there are compelling reasons to change the parking. She said there is a precedent for parking on the north side of the street on a one -way street going in the same direction as her street. Since the TAC met, she said she has gotten other petitions signed by owners rather than renters, so now there are more owners in favor than there were when the TAC heard the matter. There are now seven owners and one renter in favor of the proposal and seven owners against it. She said that twelve years ago the south side of the street was renovated and prior to that it was a vacant lot. She sees changing the parking to the other side of the street as the final step to the urban renovation that was begun twelve years ago. She said she believes there would be two or three additional parking spaces gained by moving the ® parking. She said that one of the residents who does not want the parking moved to the other side of the street has argued that the street is too narrow, therefore it will be hard for him to back out of his house. She indicated that she measured the street, her alleyway and a normal car. She said she feels this is a fairness issue. She said there is more than adequate parking on the south side of the street. For all of the houses except two there are four spaces for single family dwellings with the exception of one duplex. On the other side of the street everything is a rental and there isn't adequate parking so they park their cars on the south side of the street. She distributed photos showing how the college students put furniture in front of her house to save parking spaces for their friends. She said she thinks that activities initiated by the people on the north side of the street should be kept on the north side of the street and not transferred to the south side. Mark Pieri, 122 - 33rd Street, explained that he is the resident with the garage and he has more of a problem turning into his driveway than backing out. He said another alternative would be to red zone the north side which could cause at least two spaces to be lost. He spoke against moving the parking. Wesley Bose, 117 - 33rd Street, reported that this issue was before the TAC twice and he attended both meetings, and both times the committee made the determination not to change the parking. He said that those opposed to the change believe that the cost of changing the signs, sandblasting, paint removal and repainting of the curbs would be an unnecessary cost to the ® taxpayers. He said the potential danger to passengers that will be required to open doors into the traffic flow would be increased. He said the new parking plan would require the drivers to park parallel to their left rather Volume 51 - Page 390 City of Newport Beach City Council Minutes August 25, 1997 ® than to the conventional right, and the overall lark of experience will require more space to parallel park. He said that parking on the Seashore end of 33rd Street would hinder the vision of drivers turning left from Seashore onto 33rd and would increase the hazard to persons, animals and vehicles. He said he has signed letters from ten people on the street, six of them owners and four renters. He spoke in support of leaving the parking as it currently is. Council Member Hedges said he appreciates Mr. Bose's argument, however noted that there is at least a net increase of one parking space with the change. He said that people that live in the area know that parking is a premium in the area so anything the City can do to increase the number of available spaces for the residents and their visitors would accrue to their benefit as well as the City's. Motion by Council Member Hedges to overrule the decision of the TAC and change the parking to the north side of the street on 33rd Street between Balboa Boulevard and Seashore Drive. The motion carried by the following roll call vote: Ayes: O'Neil, Thomson, Edwards, Hedgers, Noyes Noes: Glover, Mayor Debay ®Absent: None Abstain: None 10. MARJNER'S MILE BUSINESS AND CITIZENS ADVISORY COMMITTEE RECOMMENDATIONS (contd. from 8/11/97). Assistant City Manager Wood reported that tonight the recommendations from the committee that the Council appointed approximately one year ago with a charge to address marketing and economic issues of the area, to review the effectiveness of the marine use incentives and other zoning regulations that may be discouraging economic development, and to make recommendations for improving the streetscape and overall aesthetics of the area, will be presented. She explained that the committee was comprised equally of business representatives and representatives from the nearby residential areas and the recommendations were made unanimously from the entire group. In addition to the recommendations, staff will be making a recommendation for the first step in implementation. Curt Yeager, Chairman of the Mariner's Mile Business and Citizens Advisory Committee, stated that Mariner's Mile is one of the key areas of the City and it is a significant part of the City's face to the world, and not necessarily it's best. He said he thinks the committee was formed in response to some obvious under - utilization of parcels in that area and some controversial land use decisions that required review by both the business owners and adjacent residential neighborhoods. He said the committee's ® goal was to look for areas of mutual opportunity where things could be done that would be favorable to the business climate and likewise acceptable to the surrounding neighborhoods. He noted that the recommendations they Volume 51 - Pa;ge 391 INDEX C -3153 City Lights Design Alliance (38) Mariner's Mile Business CAC (24) City of Newport Beach City Council Minutes August 25, 1997 ® are making are modest and do not call for rezoning properties or revolutionizing land uses, or building theme parks, etc. He noted that the staff report outlines the areas for improvement identified by the committee. He said there are opportunities at the entrances to the Mariner's Mile area, the Arches property on the west side and the Horwin property at Dover and Coast Highway. He said the Dover property is dramatically under- utilized and there is a terrific opportunity with some pro - active effort on the part of the City to influence what may ultimately be built there. He said the property owner is eager to be influenced and to have the City's involvement. He said the Ardell property is five acres in the middle of the Mariner's Mile area on both .sides of Coast Highway and also presents an excellent opportunity. He said another large piece of property is the Ray property across from the Bay Club. He said the committee is suggesting that there are some opportunities to unify some treatment in the area to make it generally a more handsome area. He said to the extent some consistent treatment could be found it would beautify the area. He said public and private signage could be improved in the area and there is room for improvement in the parking areas and with the streetscape (curb cuts). In summary, he said the committee found areas for improvement that they felt would provide a mutual advantage to the surrounding neighborhood and to the business owners. He said that what is before the Council is a consulting arrangement that would work on generating the development framework and providing some pro - active effort relative to some of the unifying ® treatments. Motion by Council Member Glover to approve the committee recommendations and authorize the Assistant City Manager to execute an agreement with City Lights Design Alliance to prepare development framework and to provide design assistance to property owners. Council Member Thomson praised Council Member Glover and the committee and noted that the report is very comprehensive. However, he said that since the report is so comprehensive he doesn't think the City needs to spend $30,000 for a consultant to tell the City what the committee has already told them. He said the consultants will design structures that won't be built until a developer decides to build something, and then the developer may not want to be told how to build his building. Council Member Thomson made a substitute motion to accept the committee's report and to empower the Council ad -hoc committee to move forward with the concept and to do everything without the benefit of the outside consultant. Mayor Pro Tem Edwards spoke in support of proceeding with the use of a consultant. The substitute motion failed by the following roll call vote: ® Ayes: Thomson, Noyes Noes: O'Neil, Edwards, Hedges, Glover, Mayor Debay Volume 51 - page 392 INDEX City of Newport Beach City Council Minutes August 25, 1997 ® Absent: None Abstain: None Council Member Noyes explained that he voted not to hire a consultant since he is unclear about the selection process used to select the consultant. Assistant City Manager Wood explained that the consultant team will consist of three members and one of the members, Lee Ann Kirby, volunteered her time and worked with the committee throughout the process, so she is familiar with the issues that need to be addressed and the recommendations that the committee has made. The other two members are design consultants and each one has specific areas of expertise, i.e. landscaping, urban design, and signage. Council Member Glover reported that this has been worked on for about eight years. She explained the process and different groups that have been involved over the years. She said that a sub -group identified areas of expertise that they felt was needed, therefore the team is a collaborative that was put together for that purpose. She said the committee felt there were specific skills needed and part of the process will be for the team to help people when they're renovating their buildings or working on facades, etc. She reiterated that this isn't a large scale project and the plan is to work with the businesses. She said that currently Mariner's Mile brings in just ® under $1 million annually in revenue to the City. Mr. Murphy explained that there are a variety of ways that the City selects consultants. He said that in most cases it is put out for proposals, but in this particular case, there was someone that had been involved and understood the local situation, therefore staff felt that if persons with the architectural background could be added in order to make a complete team, it would be the most effective way to proceed. If proposals were sought, the City would have to pay for them to get up to speed with the project. He said the key thing that staff was looking for was an architectural perspective. Council Member Thomson explained that he is not against the Mariner's Mile proposal, however he had concerns about the team. He clarified that the person that did the volunteer work did not know ahead of time that she would be awarded a contract. Without objection, the motion carried by acclamation. ff1 19 /:\;1IOF.1 V.\;1 14,1 Dl+/ WI II D&I 90)11 Assistant to the City Manager Ducey explained that tonight the Council is being asked to consider a fiscal analysis on the City -owned property between 15th Street and 19th Street bayward of Balboa Boulevard. Currently on the property is the American Legion Hall from which the City receives $300 per month for the lease on the hall, 40% of the marina gross revenues, 50% of ® the dry boat storage revenue and 100 %, of the parking revenues. The Girl Scout house is currently used for troop meetings, weekend campouts, and volunteer adult meetings. It was built by the Girls Scouts in the 1950's and Volume 51 - Page 393 I` 1 ' Marinapark Revenue Study (40) City of Newport Beach City Council Minutes August 25, 1997 ® they currently lease it from the City for $1 per year. The City acquired the Marinapark Mobile Home Park in 1919. It began as a campground and was converted to a travel trailer park in 1945 and in 1955 it was converted to the current mobile home park usage. There are 60 coaches in the park, two of which are occupied by managers and assistant managers. All of the leases expire in March 2000. The City's income property policy requires that the City evaluate any income property as to the highest and best use before embarking on any new lease negotiations. Pursuant to that policy the City retained Keyser Marston Associates to perform the study, but before beginning the study it was necessary to do two ttdngs. The first thing was to look at the value of the property and have appraisals conducted. To do that it was necessary to look at the highest and best use and what would be allowable on the property, therefore the first study that was completed was a tidelands boundary report. Boundaries Unlimited was retained to review the history of the property and the location of the boundary. They recommended a tidelands boundary that actually bisects the property laterally so about two - thirds of the property is in tidelands and one -third in uplands. The report puts Marinapark and the American Legion in the tidelands area. The State Lands Commission attended the Finance Committee meeting and reviewed tidelands state regulations and law and determined that the American Legion was an allowable use on the tidelands property, but pursuant to current state law, given that tidelands are to be visitor serving, residential use on tidelands, which would include Marinapark, is not an allowable use. Once the Boundaries Unlimited study ® and the appraisals were completed, Keyser Marston used that information to do their economic analysis. When this was reviewed by the Finance Committee on August 1, 1997, they approved the staff recommendations to receive and file the report, to begin negotiations with the American Legion to extend their lease, to direct staff to prepare a Request for Proposals (RFP) to actually develop the site, excluding the American Legion portion of the property, and to invite the existing lessees to submit a response to the RFP once it is released. In addition to this motion, the Finance Committee also asked staff to do a number of other things. The first thing was to prepare a legal opinion on relocation benefits for Marinapark. The City Attorney's office has determined that the City would not be obligated to pay relocation expenses to Marinapark if in fact the leases were not renewed. The second thing staff was directed to do was to prepare an ordinance actually establishing the tidelands boundary. Per the City Attorney's office a resolution was prepared since he felt that was the more appropriate vehicle. The committee also directed staff to estimate what necessary capital improvements might be needed from Marinapark if the leases were extended. That analysis has been completed and it is estimated that about $345,000 - $350,000 in capital improvements would be necessary. The Finance Committee also requested that Keyser Marston review an economic analysis that was submitted by Marinapark representatives on the Keyser Marston report. Late Friday City staff met with Marinapark representatives who presented an alternate proposal that would permit Marinapark to remain on the property and according to them would net the City between $900,000- $1,000,000 annually. Keyser Marston has reviewed that proposal and will 0 respond to it orally. Volume 51 - Page 394 INDEX City of Newport Beach City Council Minutes August 25, 1997 1 1 Cal Hollis, Senior Principal, Keyser Marston Associates, summarized the Marinapark Revenue Study prepared at the request of the City, their review of the information presented by Marinapark to the Finance committee, as well as some additional information that was submitted subsequent to the Finance Committee meeting and a brief review of the conceptual proposal discussed by representatives of Marinapark and City staff on Friday, August 22, 1997. He reiterated that currently there is a mobile home park with 58 spaces on the property. 58 of the spaces are rented and two spaces are occupied by managers. 17 of those units are occupied year round by tenants and the others are essentially used as vacation homes. The existing uses on the property are: 70 metered parking spaces, the Girl Scout House, the Balboa Community Center, the Marinapark Mobile Home Park, Las Arenas Park and tennis courts, and the American Legion Hall and marina. He explained the methodology they followed. First, they determined what the market support for various commercial uses for the property might be. They estimated the land value generated by each of those uses and the likely ground rent that would be generated by those uses. In their definition of revenue, they included local taxes that would accrue to the City as a result of particular ground uses, as well as ground rent. They projected what both the revenue and the rent would be over the maximum term of the lease and they discounted those to present value. They then converted those revenue ® amounts to present value and to present value per square foot. The purpose of doing that was to see which use generated the highest revenues on a per square foot basis and to use that information to come up with mixed uses to maximize the value of the property to the City. He explained that it has been determined that two - thirds of the site is in Tidelands (the bayfront two - thirds) and the Balboa frontage third of the site is not part of the Tidelands. The City's Charter reserves the beachfront for public beach use and they presumed there would not be a charter amendment to change that. The Local Coastal Plan (LCP) currently requires recreational and open space and the General Plan is consistent with the LCP. Based upon their review of the real estate markets in the Newport Beach area, they settled on the following as likely uses for the property: a hotel (an 85 -room small scale hotel); ownership housing on the Balboa frontage; restaurant uses; convenience retail; and rental housing. They also looked at the existing uses as a benchmark in order to compare the value of the existing uses with the value of the alternative uses. He said they also looked at parking as a use to see if that was an appropriate use. On the square foot value stage, they concluded that the highest combination of local tax revenues and ground rent would be generated by a hotel (about $63.00 sf); ownership housing would be $47.50 sf, restaurants at $45.50 sf; convenience retail at $41.00 sf, and rental housing at $25.00 sf, and existing uses if brought to market would average $24.00 s£ The mobile home park portion generates about $44.00 sf. The overall value is low because there are a number of non - revenue generating uses on the property. Parking generated the lowest value. Using those per square foot values, they developed some different development scenarios for ® the site. They identified three scenarios they felt were reasonable. The first scenario is what they called the baseline scenario, which assumes that the current uses and all existing uses stay, with an assumption that the mobile Volume 51 - Page 395 City of Newport Beach City Council Minutes August 25, 1997 home park rents are brought up to market. There would be no change to the lease agreement with the Girl Scouts, no change in the income generated by the community center, park use or parking, and the American Legion lease would remain as is except the slip rents and the dry storage rents would be brought up to market. In summary, everything would be brought to current rates, however the basic lease agreements would remain as is. Scenario A assumes a partial reconstruction wherein the mobile home park is eliminated and all other uses remain. This could be an alternative if the Council determines that the mobile home park usage is inconsistent with Tidelands, however wants to retain the other uses. The mobile home park would be replaced by a restaurant and an 85 -room hotel. All the other uses would remain. From a business standpoint the marina and boat storage operation would be transferred from the American Legion to the City, so rather than sharing the revenues the City would be responsible for all the expenses and would be the beneficiary of all of the revenues. This scenario also brings the other rents up to market. Scenario B assumes all existing uses except the American Legion are eliminated, the marina and boat storage are transferred to the City, a hotel and restaurant are placed in the Tidelands area and 30 ownership lots are created along Balboa and they are leased for development. ® The result of the analysis is that under the baseline if everything were brought up to market and all of the uses were left as they are today, the annual revenue in the first year would be approximately $821,000. They would value that over a 50 -year period at $10.3 million. This was determined by increasing the revenue stream by inflation and discounting it back to the current year. Scenario A has a value: of about $11.6 million and Scenario B has a value of just under $16 million. Under the baseline scenario, he explained that there is very little tax revenue generated as a result of those uses and it is virtually all ground rent income. Under Scenario A there are tax revenues generated by the hotel and the restaurant (TOT and sales tax). Scenario B has the same kind of taxes generated by the proposed uses. The conclusion is that compared to the baseline, Scenario A generates about $1.3 million in additional value for the term of the lease and Scenario B generates about $5.6 million in additional value. To the extent that the density of uses that have been proposed are reduced, the value is reduced. He said they have assumed that the current height limitation (26 feet - 2 stories) would be maintained. The development on the water side of the property has been limited to enhance the value of the residential lots on the Balboa side of the property. He said they believe there are other combinations than what they have illustrated, however it would warrant a market test. He said they have assumed in their analysis and their projections of revenue for Scenario B that there :is a substantial discount to the value of those residential lots as a result of them being available for a ® ground lease as opposed to them being sold. They have allowed for a substantial 30% reduction in the value of the lots because they would be available for long -term ground lease and not a fee simple sale. He stated Volume 51 - Page 396 City of Newport Beach City Council Minutes August 25, 1997 ® that this may be an overly conservative assumption. The other assumption that was made that tends to reduce the results of the value for Scenario B is that leases for those residential lots would have very low escalation, significantly less than the CPI. Mr. Hollis reported that a meeting was held on August 20, 1997 with representatives of the mobile home park to review their analyses. The tenant's conclusion that was presented was that the revenue generated by the mobile home use had a value of $23 million as opposed to Keyser Marston's value of approximately $8.2 million. The representatives of the mobile home park concluded that the value of the restaurant and the hotel property and the revenue generated by that property had a value of $2.5 million, and they valued it at $7.5 million. He indicated that there are two reasons for the wide discrepancies. The first of those has to do with the discount rate applied. The discount rates that Keyser Marston used in their analysis were meant to mirror discount rates applied by the real estate market in valuing ground lease income. They discounted the revenues between 9% in the case of the ownership housing; to 10.5% in the case of the mobile home park rent, hotel rent and other rent, and 12% for the tax revenue. The tenant's analysis discounts the mobile home park rents at 6% and the hotel and restaurant at 21% and 24% respectively. He explained that the lower the discount rate, the higher the value, so by discounting rents at 6% you get a substantially higher value than if you discount the ® rents at 10.5 %. He said that in their opinion the discount rent (6 %) applied to the mobile home park in the tenant's analysis is inappropriately low and is, in fact, lower than the rate of return received in a 30 -year government bond. He said they believe there are risks associated with ownership of property, risks associated with rent collection, and risks associated with operating expenses, therefore those risks need to be taken into account in the discount rate. He said that they would conclude that the 21% and 24% discount rates applied to the restaurant and hotel: rents are not supported by discount rents applied to ground rents in any situations that they are aware of. He said the presumption in all these analyses is that these ground leases are non - subordinated, which means that you are paid before the lender is paid so there is substantial security that you will be paid. The failure to pay would mean that they would lose the leasehold and any improvements on them. The difference in discount rates amounts to two- thirds of the difference in their valuation. The other third of the difference in the valuation relates to the mobile home park. The tenants assumed that the mobile home park rents would be increased on the average 70% when the lease is renewed in the year 2000. He said they believe that would take the rents substantially above market and their analysis assumed an increase to what they believe current market rents would be. He said he believes the representatives of the mobile home park have concentrated their analysis on the 4.27 acres by the mobile home park and Keyser Marston's analysis is on the entire 8 acres. He said decisions made as to what to do with the 4.27 acres impacts the value of the remaining portions of the property and that impact on the remaining property is not taken into account in the tenant's ® analysis. He reported that late Friday afternoon they were advised that Volume 51 - Page 397 1 � City of Newport Beach City Council Minutes August 25, 1997 I 1 representatives of the mobile home park had met with City staff and presented a conceptual proposal, so they were asked to review that proposal and submit comments (memorandum dated 8/24197). The tenant's proposal essentially would increase the rent the City would receive by the year 2000 equal to a net income of $900,000 per year. It would be increased on a CPI basis and in the event of any transfers of those leases the City would be paid $20,000 (currently the fee is $2,500). He said that their analysis is that the rents proposed would be substantially above market. The non -view lots would increase from $743 /mo. to $1189 /mo., compared to the Lido lots at $1100. He said that based on the superior view spaces at Lido, they would consider these rents to be above market. Using the numbers utilized in the original report and using these rents, the result is that the new baseline scenario results in a value that is equivalent to Scenario B. He said they are concerned with the analysis being done based upon rents above market and even though the current owners are willing to pay these rents there is no assurance that these rents can be maintained in the future by new owners. He also noted that agreement has not been obtained by all of the tenants to pay these rents and this is a conceptual proposal put forth by representatives of the tenants. He said their primary concern is the ability to sustain market rents that are above market over a long period of time. He said they believe that continued use of Marinapark as a mobile home park will limit options available for the use of the rest of the property. He noted that the analysis makes no opinion as to the permissibility of those uses by the State Lands Commission. In response to questions raised by Council, Mr. Hollis reported that 100% occupancy levels were assumed for the tenant's analysis, however voiced concerns with the proposed rental rates that are above market and said he would expect there to be higher vacancies. He said they valued the lots facing Balboa Boulevard under a lease basis at about $7.3 million so if 30% were added you would add about $2 -2.5 million to that value. He stated that Keyser Marston used a 12% rate for tax revenues because they are volatile and subject to the economy, a 10.5% rate for the commercial rents, including the mobile home parks, the restaurant and the hotel, and a 9% rate for the ground rent achieved by the residential lots. If the City were to respond to the tenant's proposal, Mr. Hollis explained that the difficulty with this kind of property is the fact that there are 58 individual leases, so each tenant makes a decision each month about paying their rent. He said he doesn't know of a mechanism the City can use to assure receipt of the rent except putting alien against the mobile home. He said that normally a non- subordinated lease has investment by the tenant in the property, which keeps the tenant motivated to pay the rent. In this case the security the City has is that it is difficult, but not impossible, for the tenant to leave and take his trailer with him. The tenant could be forced to vacate the premises. Stewart Berkshire, 1770 W. Balboa Boulevard, Space 7A, speaking on behalf of the Marinapark residents, explained that discount rates are a function of risk and the higher the risk the higher the discount rate you want to use on ® a future stream of income. He said that Keyser Marston used the same discount rate for Marinapark rents as for rents for a hotel and a restaurant. For the ground rent situation alone, he submitted that the rents have been Volume 51 - Page 398 City of Newport Beach City Council Minutes August 25, 1997 ® paid for 45 years without the City losing a dollar, which is a very low risk use of that property for a ground rent purpose. He said he inquired about what the City receives for normal long -term investments and was advised that it is 6 %, therefore he used the 6 %, as the discount rate for future rents for Marinapark. He said he increased them by 3 %n per year because there has always been a cost of living escalation clause in the lease. He pointed out that more than half of the income from the hotel use comes from other uses (TOT, sales tax, etc.), and they are subject to the economy. He noted that the City may not get the income promised if the economy is down. He said that he can get a 12 -14% return from a mutual fund investment and he believes a hotel use is a greater risk, so he increased the discount rate. He said he believes agreement can be made as to what the bottom line is for the City from a risk and a cash flow standpoint. He said that common sense would tell you that there is a greater risk on the revenue stream from a hotel and restaurant since these facilities fail regularly, than from Marinapark. He said it is also obvious that no income will be received from the hotel and restaurant until at least the year 2000 and until someone else takes possession of the property, and even then revenues will start off lower than in the Keyser Marston report. He said that increased income from Marinapark can start before that date. He said they have conducted their own surveys of market rents and after comparing their figures determined that the rents that must be paid to be at market will result in income to the City of a quite substantially larger figure than the Keyser Marston report ® states. He distributed a handout entitled "Comparative Revenues" and explained that for the hotel the land revenue is $180,000 and the total revenue is $440,000 with the difference being the tax revenue that results from the economy. He noted that the total revenue would be $774,000, however that revenue would not start until at the earliest the year 2002. By comparison, Marinapark revenues today (with no raises) results in a return to the City of $530,000 net, plus the revenue from the alternate uses ($16,002), for a total of $546,002. By accepting Marinapark's offer of "fair market" rents, plus other lease provisions, they anticipate the revenue to the City will be in the range of $900,000 to $1 million, some of which could begin as early as 1998. He said they will need forty -five (45) days to fine tune their offer, to address some of the concerns expressed by staff and to meet with the 58 homeowners to obtain a consensus. He explained that their offer includes a willingness to start paying increased rents as soon as agreement is reached, possibly two years prior to the expiration of their current leases, which is money the City had no expectation of receiving under any of the alternatives talked about. The extra revenue starting in 1998 of approximately $200,000 per year in rent plus the value incentive participation, will be ample to defray the cost of all the infrastructure improvements referenced in the staff report. He said they are prepared to make the City an offer of around $1 million per year and to do it in 45 days, therefore he has a check for $5,000 to back up this statement. He will turn it over to the City and if it is agreed that if they come in with their offer as stated in the 45 -day period, the City will return the check and deal in good faith to negotiate a lease on their behalf. The staff could analyze their ® proposal within thirty days after receipt and it could be back before Council by November of 1997. If it is unsatisfactory, nothing would be lost. He asked the Council to approve items 1 and 2 of the recommendations on the Volume 51 - Page 399 INDEX City of Newport Beach City Council Minutes August 25, 1997 ® agenda, but begged the Council to defer any action concerning Tidelands and the RFP, including items 3, 4 & 5 for 45 -60 days. He said he understands there is a move underway to address a letter to the State Lands Commission asking the obvious question about whether that body should approve the extension of their leases. He said the assumption should not be made that they are on Tidelands because they are investigating that matter themselves and they need the time to do so. If it is determined that the park is on Tidelands, they would become illegal responders to the RFP and therefore couldn't bid. He urged the Council to consider the merits of their offer and if it is favorable to the City as they state, then to stand behind the stated duty to obtain the highest and best use of this land and to approach the Lands Commission in the role of an active advocate of their position. He said the City did this for Balboa Bay Club and Beacon Bay, therefore it can be done for them. He said that under their proposal the rent per unit would go up in the order of 50 %, which they feel is consistent with what they see at the other mobile home parks. He said they expect to hire an appraiser to look at this and come up with an objective figure about what the fair market rents are. He said that the bylaws of their association give them the right to approve a lease with the City with the approval of two - thirds of the members (39), and they believe they have 39 votes to do this. He explained the transfer fee, which they have termed Value Incentive Participation (VIP), and noted that when they sell their property that a third or less of the amount it is sold for is the value of the coach and the rest is the value of the ® lease on the ground it sits on. He said that with a new lease the owners stand to gain, therefore they are proposing that the City participate in this gain. Val Skoro, 1601 Bayadere Terrace, noted that the focus to date seems to be on the dollars. He said that Marinapark is a park, there are four tennis courts on the property and if they are removed that result in a loss of 25% of the courts in the City. He said the area needs some greenery and the bottom line is the quality of life to the City not the dollars that can be derived from this venture. He said the access to the beach is very narrow and whatever is done the public recreation aspects of the area should be retained. He requested that the Parks, Beaches and Recreation Commission be consulted before any final decisions are made so that the recreation aspect and the tennis courts can be retained. Philip Bettencourt, 1824 Baypointe Drive, said that he speaks from experience as the City's former interim City Manager and property manager. He said he was at the podium more than twenty years ago as a City official seeking to reclaim and preserve this vital window to the bay. He said he recommended then, along with the PB &R Commission, that the Marinapark leases not be extended and that this enclave of private and second homes be honorably and fairly removed from the public bay, beaches, and tidelands. He said he is here tonight with the same suggestion and recommendation. He said the issue is the Council's stewardship of the Tidelands trust, the Council's guardianship of Newport Harbor, the compliance with the Coastal ® Act, and the vision for the 21st century. He said his vision for this property is white sand, blue water, green grass and small boats. He said the voices that need to be heard are the small boat sailor, the moms at the Tot Lot, the Volume 51 - Page 400 I� 1 City of Newport Beach City Council Minutes August 25, 1997 INDEX ® users of the tennis courts, and those that walk along the bay beaches. He said he supports the staffs recommendations and believes it is time the City reclaimed the window to the bay. William Fundenberg, 808 W. Balboa Boulevard, stated that the proposed resolution proposes a .boundary line which lie contends is the wrong boundary and the mechanism is not the accurate way to arrive at the correct boundary. He said it is the obligation of the State Lands Commission and not really the obligation of the City to pass the resolution. He said the City should be requesting that the proper surveys be taken first in order to arrive at the proper way of determining the mean high water line. The proposed resolution is based on Boundaries Unlimited's study, where the surveyor who wrote the study looked at whatever available materials there were. There were no studies determining the high water mark, so the surveyor arrived at the selection using a 108 year old survey (the 1889 Finley meander line). If the Council were to adopt the resolution with that line, it would result in setting the City boundary of this property about 200 -250 feet southward of the adjacent properties towards the east and the west. He said the idea that is in the Boundaries Unlimited study that you must find the ordinary high water mark as it existed prior to the dredge and fill that took place between 1919 and 1920, is not required by the law. He said the land where that ebb and flow has been going on has had the same water line basically since the dredging was completed in about 1921, which is about 20 ® years before the act that created the State Lands Commission and gave them the requirement of resolving this type of boundary line. He said that line has been there for about 70 years. If the resolution is adopted, as well as Scenario B, at least two lots in the area for ownership or rental housing would encroach into the Tidelands area. He said it would be appropriate to defer passage of this resolution until some further study can be conducted. He said he wants to be convinced that the line is in the proper place and the City is not giving back property that it owns to the State. Bob Wynn, 1617 Port Abbey Place, said that he worked with Mr. Bettencourt during the 1973 renewal of the Marinapark leases. The main thing that the Marinapark representatives would hope the Council would do is take the action on the agenda, but delete any action with respect to determining high tide and permit them 45 days to come in with a more definitive proposal. He compared the situation to the undergrounding of utilities and said something similar may be worked out here to guarantee that Marinapark could remain fully occupied. If the resolution is adopted regarding Tidelands or if a letter is sent to the State Lands Commission without: being convinced that the mobile home park may provide the highest and Neatest return to the City, their answer will more than likely be "no" than if they knew that this is what the City wanted to do. In 1985 when the lease was renewed with Marinapark, meetings were held with the State Lands Commission and they indicated that the City of Newport Beach was the local governmental entity that should make the decision and were thus required to make certain findings and with those findings they would be satisfied with the report. ® Subsequently the State Lands Commission had no adverse comments about the leases. He noted that the line to the west of the mobile home park was fixed and adjudicated by a 1929 court case that made a finding that the Volume 51 - Paige 401 City of Newport Beach City Council Minutes August 25, 1997 ® tidelands line had moved from the old Finley line through natural attrition. The State Lands Commission explained to the Finance Committee that if the tideland line moved through natural attrition then the tideland line moved with that. If it changed because of human fill, then the tidelands line remains where it is. There are a number of properties on tidelands property, the Balboa Bay Club and the Beacon Bay Club. If the marinapark residents cannot satisfy the City's desires within 45 days, the resolution can be adopted at that time and if the City approve their proposal it can be implemented as early as 1998, or two years prior to the expiration of the leases. He stated that in 1985 they did not have to deal with the Coastal Commission. Mr. Murphy explained that if the City makes any changes to the land use the Local Coastal Plan would need to be amended, which would require going to the Coastal Commission, and if there are any changes to the developments it would require a Coastal Development Permit, which would also go to the Coastal Commission. If the City were to renew the lease, it would not require Coastal Commission action. Based on the length of time it will take to develop the RFP, Mr. Murphy said the 45 days that Marinapark is requesting will not present any problems. Don Donaldson, 1517 W. Balboa Blvd, President of the American Legion, said he concurs with recommendation 2, to authorize the staff to begin enegotiations with the American Legion to renew their lease. Tom Hyans, President of the Central Newport Beach Community Association, reported that he delivered a letter to the City Clerk. He read the letter which states that their members support the long -term continuation of the current uses of the City land at both the Marinapark and the American Legion properties. He said this position is also supported by the residents represented by the Balboa Peninsula Point Association. The letter states that revenue should not be the only issue here and the highest and best use includes public benefit from public recreation, from use by non- profits such as the Girl Scouts, Sea Scouts, Orange Coast College, the American Legion and others. The letter urges that the negotiations with the Marinapark residents and American Legion be continued and that the Council ignore any attempt to fix a mean high tide line. The letter questions who will respond to the RFP on behalf of the residents for the purpose of proposing that the public facilities and access to the City's largest lower bay beach remain as they are. John Rettberg, 1770 W. Balboa Blvd., said that if the residents of Marinapark are right, what is at stake for the City of Newport Beach is somewhere between $2.5 -$3 million over the next ten years. He said the cash flows for Scenario A and their proposal would basically be the same for the first ten years. He requested that the Council give them a chance to come forward with a proposal and that no action be taken as far as requesting judgements from the state that will jeopardize their ability to submit the Oproposal. Don Hunter, 666 W. 19th Street, Apt. 1102, Costa Mesa, said he has been a Volume 51 - Page 402 I1�11 , City of Newport Beach City Council Minutes August 25, 1997 ® mobile home consumers advocate for about 38 years and has lived in mobile home parks until the last two years and most of that time was in Newport Beach. He said he no longer lives in a mobile home park because he cannot economically afford to. He reported that four mobile home parks in Newport Beach have closed and other uses have been established on the sites. He said there are only five parks left in Newport Beach. He referenced an article in "The Orange Coast Magazine" about mobile home parks and the fact that more and more of them are closing. He questioned what will happen to the residents that live there and what happened to the ones that used to live there. He pointed out that the homes that are in Marinapark are not mobile homes, but are manufactured housing and they are no longer mobile. He said there isn't any place to move the homes to, it will cost an average of $10,000 to move them and questioned who will poky the cost to relocate them. In reference to Mayor Pro Tem Edwards' question about public recreation uses being included in the RFP, Mr. Murphy indicated that this is something that staff will need to look at. He stated that there are tennis courts at that location, a tot lot in the front portion of the property, and there is certainly an opportunity for all or some of these uses to remain at this particular site. As part of the RFP there is also an opportunity to look at the possible relocation of the tennis courts. He said that Sunset Ridge is one potential future open space site for the west end of the City. He said staff is looking for Council direction as to what to include in the RFP and whether to retain some or all of the site for the uses addressed by Mr. Bettencourt and others. Motion by Council Member Hedges to: 1) Receive and file the Marinapark Revenue Study and follow -up reports prepared by Keyser Marston. 2) Authorize staff to begin negotiations with the American Legion to renew and extend their lease with the negotiations contemplating bringing the American Legion lease rates up to market rates either with the City or Legion operating the Marina. 3) Authorize staff to prepare a Request for Proposals for the remaining portions of the site; authorized the Finance Committee to review and approve the RFP prior to its distribution by October 27, 1997 and to receive the proposals and make recommendations to the City Council. The RFP to include the two broad outlines contemplated by Keyser Marston and also the inclusion of a public use /access component. The existing lessees to be given the opportunity to respond to the RFP and propose to remain on the site. 4) Direct the Mayor to prepare and forward a request, as well as the Boundaries Unlimited report, to the State Lands Commission asking them to evaluate the report as to its adequacy for determining the tidelands boundary; and asking them to confirm in writing the status of a use such as Marinapark on State Tidelands and whether it is consistent with the City's O responsibilities as the trustee. Also to ask advice from the State Lands Commission on the responsibilities of a trustee of public tidelands and the potential consequences of violation of that public: trust. The response from Volume 51 - Page 403 IN City of Newport Beach City Council Minutes August 25, 1997 the State Lands Commission to be obtained prior to distribution of the RFP. 5) Defer the action on the proposed resolution. until October 27, 1997 or sooner pending a response from the State Lands Commission. Without objection, the motion carried by acclamation. 12. COMMUNICATION FROM LEAGUE OF CALIFORNIA CITIES - LEAGUE ANNUAL CONFERENCE - OCTOBER 12-14,1997 IN SAN FRANCISCO. Motion by Mavor Pro Tern Edwards to designate Mayor Debay as the City's Voting Delegate for the Conference and Council Member Noyes as the Voting Alternate. Without objection, the motion carried by acclamation. 13. RECONSIDERATION OF THE ACTION TAKEN ON JULY 28, 1997 TRANSFERRING $5,950 FROM THE ARTS AND CULTURAL DIVISION BUDGET TO THE LIBRARY DIVISION FOR THE ESTABLISHMENT OF AN AMERICAN HISTORY COLLECTION. Volume 51 - Page 404 II 1 League of Calif Cities (61) Budget (40) Community Services Director Kienitz reported that the nine members of the Arts Commission have worked diligently to provide a basis for development e of a broader cultural arts program in the City. Their planning has two elements: 1) the development of a Cultural Arts Plan and 2) the establishment of a not - for - profit foundation. The Commission has initiated the establishment of a not - for - profit Newport Arts Foundation. The paperwork to establish the foundation is almost complete and they anticipate that this will provide the vehicle so there can be more funding for cultural arts for projects such as the art in public places and for broader cultural programs in the community. The second element was the Cultural Arts Plan. A contract was awarded to L.A. Consultants to write a cultural arts plan. The initial contract was only for phase one and additional funding is needed for phases two and three, which was what the plan was with the extra $5,950. In developing the staff report, three alternatives have been suggested: 1) to transfer the money back; 2) sustain the original action; or 3) to find new money to fund the cultural arts plan for the Arts Commission. In response to Mayor Debay, Ms. Mentz reported that the Library budget contains funds for materials collections, but funds were not placed in the budget particularly for extensive development of an American History collection. She said staff has direction from the Library Board to do as much retrospective collection development as possible. When funds are donated to the Library throughout the year, the donors primarily want the money to go towards book collections. She reported that the library does have an American History collection, albeit it is not designated as a separate collection and identified in one place. There are over 8,000 volumes in the four libraries. OMotion by Council Member O'Neil to approve recommendation #2 to reallocate the amount of $5,950 from the Library Division budget back to the Volume 51 - Page 404 II 1 League of Calif Cities (61) Budget (40) City of Newport Beach City Council Minutes August 25, 1997 ® INDEX Cultural Arts Grants Fund. Council Member Glover said that as far as she recalls the establishment of a foundation for cultural arts has never been brought before the Council. She said that if there is a group of community leaders that want to form an arts foundation it would be appropriate, however she's not sure it is the City's role to form a foundation. She pointed out that this item has been mis- stated and there has been a history and arts component within the American culture collection. She spoke in support of starting a collection and gaining a reputation for having a certain collection. Mr. Murphy explained that members of the Arts Commission, independently and separately, have formed a foundation. It was formed last year and is similar to the Library Foundation. Ms. Mentz clarified that City funds were used in the formation of the foundation. City Attorney Burnham said he can see a public rationale for the expenditure and if the question is whether this is a gift of public funds, he said that clearly there is going to be a public purpose from raising funds to give back to the City for cultural purposes. ® Mr. Murphy said he's not sure if there is any financial policy that requires that the formation of a foundation be approved by Council, however a portion last years Arts and Cultural budget ($3,000) was utilized for legal expenses to form the foundation. Council Member Glover noted that there is a City policy that states that if funds are solicited for the City, approval has to be granted by the Council. Mr. Murphy explained that foundations are formed separately and distinct from the City and the City would not be involved in the fundraising. Council Member Thomson said that it was his understanding that the purpose of the Arts Commission was to raise funds and help these areas on their own, not within a foundation. Ms. Mentz explained that there is a City policy that precludes the Arts Commission or any commission from raising money and that was partially why the Council encouraged the Library Board in 1989 to form a foundation. In response to Council Member Hedges, she reported that the library has around 280,000 - 300,000 books. Council Member Hedges noted that the third paragraph of Council Policy I- 12 states that the sum shall be provided each year for civic, cultural and artistic planning, promotion and/or. construction projects as approved by the City Council. He said every year the Council approves that, however it O doesn't mean that the Arts Commission or anybody else can hold back money for their own use without City Council approval. Further it states that it is the policy of the City that expenditures from the reserves fund should be Volume 51 - Page 405 e City of Newport Beach City Council Minutes August 25, 1997 matched equally by the community in the form of contributions and donations. He questioned how much money has been raised from the community to match the money that Council has appropriated. Ms. Kienitz reported that she has been staffing the Arts Commission since January of 1994 and during that time period there has not been any money raised. Council Member Hedges said he has been through the American History collection at the library. He pointed out that the library tries to do a lot of things for a lot of people, but it doesn't focus in on any one thing like history and culture. He said he would like to donate some money towards that end. Substitute motion by Council Member Hedges to appropriate money from the General Reserve Fund to the Cultural Arts Grant fund in the amount of $5,950 to spend on an attorney to form the foundation. Council Member O'Neil said that as long as the Arts Commission gets the $5,950 and it also legitimizes the action taken by the Arts Commission to form a foundation, he would withdraw his main motion. Without objection, the substitute motion carried by acclamation. - None ADJOURNMENT - The meeting was adjourned at 11:00 p.m. to an Adjourned Regular Meeting (Study Session) to 3:00 p.m. on Monday, September 8, 1997 followed by the Regular Meeting at 7:00 p.m. The agenda for the Regular meeting was posted on August 20, 1997 at 11:45 a.m. on the City Hall Bulletin Board located outside of the City of Newport Beach Administration Building. i�4� (1). 4,1& City Clerk .r _ 0-,frJ6,,,.,, M, Recording Secretary Volume 51 - Page 406 INDEX