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HomeMy WebLinkAbout08/22/1994 Item #(31 C--579 CITY OF NEWPORT BEACH OFFICE OF THE CITY MANAGER August 19, 1994 BY THE CITY COUNCIL CITY OF NBVPORT BEACH AUG 2 21994 TO: Honorable Mayor And Members Of The City Council FROM: Kevin J. Murphy, City Manager SUBJECT: BALBOA BAY CLUB LEGISLATION BACKGROUND: The City Council on April 11th, May 9th and July 8th received staff reports and discussed State legislation designed to resolve the City's dispute with the State Lands Commission on the tidelands/uplands designation of the Balboa Bay Club and the attendant requirement to convert it to visitor serving uses in December 1998, if the dispute is not resolved through "legislative, judicial or other appropriate process." The staff reports from each of these prior discussions is attached for your information (Attachment 1, 2 and 3). DISCUSSION: On August 9th, the City Attorney and I met with State Lands Commission staff to discuss the status of the legislation and their concerns on prior legislative proposals. At the conclusion of that discussion, the City Attorney was requested to draft a revised legislative proposal, incorporating more extensive findings for the legislation, and as you'll see in the attached letter (Attachment 4) dated August 11th trying to resolve the current use of the Terrace Apartments and the required modification to hotel or other similar visitor serving use in December 1998. Late August 17th the City staff received a new proposal from State Lands staff which was consistent with the City Attorney's draft of August 11th, excepting section (m). I've attached this section (see Attachment 5), which you'll note provides for a sharing of future Balboa Bay Club revenues with the County and the State Lands Commission. Staff has objected to this proposal for obvious reasons and due to the lateness of the legislative session has worked with Senator Bergeson's office and State Lands staff to try and craft a legislative proposal that will succeed this legislative session which terminates on August 31st. The latest proposal which City staff has indicated we will recommend to the City Council on August 22nd is attached for your review in its entirety (Attachment 6), but the key section is on the bottom of Page three and top of Page four in section (m). It provides that the City will receive -2- 95% of the Bay Club's revenues, with 5% received by the State Lands Commission to fund State review of management of public trust property. Five years after the effective date of any new Bay Club lease, that the State Lands Commission would be required to approve (and consistent with other provisions of the legislation, particularly (j), (k), and (1)), the formula would provide 90% to the City and 10% to State Lands. Presumably at that time the City would be receiving greater revenues from the expanded and redeveloped project which would permit sharing with the State Lands Commission for greater oversight activities on their part. In order for the Legislature to act on this bill this year the latest version was forwarded to the Legislative Counsel's Office by Senator Bergeson's staff and incorporated into AB 3139 by Assemblyman Terry Friedman with the understanding that the City Council must give their approval for this matter to proceed further in the process. If the City Council approves of this legislation then the matter will be heard in Committee on Wednesday, August 24th and will likely go to the floor of the Assembly and Senate on Thursday and Friday. RECOMMENDATION: The City staff endorses this legislative proposal for several reasons: 1) Based on conversations with our economic analyst on the Bay Club project the redevelopment of the Bay Club is economically infeasible without the resolution of the Terrace Apartments issue. The Terrace Apartments now represent a significant portion of the revenue stream and will be relied upon for any redevelopment to take place by a lender. If conversion of the apartments in 1998 isn't resolved, the redevelopment and lease negotiations will await future legislative or judicial action. 2) This session is the last session of the State Legislature for Senator Bergeson who has effectively lobbied for this legislation on our behalf. We will have to start over next year with new State representatives who may not have the political strength and prominence now enjoyed by Senator Bergeson. 3) Staff does not believe that any future attempts at this legislative resolution will be successful without the provisions for State Lands financial assistance. IN 4) Legal or judicial attempts to resolve the issue of uplands or tidelands may be very expensive and without guarantee that the City would succeed. ATTACHMENT 1 TO: FROM: SUBJ: CITY OF NEWPORT BEACH OFFICE OF THE CITY ATTORNEY April 6, 1994 Mayor Clarence Turner Members of City Council Robert H. Burnham AGENDA N0. 21 E PR 1 i i Proposed Legislation Regarding Terrace Apartments Balboa Bay Club/Terrace Apartments In 1985, as the City and the Balboa Bay Club were negotiating a lease extension, the State Lands Commission advised us they considered the Balboa Bay Club parcel to consist of state tidelands. State Lands staff presented some documentation to support their claim, but the documentation was not conclusive. The City had long assumed the parcel consisted of tidelands and uplands with the Terrace Apartments located on uplands. According to State Lands staff, permanent residential or apartment uses are incompatible with the public trust inherent in tidelands. The parties had nearly concluded lease negotiations and resolution of the tideland issue would have required lengthy litigation or time consuming legislation. Accordingly, the City and the Balboa Bay Club agreed that there would be no permanent residential use of the property subsequent to December 31, 1998 unless, prior to that date: "a determination is made through the legislative, judicial or other appropriate process that said permanent residential apartments are legally proper uses on the leased premises." (1986 Lease - paragraph 30) The Staff had long assumed that Senator Marian Bergeson who has a good relationship with the State Lands Commission, would be the best person to carried legislation to resolve the dispute. The time for submitting legislation expired at the end of February and Staff hurriedly prepared draft legislation to be authored by Senator Bergeson and carry it if the City Council approved. Senator Bergeson has reserved a spot for the Bill but neither her staff nor City staff has taken further action pending Council review. I have attached a copy of the proposed legislation submitted to Holly Veale, Senator Bergeson's Field Coordinator. The proposed legislation is similar to the Beacon Bay Bill and would free the Terrace Apartment site from restrictions inherent in Tidelands. Revenue derived from the Terrace Apartments would continue to go into the Tidelands Fund. The legislation would allow, but not require, the Terrace Apartments to continue to be used for residential purposes. According to Bay Club representatives the cost of converting the Terrace Apartments to a hotel would exceed $20,000,000 and the City would lose substantial revenue during conversion process. Major modifications to the terms and conditions of tenancy could significantly increase the vacancy rate and also reduce City leasehold revenue. Resolution of the tideland dispute relative to the use of the Terrace Apartments will maximize income to the City regardless of the outcome of any redevel"pment proposal submitted by the Balboa Bay Club. e Robert H. Burnham City Attorney RHB:gj Terrace.mem ti UNCODIFIED STATUTE The people of the State of California do enact as follows: SECTION I The legislature makes the following findings and determinations: (a) By virtue of the provisions of Chapters 74 of the Statutes of 1978 (Beacon Bay Bill) the legislature conveyed certain tide and submerged lands, in trust,. to the City of Newport Beach for various purposes, but primarily for the promotion and accommodation of commerce, fishing and navigation. (b) Certain portions of these tide and submerged lands have been filled and reclaimed as a result of a plan of improvement including the development of a harbor facility. In addition to the filled tide and submerged lands identified in the Beacon Bay Bill, the following additional parcel has been filled and reclaimed (Parcel D). (c) Parcel D has been fully developed, leased, and is producing income to support the statutory trust pursuant to which the tide and submerged lands are held by the City, and, except for the production of income, Parcel D is no longer required or needed for the promotion of the public trust inherent in tide and submerged lands. (d) Parcel D is hereby freed of the public trust for navigation, commerce and fishing and may continue to be used for those purposes set forth in the existing lease between the City and the Balboa Bay Club, but shall continue to be held in trust by the City of Newport Beach subject to the other terms and provisions of this Act and the laws applicable to the tide and submerged lands. Parcel D shall be held subject to the condition that revenues derived from the leasing or administration of Parcel D shall be used as provided in this act. (e) The present use of Parcel D and the preservation of that use for the production of income to promote the public trust is in the best interest of the people of the State. Section II Notwithstanding any provision of the Beacon Bay Bill or other law, the public trust inherent in tide and submerged lands is hereby removed from Parcel D, and Parcel D may be used for such purposes as will produce the maximum revenue for the fund created 4L pursuant to this -Act; --or the use of property on January 1, 19941 provided the City complies with the following: (a) The consideration received by the City for any lease of Parcel.D shall be the fair market rental value of the real property and the improvements existing as of January 1, 1994 subject to any lease advantage held by the current tenant. (b) The form of any lease of Parcel D, and the range of consideration to be received by the City, shall be approved by the State Lands Commission prior to the approval of any future lease or re-leasing. (c) All money received by the City from the existing or future lease of Parcel D shall be deposited in a City tideland fund with the revenue used only for purposes consistent with the promotion of the public trust over the remaining tide and submerged lands granted to the City. Cha74mod.doc ATTACHMENT 2 TO: FROM: SUBJ: CITY OF NEWPORT BEACH OFFICE OF THE CITY ATTORNEY MEMORANDUM May 4, 1994 Mayor Clarence Turner Members of City Council Robert H. Burnham AGENDA #35 (3y C C- -6- / l r' MAY: Proposed Legislation Regarding Terrace Apartments Balboa Bay Club/Terrace Apartments In 1985, as the City and the Balboa Bay Club were negotiating a lease extension, the State Lands Commission advised us they considered the Balboa Bay Club parcel to consist of state tidelands. State Lands staff presented some documentation to support their claim, but the documentation was not conclusive. The City had long assumed the parcel consisted of tidelands and uplands with the Terrace Apartments located on uplands. According to State Lands staff, permanent residential or apartment uses are incompatible with the public trust inherent in tidelands. The parties had nearly concluded lease negotiations and resolution of the tideland issue would have required lengthy litigation or time consuming legislation. Accordingly, the City and the Balboa Bay Club agreed that there would be no permanent residential use of the property subsequent to December 31, 1998 unless, prior to that date: "a determination is made through the legislative, judicial or other appropriate process that said permanent residential apartments are legally proper uses on the leased premises." (1986 Lease - paragraph 30) The Staff had long assumed that Senator Marian Bergeson who has a good relationship with the State Lands Commission, would be the best person to carry legislation to resolve the dispute. Since Senator Bergeson will not be in a position to carry such legislation next year and with the time running out for submittal of legislative proposals this year, Staff hurriedly prepared draft legislation and asked Senator Bergeson to reserve a spot for the Bill. Aside from my efforts to determine State Lands position on the proposed legislation, Staff has taken no action pending Council approval. I have attached a copy of the proposed legislation with changes suggested by Councilwoman Watt shown in strikeout, underlined text. Memo to May Turner 5/4/94 page two The proposed legislation is similar to the Beacon Bay Bill and would free the Terrace Apartment site from restrictions inherent in tidelands. Revenue derived from the Terrace Apartments would continue to go into the Tidelands Fund. The intent of the legislation is to allow, but not require, the Terrace Apartments to continue to be used for residential purposes. Staff is aware that some members of the public would prefer the elimination of the Terrace Apartments upon expiration of the current lease and the proposed legislation would not prohibit the Council from taking such action. According to Bay Club representatives the cost of converting the Terrace Apartments to a hotel would exceed $20,000,000 and the City would lose substantial revenue during conversion process. Major modifications to the terms and conditions of tenancy could significantly increase the vacancy rate and also reduce City leasehold revenue. Resolution of the tideland dispute relative to the use of the Terrace Apartments will satisfy the terms and conditions of the 1986 Lease, give the Council greater flexibility with respect to the use of the property, and allow the City to receive the maximum rental income (under the 1986 lease) until such time as the Council decides the most appropriate use for the site. if Ze Robert H. Burnham City Attorney RHB:kct Terrace.mem Revised 5/4 UNCODIFIED STATUTE The people of the State of California do enact as follows: SECTION I The legislature makes the following findings and determinations: (a) By virtue of the provisions of Chapters 74 of the Statutes of 1978 (Beacon Bay Bill) the legislature conveyed certain tide and submerged lands, in trust, to the City of Newport Beach for various purposes, but primarily for the promotion and accommodation of commerce, fishing and navigation. (b) Certain portions of these tide and submerged lands have been filled and reclaimed as a result of a plan of improvement including the development of a harbor facility. In addition to the filled tide and submerged lands identified in the Beacon Bay Bill, the following additional parcel has been filled and reclaimed (Parcel D) . (c) Parcel D has been fully developed, leased, and is producing income to support the statutory trust pursuant to which the tide and submerged lands are held by the City. and emeep t --€e r the—pre duetien ef ineeme;,Pareel the pubb-I-'-tidesubmerged lands. (d) Parcel D is hereby freed of the public trust for navigation, commerce and fishing and, until such time as it is restored to less developed or beach use may continue to be used for those purposes set forth in the existing lease between the City and the Balboa Bay Club, but shall continue to be held in trust by the City of Newport Beach subject to the other terms and provisions of this Act and the laws applicable to the tide and submerged lands. Parcel D shall be held subject to the condition that revenues derived from the leasing or administration of Parcel D shall be used as provided in this act. (e) The present use ef Pareel—B—and the preservation f that trust is in the best interest ef the p eepl e a €the-6taze—. Section II Notwithstanding any provision of the Beacon Bay Bill or other law, the public trust inherent in tide and submerged lands is hereby removed from Parcel D, and Parcel D may be used for such purposes as will produce the maximum revenue for the fund created pursuant to this Act, or the use of property on January 1, 1994, provided the City complies with the following: (a) The consideration received by the City for any lease of Parcel D shall be the fair market rental value of the real property and the improvements existing as of January 1, 1994 subject to any lease advantage held by the current tenant. (b) The form of any lease of Parcel D, and the range of consideration to be received by the City, shall be approved by the State Lands Commission prior to the approval of any future lease or re-leasing. (c) All money received by the City from the existing or future lease of Parcel D shall be deposited in a City tideland fund with the revenue used only for purposes consistent with the promotion of the public trust over the remaining tide and submerged lands granted to the City. Cha74mod.doc Item #7 C3�� ATTACHMENT 3 CITY OF NEWPORT BEACH OFFICE OF THE CITY ATTORNEY C — r July 8, 1994 BY THE CI -Pe CC:,;: CIT Y OE NE'VV (_?R 1 TO: Mayor and Members of the City Council w t JU[ I I IS ? FROM: Bob Burnham, City Attorney RE: Proposed BBC Legislation { As you know, the City has asked Marian Bergeson to sponsor legislation that would resolve the dispute regarding the Terrace Apartments. The dispute stems from the contention of State Lands staff that the entire Bay Club parcel consists of tidelands and permanent residential use is not permitted on tidelands. The City, Balboa Bay Club and State Lands agreed that this dispute would be resolved prior to December 31, 1998, by legislation, litigation, or boundary line agreement. State Lands Commission staff has indicated they would be unable to support or remain neutral on our proposed legislation unless the City agreed to certain amendments. These amendments include a provision that 25% of the revenue derived from the parcel would go into a Countywide tideland fund to be administered by the Board of Supervisors. We have advised State Lands staff that their proposal is unacceptable and have suggested a simple legislative solution that would give the Commission the authority to defer resolution of dispute in conjunction with their right to review and approve any new lease. This proposal would allow the proposed redevelopment to proceed, with revenues from the Terrace Apartments used to finance a portion of the project if the City and State Lands can agree to the terms and conditions of a new lease. State Lands staff is currently evaluating this concept and we will communicate their position as soon as it is known. Recommendation C, Endorse the concept of authorizing State Lands to defer resolution of the Terrace Apartment dispute in conjunction the approval of the redevelopment project and a new lease. I RHB:wb wb\ccbbccs.mem ATTACHMENT 4 PO CITY OF NEWPORT BEACH OFFICE OF THE CITY ATTORNEY U P.O. BOX 1768, NEWPORT BEACH, CA 92658-8915 c1 e� �►- (714) 644-3131 �/FpFiN August 11, 1994 Curtis Fossum State Lands Commission 1807 13th Street Sacramento, CA 95814 RE: Balboa Bay Club (BBC) Dear Curtis: Kevin and I appreciate the time you took to discuss the proposed BBC redevelopment and components of the Beacon Bay Bill. I have attached a redraft of our legislative proposal and hopefully the revisions are consistent with the concepts we discussed during our meeting. As you know, Senator Bergeson is very interested in resolving this matter during her tenure and I believe every effort should be made to conclude the legislative process this year. As you know, the City has retained an appraiser and a economist to advise us on the feasibility of the proposed BBC project and the fair market rental value of the property. We have developed workscopes for each consultant and I will send you a copy in the next week or so. We have also committed to keep you advised of all significant discussions with the BBC regarding a lease extension and to provide copies of documents relevant to the project or the re -lease. Finally, the City Manager and I will ask the City Council for authority to hire Bud Uzes to conduct a thorough review of City tidelands. We intend to contact Bob Fisher of Orange County EMA to see if he wants to expand the scope of the Uzes study to include County tidelands. The County may have information helpful to Mr. Uzes and we would like a comprehensive report on all tidelands in the upper and lower bay. We will also prepare and send to you a detailed cost accounting of tideland revenues and expenditures. Very duly yours, b9aert H. Bur RHB:gjb City Attorney cc:Kevin Murphy Fossua'i. let 3300 Newport Boulevard, Newport Beach DRAFT PROPOSED LANGUAGE FOR BALBOA BAY CLUB'S TERRACE APARTMENTS 8/11/94 The People of the State of California do enact as follows: SECTION 1.Seetion-4 5 is addedtoChapter-74-8f the r=}ac�c�-vz 1978,to read. The Legislature finds and declares as follows: (a) By Chapter 74 of the Statutes of 1978 the Legislature conveyed certain tide and submerged lands, in trust, to the City of Newport Beach upon express conditions and for certain public uses and purposes, but primarily for the promotion and accommodation of commerce, fishing and navigation. (b) ^e'�in Pportions of. these tide and submerged lands granted to City werehave been filled and reclaimed in the 1920's during the development of lower Newport Bay as a harbor to promote and accommodate commerce fishing recreational boating and navigation The property described in Section 2 of this Chapter (Parcel D) constitutes filled tide and submerged land which was reclaimed in the course of harbor development but the Precise character of the property was not known by the State or the City until 1985. as a—resume of the develepment e€-a-harber faeility. in additiems to -the filled tide -and -submerged lands identified in Seeti-en-6 deed-as-Payeel D) has been filled and reelaimed-a-s Bay as a harbor. (c) Prior to discovering thatParcel D was filled tide and submerged lands, the City leased Parcel D and adjoining Property to a private entity who constructed a private club on the adjoining property and a residential apartment complex of 142 units on Parcel D The term of this lease was extended in 1986 and the lease requires that the use of Parcel D conform to public trust purposes as of December 31, 1998 in the absence of legislation litigation or boundary line agreement he= been '_cased b. 1 the Gity, develeped by the lessee as a private residential. apartment eempl em o f 142 units, Yais preduein}eeme --te suppertthe -GeRmeT,--Law and -t statutery publie trust uses and purposes pursuant Ghapter 74 ef the -Statutes -ef !978, under whz-eh the tide (d) Since 1985, the residential apartment complex on Parcel D has produced substantial income all of which the City has used to directly promote and support public use of tide and submerged lands by providing services such as lifeguards, beach cleanup, police and fire protection and by constructing facilities which improve the quality and extent of public use of, and access to tide and submerged lands. le)_+d-- A permanent=tee residential use oft -e tide and submerged lands, whether filled or unfilled, is in conflict with the Common Law Public Trust and the Legislature's intent in the statutory trust provisions of Chapter 74 of the Statutes of 1978, if it restricts public access to, or use of, those tide and submerged lands. u+e-Y Many members of the public have made the y s dent:.., apartment complex their permanent residence, many residents have made substantial expenditures to improve their apartments and these residents will suffer significant hardships if they are forced to leave their homes on or before the December 31, 1998 deadline I-er, many years and ha-ve -erfte te leek upen the apartments as their hemes despite- their mete-menth eent-raetua} -Lg)-+f+ Parcel D represents a extremely small percentage of the tide and submerged lands granted to the City of Newport Beach a relatively small pertien ef tTe—publ-e trust lands in Newpert Bay, has been filled and reclaimed so that it- is no longer submerged or below the mean high tide line, is not,and in its present state completely usable for public trust purposes and given the large amount of public trust lands at the City of Newport Beach makes available to the public Parcel D is more valuable as a generator of revenue devoted to tideland purposes than a parcel used to promote commerce fishing and navigation.' ,u Public trust property adjacent to Parcel D has been developed as a private club with extremly limited public access. The current lessee of the private club and Parcel D has proposed and the City has approved a redevelopment plan which if implemented will allow full revenue than existing uses However the current lessee will be required to pledge revenue from the apartment complex on Parcel D to secure the financing necessary to implement the redevelopment plan and any uncertainty regarding the permissible use of Parcel D would impede or Prevent redevelopment and postpone for almost 20 years the Publics' right of access to the adioininq_propert li-fg-Y Givens-'_-az-aneing the potential hardships resulting from removals of the current siders is tenants on or before December 31,by 1998, a-nd the economic benefit to the trust from the revenue generated by the continuing use of Parcel D as an apartment complex, the benefits to the public if revenue generated by Parcel D is used to secure financing necessary to implement the redevelopment other factors specified in these findings, the apartment complex on Parcel D should be allowed to continue for the duration of its useful life, until the structure is removed or until the current or new lease expires whichever occurs first, subject to the requirement that all revenue be devoted to public trust uses and purposes. e€- ub l i etrust land ibadl-e-€er :sided 'ase-efPareel publie trust use D ' Ferted-be els-isle-terminate-in anether use dul ": 2 Should Tbhe City and the current lessee shall not be required to alter the residential use of Parcel D during the term of the current lease. Parcel D may continue to be used for residential purposes beyond the expiration of the current lease, but in no event beyond December 31 2044, upon a determination by the State Lands Commission that the revenue generated by residential use of Parcel D Provides greater public benefit conversion to a use consistent with the public trust or that continued residential use of Parcel D is an integral part of the redevelopment of the adjoining parcel and that redevelopment will significantly accelerate public use of, and access to, the adjoining parcel determe that • -- - -rM subdivisienleve, may be--usedfer residen-tia4_<)-r apprepriate—trus genes as will preduee t ef Ghapter ' —e€ --the Statutes of --_3978 and—a�� Lfieally ev�i-ded i n s ubs eet i e n--( 1) b e l ew---efth Ghapter. . SECTION 2.-,Seetion -6 of A of the —Statutes -of 9;8 .+tP.. s.w wl Tl crvza—vzf zaz-v-a-s—ur That Section 4.5 is added to Chapter 74 of the Statutes of 1978 to read: u The tide and submerged lands granted pursuant to this statute include filled and reclaimed tide and submerged lands legally described as (legal description) and referred to as (Parcel D). u Parcel D has been developed as a residential apartment complex and generates significant revenue which has been devoted solelv to the promotion of public trust purposes and may continue to be used for residential purposes for the term specified in, and, subject to the specific conditions and provisions of this statute former li) u The consideration received by the City for any future lease or amendment to the current lease which includes Parcel D shall be the fair market rental value of the real property and the improvements subject to any presently existing contractual obligations so long as the property is used for residential purposes former (k� (dd)_ The form of any future lease or amendment of the current lease involving Parcel D and the consideration fair market value to be received by the City, including the determination of fair market rental value of Parcel D, shall be approved by the State Lands Commission prior to the effective date ofany such lease or amendment_ heeeminy wffcc..zwt c.�r-rvcr former (11 (e_ Parcel D may continue to be used for residential purposes until December 31 2011 Provided, however, that residential use of Parcel D may continue until December 31 2044 or until the existing structure is removed subiect to a determination by the City of Newport Beach and the State Lands Commission that: 1. The production of revenue by Parcel D which is devoted to tideland trust uses and purposes is of greater economic benefit to the public that conversion of the apartment complex to a use consistent with the public trust inherent in tidelands: or 2. property currently developed as a private club and redevelopment of that site will accelerate the right of the public to use of, and access to tidelands and significantly increase tideland revenues.Effeetive january 1, 1995 all eney reeeived-by t}e-Gty fre e 50% inte a Gity tideland fund with the revenue used en! trust ever the g tide and submerrejed lands granted t o the G t y t ( 2) 25% irate- the -eity tideland eaP ita l fu ereated by etien 2--e€ Chapter 74 ethe -Sta es o= 0 inte the Land Bank Fund er-eated-by eetienie€ Chapter 1471 Statutes -e f !9821 subseetien (3) funds must be expended within the Geunty ef Orange and with the eeneurrenee ef the Orange Geunty Beard e -f Cha74mod.d#3 AUG -17-1994 14:39 ATTACHMENT 5 the current lease which includes Parcel D shall be the then fair market rental value of the real property and the improvements subject to any presently existing contractual obligations so long as the property is used for residen4 riv purposes. ._ The form of any future lease or amendment of the current lease involving Parcel D, and the consideration to be received by the City, in&dding thu hall be approved by the State Lands Commission prior to the e tife date of any such lease or amendment becoming &vailqble without re andfi cal ears fo ommission TO BECrION 22. ;lection 6 of Chanter 74 of the Statutes of 1978 is amended by adding: PAR `EL D (Legal Description of Faueel D) TOTAL P.04 SENT BY:SENATE LOCAL GOUT . 8-19-94 9:04AM ; 916322x'1984 7146443139;# 3 ATTACHMENT 6 AMENDMENTS To ASSEMBLY BILL Na. 3139 AS AMENDED IN ASSEMBLY APRIL 19, 1994 Amendment 1 COUNSEL: PLEASE ADD SENATOR BERGESON AS THE PRINCIPAL CO-AUTHQX. Amendment 2 Strike out the title and insert: An act to add section 4.5 to, and to amend Section 6 of, Chapter 74 of the Statutes of 1974, relating to tide and submerged lands in the City of Newport Beach. Amendment 3 On page 2, strike out line 1, and insert: SECTION 1. Section 4.5 is added to Chapter 74 of the Statutes of 1978, to road: 4.5. The Legislature finds and declares, as follows: (a) By Chapter 74 of the Statutes of 1978, the L�egjslature conveyed certain tide and submerged lands in trust to the City of Newport Beach upon express conditions and for certain public trust uses and purposes, but primarily for the promotion and accommodation of commerce, fishing, and navigation. (b) Portions of there tide and submerged lands were filled and reclaimed as a result of the implementation in the 1920's of a plan of improvement, including the development of lower Newport Bay as a harbor to promote and accommodate commerce, fishing, recreational boating, and navigation. In addition t4 the filled tide and submerged lands identified in Section 6 Of Chapter 74 of the Statutes of 1978, another parcel as described in section 2 of this chapter (hereinafter designated Parcel D) has been filled and reclaimed as part of the public project of developing lower Newport Bay as a harbor. (o) Prior to a judicial decree in 1952 which held that Parcel D and cartain adjoining lands ware State tidelands and submerged lands granted to the -city pursuant to Chapter 70 of the Statutes of 1927, the legal character of the property was subject to some question. In 1948 the City leased Parcel D and adjoining property to a private entity which constructed a private club on the adjoining property and a residential apartment complex of 142 units on Parcel D. The term of this loase was extended in 1986 and the lease requires that the use of Parcal D conform to public trust purposes as of SENT BY:SENATE LOCAL GOVT 8-19-94 9:04AM 916322n2984 7146443139:# 4 2 December 31, 1998 in the absence of legislation, litigation, or agreement with tha State Lands Commission. (d) Since 1985, the residential, apartment complex on Parcel D has produced substantial income, all of which the City has used to di.rectly,promote and support public use of tide and submerged lands held in trust by the City by providing services to those public trust lands such as lifeguards, beach cleanup, police, and fire protection, and by constructing facilities which improve the quality and extent of public us& of, and access to, tide and submerged lands. (e) Private residential use of tides and submerged lands, whether filled or unfilled, is in conflict with the Common Law Public Trust and the Legislature's intent in the statutory trust provisions of chapter 74 of the Statutes 1978. (f) Many members of the public have made the apartment complex their residence for many years and have come to look upon the apartments as their permanent homes despite their month to month contractual tenancy. (g) Parcel D, a relatively small portion of the public trust lands in Newport Bay, has been filled and reclaimed so that it is no longer submerged or below the mean high tide line, .is not in its present state usable for publio trust uses and purposes and, given the large amount of public trust lands that the City of Newport Beach makes available to the public, Parcel D 'more valuables as a generator of revenue devoted to suppor of public trust purposes than as a parcel used by the publi for trust purposes. (h) Public trus property adjacent to Parcel D has been developed as a private club with extremely limited public accesac. The current lessee of the private club and Parcel D has proposed, and the City has approved a redevelopment plan which, if implemented, Will allow full public access to 95% of the site occupied by the private club and would generate substantially more tideland revenue from existing uses. However, the current lessee will be required to pledge revenues from the apartment complex on Parcel D to secure the financing necessary to implement the redevelopment plan and any uncertainty regarding the permissible use of Parcel D could impede or prevent redevelopment and postpone, for.moi•-�u almeat=20 years, the public's right of access to the property. (i) Given the potential hardships resulting from removal of the current tenants on or before December 31, 1998, the economic benefit to the trust from the revenue generated by the continuing use of Parcel D as an apartment complex, the benefits to the public if revenue generated by SENT BY:SENATE LOCAL GOVT ' 8-19-94 9:O5AM ; 916322"1 83 7146443139;# 5 Parcel D is used to secure financingg necessary to implement the redevelopment plan for the adjo3.ning property which will dramatically improve public access to tide and submerged lands, the availability of current public facilities and the potential needs for expanded facilities for public trust uses and purposes and in recognition of the facts set forth in +subdivisions (b) , (c) , , (d) , ( a) , (f ) , and (g) of this section, and in view of the amount of public trust land remaining in Newport Bay that in suitable for public trust use, the current non -conforming residential use of Parcel D may continue for the duration of its useful life, until the structure is removed, until the current or new lease expires, or until five years after expiration of the financing secured by Parcel D revenues, whichever occurs first, but in no event later than December 31, 2044, subject to the requirement that all revenue be devoted to public trust uses and purposes as provided in subdivision (m). (j) should they City determine that the land use, economic conditions, and public needs associated with Parcel D will extend beyond the term of the present lease, the City shall apply to the State Lands Commission for a determination by the Commission that the continuation of this non -conforming uae for an additianal period is in the best interest of the public and in furtherance of public trust purposes and needs. Should the Commission make that finding, Parcel D may thein be leased for reeidential purposes for an additional period, but in no event beyond December 31, 2044. (k) The consideration received by the City for any future lease or amendment to the current lease which includes Parcel D shall be the then fair market rental value of the real property and the improvements subject to any presently existing contractual obligations so long as the property is used for private purposes. (1) The form of any future lease or amendment of the current lease involving Parcel D, and the consideration to be received by the City, shall be approved by the State Lands Commission prior to that lease or amendment becoming effective.. (m) Effective July 1, 19951 all money received by the City from the existing or future lease which includes Parcel D shall be deposited into the following tideland trust funds: (1) 95 percent into a City tideland fund with the revenue used only for purposes consistent with the promotion of public trust uses, including public access, over the remaining tide and submerged lands grantod to the City, and (2) 5 percent into the Land Hank Fund pursuant to subdivision (c) of Section 8625 of the Public Resources Code, and notwithstanding Section 8613 of the public Resources Code, the fund skull be available without regard to fiscal SENT BY:SENATE LOCAL GOVT - B-19-94 9:06AM : — 4 — 91632 -9B-) ?1464431:39;# 6 years for expenditure by the Commission for purposes of providing necessary state review of management of public trust property as provided by $+actions 6301 and 6306 of the Public Resources Code. wive yews A ["sn the of ective date.of any new lease or amendment to the current lease the above revenue percentages shall be modified so that the percentage in subdivision (1) shall be 90 percent and the peroentage in subdivision (2) shall be 10 percent, SEC. 2. Section 6 of Chapter 74 of the Statutes of 1975 is amended to read: SEC. 6. The parcels of real property referred to in this act are prescribed as follows: PARCEL A Beginning at Station No. B in the Line of Mean High Tide per judgment rendered in Case No. 20436. Superior Court of C41ifOrni8, County of Orange. recorded in Book 651, page 72 of Deeds, records of said Qntnge County, said Station No. 8 being at the easterly terminus of that certain souse in said Line of Mean High Tide shown as "North 71.34' 00" West, 1373.34 Feet"' on a map of Tract No. 4003 recorded in Hook 188+ pages 13 through 19 of Miscellaneous Maps, records of said Orange -County, said beginning being a 1'/s" iron pipe as shown an said tamp of Tract No. 4003; thence along said Lice of Mean High Tide, South BY 40,37' East, 606.01 feet to a point in it line parallel with and 100,00 feet easterly from the easterly line of Lot C as shown on a map Med in Book 9, pages 42 and 43 of Record of Surveys, records of said Or=ge County; thence along said parallel lim South 160.46 feet to sk point in the Ordinary High 71de Lina per judgm,, 4t rencicTcd is Case No, a40K Suptrior C4111ct of CaliforP, County of Orange, recorded in Book 199 pa a 276 of OfFiOW Record: of said Orange County, said point barog the True Point of Beginning of this description: thence along said Ordinary High Tida Line the following Course:; North B2' 30'00" West 297.66 feet to an angle paint therein: thence South 84' 00' 00" West, 160.00 feet: thence South 5r 04' 00' West, 100.00 feet; thence South 3,T 32' 00" East. 243.24 feet to a line that is parallel with and distant 28,00 feet northerly, messured at right angles, froth the U.S. Bulkhc d Luxe4 as shQwn on US - Engineer's Map of Harbor Linea of N*Wport Bay, dated March 20. 1936, and approved April 2& 1936. thence leaving laid Ordinary high Tide Line and along said parallel line East, 14&00 feet to the southeasterly corner of Lot 19 a: Khowm on a map filed in Book 9, pages 42 and 43 of Record of Surveys, records of said Orange County,, theaw along the easterly line of said Lot 19 North 100.00 feet; thence East 40.00 feet: thence South 100.00 feet; theme East 198,10 feat to a line parallel with and distant 20.00 feet westerly, mesiured at right angles from that cerWa course and southerly prolongation thereof. recited as, "South, 160.46 feet"; thence along said parallel line North 132.00 feet; thence East 20.00 feet; thence North 104.64 feet to the True Point of Beginning of this description. Containing 2,694 acres, more or less. (f) Many members of the public have made the apartment complex their residence for many years and have come to look upon the apartments as their permanent home despite their menth t eentraetual the nature of their tenancy. (g) Parcel D, a relatively small portion of the public trust lands in Newport Bay, has been filled and reclaimed so that it is no longer submerged or below the mean high tide line, is not in its present state usable for public trust uses and purposes and, given the large amount of public trust lands that the City of Newport Beach makes available to the public, Parcel D }s may be more valuable as a generator of revenue devoted to support of public trust purposes than as a parcel used by the public for trust purposes. (h) Public trust property adjacent to Parcel D has been developed as a private club with extremely limited public access. The current lessee of the private club and Parcel D has proposed, and the City has approved a redevelopment plan which, if implemented, will allow full public access to 9754 the majority of the site currently occupied by the private club and would generate substantially more tideland revenue from existing uses. However, the current lessee will be required to pledge revenue from the apartment complex on Parcel D to secure the financing necessary to implement the redevelopment plan and any uncertainty regarding the permissible use of Parcel D could impede or prevent redevelopment and postpone, for almest2G more than 17 years, the public's right of access to the property. ub\bbcchang.doc