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HomeMy WebLinkAbout21 - Proposed Legislation Regarding Terrace Apartments - Balboa Bay Club/Terrace ApartmentsTO: 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 € APR I 11994 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 9 r 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 ma imize income to the City regardless of the outcome of any redevel,,pment proposal submitted by the Balboa Bay Club. / City Attorney RHB:gj Terrace.mem 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 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. ChaAmod.doc