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HomeMy WebLinkAbout10/23/2012 - Special Meeting,"A 11,11111 � 11111131 n City Council Minutes Special Meeting October 23, 2012 — 4:00 p.m. I. ROLL CALL Present: Council Member Hill, Council Member Rosansky, Mayor Pro Tem Curry, Mayor Gardner; Council Member Selich, Council Member Henn, Council Member Daigle II. NOTICE TO THE PUBLIC III. PUBLIC COMMENTS IV. Jim Mosher commented on the documents related to the lease of harbor property and increased fees, and referenced an addition to Measure EE on the November ballot prohibiting class action lawsuits against the City for refund of taxes or fees. He discussed a Supreme Court decision regarding the matter, as well as a local case. He believed that the principle is not in the interest of the public and that the City is opening itself to future litigation. City Attorney Harp clarified that Measure EE will not prohibit any individual from seeking redress with the City and noted that a severability provision is already provided in the Charter. 1. COMMERCIAL MARINAS LOCATED UPON CITY_ MANAGED TIDELANDS. (100- 20121 City Manager Kiff provided a PowerPoint presentation, including an update of actions by the Ad Hoc Committee on Harbor Charges. He emphasized that the matter relates to commercial marina rents only and addressed changes to Committee recommendations related to rent, index calculations, the phase -in period starting in 2013 and ending in 2018, and options for an annual permit in lieu of a lease. He addressed the number of marinas used for the index, market reset, and changes to the lease. He presented details regarding leases versus permits, terms, and rents. Regarding rents, he presented options available to large commercial marinas which include the index rate or the actual submission of 18.5% of gross slip revenue. He reported that the intent of the minimum rent is to stay below the index rate, presented details about the marina index, and provided examples of the phase -in period under various scenarios. Council Member Henn addressed the options considered by the Committee and public input received, and noted that substantial changes have been made to the original proposal and the lease template. He believed that there are a number of misconceptions regarding what is being proposed and related impacts, and presented an example of a typical marina and possible impacts to slip rates. He addressed slip rates over time, assumptions used in determining the examples, the economic impacts of change, unintended consequences, and Volume 60 - Page 621 City of Newport Beach City Council Special Meeting Minutes October 23, 2012 details of proposed recommendations for other user classes, including upcoming meetings, workshops, and opportunities for public comment. Discussion followed regarding proposed fee waivers for non - profit organizations. ' William Hart of Hart, King and Coldren, representing Duffy Boats and Duffield Marine, referenced a letter from his firm regarding the California Environmental Quality Act (CEQA) requirements and believed that the deliberation is subject to CEQA. He took issue to the elements being conducted in segments and believed that CEQA requires that the entire matter be considered as a whole. He addressed direct and indirect changes in the Harbor, including the aesthetics of the Bay and impacts of pollution and water quality. He commented on the rental valuation and believed it is unfair because every marina will be assessed on the same basis and the same rate per square foot. He expressed the opinion that Council Member Selich should recuse himself because he is a private dock owner and his decision will affect the economics of the decisions being made. Bob McCaffrey expressed agreement with Mr. Hart's comments and read a letter believing that the matter is subject to CEQA provisions. Ted Robinson, Larson Shipyard, expressed agreement with Mr. Hart's comments and believed that the proposed increases may result in the shipyard's closure. He felt that the matter is subject to CEQA regulations, including evaluation.of environmental impacts, and should be considered as a whole. Tim Parker, Port Calypso Marina, agreed with with Mr. Hart's comments and addressed possible direct and indirect physical changes in the environment. He believed that the matter is subject to CEQA, that unintended consequences must be considered and that the proposed increases will cause businesses to relocate outside of the City. He expressed the opinion that the proposed increases are unfair and not based on fair market rates. Duffy Duffield, Duffy Boats, agreed with Mr. Hart's comments and believed that the issue encompasses more than just the Harbor. He expressed the opinion that the issue should have been considered by the entire Council rather than a subcommittee. Byron Terrazer expressed concerns with the proposed increases and urged Council to hold down the fees. Russ Fluter commented on his marina operations and believed that the proposed increases will cause him to raise his rates. He expressed the opinion that the proposed plan will hurt Harbor property values and asked that Council consider defining a marina of 5,000 square feet as a small marina. John Vallely referenced a previous Tidelands tax and believed that the proposed increase will affect his and other businesses in the area. He addressed sacrificing personal interests for the best interest of the City and requested that the City work with residents as a team. He expressed agreement with Mr. Hart's prior statements. Robert Levin expressed concerns with the perceptions of people regarding the City and spoke in opposition to the proposed increases. Ralph Rodheim reported that usually, when his business raises rates, he adds services for his customers. He addressed the proposed increases and took exception to the size of the increases. Volume 60 - Page 622 City of Newport Beach City Council Special Meeting Minutes October 23, 2012 Marvin Kaplan commented on the proposed increases and expressed concern that they will hurt existing businesses. He wondered what will happen to the additional revenues that will be generated. Brian Ouzounian spoke in opposition to the proposed project and addressed the City's assertion that a lower rent would be a gift of public funds. He questioned Council's motivation for this. Gary Hill believed that the proposed increases will become a burden and expressed agreement with Mr. Hart's comments. Ira Veer expressed agreement with Mr. Hart's comments and believed that the City has not presented a reasonable basis for the proposed increases. He asked that Council look at the matter from a reasonable perspective. He took issue with the size of the proposed increases, addressed the current economic conditions, and asked that Council consider the consequences of its actions. Robert Hawkins addressed the definition of a project and believed that it is subject to CEQA requirements, and encouraged Council to follow CEQA guidelines on this matter. Bill Kenney noted existing significant vacancies in the City's marinas and believed that increased taxes will result in alienating those businesses from the City. He encouraged Council to conduct an independent study to evaluate the potential impacts of the proposed increases. He asked that Council rethink its position on the proposed project. Dave New, Basin Marine, expressed concerns with increased vacancies and resulting decreases in sales. He believed that the proposed increases will exacerbate the issue and asked that Council reconsider the matter. Gary McKitterick, partner with the Law Firm of Allen Matkins, representing several marina owners, reiterated comments regarding the need for CEQA compliance and noted that the project cannot be piecemealed. He addressed the issue of appraisal and value, believed that there is a conflict, and expressed the opinion that the proposed increases are too high. He addressed similar issues and actions of other cities and asked for an independent appraisal process. Scott Schock, Schock Boats, thanked Council for its consideration and expressed concerns over the proposed increases, confiscation of the waterways by the State, and the resulting impacts of this decision. He expressed agreement with Mr. Hart's previous comments. John Pentecost spoke in support of small boat owners and yacht clubs, and in opposition to the proposed increases. Dennis O'Neil commented on efforts to work out a solution between his clients and the City, and expressed disappointment that a more mutually agreeable solution was not reached. Jim Mahoney, Gondola Company owner and operator, addressed improvements made by small business owners and spoke in opposition to the proposed increases. City Attorney Harp confirmed- that adoption of a lease or permit template is not a project under CEQA because the City is not committing itself to any particular project. Instead, Volume 60 - Page 623 City of Newport Beach City Council Special Meeting Minutes October 23, 2012 the lease /permit is merely establishing business terms. He stated case law that supports this and added that, if it is considered a project, it would qualify for a Class 1 exemption. He further addressed comments regarding the elements of this and expressed the opinion that there is no issue with CEQA. He addressed where a categorical exemption would be inapplicable, social and economic affects, and noted that the opposition has shown no substantial evidence. In response to City Attorney Harp's question, Council Member Selich indicated that he does not have a boat in a commercial marina and has no bias on this issue. City Manager Kiff noted that there is nothing proposed for percentage rents for shipyards, and addressed the possibility of considering marinas under 5,000 square feet as small marinas. He also discussed choices available, allocation of revenues for Harbor improvements, residential piers and private waterways and the need for the City to charge fair market value. In addition, he addressed comparable market analyses considered. Council Member Selich commented on the size of Mr. Fluter's marina, noting that it is over 15,000 square feet, not 5,000 square feet. Council Member Henn clarified a previous speaker's comments, emphasized that he did not say that he expected an exodus from the Harbor as a result of tonight's action by Council. He further pointed out that the proposal is not a tax, but rather rent and that it is appropriate to be collected. He addressed the vacancy level in the Harbor, noting that it has nothing to do with activities of the City, but has been a function of the market and the recession. He pointed out that the City has a legal obligation to consider the issue and has nothing to do with how much money the City has or needs. Council Member Daigle commented on the number of iterations that were developed and expressed the opinion that the issue should have been addressed comprehensively as a whole. She expressed concern with the amount of confrontation the issue has generated. Mayor Gardner commended the Committee for their efforts on this matter and addressed the tension generated by the matter. She indicated that she would not support the size of the proposed increase. Mayor Pro Tem Curry commented on steps taken thus far and commended members of the Committee for their efforts. Council Member Henn reported that it has taken a long time to understand the issues and believed that the proposal is good and contains substantial compromises, as well as provides options to marina owners /operators. Motion by Council Member Henn, seconded by Council Member Rosansky to a) determine a fair market rental amount for the leases/permits; b) adopt amended Resolution INTO. 2012 -91 approving a model lease template and model permit for large commercial marinas located upon City managed tidelands; c) adopt amended Resolution No. 2012 -92 establishing a 9- marina index and setting rent for large commercial marinas; and d) direct staff to bring back amendments to the Newport Beach Municipal Code to allow the City the option to issue an annual permit for commercial uses in lieu of a lease. Council Member Hill reiterated the City's responsibility, addressed compromises reached, and noted that the rent is not a tax. He expressed concern about the current economy and stated that this is the right thing to do but may be the wrong time to do it. He stated that Volume 60 - Page 624 City of Newport Beach City Council Special Meeting Minutes October 23, 2012 he would support the motion if there are no increases for the next two years, but then it would move to the definition of fair market value from 2015 to 2020. Council Member Henn indicated that he would accept the amendment to include no increases for the next year, followed by a six-step phase -in period. Amended motion by Council Member Hill, seconded by Council Member Henn to a) determine a fair market rental amount for the leases /permits; b) adopt amended Resolution No. 2012 -91 approving a model lease template and model permit for large commercial marinas located upon City managed tidelands; c) adopt amended Resolution No. 2012 -92 establishing a 9- marina index and setting rent for large commercial marinas, including a two -year phase in period prior to any rent increases; and d) direct staff to bring back amendments to the Newport Beach Municipal Code to allow the City the option to issue an annual permit for commercial uses in lieu of a lease. The amended motion carried by the following roll call vote: Ayes: Council Member Hill, Council Member Rosansky, Council Member Selich, Council Member Henn Noes: Mayor Pro Tern Curry, Mayor Gardner, Council Member Daigle V. ADJOURNMENT - 6:02 p. m The agenda for the Special Meeting was posted on October 19, 2012, at 2:30 p.m. on the City Hall Bulletin Board located outside of the City of Newport Beach Administration Building. �e City Clerk AN\4- NW- Recording Secretary Mayor Volume 60 - Page 625