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HomeMy WebLinkAbout16 - Marinapark Resort and Community PlanCITY OF NEWPORT BEACH CITY COUNCIL SUPPLEMENTAL STAFF REPORT Agenda Item No. 16 July 27, 2004 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Robert Burnham, City Attorney 644 -3131, rb urn ham (a)city.newport- beach.ca.us SUBJECT: Marinapark Resort and Community Plan APPLICANT NAME: Sutherland Talla Hospitality (STH) ISSUE: Consideration and approval or certification of various actions related to the proposed Marinapark Resort and Community Plan (Project). DISCUSSION: This memo transmits the following: (a) information regarding the background and qualifications of Cal Hollis and Kim Thompson who are assisting the City in the discussions regarding lease terms and conditions (Exhibits 1 and 2); (b) a memo from Cal Hollis regarding Michael Rosenfeld and Woodridge Capital LLC (Exhibit 3); (c) a letter from Carlson Hotels (the parent of Regent Hotels) confirming their continuing interest in management of the Marinapark resort; and (d) the "Entitlement Table" maintained pursuant to the Measure S Guidelines (Exhibit 5). The Cal Hollis memo represents our preliminary review of the reputation, experience and financial capacity of Michael Rosenfeld and Woodridge Capital LLC. Rosenfeld is the financial partner in Bayside Pacific LLC — an entity to which STH is considering assignment of their interest in the exclusive negotiating agreement. The assignment requires City Council approval. The Entitlement Table confirms that no amendments have been processed for the Statistical Area that encompasses Marinapark but the Measure S Guidelines require the Entitlement Table to be included in the staff report on any General Plan amendment. List of Attachments: Exhibit 1 Cal Hollis Background /Experience; Exhibit 2 Kim Thomson Background /Experience; Exhibit 3 Cal Hollis Memo; Exhibit 4 Letter from Carlson Hotels - Americas; Exhibit 5 Entitlement Table. Cal Hollis Managing Principal Keyser Marston Associates Keyser Marston Associates, Inc. is the preeminent West Coast real estate advisory firm specializing in public - private real estate transactions. From its offices in San Francisco, Los Angeles and San Diego, Keyser Marston serves nearly every major city in California, as well as clients in Idaho, Washington, Oregon and Nevada. In addition to these city governments, KMA's clients include other governmental entities including the Alameda Base Reuse and Redevelopment Authority, California State University Chancellor's Office, California State University - Fresno, University of California at Davis, the Santa Barbara School District, the Los Angeles County MTA, The Los Angeles Count Department of Beaches and Harbors (Marina Del Rey), and the County of Orange (Dana Point) Private and clients include Huntington Memorial Hospital in Pasadena, The Morongo Band of the Mission Indians, and The Grand Avenue Committee. Cal Hollis is the managing principal of the Keyser Marston Los Angels Office. A principal with the firm for over 22 years, Mr. Hollis is widely acknowledged as an expert in the structuring of public /private real estate transactions. Mr. Hollis is a full member of the Urban Land Institute (Public /Private Development Council), a member of the Board of Directors of the Los Angeles County Economic Development Council, and a special advisor to the California Redevelopment Association. The following is a partial list of assignments where Mr. Hollis was the client's principal real estate advisor. • City of Beverly Hills — Montage Hotel and Public Gardens Project • The Grand Avenue Committee - Development sites adjacent to Disney Hall • City of Long Beach — The Pike at Rainbow Harbor • City of Los Angeles — The Hollywood Highland Project and Renaissance Hotel • City of Pasadena — Paseo Colorado • City of San Jose — Fairmont Hotel Expansion (with manager of San Francisco office) • City of West Hollywood — Sunset Millennium Project including "W" and Marrioti hotels • Los Angeles County MTA — Hollywood Highland Ground Lease EXHIBIT 1 Partner, Real Bstate J¢6un (714)641 -3449 kthumps,ninnnanann Areas of Experience Beal Hsrate DecdnhmenC I.caaamg and amalafvrrcd F! changes Gmund leasing of Real Psmk Beal 11 ..peny 11umhasc and Salc Agrecmants Uncnoin,mml Law Education Univmih' of sinvhem Caldomla Law Ccnmr, LD. 1995, iMide n US(:, i11r. Thompson participates on the staff, of the Maw 'I'a,, Plane, p bl a1i.t and the Cumnuter I." lourn:rl Nnnhcm Arizona U.kcasity, B.S. Finance and Accounting, Summa Cunr laude, 1982 Memberships Orange County Bar A.... inn $tale Bar of Qdifvmia Publications /Seminars 11 kw 11"asle IiebiliP- Dialling Cnnt'L'l t rel /I uOu6mg Y brnr Prior In L \tmIL, nl Pvnlere rnl Sale :'Iry ew is ✓,, laLuc Co- :Wthor, Reun & 'hunker Ncrvslcacr, spring 1988 and A Point of Vita -, Spring 1989 (Nc whetter publtshed by I high dl. Snddington & C.ontpaoy, C =rafted Public Accnuntancs). P"Pon 0,,n ,' pnme, me Ih' : b,,or unr Ililb Pimbililies -'Lt. (Mange County Business burr, hilv 27, 1'19^_, Vol. 15, Nu. 31I and Apartmo,l New,. Viil. 33. November 1992. Kim D. Thompson Mr. Thompson is a partner and head of the Real Estate Department of Rutan & Tucker and regularly advises clients in commercial real estate transactions. His primary areas of real estate practice include the ground lease, acquisition, leasing, development and sale of all types of real estate projects including shopping centers (large -box and shop space leasing), office buildings, residential developments, industrial buildings/ projects and freestanding commercial real estate; tax deferred exchanges of real property and investment properties (including airplanes and corporate jets); environmental law and borrower representation in real estate loans. Mr. Thompson has been a member of the Real Estate Department for his entire 19 years of practice. In addition, he served as the recruiting chairperson for the firm for several years and currently serves on the finance and business development committees. He is also a member of the firm's Environmental Practice Group. Representative Transactions Lead Counsel for the ground lease of the following projects: Arbor Lake Forest, Lake Forest, California (Represents Landlord and developer on 12 acre project with Home Depot, Wells Fargo and assorted national and local tenants) • 'Twin Peaks Shopping Center, Lake Forest, California (Represents ground lessor on 12 acre retail project) • Assorted shopping centers, Lake Forest, California (Represents ground lessor on multiple paid -range sized retail projects) • Santa Monica Seafood, Costa Mesa, California (Represents ground lessor) 17 "' Street Promenade (formerly IIillgren Square), Costa Mesa, California (Represents ground tenant and developer) Crenshaw Imperial Center, Crenshaw, California (Represents ground lessor) Lead Counsel for the developer of the following projects: • Gateway Town Center, Norco, California (Staples, Albertson's) • IIomeBase Center, Norco, California (HomeBase, Texaco, McDonalds) • West Covina Parkway Plaza, West Covina, California (Circuit City) • Lake Forest Town Center, Lake Forest, California (Staples, Page 1 of 2 EXHIBIT 4 Kim D. Thompson A, firm's, PepBoys, Dietrich's Coffee) Community Activities and othct • Foothill and Wheeler Shopping Center, La Verne, California AITGatfons Mn 'Ihumpson participated in the (Stein- blert) nq;ani>auon and planning of the Onm e Conn Crntcnnial including • Orange Villa Shopping Center, Orange, California (Staples) alebmdon, tile cs'iabhshmnnt nC a schnla�shgt f "" "dart ° "_ ire _ " ^ed a` ti'e `Ttojcct Hawthorne Gateway Shopping Center, Hawthorne, California Chaiotim Co, Placground° fo, Ncvprnt tldghts (lied, Bath & Beyond, Staples, Starbucks, McDonalds, Aaron Glemcntaq' School in Nmpon Brothers, Costco) 11cid" Cafifomia and is an ufficnr and Dincdnr of Newport I Icights Clcmcnuny Ponndation. I It, ,d,o • Western Plaza, Laguna Niguel, California (Shop space and scncd on the B,,c,d of Dinctors of orange Cnnnn search & regional restaurant) Rescuc, which is a non -profit o,gani>ation unoh d in the in • Crcckslde Plaza, Santa Ana, California tctining of ",I.utcea emergency and disast" rc niedneu. P I' Chapman Retail Project, Orange, California (Best Buy, Wendy's and shop space) Corona Crossroads, Corona, California (industrial) Page 2 of 2 K E Y S E R M A R S T O N ASSOCIATES I N C. 500 SOUTH GRAND AVENUE. SUITE 1680 REAL ESTATE LOS ANGELES. CALIFORNIA 90071 REDEVELOPMENT PHONE: 2131622 -8095 AFFORDABLE 4IOUS1]4 FAX 2131622 -5206 ECONOMIC DEVELOPMENT W W WI AF.Y5E RD1AR51'OH.COV MEMORANDUM lv h�in E. E. H Hollis, 11 Calvin Kathleen H. Head James A. Rabe Paul C Anderson To: Bob Burnham, City Attorney Gregor}' D. Soo -Hoo City of Newport Beach SAN DIEGO Gerald NL Trimble Paul C. Marra From: Cal Hollis SANYRAAY'LiCO A. Jarry Keyser Date: July 23, 2004 Timothy C. Kelly Kate Eerle Funk Debbie XL Kern Subject: Qualifications and Financial Review for Robert J. Wetmore Michael Rosenfeld — Status Report Pursuant to your request, I have reviewed the personal financial statement prepared by RBZ, LLC., certified public accountants for Mr. and Mrs. Rosenfeld. The Rosenfeld's are sole owners of Woodridge Capital, the proposed development and financial partner for the Marina Park Hotel project. In connection with the review of the financial statements, I have signed a non- disclosure agreement that limits the detail that I can provide with respect to these statements. Based upon my review of the financial statements, I can conclude that the Rosenfelds have sufficient net worth to provide the anticipated equity required for development of the project. Additionally, the Rosenfeld's liquid assets (cash and cash equivalencies) are more than sufficient to provide the working capital and predevelopment expenses necessary to move the project forward to the point where the lease can be effective and construction financing obtained for the project. With regard to business references, Keyser Marston Associates, Inc. (KMA) has been provided a list of five references including recent co- investors /partners of Mr. Rosenfeld in major real estate transactions as well as Mr. Rosenfeld's long time C.P.A. from RBZ. KMA has placed calls to all the references provided and have received return calls from three as of this date. The following summarizes our findings: CLLLBP.I11Vrr i0 Fbf XC UF.SFR i'L.'E I U 01M CIRMS 0600 H CEH.BEO 16101.0 01 004 Ex H I B I T 4 To: Bob Burnham, City of Newport Beach July 23, 2004 Subject: Qualifications and Financial Review for Michael Rosenfeld Page 2 Nicholas Colonna, Partner Pacific Coast Capital Partners, LLC Pacific Coast Capital Partners is a debt and equity fund with over $1 billion in investments in California and the Western States. " Woodridge "is listed in Pacific Coast's promotional material as a client. Our interview with Mr. Colonna confirmed this relationship. They have co- invested in five major real estate transactions with Woodridge, and were highly complimentary concerning the firm's reputation, integrity, and performance in these projects. The projects include an $88 million luxury residential project in Hawaii where Mr. Rosenfeld has negotiated successfully through a very difficult entitlement process. Mr. Colonna considers Woodridge a valuable client and looks for additional invest opportunities with the firm. Reagan Vidal, SVP Guaranty Federal Bank Mr. Vidal represented Societe Generale, a French bank that provided Woodridge $20 million in construction financing for a condominium project on Wilshire Boulevard in Los Angeles during the mid- 1990s. The loan was handled as agreed upon between the Bank and Woodridge, despite a downturn in the condominium market. The Bank and all equity sources were repaid, and the project completed. Since that time, Mr. Rosenfeld has continued to successfully complete projects using institutional equity sources and non - recourse debt. Mr. Vidal has no current business with Woodridge as Guaranty Federal only makes recourse loans. Mr. Vidal spoke highly of Mr. Rosenfeld's reputation and development expertise, including his ability to navigate difficult entitlement processes, citing a land development transaction in Thousand Oaks as an example. Mr. Vidal highly recommends Woodridge and Mr. Rosenfeld without hesitation. Harvey Brookstein, Principal RBZ, LLC. (Certified Public Accountants) Mr. Brookstein has known Mr. Rosenfeld for over 20 years and is his personal and business accountant. In addition, Mr. Brookstein has been an investor in a number of the Woodridge projects. The investments have been highly successful. In these investment projects, Mr. Rosenfeld has taken the primary role as the development manager responsible for entitlements, development and financing. Other investors have included Pacific Capital and Cargill, a highly selective equity source. Mr. Rosenfeld has also acted as an entitlement consultant to other real estate development firms. Mr. Brookstein highly recommends Mr. Rosenfeld. This completes our review to date. We anticipate additional interviews on Monday and will report on the results as soon as possible. CE1.E1?X47INti30 Yl RSol S{.Rf]C.Iu OURCl.11i,MIS 040]04].NWPBECH CEH Bbd 16101 001 004 Jul 23 04 05:55p Dev - Asia Pacific 763 212 2494 p.2 Carlson Hotels - Americas Luis C. Acosta Vice President, Development Full Service Hotels July 23, 2004 Mayor Tod Ridgeway City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92663 Dear Mayor Ridgeway: Congratulations on your election from Council Member to Mayor I would like to express to you the continued interest that Regent International Hotels has in being part of Stephen Sutherland's exciting luxury resort project at the Balboa Peninsula. We have been, and looked forward to continuing our involvement throughout the development process. As the proposed hotel manger we are working closely with Mr. Sutherland to ensure that the resort meets our 5 -star level luxury standards as well as the requirements of the City. We have reviewed the PKF market study and are in agreement that the project is ideally suited for the Balboa Peninsula, and believe it will be highly competitive in the Southern California market. If you have any questions as we proceed through the planning and development phases, please do not hesitate to contact me. We look forward to being part of this dynamic project. Sincerely, C�L't." C Luis C. Acosta Cc: Stephen Sutherland Bob Williamson — VP Development CHW EXHIBIT 701 rarlcnn Parkwav MR R2.54 Minnetnnka Minne-nta 55905 tz y rl \-T C C7 � Z m � ad o� J � N � W !D 0 A S N IA N W I� F f� N fA cD fD Z w� V Y N W 1 Q 1"A Q A 0% fD y lb 10 10 A 0 Q �D T o� y J O Ut A W N N a� O Co O m co N N N N N N N N N N N N N N G i g y Or�) O K) 66 O N O O O ## N W t0 A (P D1 J W O O W W N W A O O O O o y N J A t0 W 0 0 0 0 0 0 o a W W W W N N N O O O O o 111 t0 A N N O � N pI G O O O O O O O C7 C7 � c m m m O O y n O y O Z Z 0 o �. a a d d � J Ut W t0 Ut Ut d _ d o d co o m D n H Z a O a O N N N N N N N A W W W W N N N O (n w Ut N J W J D7 fC'1 O C7 r 0 D z co D o 7L R f o N 0 N < y N o F 0 d m m m D ° D .'^. m m m m cn Q m u °m - m - m m O 0 J N o N Q O Cf) � N y' d C R O O > > N O O O N a m N S N N S ada� fA cD fD Z w� V Y N W 1 Q 1"A Q A 0% fD y lb 10 10 A 0 Q �D T o� y 0 CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 16 July 27, 2004 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Robert Burnham, City Attorney 644 -3131, rburnham (cilcity.newport- beach.ca.us Sharon Wood, Assistant City Manager 644 -3222, swood(a)city.newport- beach.ca.us SUBJECT: Marinapark Resort and Community Plan APPLICANT NAME: Sutherland Talla Hospitality (STH) ISSUE: Consideration and approval or certification of various actions related to the proposed Marinapark Resort and Community Plan (Project). 0 RECOMMENDATION: Take the following actions: 1. Adopt a Resolution (Exhibit A) certifying that the final Environmental Impact Report (EIR) for the Project fully complies with the California Environmental Quality Act (CEQA) and the CEQA Guidelines, making the findings required by CEQA and the CEQA Guidelines and adopting the Mitigation Monitoring Program for the Project. 2. Adopt a Resolution (Exhibit C), pursuant to Section 423 of the City Charter, the Measure S Guidelines and the agreement between the City and STH dated March 11, 2003, submitting to the electorate at the regular municipal election on November 2, 2004 proposed amendments to the Land Use Element and the Recreation and Open Space Element of the General Plan pertaining to the Project and Marinapark (Property). 3. Adopt Resolutions (Exhibits D and E) authorizing any member or members of the City Council to file arguments in favor of, or against, the proposed amendments, and directing the City Attorney to prepare an impartial analysis and authorize rebuttals. 4. Receive and file the Market Analysis prepared by PKF Consulting (Exhibit F) and the Fiscal Impact Analysis prepared by Applied Development Economics (Exhibit G); Marinapark Resort and Community Plan July 27, 2004 Page 2 5. Receive the report of the Marinapark Negotiating Committee (Ridgeway and Heffernan) regarding the status of discussions with the Project proponent regarding a lease of the Property and approve the recommendations of the Committee regarding appropriate lease terms and conditions. INTRODUCTION The redevelopment of Marinapark has been a topic of discussion and analysis at numerous public hearings and public meetings (approximately 29) during the past seven years. This public hearing is yet another opportunity for public input and represents the continuation of a lengthy process that, assuming City Council certification of the EIR, will continue with a decision by the electorate on proposed amendments to the Land Use Element and the Recreation and Open Space Element. The key elements of the Project can be summarized as follows: (1) A luxury resort with a maximum of 110 guest units (of the 110 units up to 12 could be "fractional ownership "), a spa, lobby, a small restaurant and cafe, and other hotel amenities that, combined would not exceed 96,000 square feet would be developed on the 5 acre site of the existing 56 unit mobilehome park (2) The guest units are proposed to be in one -level or two level structures with average roof heights of 14 and 24 feet respectively. The average roof height of the lobby would be 34 feet. Parking will be provided on site with 100 surface spaces and a 100 space subterranean facility; (3) One long dock that could accommodate approximately 6 vessels, depending on size, would serve resort guests or visitors. (4) An expanded Community Center would be constructed by the resort developer to accommodate Girl Scout and community events and activities and the existing public recreational facilities (four tennis courts, playground and public parking) would be reconstructed except the "half- court" basketball court would be eliminated. This memo summarizes the history of the Project, the City's compliance with CEQA and the CEQA Guidelines including the resolution proposed for certification of the EIR and the resolutions necessary to submit the General Plan Amendment to the voters. This memo also discusses the Fiscal Impact Analysis and the status of discussions between the Marinapark Negotiating Committee as well as the recommendations of that Committee. 0 Marinapark Resort and Community Plan July 27, 2004 Page 3 HISTORY The following is a brief summary of key events related to Marinapark and the Project: • 1997 The State Lands Commission staff advised the City that Marinapark is primarily tidelands and that permanent residential use — such as the existing mobilehome park - is inconsistent with tideland trust restrictions. The City Council commissioned and considered a Keyser Marston revenue study that concluded a hotel use on the bayfront and residential uses on Balboa Blvd. would provide the highest economic return to City. The City Council directed staff to discuss the tidelands issue with State Lands Commission staff, to begin negotiations with American Legion on a new lease for that property and to prepare an RFP for the remainder of Marinapark. • 1999 The Economic Development Committee and City Council received a presentation on hotel redevelopment by Sutherland Talla Hospitality. The City Council directed staff to request proposals from all interested parties and issued the RFP. • 2000 The City received 9 responses to the RFP including proposals from STH, the American Legion and the PB &R Commission. The City Council conducted noticed public hearings to receive presentations from those submitting proposals and the public. The City Council directed staff to prepare an economic analysis and asked 4 interested parties to submit additional information. The City Council, after extensive discussion and public input, approved an agreement designating STH as the sole entity with which the City would participate regarding any redevelopment. • 2001 STH submitted a Draft Project Description (DPD) and the City conducted a community forum on the DPD to obtain public input. STH engaged in public outreach and worked with the American Legion and the Girl Scouts. • 2002 STH submitted a Modified DPD, which excluded the American Legion site from the Project. The City Council initiated the General Plan and Zoning amendments that would, if approved, change the Land Use Element designation from "recreational and environmental open space" to "recreation and marine commercial." • 2003 STH, in response to public input, submitted revised site /floor plans for a 110 -room resort with related public and community improvements. STH and the City agreed that the City Council would approve a Project description for CEQA purposes only and submit the Project related General Plan amendments to the voters in November 2004. The City Council appointed a Marinapark Negotiating Committee (Ridgeway and Heffernan) to discuss terms of a lease that might be approved assuming the electorate approved the GPA and other conditions were satisfied. The City issued a Notice of Preparation of the EIR for the Project, conducted a scoping session and the Citizens Environmental Quality Affairs Committee (EQAC) reviewed the NOP in November. Marinapark Resort and Community Plan July 27, 2004 Page 4 • 2004 A Notice of Completion was issued and Draft EIR released for public comment. Extensive comments received from the public, EQAC, the Harbor Commission and the Planning Commission. The Planning Commission held two noticed public hearings /meetings on the EIR and the City Council held three noticed public hearings /meetings to receive public input and consider the EIR and the Project. ENVIRONMENTAL IMPACT REPORT With very limited exceptions, the City is required to comply with CEQA and the CEQA Guidelines prior to submitting any measure to the voters. In the case of this Project, the City Council decided to prepare a full "Environmental Impact Report" (EIR) for the Project and the City issued a Notice of Preparation in November 2003. The City issued a Notice of Completion of the Draft EIR in April 2004 and received numerous public comments during the 45 day review period. Staff and the EIR consultant prepared responses to all comments and, on July 8, 2004, the Planning Commission reviewed and considered the draft EIR and the responses to comments. On July 8, 2004, the Planning Commission unanimously recommended that the City Council determine that the EIR was prepared in compliance with CEQA and the CEQA Guidelines. Some minor corrections to the EIR were made at the Planning Commission hearing and subsequently by staff. These corrections are documented in a supplemental letter from the City's environmental consultant, Michael Brandman Associates (Exhibit B). Chris Taylor of Shute Mihaly & Weinberger, a CEQA expert, has reviewed the EIR and also concluded that the DEIR fully complies with CEQA and the CEQA Guidelines (Exhibit H) CEQA and the CEQA Guidelines require the City Council to make findings with respect to each potentially significant impact identified in an environmental impact report, the reasons for rejecting identified mitigation measures and project alternatives and to adopt a program for 'reporting on or monitoring the changes it has required in the project or made a condition of approval to avoid or substantially lessen significant environmental effects." The EIR for the Project identified potentially significant impacts related to "Geology and Soils ", "Hydrology and Water Quality', 'Biological Resources ", "Air Quality, "Hazards and Hazardous Materials" and "Cumulative Impacts." The EIR also identified feasible mitigation measures that, if adopted and implemented, would reduce each potentially significant impact to a level of insignificance. Staff, the EIR consultants and special counsel have collaborated in the preparation of a resolution (Exhibit A) that certifies the EIR, makes the findings required by CEQA and the CEQA Guidelines (including the adoption of all mitigation measures) and identifies the 'location and custodian of the documents that constitute the record of the proceedings on which the decision is based." Marinapark Resort and Community Plan July 27, 2004 Page 5 City Council certification of the EIR does not approve the Project. A vote to certify the EIR represents that Council Member's determination that the EIR satisfies the requirements of CEQA and the CEQA Guidelines — a determination that the Planning Commission unanimously recommended and a determination that special CEQA counsel is recommending. The practical effect of a vote to certify the EIR is to give the electorate the opportunity to express their opinion as to the future of Marinapark. ELECTION The Land Use Element of the General Plan designates the Property as "Recreation and Environmental Open Space." The current Land Use Element designation does not allow hotels or resorts. The Project proponent has asked that the Land Use Element be changed to "Recreation and Marine Commercial" and that corresponding amendments be made to the Recreation and Open Space Element (GPA). The proposed GPA would establish entitlement for a resort with a maximum of 110 guest units and 96,000 square feet and retain the community center and most of the public recreation facilities. In March 2003, the City Council approved an agreement with STH regarding the processing of the Project. This Agreement specified that the City Council would, assuming certification of the EIR, submit the proposed GPA to the voters in November 2004. In June 2004, the City Council approved amendments to the Measure S Guidelines that require hotels to be entitled in terms of the number of rooms and the amount of floor area (intensity). Section 423 of the City Charter and the Measure S Guidelines require voter approval of any General Plan amendment that, when compared to allowed uses (individually or when added to increases from other City Council approved amendments within that statistical area within the preceding 10 years), increases intensity by more than 40,000 square feet, increases traffic by more than 100 peak hour trips, or increases density by more than 100 dwelling units. The proposed GPA does not involve density and the total peak hour trips generated by the Project — 24 AM peak hour trips and 32 PM peak hour trips - are below the Section 423 threshold. However, the proposed GPA would exceed the 40,000 square foot intensity threshold and requires voter approval. Staff has prepared a resolution that submits the proposed GPA to the electorate (Exhibit B). The City Attorney prepared the language in Exhibit C after receiving comments from interested parties and members of the City Council, but the City Council makes the final decision on the precise language of the ballot measure. Staff has prepared resolutions (Exhibits C and D) authorizing any member or members of the City Council to file an argument, directing the City Attorney to prepare an impartial analysis and authorizing the submittal of rebuttals. 0 Marinapark Resort and Community Plan July 27, 2004 Page 6 FISCAL IMPACT REPORT We have attached copies of a "Market Analysis" prepared by PKF Consulting (Exhibit F) at the request of the Project proponent and a "Fiscal Impact Analysis" prepared by Applied Development Economics at the direction of the Assistant City Manager (Exhibit G). PKF is a nationally recognized firm that specializes in conducting marketing studies for hotels and resorts. PKF predicts that, in 2010 — projected to be the fourth year of operation and the first year in which hotel rents and occupancies are expected to stabilize — daily room rates would be $367.00 (in 2004 dollars) and occupancy rates would be 76 %. The Fiscal Impact Analysis, which is based on the assumptions in the PKF Market Analysis, predicts that total revenue to the City in 2010 (primarily from rent and Transient Occupancy Tax) would be $2,141,966 (in 2004 dollars) and City expenses would be $26,185. The draft Fiscal Impact Report released on July 8, 2004 projected much higher revenue due to an error in calculation. The Market Analysis and the Fiscal Impact Analysis are projections that, while based on the best available data and prepared by experienced professionals, may be higher or lower than actual revenue and costs depending on numerous variables including final terms of the lease and general economic conditions. These reports were prepared to provide the City Council and the public with the best available projections and the reports clearly indicate that Project revenue will greatly exceed the City's expenses in providing municipal services. LEASE DISCUSSIONS The Marinapark Negotiating Committee (Ridgeway and Heffernan), Cal Hollis of Keyser Marston, Kim Thompson of Rutan & Tucker and staff have discussed possible lease terms and conditions with STH and Bayside. Mr. Hollis has extensive experience representing the pubic and private sector in real estate matters and currently represents the City of Beverly Hills in their negotiations with the Montage. Mr. Thompson is an attorney who specializes in real estate transactions with almost 20 years experience in drafting ground leases. These discussions have produced a consensus - among those involved in the discussions - on certain issues and differences of opinion on other issues. The Marinapark Negotiating Committee has been advised that STH is considering an assignment of their rights in the exclusive negotiation agreement to Bayside Pacific LLC and has directed Mr. Hollis and Mr. Thompson to conduct appropriate "due diligence" with respect to all persons and entities associated with the prospective assignee. The areas of general agreement include the term of the lease (50 years), a five year option to lease, the conditions to the Project proponent's right to exercise the option (satisfy all conditions necessary to begin construction), the base rent ($1.1 million), the proponent's obligation to rebuild the Peninsula Community Center (which accommodates Girl Scout activities and community events) and a commitment to fund Marinapark Resort and Community Plan July 27, 2004 . Page 7 major renovations of the American Legion facility. The negotiators have not reached a consensus on other issues including the option consideration and the percentages of each category of revenue to be used to calculate percentage rent. Mr. Hollis has conducted an extensive review of the PKF Market Analysis and determined that $1.1 million represents a fair base rent for the Property given the constraints on the property. The Marinapark Negotiating Committee has asked staff to present to the City Council, for approval, the following direction general recommendations to guide them in continued discussions: 1. That the terms and conditions of any lease of Marinapark are reasonably calculated to generate revenue to the City consistent with the projections in the Fiscal Impact Analysis. 2. That the terms and conditions of the lease, or the right to exercise an option to lease, are consistent with the City Charter as well as all relevant plans, policies, ordinances and resolutions of the City. 3. That the lease protects the City's non - economic interests including assurances that all public improvements are constructed and maintained and the City • maximizes its ability to control the use of the Property in the event of any default. 4. That the lessee has the financial ability and the experience necessary to construct and operate a luxury resort (or has contracted with an entity or individual with the requisite construction operation experience) as well as a reputation for responsible and community sensitive development. Submitted by: S aron ood Assistant City Manager List of Attachments: Exhibit A Exhibit B Exhibit C Exhibit D Exhibit E Exhibit F Exhibit G Exhibit H City Attorney CEQA Resolution (and attachments); Supplemental Letter from Michael Brandman Associates Ballot Measure Resolution; Argument/Impartial Analysis Resolution; Rebuttal Resolution; PKF Market Analysis; Applied Development Economics Fiscal Impact Analysis; Legal Opinion — Chris Taylor. Michael Btamkan Msodites July 21, 2004 James Campbell City of Newport Beach Planning Department 3300 Newport Boulevard Newport Beach, CA 92659 ENVIRGNiMHN'IA]. SC HVI Elf's - PLANNING - NAI'IIHAI.P[;:h ifl \i.h.SMANA(IF.MF.N,I, Subject: Supplemental Information for the Final Environmental Impact Report for Marinapark Resort & Community Plan Dear Mr. Campbell: During the Planning Commission meeting on July 8, 2004, there were a few comments that were raised that warrant the preparation of this supplemental information letter. Following is a general discussion of each comment and a response is provided. These supplemental responses are to be considered part of the final MR, under CEQA. Guidelines section 15132. There was a comment regarding response to comment. K5 incorrectly referring to response to comment K7 about emergency evacuations. This comment is correct, and the following responds to comment K5 with respect to the project physically interfering with the City's plans for emergencies on the peninsula or carrying out emergency evacuations. The proposed project is located on Balboa Peninsula and includes a 110 -room luxury hotel. The ancillary facilities are sized to accommodate the guests at the luxury hotel. Based on a review of the City of Newpot. Beach Land Use Element, there are currently 2,150 dwelling units east of the project site on the Peninsula. Based on an occupancy of 24 units within the existing Marinapark mobile homes, the nct increase in rooms/dwelling units on Balboa Peninsula would be 86. Comparing the number of dwelling units east of tho project site (not accounting for the existing number of hotel/motel rooms east of the project) to the net increase on 86 units/rooms, the project would result in a 4 percent increase in unitstrooms. Since this figure does not include existing hotel/motel rooms east of the project site, and since the new hotel will not maintain a constant 100 percent occupancy rate, and since the existing mobile home park may have an occupancy higher than 24 units at certain times of the year, this is considered a worst -case estimate. Based on this worst -case estimate, a 4 percent increase in units/rooms along the north side of Balboa Boulevard is expected to generate a relatively nominal increase of people and vehicles during emergencies and evacuations. This nominal increase would not physically interfere with or 220 Commerce, Suite 200, Irvine, CA 92602 714 . 508 . 4100 rex 714 . 508 . 4110 Inland Empire Bay Area Kem County 909.884.2255 925.830:2733 661.33i.2755 www.brandana.com BMAILmbu@hcmdauacom EXHIBIT B 0 0 James Campbell July 21, 2004 Page 2 significantly contribute traffic during the City's responses to emergencies or implementation of emergency evacuations of the community. 2. There was a comment regarding response to comment 02 incorrectly referring to response to continent B22. The correct cross- reference is to comment B24 regarding land to water issues. 3. 'There was a comment regarding the demand for recreational services and facilities in Comment Letter U. The issue in this comment has been responded to previously in response to comment 815. 4. There was a comment regarding. response to comment Cli about the timing for in- water construction activities. To clarify the intent of the additional bullet to mitigation measure HWQ -1, which will further reduce powntial! impacts to marine life by avoiding construction disturbance during the reproductive season, the bullet is modified to read: • Construction Timing: In -water construction activities shall not occur between March 3land October 1. 5. fluting the Planning Commission meeting, there was a comment regarding the number of mobile home units that were assumed to be occupied for purposes of the traffic analysis. The analysis in Section 5.5 in the Draft EIR evaluated the potential impact of the proposed project on traffic during the shoulder season. It was noted that the last sentence on page 5.5 -2 and continuing to page 5.5-3 of the Draft EIR staid that the evaluation assmned a fully occupied mobile home park, This sentence is incorrect. As indicated in Table 5.5 -2 of the Draft EIR, the traffic analysis assumed a partially occupied mobile home park (24 mobile homes were assumed to be occupied). Assuming the lower occupancy of the existing use resulted in a higher number of net new trips, which is the more conservative approach. The last sentence on page 5.5 -2 and continuing to page 5.5 -3 of the Draft EIR is revised to correctly describe the analysis that was done, as follows: Delete: "To be conservative related to the project's traffic contribution, the net increase in trips was determined by the difference of the number of trips associatul with a fully occupied hotel and the number of trips associated with a fully occupied mobile home park." Add: `"To be conservative related to the project's traffic contribution, the net increase in trips was determined by the difference of the number of trips associated with a fully occupied hotel and 0 James Campbell July 21, 2004 Page 3 the number of trips associated with a partially occupied mobile home park" In addition to the above comments during the Planning Conunission hearing, City staff noted that the hazards and hazardous materials impact relating to the removal of existing structures that may contain lead and/or asbestos, which was identified as potentially significant, and the recommended ntigation measure, both identified on page 1-4 in the Draft EIR, were not included in Table 2 -1 in the Executive Summary of the Draft EIR. As stated in the Draft EIR, the mitigation measure will reduce the potential hazardous materiaLs impact to less than significant. Therefore, page 2 -15 in the Draft FIR is revised to include the information regarding lead and asbestos materials as shown in Attachment 1. Finally, staff noted a scrivener's error in the drafting of additional measure LU -1. The third sentence is corrected to read as follows: "The floating dock is anticipated to accommodate 'up to six (6) 30 -foot boats, or a greater number of shorter watercraft." The ahovc supplemental information serves to clarify or amplify, or make insignificant modifications to the Draft FIR. It does not provide significant: new information regarding environmental effects of the Marinapark Resort & Community Plan project or mitigation treasures. If you have any question regarding the above information, please call me. Sincerely, MICHAEL BRANDMANj ASSOCiA/TTFF.SS Michael E. Houlihan, A1CP Manager of Environmental Services H.1C1e4r (PNJN)V)064W640020Wan wpark RTC Supplement lister m727_7.doc 0 9 0 ATTACHMENT 1 QIWINDOWSITemporary Inler l FilesIOLUOD01Environwnml Impactdoc I x a d U C C V O w � C Ol N O U ' J j N C ' O Of ' c d E c O C W •�I n n U U 'C 'C L U d Y1i L � � J G J N CII ,n y L L-- y Y• F' �.-� �'+ y O 'N 'Y � ti J V A '- es E 19 .. cd cC 0 n i J � y L U d y n y � � C J « ti C• y y .- �� i - C d - E r y T 5 .^- - � y - N � rn c1 d L � L N CII ,n y L L-- y Y• F' �.-� �'+ y O 'N 'Y � ti J V A '- es E 19 .. cd cC 0 9 RESOLUTION NO. 2004 - 0 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, ORDERING THE SUBMISSION TO THE QUALIFIED ELECTORS OF THE CITY OF A CERTAIN MEASURE RELATING TO THE MARINAPARK RESORT AND COMMUNITY PLAN AT THE GENERAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY, NOVEMBER 2, 2004 AS CALLED BY RESOLUTION NO. 2004 -53. WHEREAS, the City Council has, by Resolution No. 2004 -53 that was adopted on June 22, 2004, called a General Municipal Election on Tuesday, November 2, 2004; and WHEREAS, Section 423 of the City Charter and the Measure S Guidelines require voter approval of any amendment to the General Plan that exceeds certain thresholds; and WHEREAS, the City Council has, pursuant to an agreement with the proponent of the Marinapark Resort and Community Plan (Project) and assuming certification of the relevant Environmental Impact Report, committed to submitting to the electorate those General Plan Amendments necessary to ensure that the Project conforms to the Land Use and Recreation and Open Space Elements; and WHEREAS, the City Council the proposed amendments to the Land Use and Recreation and Open Space Elements require voter approval pursuant to the provisions of Section 423 of the City Charter and the Measure S Guidelines because the increase in intensity exceeds 40,000 square feet of floor area. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, DOES RESOLVE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. That the City Council, pursuant to its right and authority, does order submitted to the voters at the General Municipal Election on Tuesday, November 2, 2004, the following question: Shall the Newport Beach General Plan designations for Marinapark, approximately 8 acres of City -owned bayside property on Balboa Peninsula between the American Legion and 18th Street, be amended from Recreation and Environmental Open Space to Recreational and Marine Commercial to permit a resort with a NO maximum of 110 guest units and 96,000 square feet on approximately 5 acres and a Community Center and public recreation facilities on 3 acres? EXHIBIT 0 SECTION 2. That in all particulars not recited in this resolution, the election shall be held and conducted as provided by law for holding municipal elections. SECTION 3. That notice of the time and place of holding the election is given and the City Clerk is authorized, instructed and directed to give further or additional notice of the election, in time, form and manner as required by law. SECTION 4. That the City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions. PASSED, APPROVED AND ADOPTED ON JULY 27, 2004. u=T-9 ATTEST: CITY CLERK is RESOLUTION NO. 2004 -_ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, SETTING PRIORITIES FOR FILING WRITTEN ARGUMENT REGARDING A CITY MEASURE AND DIRECTING THE CITY ATTORNEY TO PREPARE AN IMPARTIAL ANALYSIS WHEREAS, a General Municipal Election is to be held in the City of Newport Beach, California, on November 2, 2004 at which there will be submitted to the voters the following measure: Shall the Newport Beach General Plan designations for Marinapark, approximately 8 acres of City -owned bayside property on Balboa Peninsula between the American Legion and 18th Street, be amended from Recreation and Environmental Open Space to Recreational and Marine Commercial to permit a resort with a maximum of 110 guest units and 96,000 square feet on approximately 5 acres and a Community Center and public recreation facilities on 3 acres? NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. That the City Council authorizes ALL members of the City Council to file (a) written argument(s) In Favor of or Against City measure(s), accompanied by the printed name(s) and signature(s) of the person(s) submitting it, in accordance with Article 4, Chapter 3, Division 9 of the Elections Code of the State of California and to change the argument until and including the date fixed by the City Clerk after which no arguments for or against the City measure may be submitted to the City Clerk. SECTION 2. That the City Council directs the City Clerk to transmit a copy of the measure to the city attorney. The city attorney shall prepare an impartial analysis of the measure showing the effect of the measure on the existing law and the operation of the measure. If the measure affects the organization or salaries of the office of the city attorney, the city clerk shall prepare the impartial analysis. The impartial analysis shall be filed by the date set by the City Clerk for the filing of primary arguments. SECTION 3. That the City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions. PASSED, APPROVED AND ADOPTED ON JULY 27, 2004. ATTEST: CITY CLERK MAYOR EXHIBIT iD RESOLUTION NO. 2004 -_ 0 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, PROVIDING FOR THE FILING OF REBUTTAL ARGUMENTS FOR CITY MEASURES SUBMITTED AT MUNICIPAL ELECTIONS. WHEREAS, Sections 9220 and 9285 of the Elections Code of the State of California authorize the City Council, by majority vote, to adopt provisions to provide for the filing of rebuttal arguments for city measures submitted at municipal elections. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. That pursuant to Sections 9220 and 9285 of the Elections Code of the State of California, when the Clerk has selected the arguments for and against the measure which will be printed and distributed to the voters, the Clerk shall send copies of the argument in favor of the measure to the authors of the argument against, and copies of the argument against to the authors of the argument in favor. The authors may prepare and submit rebuttal arguments not exceeding 250 words. The rebuttal arguments shall be filed with the City Clerk, accompanied by the printed name(s) and signature(s) of the person(s) submitting it, or if submitted on behalf of an organization, the name of the organization, and the printed name and signature of at least one of its principal officers, not more than 10 days after the final date for filing direct arguments. Rebuttal arguments shall be printed in the same manner as the direct arguments. Each rebuttal argument shall immediately follow the direct argument which it seeks to rebut. SECTION 2. That all previous resolutions providing for the filing of rebuttal arguments for city measures are repealed. SECTION 3. That the provisions of Section 1 shall apply only to the election to be held on November 2, 2004 and shall then be repealed. SECTION 4. That the City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions. PASSED, APPROVED AND ADOPTED ON JULY 27, 2004. ATTEST: CITY CLERK MAYOR EMBIT E 0 Mr. Stephen Sutherland Bayside Pacific, LLC. 4500 Campus Drive Suite 500 Newport Beach, California 92660 Dear Mr. Sutherland: In accordance with your request, we have completed our market analysis for a proposed luxury hotel in conjunction with fractional ownership units to be developed at the Marina Park site in Newport Beach, California. This letter is brief in scope and provides facility recommendations and an analysis of the potential market demand for the proposed hotel facility and fractional private residences. We have also estimated 10 -year cash flows for both projects and presented our results in a consolidated statement of cash flows. The conclusions reached are based on our knowledge of the lodging and fractional ownership markets in the competitive area as of April 2004. Our letter and the analysis presented herein assume the opening of the proposed hotel on April 1, 2006. This letter report is designed for your internal use in planning for the proposed project. We understand that it may be shared with representatives of the City of Newport Beach. It is subject to the attached statement of Assumptions and Limiting Conditions. SITE ANALYSIS AND ACCESSIBILITY The site is located on the northern side of Balboa Boulevard on Balboa Peninsula in Newport Beach, California. The site is bordered by West Balboa Boulevard to the south, 18'" Street to the west, 16" Street to the east, and Newport Channel to the north. The site offers waterfront frontage and a beach. One block to the south of the property is the beach (Newport Beach), and one half mile southwest of the subject is Newport Pier. Across 18'h Street to the west is the 25 room Best Western Bay Shores Inn. Bordering on the east side of the site is an American Legion Building, the American Legion Yacht Club, and an apartn)ent building. The greater area surrounding the subject site is composed primarily of residential dwellings with a number of small commercial businesses located along Balboa Boulevard. Currently, the site is improved with four tennis courts, a small park, and a residential mobile home park. The site is clearly visible from Balboa Boulevard, which borders the southern portion of the site. Additionally, the site is clearly visible from passing boats along A wholly owned subsidiary of Hospitality Asset Advisors International, Inc. EXHIBIT. F, PKF Consulting 666 south place street su9e 104 May 19, 2004 LM Angela CA 90017 Telepnom(213)680 -0900 Telefez (213) 623 -9210 Mr. Stephen Sutherland Bayside Pacific, LLC. 4500 Campus Drive Suite 500 Newport Beach, California 92660 Dear Mr. Sutherland: In accordance with your request, we have completed our market analysis for a proposed luxury hotel in conjunction with fractional ownership units to be developed at the Marina Park site in Newport Beach, California. This letter is brief in scope and provides facility recommendations and an analysis of the potential market demand for the proposed hotel facility and fractional private residences. We have also estimated 10 -year cash flows for both projects and presented our results in a consolidated statement of cash flows. The conclusions reached are based on our knowledge of the lodging and fractional ownership markets in the competitive area as of April 2004. Our letter and the analysis presented herein assume the opening of the proposed hotel on April 1, 2006. This letter report is designed for your internal use in planning for the proposed project. We understand that it may be shared with representatives of the City of Newport Beach. It is subject to the attached statement of Assumptions and Limiting Conditions. SITE ANALYSIS AND ACCESSIBILITY The site is located on the northern side of Balboa Boulevard on Balboa Peninsula in Newport Beach, California. The site is bordered by West Balboa Boulevard to the south, 18'" Street to the west, 16" Street to the east, and Newport Channel to the north. The site offers waterfront frontage and a beach. One block to the south of the property is the beach (Newport Beach), and one half mile southwest of the subject is Newport Pier. Across 18'h Street to the west is the 25 room Best Western Bay Shores Inn. Bordering on the east side of the site is an American Legion Building, the American Legion Yacht Club, and an apartn)ent building. The greater area surrounding the subject site is composed primarily of residential dwellings with a number of small commercial businesses located along Balboa Boulevard. Currently, the site is improved with four tennis courts, a small park, and a residential mobile home park. The site is clearly visible from Balboa Boulevard, which borders the southern portion of the site. Additionally, the site is clearly visible from passing boats along A wholly owned subsidiary of Hospitality Asset Advisors International, Inc. EXHIBIT. F, 2 the Newport Channel. Freeway access is provided via Highway 55 or Newport Boulevard, which becomes Balboa Boulevard. Additionally, the property is accessible from the northwest and southeast via the Pacific Coast Highway to Balboa Boulevard. The subject property is expected to benefit from its unique waterfront location in a highly residential area, its proximity to the beaches, attractions, and commercial centers located within Newport Beach, and spectacular views of the Newport Channel. Additionally, as waterfront property available for resort development becomes increasingly scarce, this project will maintain a competitive advantage due to its waterfront location. AREA OVERVIEW The subject site is located in the City of Newport Beach, California. Newport Beach is known as a tourist destination, as such it has a year -round population of about 79,000 permanent residents with summer population figures of over 100,000 residents. The City of Newport Beach is located within a five to ten mile radius of John Wayne Airport and has excellent access to all of the major highways in Orange County. Furthermore, it is located proximate to the commercial and industrial areas of Orange County, including the cities of Irvine, Costa Mesa, and Huntington Beach. Due to Newport Beach's proximity to various commercial office and industrial areas, and a major airport, the majority of the hotel demand in the area is driven by group and commercial business. Additionally, home to a variety of attractions, Newport Beach offers an excellent climate, ocean orientation, and a variety of shopping and entertainment venues for the leisure visitor. The future economic outlook for the City of Newport Beach indicates continued modest economic growth with overall economic stability. The following statements provide an overview of the Newport Beach market area. ➢ From 1990 to 2003, the population of the City of Newport Beach rose from 66,600 to 79,392, representing a compound average annual growth of 1.4 percent, which is a stronger rate than that of neighboring Costa Mesa, but below that of Irvine. From 2002 to 2003, the population of the City of Newport Beach grew by 10.7 percent, whereas Costa Mesa and Irvine grew by 1.0 percent and 5.0 percent, respectively. ➢ The Newport Beach office market has remained strong. Included as part of the Greater Airport Area submarket, which consists of 35,206,537 square feet of office space, Newport Beach and the surrounding communities posted a 2003 year -end vacancy rate of 15.0 percent, making them the second lowest Orange County submarket. Currently, the average rental rate for Class A office space in this submarket is $2.25 per square foot per month, the highest in the county. In 2004, the Orange County office market is expected to continue its growth towards higher occupancy and lease rates, with a limited amount of new construction taking place. Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California j • In 2003, approximately 40,811 square feet of new office space in the Greater Airport Submarket was completed and by the end of 2003, approximately 85,939 square feet of space remained under construction. • John Wayne Airport has become one of the country's busiest regional airports, with passenger numbers increasing at a compound average annual rate of 4.9 percent between 1990 and 2003. 2003 passenger figures reached 8.54 million at John Wayne Airport, an increase of 8.0 percent over 2002 figures. In 2001, According to CIC Research, Orange County hosted 40.9 million visitors that spent an estimated $6.5 billion during their stay. The tourism industry is still recovering from the events of September 11, 2001 and the weakened economy. In 2002, the latest information available, Orange County posted a slightly higher number of visitors with 41.8 million, but spending decreased to $6.4 billion. DESCRIPTION OF THE PROPOSED SUBJECT HOTEL AND FACILITIES RECOMMENDATIONS Proposed for the subject site is a 98 -unit luxury hotel, 12 fractional ownership residences, boat slips capable of accommodating yachts up to 80 feet in length at waterline (LWLJ, and a 6,000 square foot spa facility. Architecturally styled after Villa Fiorentina, built in the 1880's and located in Southern France, the project captures the essence of a European villa through its low -rise structure, complete with landscaped courtyards and fountains. The property should capitalize on its waterfront location by ensuring that a majority of the guestrooms and public space areas afford waterfront views. In keeping with the Newport Beach atmosphere, the property is anticipated to have a total of 12 slips for use by yachts in transit, a sailing and rowing club, and four visitor slips. The hotel will offer an array of other motor and sailing craft for use by hotel guests as well as area residents. The proposed subject hotel will include a 6,000 square foot spa, a 1,100 net square foot signature restaurant, a 3,600 square feet ballroom, 1,500 net square feet of restaurant and lounge area, swimming pool, and a Racquet Club consisting of two tennis courts. The Racquet Club will be used by hotel guests, as well as the local public, on a non - reservation basis at no cost. The guestrooms will consist of a mixture of junior suites, double queens, and full suites. The rooms will range in size from 500 square feet for a junior suite to 2,500 square feet for the presidential suite. Additionally, boaters in transit will be able to tie up to the hotel's docks and make use of room service and housekeeping, and the spa and hotel facilities will be made available to them as well. • The fractional ownership units will be 1500 square feet. Each unit will contain a kitchen, a fireplace, private Jacuzzi and patios, five fixture bathrooms, and guest bathrooms. Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 4 • Ownership intervals are anticipated to be sold in 1/8 " interests (or roughly six weeks per year of usage), and a floating program will be implemented. Overall it is expected that the hotel's waterfront location, luxury amenities, excellent spa services, and Newport Beach location will enable the property to be highly competitive in the Southern California resort hotel market. Furthermore, the property will have the unique advantage of accommodating yachts in transit, increasing the resort's appeal to niche (sailing and boating) market demand. MARKET ANALYSIS To determine the future market potential of the competitive properties and the subject, we reviewed our database, conducted primary research relative to the competitive hotel sub - market and prepared a five -year history of occupancy and average daily rate trends for that market. To obtain data on current conditions, market mix, and likely future results, we conducted primary research in the area, consisting of interviews with the management of key competitive hotels, developers and city officials. It should be noted that the proposed property, by virtue of its location near the ocean, facilities including spa, and its services, can be classified as a destination resort. As such, the property is expected to compete within the coastal resort market. Competitive Supply In order to identify the competitive market of the proposed hotel, we have analyzed the overall Southern California coastal resort market. Newport Beach and its surrounding coastal resort areas have been developed to a point where they warrant being considered their own market. After analyzing the properties in Orange County, we selected five properties that we feel will offer competition to the subject hotel. The selection of the competitive hotels was based on each property's location, number of guestrooms, quality level of facilities and amenities, room rate structure, and market orientation. The following chart presents the primary competitive supply for the proposed subject hotel. Source: PKF Consulting Marina Park Hotel and Fractional Ownership Units, Newport Beach, California Proposed Marina Park Hotel Historical and Current Competitive Supply 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Primary Competition Proposed Marina Park Hotel 0 0 0 0 0 0 0 74 98 98 Four Seasons Newport Beach 285 285 295 295 295 295 295 295 295 295 Ritz Carlton Laguna Niguel 393 393 393 393 393 393 393 393 393 393 St. Regis Monarch Beach (8 /01) 0 0 167 400 400 400 400 400 400 400 Balboa Bay Club (5/03) 0 0 0 0 88 132 132 132 132 132 Montage Resort (3103) 0 0 0 0 224 262 262 262 262 262 ADDITION TO SUPPLY Pelican Inn 204 204 Cumulative Rooms Supply 678 678 855 1,088 1,400 1,482 1,482 1,556 1,784 1,784 % Change N/A 0.0% 26.1% 27.3% 28.7% 5.9% 0.0% 5.0% 14.7% 0.0% Source: PKF Consulting Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 1] 0 5 Additions to Supply In addition to the current competitive supply, we have identified one proposed coastal - oriented resort project as possible future additions to the supply. This project is set to open in 2007 and contain a total of 204 rooms. Pelican Inn The 204 -room Pelican Inn will be located adjacent to the existing Pelican Hill Golf Club in the City of Newport Beach. The hotel is planned to include 20,000 square feet of indoor meeting space and several outdoor function areas. Other facilities will include a 20,000 square foot spa, swimming pools, and five food and beverage outlets, including a lobby lounge and pool bar. This project is being constructed by the Irvine Company and is set to open in 2007. The 98 -room subject hotel is assumed to open in April 2006. Historical Performance The aggregate total annual available and occupied rooms, the resulting occupancy levels, average daily room rate, and REVPAR (revenue per available room) for the competitive supply from 1999 to 2003 are presented in the following table. Histnriral Market Perfnrmanre of the Competitive Sunnly Source: PKF From 1999 to 2003, the annual supply of rooms increased at a compound aggregate annual growth rate of 19.9 percent. This outpaced growth in occupied rooms, which increased at 14.3 percent on an aggregate annual basis. The competitive set is relatively new, with two properties opened in 2003 and one in 2001. The combined result of the influx of rooms in 2001 and the events of September 11, 2001 was a decrease in occupancy from 80.1 percent to 60.8 percent in 2001. 2002 showed strong signs of recovery, reflected in a growth in occupancy to 62.7 percent, while not quite having maintained the ADR from the prior year. 2003, however, showed both a strong increase in occupancy as well as a 7.8 increase in ADR. This resulted in a 9.0 percent increase in the revenue per available room in 2003. Though the market is still below 1999 and 2000 levels, it has fared remarkably well through the weakened economy and shows strong signs of growth. Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California Annual Percent Occupied Percent Market Average Percent Percent Year Supply Change Rooms Change Occu anc Dail Rate Change REVPAR Change 1999 247,470 189,755 76.7% $276.10 $211.71 2000 247,470 0.0% 198,333 4.5% 80.1 307.91 11.5% 246.78 16.6! 2001 312,075 26.1 189,642 -4.4 60.8 301.97 -1.9 183.50 -25.6 2002 397,120 27.3 248,796 31.2 62.7 292.13 -3.3 183.02 -0.3 2003 511,000 28.7 323,706 30.1 63.3 314.88 7.8 199.47 9.0 CAAG 19.9% 14.3% 3.3% -1.5% 03 ytd 511,000 263,573 51.6% $294.75 $152.03 04 ytd 540,930 5.9% 1 335,866 27.4% 62.1% 289.51 -1.8% 179.76 18.2% Source: PKF From 1999 to 2003, the annual supply of rooms increased at a compound aggregate annual growth rate of 19.9 percent. This outpaced growth in occupied rooms, which increased at 14.3 percent on an aggregate annual basis. The competitive set is relatively new, with two properties opened in 2003 and one in 2001. The combined result of the influx of rooms in 2001 and the events of September 11, 2001 was a decrease in occupancy from 80.1 percent to 60.8 percent in 2001. 2002 showed strong signs of recovery, reflected in a growth in occupancy to 62.7 percent, while not quite having maintained the ADR from the prior year. 2003, however, showed both a strong increase in occupancy as well as a 7.8 increase in ADR. This resulted in a 9.0 percent increase in the revenue per available room in 2003. Though the market is still below 1999 and 2000 levels, it has fared remarkably well through the weakened economy and shows strong signs of growth. Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 6 Year to date 2004 portrays a healthy increase in market occupancy and an 18.2 percent increase in revenue per available room over the same period in 2003. This is largely attributed to the opening of Montage Resort, which has led the market in ADR. The Orange County coastal resort market has shown that it is very successful at absorbing additional properties and inducing demand as a result Mix of Demand for the Competitive Market As illustrated in the following table which presents the 2003 mix of demand, the competitive market is driven primarily by the leisure and group meeting market segments. Competitive Market 2003 Mix of Demand Market Segment Room Nights Ratio Group 176,700 55% Corporate 41,100 13 Leisure 105,900 33 Total 324,000 100% Source: PKF Consulting The group market segment is the primary source of demand, representing approximately 55 percent of the total market demand in 2003. This segment is primarily corporation and association group business. The leisure market accounted for approximately 33 percent of the total market demand, or approximately 105,900 total room nights in 2003. Commercial demand, which was 13 percent, or 41,100 rooms in 2003, is derived primarily from businesses and corporations located in the local areas. Projected Performance of the Competitive Supply Using the historical growth in the market as a base, and taking into account the current demonstrated and future projected economic conditions, we have estimated future growth in overall market demand and average daily rate as outlined in the following table. While new supply has been readily absorbed into the market in 2001 through 2003, this has hampered the growth in occupancy in the Orange County coastal resort market, especially combined with the effects of the terrorist events and the weakened economy. There is, however, strong potential for future growth. As the market adapts to its new rooms supply, and the newly opened resorts reach stabilization, the market will be able to regain the strong ADR and occupancy levels attained prior to 2001. We have estimated continued future growth in all three market segments, with greater growth levels expected in the leisure and group segments. With this growth and our estimates of induced leisure and group demand generated by the remaining rooms of Balboa Club and Montage entering the supply, we project that market occupancy will increase to 66 percent in 2004. The market occupancy is expected to rise to 69 percent in 2005. In 2006, when 74 rooms of the proposed subject enter the market, assuming an opening date of April, 2006, we project that the market will achieve 70 percent Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California r] 0 0 occupancy. This accounts for the rooms induced by the subject, as well as a continued strong growth in the leisure segment. We project that 2007 will remain at 70 percent occupancy due to the absorption or the remaining rooms of the subject and the opening of the 204 -room Pelican Inn. The occupancy level is then estimated to increase to 72 percent in 2008, 74 percent in 2009, and reach stabilization at 76 percent in 2010. The table on the next page sets forth our projection of market performance over the next seven years. Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California ` Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 0 0 0 Proposed Marina Park Hotel Competitive Market Estimated Future Growth in Lodging Supply and Demand 2004 -2010 2003 2004 2005 2006 2007 2008 2009 2010 ROOMS SUPPLY 1,088 Addilionst(Delelions) to Supply Proposed Marina Park Hotel 74 24 Balboa Bay Club (5/031 88 44 Montage Resort (3/03) 224 38 Pelican Inn 204 Cumulative Rooms Supply 1,400 1,482 1,482 1,556 1,784 1,784 1,784 1,784 Total Annual Rooms Supply 511,000 540,930 540,930 567,940 651,160 651,160 651,160 651,160 Growth Over the Prior Year 28.7% 5.9% 0.0% 5.0% 14.7% 0.0% 0.0% 0.0% DEMONSTRATED DEMAND IN BASE YR Group 176,733 55% Corporate 41,059 13% Leisure 105,914 33% TOTAL DEMONSTRATED DEMAND 323,706 100% INDUCED /(UNSATISFIED) DEMAND Group 14,000 0 2,500 18,000 0 0 0 Corporate 0 0 0 0 0 0 0 Leisure 6,000 0 8,000 26,000 0 0 0 TOTAL INDUCED /(UN5AT15FIED) DEMAND 20 =000 0 10,500 44,000 0 0 0 GROWTH RATES Group 4.0% 4.0% 3.0% 3.0% 3.0% 3.0% 3.0% Corporate 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Leisure 7.0% 5.0% 4.0% 4.0% 4.0% 3.0% 3.0% PROJECTED DEMAND Group Demonstrated 176,733 183,802 205,714 211,886 220,817 245,982 253,361 260,962 Inducedl(Unsatisfied) 0 14,000 0 2,500 18,000 0 0 (2,075) Total 176,700 197,800 205,700 214,400 238,800 246,000 253,400 258,900 Growth Over Prior Year WA 11.9% 4.0% 4.2% 11.4% 3.0% 3.0% 2.2% Corporate Demonstrated 41,059 42,290 43,559 44,866 46,212 47,598 49,026 50,497 Inducedl(Unsatisfiied) 0 0 0 0 0 0 0 (402) Total 41,100 42,300 43,600 44,900 46,200 47,600 49,000 50,100 Growth Over Prior Year N/A 2.9% 3.1% 3.0% 2.9% 3.0% 2.9% 2.2% Leisure Demonstrated 105,914 113,328 125,294 130,306 143,838 176,632 181,931 187,389 Induced/(Unsatisfied) 0 6,000 0 8,000 26,000 0 0 (1,490) Tom] 105,900 119,300 125,300 138,300 169,800 176,600 181,900 185,900 Growth Over Prior Year WA 12.7% 5.0% 10.4% 22.8% 4.0% 3.0% 2.2% Total Markel Demand 323,700 359,400 374,600 397,600 454,800 470,200 484,300 494,900 Growth Over Prior Year N/A 11.0% 4.2% 6.1% 14.4% 3.4% 3.0% 2.2% Market Occupancy 63% 66% 69% 70% 70% 72% 74% 76% Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 0 0 0 0 9 It should be noted that supply is projected to increase at a compound average annual rate of 3.1 percent. During the projection period, we have projected accommodated demand to increase at a compound average annual rate of 5.5 percent and average daily rate to increase at a compound average annual rate of 3.1 percent. Market occupancy is projected to stabilize at 76 percent in 2010. is 0 Based upon historical data and year -to date performance, the market average daily rate is anticipated to increase 4.2 percent in 2004 over 2003 levels, resulting in a 2004 year end rate of $328.00. We have estimated average daily rate annual growth of 3.0 percent in 2005, 3.6 percent in 2006, and three percent annually thereafter. The following table summarizes the projected supply, market occupancy, market average daily rate and REVPAR for the period between 2004 and 2010. Proiected Market Performance of the Competitive Supply Year Annual Supply Percent Change Occupied Rooms Percent Change Market Occupancy Average Daily Rate Percent Change REVPAR Percent Change 2904 540,930 5.9% 359,400 11.0% 66% $328.00 4.2% $217.93 9.3% 2005 540,930 0.0 374,600 4.2 69 338.00 3.0 234.07 7.4 2006 567,940 5.0 397,600 6.1 70 350.00 3.6 245.03 4.7 2007 651,160 14.7 454,800 14.4 70 360.00 2.9 251.44 2.6 2008 651,160 0.0 470,200 3.4 72 371.00 3.1 267.90 6.5 2009 651,160 0.0 484,300 3.0 74 383.00 3.2 284.86 6.3 2010 6.1 60 0.0 494,900 2.2 76 395.00 3.1 300.21 5.4 CAAG 1 3J% 5.5% 3.1% 5.5% _ 111JIM Estimated Market Performance of the Subject Hotel We estimate that the subject will have an overall market penetration of 86 percent and a corresponding occupancy of 60 percent in 2006, its first year of operation. In its second year of operation, we project that the subject will penetrate the market at 94 percent, resulting in an occupancy of 66 percent. As the competitive properties have historically run high occupancies, it is reasonable for the subject to benefit from the strength of the market. As such, we have estimated market penetration to increase to 101 percent and occupancy level to 73 percent by 2008, its third year of operation. Due to the subject's waterfront location and unique marine orientation, we have estimated that the property will achieve a stabilized penetration rate of 100 percent of fair share over the long term resulting in a 76 percent occupancy. The following table sets forth our estimates of penetration by year and by market segment. Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California to Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 0 0 Proposed Marina Park Hotel Market Penetration and Projected Occupancy 2006 2007 2008 2009 2010 TOTAL ROOMS AVAILABLE Proposed Marina Park Hotel 27,010 35,770 35,770 35,770 35,770 Competitive Market 567,940 651,160 651,160 651,160 651,160 Fair Share of Supply 4.8% -__ - 5.5% __°e 5.5% e > - e 5.5% eez_ 5.5% ___- ESTIMATED TOTAL MARKET DEMAND Group 214,400 238,800 246,000 253,400 258,900 Corporate 44,900 46,200 47,600 49,000 50,100 Leisure 138,300 169,800 176,600 181,900 185,900 TOTAL 397,600 454,800 470,200 484,300 494,900 397,600 454,800 470,200 484,300 494,900 FAIR SHARE OF DEMAND Group 10,200 13,100 13,500 13,900 14,200 Corporate 2,100 2,500 2,600 2,700 2,800 TOTAL 18,900 24,900 25,800 26,600 27,200 SUBJECT PENETRATION Group 75% 800)6 85% 85% 80 1b Corporate 95% 105% 115% 125% 125% Leisure 100% 110% 120% 120% 120 "1. ROOM NIGHTS CAPTURED Group 7,600 10,500 11,500 11,800 11,400 Corporate 2,000 2,700 3,000 3,400 3,500 Leisure 6,600 10,300 11,600 12,000 12,300 TOTAL CAPTURED DEMAND 16,200 23,500 26.100 27,200 27,200 MARKET SHARE CAPTURED 4.1% 5.2% 5.6% 5.6% 5.5% OVERALL MARKET PENETRATION 86% 94% 101% 102% 100% SUBJECT OCCUPANCY 60% 66% 73% 76% 76% MARKET MIX Group 47% 45% 44% 43% 42% Corporate 12% 11% 11% 13% 13% Leisure 41% 44% 44% 44% 45% TOTAL 100% 100% 100% 100% 100% Source: PKF Consulting Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 0 0 0 9 11 Our derivation of the average daily rate for the subject property in a stabilized year of operation is based primarily on the historical average daily rates achieved by the other hotel properties in the competitive supply, as well as its unique positioning as a marina-oriented hotel. We have estimated that the subject will achieve a $387.00 average daily rate in 2006, its first year of operation. We have estimated that the subject property will experience a 3.5 percent rate increase in 2007 (its first full year of operation) over 2006 levels. Thereafter, the subject's average daily rate is expected to increase at three percent annually. This equates to an average daily room rate of $425.00 in 2009, when the subject is projected to achieve a stabilized occupancy, and a stabilized ADR of $367.00 in 2004 dollars. This positions the subject property at the upper end of the competitive market in terms of rate due to its proposed amenities and management by Regent or a comparable management company.. The following table summarizes our estimates of penetration and occupancy as well as average daily rate and the resulting revenue yield for the subject for the period 2006 through 2010. Vmiort" M­L,or P- imm-ro of tko G,i6iw t Hntnl Year Annual Supply Percent Change Occupied Rooms Percent Change Occupancy Percentage Average Dail Rafe Percent Chan a REWAR Percent Chan a Market Penetration Revenue Yield 2006 27,010 16,200 60% $387.00 3.0% $232.11 86% 95% 2007 35,770 32.4% 23,500 45.1% 66 401.00 3.5 263.45 13.5% 94 105 2008 35,770 0.0 26,100 11.1 73 413.00 3.0 301.35 14.4 101 112 2009 35,770 0.0 27,200 4.2 76 425.00 3.0 323.18 7.2 102 113 2010 35,770 0.0 27,200 0.0 76 438.00 3.0 333.06 3.1 100 111 CAAG 7.3% 118% 3.1% 9.4% YKF STATEMENTS OF ESTIMATED ANNUAL OPERATING RESULTS Basis of Projections To prepare estimates of future operating results for the proposed Marina Park Hotel, the starting point or basis is the best estimate of results that could be achieved with good management in a representative year or stabilized market, calculated in 2004 dollars. We estimate that during a representative year, the subject property could achieve a stabilized occupancy of 76 percent at an average daily room rate of $367.00, stated in 2004 dollars. From this base, we considered the effects of inflation, and occupancy levels for the projection period for a ten -year operating period, from April 1, 2006 through March 31, 2016. The underlying rationale and assumptions used in preparing these estimates are presented in this section. The estimates of revenues, costs and expenses are based on the proposed facilities and services and the operational characteristics thereof. The basis for our projections are the operating results of comparable resorts in California and Arizona that are believed to operate with efficient management and proper control over costs and expenses. Proposed Marina Park Hotel and Fractional Ownership Units. Newport Beach. California 12 Comparable Hotels We have used information on the operating performance of five other comparable facilities. This information is primarily obtained from confidential statistics compiled as a basis for the PKF Consulting publication Trends in the Hospitality Industry. Our comparable hotels consist of five full- service, resort- oriented hotels that are located in affluent areas and are all considered comparable to the subject due to their size, facilities and rate. Two of the comparable properties are in Arizona and three are in California. Given that the information is provided to us on a confidential basis, we cannot disclose the identity of the comparable hotels. The figures for the comparables are stated in 2002 dollars. While five comparable resorts have been included in our write -up of the estimated annual operating results, numerous additional sources were utilized in our analysis and to confirm the reasonableness of our projections going forward. Summary data pertaining to the comparable hotels is provided on the following pages. 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VV C 111 ry m V N N y y Ip I O o O N V v ry 1c no ° n o ri o .; a° ae o PrvN.c .n o Q N V m N m m P ry c a L a E A.0 v Q v LL a E EOd E v > VO O m �.w V�iw h V an v ' c � O 0 O s Z 2 e d `u E v o c :a 1 U a v = o Q y r 3 = w V1 C C 1� C P N O h V n V1 �O O� a0 V fV V C C ry h O� n P n �O of C 2 A y oF '° a A -= `m o m d mo d ` o � a c s y m E O "n m°°v> '� 0 0c a u f m m aP iry C P P mV ry mm P�P ary s Nse O O E e O `m v aV.N m �rvm imV V N PV C us n oN oLLe O ^O f iv l b a.ry V�VC �m n "aPm c p n r° v 4 d1 cE o Ie N O m ay.N P P a rvN 0P N � ts h c Q O 0 e +� � w A i d ` " i oO V n N iV �N r VO^ffn� �s V V `N<V V f J ^c C c a 1 m 6O P v m rvPm rvP 0 a M v'c 0 l � dc m a c y m c d o v 6 r ry C m O V h IN �oo rry ry P � /Vry " U7 n 1 f o i f o�V h m m � ry ov o m N O N P N Vs P n w O $.- r 0 ° f a c °E :v OO c f l ' - ry oO m m �.P G n O � af d c d N ° w LL y v x ry P ry omV ory m m ry m Vm�6 f �v x d d l h h N m m �.s �iN V _s v n c s 5 O Z v E o C : w w h 0 ry O ry Be ae Be ae ae s ae ae m oN ry N VIO V m ry O IG P P h P O O m O h n am w O° w E m o O P C a� o N P P No C n N n 0°ry O ? e- e- s s s e- s s e- 0 ry o 7 V1 m V m 7 N n - 0 v Ro m 0 m o P O ry N V O V ry O N N m. VV C 111 ry m V N N y y Ip I O o O N V v ry 1c no ° n o ri o .; a° ae o PrvN.c .n o Q N V m N m m P ry c a L a E A.0 v Q v LL a E EOd E v > VO O m �.w V�iw h V an v ' c � O 0 O s Z 2 e d `u E v o c :a 1 U a v = o w r m O muC �n w h w v c ry ry V VV vm 1 f P .c v C o p o = m m w s O � n .m s N m � .P r m o - mui�rvo 0 m o s' b ti U u b v m i O 3 v Z j .R i a e 3 O `o u b c b v i 4 b C .4 d O . 0 C = w p o = m m w s O � n .m s N m � .P r m o - mui�rvo 0 m o s' b ti U u b v m i O 3 v Z j .R i a e 3 O `o u b c b v i 4 b C .4 d O . 0 C b ti U u b v m i O 3 v Z j .R i a e 3 O `o u b c b v i 4 b C .4 d O . 0 C 0 STABILIZED YEAR ESTIMATE As indicated previously, we have estimated the performance of the subject for a stabilized year of operation. This estimate is primarily based on our review of the performance of other comparable resorts. The support for our stabilized year estimate is detailed in the following paragraphs, and is stated in calendar year 2004 dollars. Departmental Revenues and Expenses In the Uniform System of Accounts for Hotels, revenues to the facility are categorized by the department from which they are derived. In the case of the subject, these include income from rooms, food and beverage, telephone, spa, other operated departments, and rentals and other income. In the Uniform System of Accounts for Hotels, only direct operating expenses associated with each department are charged to the operating departments. General overhead items, which are applicable to the overall operation of the facility, are classified as undistributed operating expenses. Direct or departmental revenues and expenses, which typically vary with occupancy, are generally analyzed on a per occupied room (POR) or ratio basis, while undistributed expenses, which are more fixed in nature, are typically analyzed on a per available room (PAR) basis. Room Revenue and Expense Room revenue is based on the number of occupied rooms multiplied by the ADR for each respective year as presented in this report. As indicated in our previous analyses, we estimated that the stabilized occupancy rate of the subject would be 76.0 percent, with an ADR of $367.00 (expressed in 2004 dollars). 9 RRooms x 365 Days x 76.0% Occupancy x $367.00 = $ 9,977,000 The following is a table illustrating average daily rate, annual occupancy and annual rooms revenue commencing April 1, 2006 (date of opening). Proposed Marina Park Hotel and Fractional Ownership Units. Newport Beach, California Estimated Rooms Revenue Average Annual Rooms Year Daily Rate Occupancy Revenue 2006/07 $391.00 61.0% $ 8,532,000 2007/08 404.00 67.0% 9,684,000 2008/09 416.00 74.0% 11,012,000 2009/10 428.00 76.0% 11,637,000 2010/11 441.00 76.0% 11,991,000 2011/12 455.00 76.0% 12,371,000 2012/13 468.00 76.0% 12,725,000 2013/14 482.00 76.0% 13,106,000 2014/15 497.00 76.0% 13,513,000 2015/16 512.00 76.0% 13,921,000 Proposed Marina Park Hotel and Fractional Ownership Units. Newport Beach, California 16 Room expense consists of salaries and wages, employee benefits, commissions, contract cleaning, guest transportation, laundry and dry cleaning, linen, operating supplies, reservation costs, uniforms, complimentary benefits, and other items related to the rooms department. The operating results for the comparable hotels have a range of 25.0 percent to 33.1 percent of room sales, or a range of $66.69 to $94.49 per occupied room. Based on our analysis of comparable properties, we estimate that for a stabilized year of operation the room department expense for the subject will be $80.00 POR or 21.8 percent of room revenue. This estimate is within the range of comparables on a POR basis and in line with industry standards on a ratio basis. Rooms Expense Per Occupied Room I Ratio to Rms Revenue Comparables A A $84.84 25.0 B 69.59 33.1 C 66.69 25.4 D 89.48 27.4 E 94.49 30.4 Food and Beverage Revenue and Expense Food and Beverage revenue is typically generated by the sale of meals to both hotel guests and outside patrons in the restaurants and lounges; room service; banquet revenues, including banquet room and audio /visual rental income; and other associated revenues. At the comparable properties, the food and beverage revenue ranged from $114.60 to $413.16 per occupied room. We have projected $200.00 per occupied room for food and beverage revenue for the subject during a stabilized year, stated in 2004 dollars. Comparables A $14,763,658 $276.41 B 4,523,385 114.60 C 11,737,838 413.16 D 22,629,000 311.33 E 10.590.300 222.54 Food and Beverage expense includes the cost of food and beverages, payroll and related expenses, and other items such as laundry, linen, china, glassware, silverware, uniform costs, supplies, and other miscellaneous items. The food and beverage expenses at the comparable properties ranged from 65.2 percent to 83.7 percent of departmental revenues. Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 0 17 We have estimated food and beverage expenses at 78.0 percent of food and beverage revenues in a representative year. Food comparables A 76.3 B 65.2 C 70.4 D 78.7 E 83.7 Telecommunications Revenue and Expense Telecommunications revenue is derived from the use of telephones and internet connections within guestrooms. Telephone revenues are highly dependent on the surcharges imposed by the property. Telephone revenue at the comparable hotels ranged from $4.23 to $15.30 per occupied room. Telephone revenues are variable, tend to correlate directly to occupancy, and have been decreasing in recent years with the increased usage of cell phones and the trend toward complimentary high -speed internet access. We estimated telephone revenue at the property to be approximately $12.00 per occupied room in 2004 dollars in a representative year, which is within the range of the comparables. Room Comparables A $ $8.27 Telecommunications expense includes the cost of calls, operation of the telephone switchboard and internet connection, and any telephone and internet service charges. The comparables' telephone expense ranged from a 39.4 percent to a 80.7 percent departmental expense ratio. For a representative year of operations, we have estimated expenses at approximately 60.0 percent of revenues, which meets industry standards and is within range of the comparables. Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 18 Spa Revenue and Expense Spa revenue is generated from beauty and wellness treatments provided in the health spa and in guest rooms, use of the fitness facilities, and sales of retail items in the spa boutique. Spa revenues at comparable hotels and resorts located in California and Arizona ranged from $12.68 to $71.93 per occupied room, and $56.25 to $178.86 per square foot. We have estimated the income for the subject to be approximately $40.00 per occupied room in a representative year of operations, which is equivalent to $181.23 per square foot for the proposed 6,000 square foot spa facility. This estimate is within the range of comparable spas on a per occupied room revenue basis. Spa Revenue Total Amount Ratio to T -Comm. Rev. Comparables B 96.4 A Comparables 72.4% B $12.68 80.7 C 3,597,829 52.9 D C 39.4 E 130.96 54.9 Spa Revenue and Expense Spa revenue is generated from beauty and wellness treatments provided in the health spa and in guest rooms, use of the fitness facilities, and sales of retail items in the spa boutique. Spa revenues at comparable hotels and resorts located in California and Arizona ranged from $12.68 to $71.93 per occupied room, and $56.25 to $178.86 per square foot. We have estimated the income for the subject to be approximately $40.00 per occupied room in a representative year of operations, which is equivalent to $181.23 per square foot for the proposed 6,000 square foot spa facility. This estimate is within the range of comparable spas on a per occupied room revenue basis. Spa Revenue Spa expenses include payroll costs, employee benefits, the cost of retail sales, and other operating supplies. The comparable spa departments had an expense range of 71.0 percent to 96.4 percent of departmental revenues. For a representative year of operations, we have estimated expenses at approximately 80.0 percent of revenues for the subject, which is within the range of projected performance and in line with industry standards. Rev. Comparables Total Amount Per Occupied Room Per Square Foot B 96.4 C Comparables A $1,341,449 $12.68 $178.86 B 3,597,829 71.93 149.91 C 1,702,427 13.65 130.96 D 1,406,191 24.16 56.25 Weighted Average N/A 23.76 115.80 Subject Stabilized Year $1,087,408 $40.00 $181.23 Spa expenses include payroll costs, employee benefits, the cost of retail sales, and other operating supplies. The comparable spa departments had an expense range of 71.0 percent to 96.4 percent of departmental revenues. For a representative year of operations, we have estimated expenses at approximately 80.0 percent of revenues for the subject, which is within the range of projected performance and in line with industry standards. Rev. Comparables A 71.0% B 96.4 C 73.4 D 92.7 Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 0 0 19 Other Operated Departments Revenue and Expense Other Operated Departments can vary significantly among the comparable properties and the subject depending on the nature of the additional revenue generators. Other operated department revenue is typically generated from guest laundry, business center, and /or other recreational amenities. Other operated departments at the subject property include revenue from business services, guest laundry and the sundry shop. The comparable hotels had a range of other operated department revenue from $5.78 to $226.98 per occupied room. Based upon the various components of this line item, we have estimated the income for the subject to be approximately $7.00 per occupied room in a representative year of operations. Comparables A $ 77.45 B 116.89 C 50.70 D 226.98 111.62 Other Operated Department Expenses include payroll costs, employee benefits, and other operating supplies of such other operated departments. The Comparables' other operating expenses ranged from a 47.8 percent to a 725.3 percent expense ratio. For a representative year of operations, we have estimated expenses at approximately 65.0 percent of revenues, which is within the range of the Comparables' performance. Rentals and Other Income Rentals and Other Income generally reflects the net revenues associated with the rental of retail, restaurant and office space, concessions, commissions, cash discounts earned, forfeited advance deposits, service charges, interest income and other. With no leased space at the proposed subject, we have projected $6.00 per occupied room for the proposed subject, or $447 per day, which falls in the range of the Comparables. Proposed Manna Park Hotel and Fractional Ownership Units, Newport Beach, California Ratio to O.O.D. Rev. Comparables A 78.6% B 94.6 C 71.5 D 47.8 E 725.3 Rentals and Other Income Rentals and Other Income generally reflects the net revenues associated with the rental of retail, restaurant and office space, concessions, commissions, cash discounts earned, forfeited advance deposits, service charges, interest income and other. With no leased space at the proposed subject, we have projected $6.00 per occupied room for the proposed subject, or $447 per day, which falls in the range of the Comparables. Proposed Manna Park Hotel and Fractional Ownership Units, Newport Beach, California 20 Rentals and Other Income Per Occupied Room Per Da Comparables A $ 2.90 $ 425 B 5.43 587 C 0.27 21 D 5.53 1,101 E 52.52 6,847 Year Undistributed Operating Expenses Undistributed Operating Expenses are operating expenses that are not chargeable to a particular operating department and are presented as undistributed operating expenses, in accordance with the Uniform System of Accounts for the Lodging Industry. These expenses include administrative and general, marketing, property operations and maintenance, and energy and utilities. These expenses are relatively unaffected by fluctuations in occupancies and ADR. Excluding management fees, which are a fixed percentage based on a contract agreement and market parameters, these expenses are analyzed primarily on a dollar amount per available room (PAR) basis. Administrative and General This category includes the salary and wages of the general manager and administrative staff; cash overages and shortages; credit card commissions; bad debt expense; security; data processing costs; accounting payroll expense; and professional fees. It should be noted that, according to the ninth revised edition of the Uniform Systems of Accounts for the Lodging Industry, general liability insurance is no longer included in this line item. Instead, it is included under the fixed charges "insurance" line item. Administrative and general expenses at the comparables range from $11,771 to $16,119 per available room with ratios to total revenue ranging from 6.2 percent to 9.6 percent. We have estimated an administrative and general expense for the subject property of $13,500 per available room, which is 7.7 percent of revenues. Administrative and General Per Available Room Ratio to Total Rev. Comparables A $16,119 8.9% 8 11,851 9.6 C 14,511 8.1 D 12,210 6.2 Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach. California 0 0 0 • Marketing This expense includes the cost of advertising, printing of brochures, salary associated with sales and marketing personnel, and other costs associated with an ongoing sales and promotion program. Marketing expenses for the comparables ranged from $8,921 to $13,182 per available room. The amount spent on marketing depends on the location, reputation, and brand association of the property. As such, we have estimated an expense of approximately $10,000 per available room, which equates to 5.7 percent of total revenues. Marketing Per Available Room Ratio to Total Rev. Comparables A $10,264 5.7% B 10,880 8.8 C 13,182 73 D 8,921 4.6 Subject Stabilized Year 1 $10,000 1 5.7% Franchise Fees As the property is assumed to be operated and managed by Regent or a comparable management company, only a management fee would be paid and not a franchise fee. Property Operations and Maintenance Property operations and maintenance expenses are a function of building age and usage. This category includes the engineering salaries, wages and benefits, maintenance of the building, grounds and landscape, electrical and mechanical equipment, engineering, refrigeration, operating supplies, cleaning, waste removal and uniforms. The comparable hotels posted expenses for 2002 ranging from $6,199 to $10,565 per available room. Property operations and maintenance expenditures for the subject are estimated at approximately $7,500 per available room in 2004 dollars in a representative year, which is 4.3 percent of revenues. Comparables A $10,565 5.8% B 8,268 6.7 C 7,801 4.3 D 8,492 4.3 E 6,199 4.3 Subject Stabilized Year 1 $7,500 1 4.3% Proposed Marina Park Hotel and Fractional Ownership Units, Newporl Beach, California Rev. 22 Utility Costs Energy and utility costs include electric, fuel, steam, water, and sewer charges. The cost of utilities at the comparable hotels ranged from $3,565 to $5,771 per available room in 2002. We have estimated energy and utility costs of $4,500 in a representative year of operation, equal to 2.6 percent of total revenues. Comoarables Per Available Room I Ratio to Total A $5,771 3.2% 8 5,090 4.1 C 3,565 2.0 D 5,456 2.8 Management Fee and Fixed Charges Management Fee Rev. We have assumed a management fee of 3.0 percent in the first year of operation, stabilized throughout our projections. Real Estate and Property Taxes The subject property is in the real estate taxing jurisdiction of the Orange County Assessor's Office. In California, Proposition 13 limits property taxes to one percent of the assessed value as of the 1997/1998 fiscal year, plus city, special district, and county bonds. Assessed values are further limited to a two percent increase per year, except upon sale or major alterations of the property. The proposed resort will be built on land owned by the City of Newport Beach. For a proposed improvement such as the subject property, the assessed value is based on a tax rate applied to the replacement value of the property and it's underlying land value. We have applied a tax rate of 1.1 percent to derive a representative property tax base of approximately $430,000 in a representative year of operations. This figure has been inflated at two percent per year in accordance with the Jarvis -Gann Amendment. Insurance Insurance expense includes coverage for liability and buildings and contents, and has been on the rise in the last few years. Insurance expense for the comparable properties ranged broadly from $754 PAR to $2,091 PAR. This expense at the subject property is estimated to be $1,600 per available room in 2004 dollars in a representative year of operation, based upon the range of the comparables and our knowledge of the industry trends. Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California J IF \_J • Comparables A $1,731 B 2,966 C 754 D 2,091 E 968 Ground Rent 23 The property will be subject to a ground lease paid to the City of Newport Beach. The lease will be in the amount of $1,100,000 per year, and will remain consistent for the duration of our projections. This equates to 6.4 percent of revenues in a representative year. Reserves For Replacement An additional item not typically listed on an owner's income statement is the amount required for the periodic replacement of certain short-lived items such as carpeting, draperies, and other furniture, fixtures and equipment. For a new hotel, reserves are often lower in the first few years, because very little capital improvements will be necessary. We • have increased the reserves gradually over the first three full years of the projection period to build up reserves as the building ages. We have projected reserve for replacement of two percent for the first year of operation, three percent for the second year of operation, and four percent for the third year and thereafter. 0 STABILIZED YEAR OPERATING RESULTS Presented on the following page is an estimate of the subject hotel's stabilized year operating results expressed in current value 2004 dollars. This estimate is based on the foregoing analysis. For this twelve -month period, revenues are projected to total approximately $17,180,000. Gross operating profit, which does not include management fees, property taxes, direct assessments, insurance, or reserves for replacement, totals approximately $6,095,000, or 35.5 percent of total revenue. This ratio places the subject above the upper range of the comparables, which reported gross operating profits from 13.7 percent to 31.3 percent. Operating income for the subject in a stabilized year, after the deduction of a management fee, property taxes, insurance, ground rent, and a reserve for capital replacement, is projected to be $3,206,000 or 18.7 percent of total revenue. Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 24 Marina Park Hotel Representative Year of Opera ion Number of Units: Number of Annual Rooms Available: Number of Rooms Occupied: Annual Occupancy: Average Daily Rate: Revenue Per Available Room: Revenues Rooms Food & Beverage Telecommunications Spa Other Operated Departments Revenues Rooms Food & Beverage Telecommunications Spa Departmental Profit Undistributed Expenses Administrative & General Marketing Property Operation and Maintenance Utility Costs Total Undistributed Operating Expenses Gross Operating Profit Base management Fee Fixed Expenses Property Taxes Insurance Ground Rent Total Fixed Expenses Net Operating Income FF &E Reserve Net Operating Income After Reserve Source: PKF Consultin Stated in 2004 Dollars 21.8% 22,194 80.01 98 78.0% 43,276 156.00 196,000 35,770 2,000 7.21 870,000 80.0% 27,185 32.00 124,000 65.3% 1,265 76.0% 7,606,000 44.3% 77,612 279.78 $367.00 $278.92 Amount Ratio Per Room P.O.R. $9,977,000 58.1% $101,806 $367.00 5,437,000 31.6% 55,480 200.00 326,000 1.9% 3,327 11.99 1,087,000 6.3% 11,092 39.98 190,000 1.1% 1,939 6.99 163,000 0.9% 1,663 6.00 17,180,000 100.0% 175,306 631.96 2,175,000 21.8% 22,194 80.01 4,241,000 78.0% 43,276 156.00 196,000 60.1% 2,000 7.21 870,000 80.0% 8,878 32.00 124,000 65.3% 1,265 4.56 7,606,000 44.3% 77,612 279.78 9,574,0001 55.7% 1 97,694 352.18 1,323,000 7.7% 13,500 48.67 980,000 5.7% 10,000 36.05 735,000 4.3% 7,500 27.04 441,000 2.6% 4,500 16.22 3,479,000 20.3% 35,500 127.97 6,095,0001 35.5% 1 62,194 224.20 515,0001 3.0% 1 5,255 18.94 430,000 2.5% 4,388 15.82 157,000 0.9% 1,602 5.78 1,100000 6.4% 11,224 40.46 1,687,000 9.8% 17,214 62.06 3,893,0001 22.701. 1 39,724 143.20 687,0001 4.0% 1 7,010 25.27 $3,206,000 1 18.7% 1 $32,714 $117.93 Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California • 0 9 0 2s ESTIMATED ANNUAL OPERATING RESULTS The previous analysis provided for the income and expenses incurred in the operation of the subject in a stabilized year. In the following analysis, we provide estimated income and expenses for the subject during each year of the 10 -year holding period anticipated for a typical investor. Our estimate of the performance for the subject in the stabilized year is used as a basis for our analysis, considering the effects of inflation, business development, and varying occupancy. Inflation To portray price level changes during the holding period, we have assumed an inflation rate of 3.0 percent throughout the projection period. This rate reflects the consensus of several well- recognized economists for the current long -term outlook for the future movement of prices and is consistent with the inflation rates of the 1990s and early 20005. All expenses are projected to increase at 3.0 percent throughout the holding period. It should be noted that inflation is caused by many factors and unanticipated events and circumstances can affect the forecasted rate. Therefore, the estimated operating results computed over the projection period can vary from the actual operating results, and the variations may be material. Statement of Estimated Annual Operating Results The estimated annual operating results for the proposed resort hotel from April 1, 2006 to May 31, 2016 are presented on the following pages. 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Deeded ownership in perpetuity is usually conveyed as with any form of traditional ownership. There are three price tiers of fractional interest, based on aggregate selling price per square foot of living unit. Traditional Fractionals are products selling for less than $500 per square foot. These resort condominiums are usually characterized as at a "three star" level and of average quality. High -end Fractionals are characterized as products that sell for $500 to $999 per square foot and represent a higher quality level than traditional fractionals. These are typically characterized as "four star" quality and offer a more desirable location, lower density, larger size, or higher level of finish. Private Residence Clubs are high -end fractionals representing the upper - priced segment of the fractional product with gross selling prices above $1,000 a square foot. These are usually located in top tier resort areas and offer a "five star" quality level. While fractional interest in theory has existed for many years, a new form of ownership was introduced in 1995. New variables introduced included a wide overlay of services and benefits to the consumer, smaller fraction sizes, and higher prices. The characteristics have differentiated the fractional industry from the resort timesharing, as individual weeks in a timeshare are sold at an average price of approximately $13,900. Of this amount, only about one - quarter of this price is allocated to the vacation home itself, with the rest left to fund administrative and sales and market costs. In a fractional interest, purchase prices are higher, but much more time is received and a greater portion of the price is allocated to the product itself. The following paragraphs present an overview of the existing fractional industry with data provided by RCI and Ragatz Associates. EXISTING PROJECTS Ragatz Associates 2004 edition of Fractional Interests: A Market Profile has identified 66 high -end fractional interest projects within the United States, Canada, Mexico, and the Caribbean islands which all catered to upper- income consumers. Projects which have sales prices of $1,000 or more per square foot are categorized as private residence club projects while projects which sold for between $500 to $999 per square foot are considered to be high -end fractionals. The following lists the fractional interest projects in North America. Due to the scope of this market study and the positioning of the product being offered at the proposed subject, we have focused on the two higher segments of the fractional ownership market. is Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 0 Private Residence Clubs (>51,000 per square too() 1 Auberge Residence Club Cabo San Lucas, Mexico 2 Austria Haus Vail, CO 3 Cinnamon Hill Club Jamaica, West Indies 4 Club Residences at Vail Vail, CO S Exclusive Resorts Multiple destinations 6 Fairmont Heritage Place Acapulco, Mexico 7 Four Seasons Aviara Cadsbad, CA 8 Four Seasons Jackson Hole Jackson Hole, WY 9 Four Seasons Scottsdale Scottsdale, AZ 10 Hyatt Grand Aspen Lodge Aspen, CO 11 Hyatt Main Street Station Breckenridge, CO 12 Hyatt Mountain Lodge Beaver Creek, CO 13 Les Saisons Sun Valley, ID 14 Marriott Grand Residence Club South Lake Tahoe, CA IS Poet's Cove Seaside Resort Vancouver, BC 16 Porches at More's Corner Steamboat Springs, CO 17 Phillips Club at Lincoln Square New York, NY 18 Residence Club at Tucker's Point Tucker's Town, Bermuda 19 Ritz Carlton Aspen Highlands Aspen, CO 20 Ritz Carlton Bachelor Gulch Beaver Creek, CO 21 Ritz Carlton Jupiter Jupiter, FL 22 Ritz Carlton St. Thomas St. Thomas, USVI 23 River Club Telluride, CO 24 Roaring Fork Club Basalt, CO 2S Sanctuary at Snowmass Club Snowmass Village, CO 26 Snowmass Club Snowmass, CO 27 St. Regis Residence Club Aspen Aspen, CO 28 Storied Places at Natures Door Whistler, BC 29 Timbers Club Snowmass Village, CO 30 Tonopalo Tahoe Vista, CA 31 Valdom Mountain Lodge Breckenridge, CO High-end Fractionals (<$1,000 per square foot) 32 Christie Club Steamboat Springs, CO 33 Cirque at Copper Mountain Capper Mountain, MO 34 Club at Big Bear Village Big Bear Lake, CA 3S Cottages at National Golf Club Village of Pinehurst, NC 36 Crescent Club Los Calms, Mexico, Vail, Co, and Scottsdale, AZ 37 Deer Valley Club Park City, UT 38 Franz Klammer Lodge Telluride, CO 39 Hemingways Sun Valley, ID 40 Inn at Lost Creek Telluride, CO 41 Lodge at Lincoln Peak Warren, VT 42 Mountain Club Kirkwood, CA 43 Northstar Club Northstar, CA 44 Owners Club at Barton Creek Austin, TX 4S Owners Club at Hilton Head Hilton Head, SC 46 Owners Club at Puerto Vallarta Puerto Vallarta, Mexico 47 Owners Club at Homestead Hot Springs, VA 48 Pine Meadows Telluride, CO 49 Rancho Manana Cave Creek, AZ SO Residence Club at Soulhshom Zephyr Cove, NV Sl Residence Club at Seaside Seaside, OR S2 Residence Club at Teton Pines Jackson Hole, WY S3 Rocks at Pinnacle Point Scottsdale, AZ S4 Scottsdale Club Villas Scottsdale, AZ S5 Sentinals Private Ownership Club Kirkwood, CA S6 Teton Club Jackson Hole, WY S7 Villas of Gold Mountain Graegle, CA S8 Villas at Trapp Family Lodge Stowe, VT S9 WaterColor Private Residence Club Seagrove Beach, FL Source: Ragatz Associates E Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 19 30 Among the existing projects, there are presently approximately 2,135 built units that comprise high -end fractional interests (HFI) and private residence clubs (PRC). Location A common thread among the 66 projects is their location in areas where overnight rental rates and real estate prices are high. The following table presents the locations of existing fractional ownership units. Location Comparison of Existing Fractional Ownership Units Location Type HFI' PRC' Total Existing western Ski 48.5% 52.9% 4TI % Golf- Oriented 24.2 17.6 18.3 Oceanfront 21.2 14.7 30.1 Multiple' 6.1 5.9 2.6 Urban 0.0 8.8 2.0 Total 100.0 % 100.0% 100.0% 'Deeded ownerships in single family homes in multiple resort locations. 'High -end Fractional Interests. 'Private Residence Clubs. Source: Ragatz Associates The majority of existing fractional projects are located within ski areas, however, 48.4 percent of the planned projects are either golf or ocean oriented. Of the existing projects, 28.8 percent are located within Colorado. Of the projects in North America, nine are located in California, up from only three projects in 2001. Also, of the 33 fractional interest projects starting sales in 2004 or later, 5 are planned for California. Planned Projects Currently, there are over 33 fractional interest projects under construction and in the planning phase. Some of these projects will be starting sales in 2004. Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 0 0 31 Planned and Fractional Interest Projects Under Construction Name Location 2003 Fractional Sales During 2003, 65 fractional resorts were in active sales, containing a total of 1,710 units. This includes projects that were closing sales, taking pre- opening bids with refundable deposits, or taking non - refundable deposits on contracts closing once a certificate of occupancy is issued. Of these projects in active sales, 26 were high end fractionals and 29 were private residence clubs. New fractional interest sales totaled about $513 million in 2003, with private residence clubs providing the largest share with $428 million in sales. The high -end fractional interests had sales of $61 million. Total sales of new units increased by 37.6 percent over 2002 sales, largely credited to the popularity of membership clubs, which accounted for 27 percent of 2003 sales. Trend in Project Size The average size of a high -end fractional project active in sales in 2003 was 28 units. Once all under - construction and planned units are built, the average size will increase to 42 units, signifying a trend towards larger size projects to support more amenities and Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California Argenta Lodge Solitude, UT Distinctive Retreats multiple locations Edgemont at Durango Durango, CO Four Seasons Celebration Celebration, FL Four Seasons Costa Rica Costa Rica Four Seasons Exuma Exuma, Bahamas Four Season Punta Mita Punta Mita, Mexico Kura Hulanda Curacao Las Villas de Tres Vidas Acapulco, Mexico Le Bear Resort Glen Arbor, MI Legendary Resorts multiple locations Little Red Ski Haus Aspen, CO Lodge at Cordillera Vail, CO mountain Grand Lodge & Spa Boyne Falls, MI Old Greenwood Truckee, CA Pelican Hill Newport, CA Private Quarters Club at Cimarron Hills Austin, TX Private Quarters Club at Lake Geneva Lake Geneva, WI Private Residence Club Miami Beach, FL Residence Club at Lighthouse Pointe Amelia Island, FL Residence Club at Little Nell Aspen, CO Residence Club at PGA West La Quinta, CA Ritz- Carlton Santa Barbara Santa Barbara, CA St. Regis Hotel & Residence Ft. Lauderdale, FL Storied Places at Lake Las Vegas Las Vegas, NV . Storied Places at Mammoth Lake Storied Places at San Destin Mammoth Lake, CA San Destin, FL Storied Places at Tremblant Tremblant, Quebec Storied Places at Whistler Whistler, BC Swiss Hotel & Spa Vail, CO Villas of La Solana Punta Mita, Mexico Whiteface Lodge Lake Placid Lake Placid, NY Source: Ragatz Associates 2003 Fractional Sales During 2003, 65 fractional resorts were in active sales, containing a total of 1,710 units. This includes projects that were closing sales, taking pre- opening bids with refundable deposits, or taking non - refundable deposits on contracts closing once a certificate of occupancy is issued. Of these projects in active sales, 26 were high end fractionals and 29 were private residence clubs. New fractional interest sales totaled about $513 million in 2003, with private residence clubs providing the largest share with $428 million in sales. The high -end fractional interests had sales of $61 million. Total sales of new units increased by 37.6 percent over 2002 sales, largely credited to the popularity of membership clubs, which accounted for 27 percent of 2003 sales. Trend in Project Size The average size of a high -end fractional project active in sales in 2003 was 28 units. Once all under - construction and planned units are built, the average size will increase to 42 units, signifying a trend towards larger size projects to support more amenities and Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 32 flexibility in duration and time -of -year for fractional ownership. Likewise, the current average size of a private residence club active in sales is 51 units. Upon completion of planned and under - construction projects, this will increase to 75 units. Unit Size, Configuration and Orientation Fractional units are available in a variety of configurations ranging from a studio size to four bedrooms or more. The following table summarizes unit sizes and configuration of Ragatz Associates sample of fractional projects. Associates Due to the lower price of real estate or construction costs, there are a larger proportion of three- and four - bedroom units in the high end fractional projects than in the private residence club projects. The majority of units in both PRC and HFI units, however, are one- , two -, and three - bedroom units. A survey conducted by Ragatz Associates indicates that buyers prefer two and three bedroom units rather than larger units. In the resort market, fractional (or residence club) units are typically constructed and located adjacent to the resort itself and owners are entitled access to the resort's facilities and amenities. In a limited case, fractional units are located within the resort itself alongside the hotel rooms. The Four Seasons Residence Club in Jackson Hole is an example of fractional ownership units and hotel rooms housed within the same resort building, located on a designated floor. This club's ski location is a driving factor in the design and layout, providing owners convenient access to resort facilities, amenities and service during winter months without having to leave the comforts of home or travel through the snow. Interval Prices Fractional interests range in time, size, and quality tiers. In order to best analyze interval pricing, we will utilize three methods of comparison: Price per fraction; • price per square foot; and • price per week of ownership Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 0 Unit Size and Confi uration PRC HFI Proportion S . Ft. Proportion S . Ft. Configuration Studio 4% 550 7% 49 One - Bedroom 20 700 18 810 Two-Bedroom 45 1,410 34 1,440 Three - Bedroom 24 1,910 28 2,160 Four - Bedroom 7 33 250 13 2840 Total 100% 100% Associates Due to the lower price of real estate or construction costs, there are a larger proportion of three- and four - bedroom units in the high end fractional projects than in the private residence club projects. The majority of units in both PRC and HFI units, however, are one- , two -, and three - bedroom units. A survey conducted by Ragatz Associates indicates that buyers prefer two and three bedroom units rather than larger units. In the resort market, fractional (or residence club) units are typically constructed and located adjacent to the resort itself and owners are entitled access to the resort's facilities and amenities. In a limited case, fractional units are located within the resort itself alongside the hotel rooms. The Four Seasons Residence Club in Jackson Hole is an example of fractional ownership units and hotel rooms housed within the same resort building, located on a designated floor. This club's ski location is a driving factor in the design and layout, providing owners convenient access to resort facilities, amenities and service during winter months without having to leave the comforts of home or travel through the snow. Interval Prices Fractional interests range in time, size, and quality tiers. In order to best analyze interval pricing, we will utilize three methods of comparison: Price per fraction; • price per square foot; and • price per week of ownership Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 0 0 • We will focus on analyzing the pricing of similarly sized units compared to those the subject will offer. The following data table lists the different pricing methods for two- bedroom units in the three tiers of fractional ownership. Pricing Analysis of Two-Bedroom Fractional Interests Price per Price per Price per week Fraction Square Foot of Ownership Traditional $117,400 $ 400 $11,300 HFI 146,400 710 20,100 PRC 214,300 1,425 43,400 Source: Ragatz Associates Based on an average of 1,670 square feet for the private residence clubs, the average price for a fraction is $214,300 or $43,400 per week. In terms of price per square foot, the average is $1,425 per square foot. For the high -end units, Ragatz Associates reports an average price of $146,400 per fraction or $20,100 per week based on an average size of 2,110 square foot. The average price per square foot for the traditional fractional interest is $400. Average Fractional Share and Maintenance Fees As previously mentioned, fractional interest shares range front 1/25 (two weeks of ownership) to 1/4 (13 weeks of ownership). The average fraction size of the comparable projects, both HFI and PRC, is smaller than the average fraction size of traditional fractional interest, which averages 1/4. Among HFI resorts in active sales in 2003, the average fractional size was 1/9, and similarly, the average fractional size of PRC in active sales during 2003 was 1/10. The average weekly maintenance fee is $1,100 for all unit sizes and configurations. This varies, however, between each tier and between unit sizes. The subject will offer two - bedroom units, therefore we will discuss maintenance fees accordingly for that size. In 2003, high -end fractional two - bedroom units averaged $3,820 per year per fraction, or $700 per week of usage. In comparison, private residence club two - bedroom units had an average yearly maintenance fee of $6,730, or $1,690 per week of usage. Average Performance Characteristics The economics of fractional interests vary from that of resort timesharing. Sales and marketing costs average 19 percent, general and administrative costs average seven percent, and product costs average 54 percent. This translates to a total cost of roughly 80 percent, resulting in a 20 percent profit. Emerging Trends and Survey Conclusions Based on a study conducted by Ragatz Associates, the following trends have been identified: Proposed Marina Park Hore/ and Fractional Ownership Units, Newport Beach, Caltjornia • • There is a greater desire for flexible offerings in terms of exchange, rentals, and locations; • 2003 showed tremendous growth in membership club companies, resulting in sales growth of 33.8 percent; • There is fairly low awareness of fractional interest projects, with an estimated penetration rate of five percent. This allows for a still largely - untapped market of over 100,000 purchases in the next 10 years; • The market has preferences for smaller shares, moderate sized homes (price sensitivity/value), equitable use, external exchange, beach /ski /golf location, and mix of resort and urban location; The market realizes the importance of rental and resale and prefers non - overloading of services and certainty over flexibility; • There is high interest in the fractional product; and • The fractional ownership market is untapped, but finite. Southern California Fractional Interest Projects Currently, only four private residence club fractional interest projects as defined by Ragatz Associates exist in California: The Four Seasons Aviara in Carlsbad, Tonopalo in Tahoe Vista, Calistoga Ranch in Calistoga, and the Marriott Residence Vacation Club in South Lake Tahoe. The projects at Tahoe Vista and Lake Tahoe are heavily seasonal, while the Aviara project enjoys a location in a coastal city and the Calistoga Ranch is in Napa Valley, both with a year -round temperate climate. The minimum number of fractional products in coastal cities within Southern California allows the development of the subject an opportunity to fill this niche. The Four Seasons Aviara Residence Club is considered to be the most comparable and competitive to the proposed subject project due to its coastal positioning, quality level, and facilities and amenities base. Aviara, however, is not a true fractional and operates more as a traditional timeshare since the fractional product was only vaguely established six years ago when Aviara opened. The Four Seasons Residence Club is now moving the Aviara project in the direction of a true fractional model. The Four Seasons Aviara Resort is a 329 - room, four -star property, with multiple food and beverage outlets, retail space, 22,900 square feet of meeting space, swimming pool, spa, and an Arnold Palmer golf course. The Residence Club consists of 240 one -and two- bedroom units, of which 80 units are part of the phase two "The Meadows" development. A minimum two -week share at Aviara is priced between $70,000 and $100,000 and four -week shares are priced between $140,000 and $200,000. The minimum interval purchase is two weeks of ownership. The first phase of the project is sold out, and residences at the second phase of the project are currently for sale. • Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, Caltjornia 0 35 Calistoga Ranch is a private vineyard retreat nestled on 157 acres in upper Napa Valley, which currently offers a luxury resort, but no golf course. The property began selling 1/5" and 1 /10" fractional ownerships in April 2003. The two-bedroom fractional ownerships were built in phases, six at a time, with the complete build -out plan of 27 units recently completed. Each unit is 3,000 square feet and offers two bedrooms, the master bedroom featuring an outside shower and garden, kitchen with wine storage, outdoor living room with fireplace, and bungalow style architecture. The 1/10" fractional price is $360,000, which translates into $3,600,000 for a whole ownership unit. The property is managed by Auberge Resorts and features fine - dining, a bath house, and other amenities. Additions to Supply We have identified five properties which will open in California that could be competitive with the proposed fractional ownership units at the subject. One will be located within the subject's competitive set in Newport Beach, with the others in Santa Barbara, Mammoth, Napa Valley, and La Quinta. The Inn at Pelican Hill is a private residence club in the development phase in Newport Beach. The Inn at Pelican Hill is being developed by the Irvine Company, and will be positioned as a "five- star" residence club. A Ritz Carlton Residence Club has been proposed in Santa Barbara. This 56 -unit project will be developed in three phases, with the first phase consisting of 18 units. One, two, and three bedroom units will be offered at 1/16 interest shares starting at $150,000 per share. The project will also include 20,000 square feet of retail space, a Ritz Carlton Spa, and three restaurants. If ultimately developed, the project is anticipated to be competitive with the proposed subject. The project has not broken ground and has not begun marketing itself. It is assumed that a two - bedroom unit at this product will range between 1,500 and 2,000 square feet. The Old Greenwood development by East West Partners in Truckee, California, will complete phase one of a seven phase, 174 unit fractional ownership project on July 4th. Phase one includes 10 two- and three - bedroom cabins ranging in size from 2500 to 3000 square feet and seven townhomes ranging in size from 1300 to 1800 square feet. Both will sell in fractions of 1/17 "'s and will range from $53,000 to $190,000 per share for three weeks of ownership. Old Greenwood will adopt a combination of fixed and floating reservation system where each owner chooses one week that remains the same from year to year and two weeks that float. Pricing is reflected by the fixed week the owner takes, choosing from one of nine weeks in the summer or eight weeks in the winter that are deemed high season. Old Greenwood began sales on April 4", three months prior to the estimated opening of phase one, and has already sold roughly 40 percent of its intervals, closing 64 percent of them on the first day of active sales. The Residence Club at PGA West is a fractional development that has 32 homes surrounded by world -class golf courses. Each 3,000 square -foot home has double master bedrooms, individual pools and Jacuzzis, personal golf carts, and comes with a full golf, Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach. California 36 tennis, and spa membership. They will be sold in 1/9" shares, starting at $179,000 for 40 days or approximately six weeks. The Residence Club at PGA West is set to begin marketing in June and open the first unit in October. The Storied Place at Mammoth Lake has not chosen a site yet, and is therefore considered too speculative. SUBJECT PROJECT DESCRIPTION According to current plans, the subject is proposed to have 12 fractional interest units, all of which will be two bedroom units. Each unit will be 1,500 square feet and located adjacent to the hotel rooms. Within the fractional ownership industry, especially within private residence club fractional ownership, consumers tend to favor smaller fraction sizes. Ownership intervals are anticipated to be sold in 1/8" interests (or approximately six weeks per year of usage), and a floating program will be implemented. ESTIMATED SALES PACE OF THE SUBJECT PROJECT Estimating the sales pace for a fractional project is an inherently difficult process because of the large number of factors that affect the level of demand for the product. Among these factors are the demographics of the area, the desirability of the area as a destination, the quality and pricing of the facilities, and the quantity and quality of the sales and marketing effort. To estimate the sales pace of the subject project, we have examined the pace of sales at comparable fractional projects and for the fractional industry as a whole. Comparable Projects and Industry Sales Pace In addition to other factors, the rate at which fractional intervals are sold depends heavily on the quantity and quality of the sales and marketing effort. Examining the sales pace at comparable projects (deemed comparable in terms of location and /or pricing) provides insight into the sales pace that the subject might reasonably be expected to achieve. One example of a recently opened fractional project is Storied Places at Tonopalo. Tonopalo finished its 19 units in March, 2004. In its three months of sales effort, it has sold roughly half of its 133 intervals, including its pre -sale period. This equates to a sales pace of 11 intervals per month during the 6 months of sales. According to Ragatz Associates, Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California Hotel Marina Park Additions to Supply 2004-2009 California Number Fraction # of Interest Cost per New Supply Location of Units Size Weeks Available Square Foot' Inn at Pelican Hills Villas and Casitas Newport Beach N/A N/A WA N/A N/A Ritz Carlton Residence Club Santa Barbara 56 1/16 3 150,000 $1,200 - $2,400 Old Greenwood Truckee 174 1117 3 53,000- 190,000 $690- $1,070 Residence Club at PGA West La Quinta 32 1/9 .5 -6 169,000 $540 Storied Place at Mammoth Lake Mammoth Lake n/a n/a n/a n/a n/a 'Cost per square foot is derived by multiplying fractional cost by number of intervals, then dividing by square footage. Source: PKF Consultinz SUBJECT PROJECT DESCRIPTION According to current plans, the subject is proposed to have 12 fractional interest units, all of which will be two bedroom units. Each unit will be 1,500 square feet and located adjacent to the hotel rooms. Within the fractional ownership industry, especially within private residence club fractional ownership, consumers tend to favor smaller fraction sizes. Ownership intervals are anticipated to be sold in 1/8" interests (or approximately six weeks per year of usage), and a floating program will be implemented. ESTIMATED SALES PACE OF THE SUBJECT PROJECT Estimating the sales pace for a fractional project is an inherently difficult process because of the large number of factors that affect the level of demand for the product. Among these factors are the demographics of the area, the desirability of the area as a destination, the quality and pricing of the facilities, and the quantity and quality of the sales and marketing effort. To estimate the sales pace of the subject project, we have examined the pace of sales at comparable fractional projects and for the fractional industry as a whole. Comparable Projects and Industry Sales Pace In addition to other factors, the rate at which fractional intervals are sold depends heavily on the quantity and quality of the sales and marketing effort. Examining the sales pace at comparable projects (deemed comparable in terms of location and /or pricing) provides insight into the sales pace that the subject might reasonably be expected to achieve. One example of a recently opened fractional project is Storied Places at Tonopalo. Tonopalo finished its 19 units in March, 2004. In its three months of sales effort, it has sold roughly half of its 133 intervals, including its pre -sale period. This equates to a sales pace of 11 intervals per month during the 6 months of sales. According to Ragatz Associates, Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 0 37 private residence clubs in 2003 had an average sales pace of eight fractionals per month, followed by five per month for traditional and four per month for high end fractional interests. In further analyzing sales pace, multiple location clubs had an average sales pace of 11 per month, beach destination eight per month, urban destinations seven per month, and ski and golf destinations five and four per month, respectively. Other considerations that contributed to our estimate of sales pace include the following • The area's relatively high- income demographic; • Proximity to Los Angeles and Orange County • Unique marina - oriented hotel and fractional ownership concept; • The lack of high -end fractional products in Southern California; • The area's amenities base including shopping, dining, and recreational options; • The high quality of the proposed units; and • The small size of this fractional project, in conjunction with the hotel units, will allow it to be absorbed into the market. We recommend that the subject develop its fractional intervals in one phase of 12 units, their opening correlating with the opening of the 98 hotel rooms. Roughly 10 percent of the units are estimated to be sold during the presale period. It is further estimated that the subject will average about four to five sales per month during the first year of sales and three to four sales per month during the second year. We have estimated that the subject project will sell out over a period of two years. ESTIMATED INTERVAL PRICE OF THE SUBJECT PROJECT In order to estimate a price for the interval project, we have utilized two approaches: a comparison approach and a rack rate approach. The two approaches are discussed in the following paragraphs. Comparison Approach Based on the location, marina orientation, and proposed facilities and amenities of the subject project, we believe that the interval units at the Marina Park Hotel should fall within the higher - priced category. We recognize the fact that the subject site is not located within a destination ski -resort area nor offers golf on -site, as well as that it is a single project without options to swap, and thus we have positioned it at the lower end of the high -end category range. Using the foregoing figures of the existing high -end interval projects as a guideline, we estimate that the subject can achieve an average interval prices as follows. Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 38 Proposed Marina Park Fractional Units Average Interval Prices Unit Price Per Share (1 /8ths) $/SF Two-Bedroom $190,000 $1,013 Based on the proposed size of the units, this translates to $1,013 per square foot for the two-bedroom units. This is within the range of the high -end comparable interval projects, which had an average of roughly $1,300 per square foot. Rack Rate Approach Another method used to estimate interval price is the rack rate approach. We have estimated that the fractional interest units, if used as rentals, could achieve a rack rate of approximately $450 per night for the two - bedroom units. To achieve the weekly rate, the rack rate is multiplied by seven. The industry rule of thumb indicates that the price of the interval should be ten times the weekly rental rate. This number then is multiplied by six to equate to 1 /8ths per share. The calculation is presented in the following table. Unit Average Year Round Average weekly Rule of Thumb Six week Price Size Rack Rate Rate (x 7) Pricing (x10) (Rounded) Two-Bedroom 1 $450 1 $3.150 1 $31.500 1 $189.000 This method indicates an average sales price of roughly $189,000 for the two- bedroom units, which supports our estimates from the comparison approach. Therefore, we estimate that the subject can achieve an average interval price of $190,000 for the two - bedroom units. Taking into account that interval sale prices are typically discounted during the pre - construction period, we have applied an eight percent discount to the average interval price during the pre -sale period. Taking into consideration the foregoing information, industry trends, and current and projected market conditions, the estimated sales pace and revenues for the subject are presented in the following page. In 2006 and beyond, the average interval price is inflated by the annual inflation rate of 3.0 percent per year. The following table summarizes the sales pace as set forth by the comparable projects approach, the estimated average interval price, and the resulting interval sales revenue for the proposed subject. Our forecast assumes the opening of both the fractional units and the hotel in second quarter 2006. The projections for interval sales are based on fiscal years from April 1 to March 31. Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 0 0 • E 0 39 Proposed Marina Park Hotel and Fractional Ownership Units Fractional Interest Interval Sales Presale Year 1 Year 2 2005/2006 2006/2007 2007/2008 REVENUES Two Bedrooms 12 12 12 Number of Intervals 8 8 8 Total Intervals Available 96 96 96 Percentage Sold 10% 50% 40% Annual Intervals Sold 10 48 38 Cumulative Intervals Sold 10 58 96 Intervals Remaining to be Sold 86 38 0 Average Interval Price $ 190,000 $181,394 $203,083 $209,175 Inflation /Discount 3.0% - 8.000% 3.000% 3.000% Gross Intervals Sales $1,814,000 $9,748,000 $7,949,000 Total Gross Annual Interval Sales $1,814,000 $9,748,000 $7,949,000 Sales Per Month 0.8 4.0 3.2 Yearly Intervals Sold 10 48 38 Cumulative Intervals.Sold, 10 58. 96 Remaining Intervals 86 38 0 Yearly Units Sold 1 6 5 Cumulative Units Sold 1 6 11 % Sold 10% 60% 100 ESTIMATED ANNUAL OPERATING RESULTS OF FRACTIONAL OWNERSHIP UNITS Basis of Projections To prepare estimates of future operating results for the proposed fractional ownership units, we have incorporated our previous projections of sales pace and fractional price. We estimate that the subject property can achieve a three year sales pace, including a year of pre- sales, for its 96 1/8 fractional ownership interests in the proposed 12 units. Furthermore, we have estimated a sale price per fraction of $190,000, stated in 2004 dollars. This equates to approximately $1,013 per square foot. Based on this sale price and pace, we have projected the operating results from April 1, 2005 to March 31, 2016. This takes into consideration a one -year pre -sale period prior to the opening of the fractional units. The estimates of revenues, costs and expenses are based on the proposed facilities and services and the operational characteristics thereof. The basis for our projections is the operating results of comparable fractional ownership projects presented earlier in this report and the 2004 edition of Fractional Interest: A Market Profile by Ragatz Associates. Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California 40 Revenues The estimated revenues from the fractional ownership units are derived from cash sales of the fractional ownership interest. These projections assume that all sales will be a 100 percent cash. Expenses The expenses include sales and marketing, administrative and general expenses, and maintenance fees on unsold units. Sales and marketing is projected to be 25 percent of sales during presales, then trend down and stabilize at 20 percent of revenues for the remaining two years of active sales. Administrative and general expenses include overhead for the fractional project, as well as the salary and wages of the director of sales and administrative staff; cash overages and shortages; credit card commissions; bad debt expense; security; data processing costs; accounting payroll expense; and professional fees. We estimate administration cost of ten percent in year one, 8.0 percent in year two, and stabilization at 7.0 percent thereafter. Home owners association (HOA) fees are projected to run at $8,000 per fraction, which includes the engineering salaries, wages and benefits, maintenance of the buildings and individual units, grounds and landscape, electrical and mechanical equipment, engineering, refrigeration, operating supplies, cleaning, waste removal and utilities. These costs are not reflected on the income statement, but instead are passed directly onto the fractional owners and managed by the homeowners' association. There is, however, an estimated maintenance expense per unsold unit of $15,000 per year to upkeep the units prior to sale. ESTIMATED ANNUAL OPERATING RESULTS The previous analysis provided for the income and expenses incurred in the operation of the fractional project during its three year sales period. In the following analysis, we provide estimated income and expenses for the project during each year of the 11 -year holding period anticipated for a typical investor. This includes one year of pre -sales prior to the opening of both the fractional units and the subject hotel. Our estimate of the performance for the project considers the effects of inflation. Inflation To portray price level changes during the holding period, we have assumed an inflation rate of 3.0 percent throughout the projection period. This rate reflects the consensus of several well- recognized economists for the current long -term outlook for the future movement of prices and is consistent with the inflation rates of the 1990s and early 2000s. It should be noted that inflation is caused by many factors and unanticipated events and circumstances can affect the forecasted rate. Therefore, the estimated operating results computed over the projection period can vary from the actual operating results, and the variations may be material. Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, 41 Statement of Estimated Annual Operating Results The estimated annual operating results for the proposed resort hotel from April 1, 2005 to May 31, 2016 are presented on the following pages. Proposed Marina Park Fractional Units TOTAL REVENUES $1,814,000 Statement of Estimated Operating Results $7,949,000 Year 1 Year 2 Year 4 — Presales Opening Year 3 Year 11 200512006 2006/2007 2007/2008 2008/2009 REVENUES $1,949,600 $1,589,800 Interval Sales Cash Revenue Administrative and General Expense Gross Interval Sales $1,814,000 $9,748,000 $7,949,000 $0 Total Interval Sales Cash Revenue $1,814,000 $9,748,000 $7,949,000 $0 11 COMBINED NET OPERATING INCOME The spreadsheet on the following page shows the combined projected operating revenues, expenses, and net operating income for the Marina Park Hotel and Fractional Ownership Units. Projections are presented for 11 fiscal years, beginning 2005/06 through 2015/16. Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California TOTAL REVENUES $1,814,000 $9,748,000 $7,949,000 $0 EXPENSES Sales and Marketing Expense $453,500 $1,949,600 $1,589,800 $0 Administrative and General Expense $181,400 $779,840 $556,430 $0 Maintenance Fees on Unsold Units $0 $684,281 $302,357 $0 TOTAL EXPENSES $634,900 $2,729,440 $2,146,230 $0 NET OPERATING INCOME $1,179,100 $7,078,560 $5,802,770 $0 NET CASH FLOW $1,179,100 $7,018,560 $502,770 $0 Source: PKF Consulting 11 COMBINED NET OPERATING INCOME The spreadsheet on the following page shows the combined projected operating revenues, expenses, and net operating income for the Marina Park Hotel and Fractional Ownership Units. Projections are presented for 11 fiscal years, beginning 2005/06 through 2015/16. Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California Q i OC C m d a� d � O y = A . Y E ' aW � c o� N C . d E' d. 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P o ^ s n O a.. e o1_ d1P OOIO 1'I^ a° a O 01 O O D O O o m .n N ^ a° 0 o s o O O O O O P 1� P rt N O n N w w W 6 U C X w A C � b A C LL M 115 - > s b ^ `o s o n N O O P P V w o c o s n N O O O P ^ V w b ^� r N n O O W \ e a r O O O O 0 a 0 v' o N s° n O O O N N w 0 _ z O c C O rj N LL C 25 z D z S b 3 2 44 • We appreciate the opportunity to work on this assignment and look forward to answering any questions you may have regarding our findings and conclusions presented herein. Sincerely, PKF Consulting By Bruce Baltin Senior Vice President 0 J Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California STATEMENT OF ASSUMPTIONS AND LIMITING CONDITIONS This report is made with the following assumptions and limiting conditions: Economic and Social Trends - The consultant assumes no responsibility for economic, physical or demographic factors which may affect or alter the opinions in this report if said economic, physical or demographic factors were not present as of the date of the letter of transmittal accompanying this report. The consultant is not obligated to predict future political, economic or social trends. Information Furnished by Others - In preparing this report, the consultant was required to rely on information furnished by other individuals or found in previously existing records and/or documents. Unless otherwise indicated, such information is presumed to be reliable. However, no warranty, either express or implied, is given by the consultant for the accuracy of such information and the consultant assumes no responsibility for information relied upon later found to have been inaccurate. The consultant reserves the right to make such adjustments to the analyses, opinions and conclusions set forth in this report as may be required by consideration of additional data or more reliable data that may become available. Hidden Conditions - The consultant assumes no responsibility for hidden or unapparent conditions of the property, subsoil, ground water or structures that render the subject property more or less valuable. No responsibility is assumed for arranging for engineering, geologic or environmental studies that may be required to discover such hidden or unapparent conditions. Hazardous Materials - The consultant has not been provided any information regarding the presence of any material or substance on or in any portion of the subject property or improvements thereon, which material or substance possesses or may possess toxic, hazardous and/or other harmful and/or dangerous characteristics. Unless otherwise stated in the report, the consultant did not become aware of the presence of any such material or substance during the consultant's inspection of the subject property. However, the consultant is not qualified to investigate or test for the presence of such materials or substances. The presence of such materials or substances may adversely affect the value of the subject property. The value estimated in this report is predicated on the assumption that no such material or substance is present on or in the subject prbperty or in such proximity thereto that it would cause a loss in value. The consultant assumes no responsibility for the presence of any such substance or material on or in the subject property, nor for any expertise or engineering knowledge required to discover the presence of such substance or material. Unless otherwise stated, this report assumes the subject property is in compliance with all federal, state and local environmental laws, regulations and rules. Zoning and Land Use - Unless otherwise stated, the projections were formulated assuming the hotel to be in full compliance with all applicable zoning and land use regulations and restrictions. Licenses and Permits - Unless otherwise stated, the property is assumed to have all required licenses, permits, certificates, consents or other legislative and/or administrative authority from any local, state or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based. Engineering Survey - No engineering survey has been made by the consultant. Except as specifically stated, data relative to size and area of the subject property was taken from sources considered reliable and no encroachment of the subject property is considered to exist. Subsurface Rights - No opinion is expressed as to the value of subsurface oil, gas or mineral rights or whether the property is subject to surface entry for the exploration or removal of such materials, except as is expressly stated. Maps, Plats and Exhibits - Maps, plats and exhibits included in this report are for illustration only to serve as an aid in visualizing matters discussed within the report. They should not be considered as surveys or relied upon for any other purpose, nor should they be removed from, reproduced or used apart from the report. STATEMENT OF ASSUMPTIONS AND LIMITING CONDITIONS (continued) Legal Matters - No opinion is intended to be expressed for matters which require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate consultants. Right Of Publication - Possession of this report, or a copy of it, does not carry with it the right of publication. Without the written consent of the consultant, this report may not be used for any purpose by any person other than the party to whom it is addressed. In any event, this report may be used only with proper written qualification and only in its entirety for its stated purpose. Testimony in COUrt - Testimony or attendance in court or at any other hearing is not required by reason of rendering this appraisal, unless such arrangements are made a reasonable time in advance of said hearing. Further, unless otherwise indicated, separate arrangements shall be made concerning compensation for the consultant's time to prepare for and attend any such hearing. Archeological Significance - No investigation has been made by the consultant and no information has been provided to the consultant regarding potential archeological significance of the subject property or any portion thereof. This report assumes no portion of the subject property has archeological significance. Compliance With the American Disabilities Act - The Americans with Disabilities Act ( "ADA ") became effective January 26, 1992. We assumed that the property will be in direct compliance with the various detailed requirements of the ADA. Definitions and Assumptions - The definitions and assumptions upon which our analyses, opinions and conclusions are based are set forth in appropriate sections of this report and are to be part of these general assumptions as if included here in their entirety. 0 Dissemination Of Material - Neither all nor any part of the contents of this report shall be disseminated to the general public through advertising or sales media, public relations media, news media or other public means of communication without the prior written consent and approval of the consultant(s). Distribution and Liability to Third Parties -The party for whom this report was prepared may distribute copies of this appraisal report only in its entirety to such third parties as may be selected by the party for whom this report was prepared; however, portions of this report shall not be given to third parties without our written consent. Liability to third parties will not be accepted. Use in Offering Materials - This report, including all cash flow forecasts, market surveys and related data, conclusions, exhibits and supporting documentation, may not be reproduced or references made to the report or to PKF Consulting in any sale offering, prospectus, public or private placement memorandum, proxy statement or other document ( "Offering Material ") in connection with a merger, liquidation or other corporate transaction unless PKF Consulting has approved in writing the text of any such reference or reproduction prior to the distribution and filing thereof. Limits to Liability - PKF Consulting cannot be held liable in any cause of action resulting in litigation for any dollar amount which exceeds the total fees collected from this individual engagement. Legal Expenses -Any legal expenses incurred in defending or representing ourselves concerning this assignment will be the responsibility of the client. 0 FISCAL IMPACT ANALYSIS MARINA PARK RESORT July 21, 2004 Prepared for City of Newport Beach Prepared by Applied Development Economics 2029 University Avenue • Betketey, California 94704 • (510) 548 -5912 1029 J Street, Suite 310 • Sactamento, California 95814 • (916) 441 -0323 www.adeusa.com EXHIBIT G CONTENTS 0 INTRODUCTION............................................... ..............................1 PROJECT DESCRIPTION ................................ ..............................2 LandUse Overview ............................................... ..............................2 Phasing................................................................... ............................... 3 FISCAL IMPACT ANALYSIS ........................... ..............................5 General Fund and Tidelands Fund Fiscal Impact Analysis ........... 5 REFERENCES................................................. ............................... 17 LIST OF TABLES 1 Proposed Marina Paxk Resort and Community Facilities ......................... ..............................3 2 Projected Phasing For Marina Park Fractionals and Rental Occupancy Stabil ization ..............................4 3 Impact of Existing Marina Park Land Uses, 2004 ........6 4 Impact of Marina Park Hotel at Stabilization (2009), in 2004 Dol lars ...................... ..............................8 5 Net Impact of Marina Park Hotel at Stabilization (2009), in 2004 Doll ars ...................... ..............................9 6 Marina Park Fiscal Impact Projections, 2006- 2014.... 11 E 10 INTRODUCTION • 0 This memo presents our analysis of the fiscal impacts of the proposed Marina Park resort on the City of Newport Beach, in comparison with the impacts of the site's existing uses. This analysis estimates the annual operating costs and revenues for all services provided to the existing uses and the proposed project through the Newport Beach General Fund, the Tidelands Fund, the Gas Tax Fund, and the Measure M Fund. Based on the assumptions and inputs outlined below, it projects the fiscal performance of the development from its initial year of operation through five years after rent stabilization, for a total of nine years. This projection reflects escalations in costs and revenues as the development ages, and is thus presented in future dollars. Many of the inputs used to estimate costs and revenues, including projected room rents, occupancy rates, food and beverage income, and other income, were obtained from market analyses conducted by PKF Consulting (PKF) and Keyser Marston Associates (KMA). Both are well- respected firms with extensive experience in California. PKF is an international consulting group that provides services specifically for the hospitality industry. Their projections are based on experience combined with information from several proprietary databases that track occupancies, room rates, and other factors in hospitality sub - markets throughout the United States. KMA is a real estate advisory firm that specializes in several areas including infill development projects. They frequently assist cities in negotiations with developers. Based on our knowledge of these companies and their past work, we believe their projections are reliable. The relevant assumptions they used in reaching their projections are noted in the Fiscal Analysis Methodology section below. PROJECT DESCRIPTION LAND USE OVERVIEW The site of the proposed Marina Park Resort in Newport Beach is roughly bounded by Newport Bay and a public beach to the north, Veterans Memorial Park and the American Legion Building to the east, 18`h Street to the west, and Balboa Blvd. to the south. Encompassing 8.1 acres, the site currently houses the 56 -space Marina Park Mobile Home Park, the Balboa Community Center, the Neva B. Thomas Girl Scout House, the Balboa Power Squadron (a boating club), Las Arenas Park, four tennis courts, and a half basketball court. The mobile home court currently has 24 full-tithe and 32 part -time residents. is The primary component of the proposed project is a 110 - room luxury resort hotel. Up to 12 of the rooms may be sold as fractionals, while the remaining 98 rooms will be available for rent. The 19,830 - square foot hotel lobby will include a . registration area, retail, a cafe, a restaurant, a bar, a ballroom, and supporting facilities. Other uses associated with the hotel include a business administration building (2,154 square feet) and a spa villa (6,191 square feet). The project also includes reconstruction of the Girl Scout House and tennis courts, a tot park, and a shared parking facility for the resort and community uses. A summary of the proposed uses is presented in Table 1. 0 ! TABLE 1 Proposed Marina Park Resort and Community Facilities Land Use Rooms /Square Feet/ Spaces /Acres OVERALL FLOOR AREA RATIO 0.285 Source: ADE, based on information provided by Michael Brandman Associates PHASING This analysis estimates the fiscal impact of the Marina Park resort during each year of its development. Although it is expected that all of the project components will be in place when the hotel begins operations in 2007, it will take several years for rental rates to stabilize. According to PKF Consulting and Keyser Marston Associates, this should occur during the fourth year of hotel operations, in 2010. In addition, fractionals will be released over a period of three years, beginning the year before development is complete (2006), and ending during the second year of operations . (2008). A summary of expected fractional sales, occupancy 3 RESORT Luxury Resort Hotel 110 rooms/66,949 sf Hotel Lobby Building Lobby 3,000 sf Registration 483 sf Retail 600 sf Cafe 550 sf Restaurant 1,124 sf Bar 1,154 sf Ballroom 3,603 sf Supporting Facilities 8.316 sF Total 19,830 sf Business Administration Building 2,154 sf Spa Villa 6,191 sf COMMUNITY Community Center /Girl Scout House 6,191 sf Tot Park 3,000 sf Public Tennis Courts 4 courts PARKING Structure 100 spaces Surface 100 spaces Handicap 9 spaces Total Parking 209 spaces TOTAL ENCLOSED FLOOR AREA 101,315 sf PROJECT SITE AREA 8.10 Acres OVERALL FLOOR AREA RATIO 0.285 Source: ADE, based on information provided by Michael Brandman Associates PHASING This analysis estimates the fiscal impact of the Marina Park resort during each year of its development. Although it is expected that all of the project components will be in place when the hotel begins operations in 2007, it will take several years for rental rates to stabilize. According to PKF Consulting and Keyser Marston Associates, this should occur during the fourth year of hotel operations, in 2010. In addition, fractionals will be released over a period of three years, beginning the year before development is complete (2006), and ending during the second year of operations . (2008). A summary of expected fractional sales, occupancy 3 rates, and number of occupied rooms through stabilization is presented in Table 3. TABLE 2 Projected Phasing For Marina Park Fractionals and Rental Occupancy Stabilization Project Component 2006/07 2007/08 2008/09 2009/10 2010/11 (Unit of Measure) (Construction) (Year 1) (Year 2) (Year 3) (Stabilization) Fra(t,oiial Sales 10 48 38 �.. F :Rental OmlpafKy ,� (veiceM)�,�., 61.0%., ...67.0% 74.0% .76.0% Annual Rental Rooms Available (urnts) 35,170 35,770 35,770 35,770 ... _ :. o.._. _. o.. Moupled Rona (units) •= - "YA 21,870 �- 3,9 23,970 = 26,470 27,190 ?„U (C C: .11 ) 1'., h.ocd on mhn m.uum prodded be P K F (.0 IISnIT 11 Ig.11ll l F.ccs(r \la nvm A', ,ic r.0 , CJ 0 FISCAL IMPACT ANALYSIS Ir1 • LA GENERAL FUND AND TIDELANDS FUND FISCAL IMPACT ANALYSIS This fiscal analysis addresses the revenues generated and costs incurred by the Marina Park resort development as they impact the City of Newport Beach General Fund and Tidelands Fund. The capital costs stemming from construction of public infrastructure and facilities related to the project would be fully funded by the project developer and are not detailed in this report. SUMMARY OF FISCAL IMPACTS Using the Newport Beach fiscal impact model developed for the City's General Plan Update, ADE estimated the annual costs and revenues associated with both Marina Park's existing land uses and those associated with the proposed development. The results of these analyses are presented in Tables 3 and 4. Next, we considered the net impact of the hotel project at stabilization when compared to the existing uses (Table 5). Finally, we estimated the annual costs and revenues of the proposed project over time, from the first year of operations to five years after stabilization, for a total of nine years (Table 6). Existing Site Impacts The impact analysis of the site indicates that the current land uses generate positive net revenues of $696,000, with $718,000 in revenues against $21,000 in expenditures. This positive impact occurs despite the predominance of residential land uses (the mobile home park) because the City owns the site and collects land lease revenue from both the residents and the Balboa Power Squadron (Table 3). TABLE 3 Impact of Existing Marina Park Land Uses, 2004 Revenues $2,811 Mobile Power _ Total Home Park Squadron GENERAL FUND $5,626 $5,626 $0 Property Tax 1570 $5' $1i Sales Tax $5,589 $5,589 $0 Transient Occupancy Tax $0 $o $0 Franchise Fees $581 $581 $0 Business Licenses $277 $277 $O Motor Vehicle-in -Lieu $950 $950 $0 Other Intergovernmental $432 $432 $fl . Charges for Servlee.. $2,337. $2,337 $0 Fines, Penalties, and Forfeitures $862 $862 $i) Licenses and Permits $103 $103 $0 Use of Property $1,458 $1,458 $o Other Revenue`.;: $153 $153 $0 Interest Income $1 $ t $O SUBTOTAL GENERAL FUND $13,312 $13,312 $O TIDELANDS FUND Licenses, Permits, and Fees $318 1318 $0 Charges for Service $9 $9 $0 Use of Money and Property $703,413 $701,479 $1,935 GAS TAX $855 $855 $0 MEASURE M $3 $3 $fl SUBTOTAL OTHER FUNDS $704,599 $702,664 $1,935 TOTAL REVENUE $717711 $715776 SL935 Expenditures GENERAL FUND General Government Police Fire Public Works Community Development Community Servioes CIP Streets Other CIP Projects SUBTOTAL GENERAL FUND TIDELANDS FUND Harbor Resources Oil and Gas CIP GAS TAX MEASURE M SUBTOTAL OTHER FUNDS $2,811 $2,811 $ii $6,227 $6,227 $0 $(I $() $10 $5,626 $5,626 $0 $622 $622 $0 $4,633 $4,633,.: . $0 $146 $146 $0 $798. $798 $0 $ " i,ti94 $20,894 $O SO $il $0 $(I 111 $O $230 1230 $O $175 1175 $0 $ll8 $118 $U $523 $523 $) TOTAL EXPENDITURES $21,417 121,417 $ll NET $696,494 $694,559 $1,935 Source: Ally, Cry of NewPurt Beach R • 0 • Project Impact & Net Impact at Stabilization Analysis of the proposcd projcct indicatcs that in the ycar that hotcl rents stabilizc (ycar 4), the Marina Park resort will gcncratc positivc nct rcvcnucs of about $2.12 million (in 2004 dollars), with $2.14 million in rcvcnuc against $26,000 in cxpcnditures. Largc rcvcnucs arc gcncratcd duc to both the prospccdvc land lcasc tctms and the transicnt occupancy tax gcncratcd by the projcct (Tablc 4). Subtracting the rcvcnues gcncratcd by cxisting sitc uscs from this amount results in a nct rcvcnuc inctcasc of $1.42 million for the Ncwport Bcach budgct, including the Gcncral Fund, Tidclands Fund, Gas Tax Fund and Mcasurc M Fund (Tablc 5). Expenditures TABLE 4 Impact Of Marina Park Hotel at $2,286 Stabilization (2010), in 2004 Dollars Police ___ _ Revenues Lodging . Fire GENERAL FUND Public Works Property Tax $66,980 Community Development Sales Tax $54,370 Community Services Transient Occupancy Tax $903,301 CIP Sheets Franchise Fees $1,177 Other CIP Projects Business Licenses $253 SUBTOTAL GENERAL FUND Motor Vehicle -in -Lieu $0 TIDELANDS FUND Other Intergovernmental $514 Harbor Resources Charges for Service $2,782 Oil and Gas Fines, Penalties, and Forfeitures $1,027 CIP Licenses and Permits $ 123 GAS TAX Use of Property $1,736 MEASURE M Other Revenue $182 SUBTOTAL OTHER FUNDS Interest Income $15,327 TOTAL EXPENDITURES SUBTOTAL GENERAL FUND $t,043,064 NET TIDELANDS FUND S,msc: ADF. Cit)' of Ncwp�'rt Beach, Keyser Licenses, Permits, and Fees $379 N1ar�tun A'."xiates, PK I. Consulting Charges for Service $11 Now: Public ❑it'i tiro not li.<red bccau.,c dicy du not Use of Money and Property $1,096,753 GAS TAX $0 MEASURE M S86U SUBTOTAL OTHER FUNDS 511198,00 TOTAL REVENUE 52.141966 Expenditures GENERAL FUND General Government $2,286 Police $7,772 Fire $4,947 Public Works $6,698 Community Development S -l'I Community Services $U CIP Sheets $.,4; Other CIP Projects $950 SUBTOTAL GENERAL FUND $24,230 TIDELANDS FUND Harbor Resources $il Oil and Gas SO CIP $254 GAS TAX $1,009 MEASURE M $684 SUBTOTAL OTHER FUNDS $1947 TOTAL EXPENDITURES $26,181 NET $2,115,781 S,msc: ADF. Cit)' of Ncwp�'rt Beach, Keyser N1ar�tun A'."xiates, PK I. Consulting Now: Public ❑it'i tiro not li.<red bccau.,c dicy du not gencratu any costs or rCVen UC.1 io thi., Ycnarin. C 8 TIDELANDS FUND Harbor Resources $) $u $1) Oil and Gas $U $O TABLE 5 CIP $23o $254 Net Impact Of Marina Park Hotel $ 171 5 $1,009 at Stabilization (2010), in 2004 Dollars $684 $565 Revenues Existing Proposed $1,423 TOTAL EXPENDITURES _ Site Project Net Impact $696,494 GENERAL FUND $1,419,287 Property Ta. $571) S66;990 $66,41u Sales Tax $5,589 $54,370 $48,782 Transient Occupancy Tax $n $903.301 $903 301 Franchise Fees $581 $1,177 $596 Business UcerlsL5 $277 $253 (S24) Motor Vehide -In -Lieu $950 $0 ($950) Other lntergovernmenlal $132 $514 $82 Charges for Service $2,337 $2,782 $445 Fines, Penalties, and Forfeitures 5862 $1,1127 $164 Licenses and Permits $103 $123 $20 Use of Property $1,458 S1 ".)6 $278 Other Revenue $153 $182 $29 Interest Income SI 515,327 515,327 SUBTOTAL GENERAL FUND 513,312 31 1143,904 3l 1130,652 TIDELANDS FUND Licenses, Permits, and fees $318 $370 $61 Charges for Service $9 $11 $2 Use of Money and Property $703,413 $1,196,153 $393,340 GAS TAX $855 $0 ($855) MEASURE M $3 $860 $857 SUBTOTAL OTHER FUNDS $704,597 $1,098,0113 $393,404 _TOTAL REVENUE $717,911 $2,141,066 $1324056 Expenditures GENERAL FUND General Government $2,841 S2, 286 ($555) Police $6,227 $7,772 $1,545 Fire SO 54,947 $4,947 Public Works $5,626 $6,698 $1,072 Community Development $622 $ dpi $tl8 Community Services $4,633 $0 ($4,633) CIP Streets $146 $h.15 $699 Other CIP Projects $798 $950 $152 SUBTOTAL GENERAL FUND $211)894 $24,239 $3,345 TIDELANDS FUND Harbor Resources $) $u $1) Oil and Gas $U $O $O CIP $23o $254 524 GAS TAX $ 171 5 $1,009 5834 MEASURE M $118 $684 $565 SUBTOTAL OTHER FUNDS $5_3 S1,947, $1,423 TOTAL EXPENDITURES $21,417 $26,185 $4,7(,8 NET (COST) /REVENUE $696,494 $2,115,781 $1,419,287 Source: AI)F, laity of Newport Beach, Kc}'scr Ataeaom As:uaates, PKF Consulting &• E Project Impact Over Time Based on out projections, the project will initially generate a negative fiscal impact for the City, but by the time the project commences operations in 2007, the fiscal impact will be a net positive. In year one of operations the proposed project will generate $2.01 million in net revenues, with $2.04 in revenue against $29,000 in expenses (in 2007 dollars). Net revenues are predicted to increase steadily through five years after stabilization. At this point, the development is expected to generate $2.93 million (in 2014 dollars) in net revenues, with $2.96 million in revenues against $36,000 in expenses (Table 6). [Phis space intentionally left blank] 10 0 1] 11 0 KOA TABLE 6 Marina Park Fiscal Impact Projections, 2006 -2014 NET ($530,000) $550,000 $2,010,420 $2,124,799 $2,392,846 CUMULATIVE NET ($530,000) $20,000 $2,030,420 $4,155,219 $6,548,065 Sour(e: AI )lit, City of Newport Beach. Keyscr 91trmin Ass„riiitcs. 18iF Consulting 'Rctxnucs from Use of honey and Properly may chendc ha.q(A on eredil.. given to the du%dol cr fir oprinu payntvnte. Development Operations Revenues Year 1 Year 2 Year 1 Year 2 Year 3 (2005) (2006) (2007) (2008) (2009) GENERAL FUND Property Tax $71p80 $72,501 573,951 Sales Tax $50,454 .$56,799 $61,372 Transient Occupancy Tax $790,870 $897,542 $1,020,760 Franchise Fees $1,286 $1,324 $1,364 Business Licenxw 5-7 $285 $293 Motor Vehicle -in -Lieu $0 50 $0 Other Intergovernmenla: $ihl $578 $596 Charges for Service $3,040 $3,131 $3,225 Fines, Penalties, and Forfeitures $:,122 $1,156 $1,190 Licenses and Permits .$134 $138 $142 Use of Property $1,897 $1,954 $2,012 Other Revenue $199 $205 $212 Interest Income $16749 $17,251 $17,769 SUBTOTAL GENERAL FUND $i1 SO $937,669 $1,052,861 $1,182,886 TIDELANDS FUND Licenses, Permits, and Fees $411 $426 $431) Charges for Service $12 $12 $13 Use of Money and Property* $550,000 $5511,0001 $1,101),oloo $1,1 Un,00f1 $1,238,868 GAS TAX $0 $0 $0 MEASURE M $939 $967 $997 SUBTOTAL OTHER FUNDS $55010011 $5501000 $1,101,365 $1,101;4016 $1,240,316 TOTAL REVENUE 5550,000 $550,0110 $2,039,034 $2,154,271 $2;123,2112 Expenditures GENERAL FUND General Government $2,498 $2,573 $2,(;5f) Police $8,492 $8,747 $9,010 Fire $5,4% $5,568 $5,735 Public works $7,319 $7,539 $7,765 Community Development $809 $833 $958 Community Services $0 $0 $0 CIP Streets $9 23 $')51 $977 Other CIP Projects $1,039 $1,070 $1,102 SUBTOTAL GENERAL FUND $U So $26,486 527281 $28,099 TIDELANDS FUND Harbor Resources $0 $0 S0 Oil and Gas $0 50 SO CIP $1681),1)01) $0 $278 $286 $294 GAS TAX $1,102 $1,136 $1,170 MEASURE M $747 $7711 $ 793 SUBTOTAL OTHER FUNDS 51,()80,0 Wo $0 $3,127 $2,191 $2,257 TOTAL EXPENDITURES $1,080,001.1 $11 $28,614 $29,47' $30,356 NET ($530,000) $550,000 $2,010,420 $2,124,799 $2,392,846 CUMULATIVE NET ($530,000) $20,000 $2,030,420 $4,155,219 $6,548,065 Sour(e: AI )lit, City of Newport Beach. Keyscr 91trmin Ass„riiitcs. 18iF Consulting 'Rctxnucs from Use of honey and Properly may chendc ha.q(A on eredil.. given to the du%dol cr fir oprinu payntvnte. C� Revenues Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 (2010) (2011 ) (2012) (2013) (2014) (2014) GENERAL FUND Property Tax $75,430 $76,939 $78,478 580,047 $81,648 $83,281 Sales Tax ., .. $64,921 $66,869 : $68,875 $70,941 $73,069 $75,261 Transient Occupancy Tax $1,078,589 $1,111,350 $1,146,631 $1,179,392 $1,214,673 $1,252,474 Franchise Fees _ .. $1,405, $1,447. $1,491 .$1,535 $1,581 $1,629 Business Licenses $302 $311 $ 321 $330 $3..l i $35(i Motor Vehide -in -Lieu :, $0 $0 $0 $0 $0 $0 Other Intergovernmental $611 $612 $651 $Wo $01) $711 'Charges for SehACe .. $3,321 $3,421 $3,524 $3,629 , $3,738 $3,850 Fines, Penalties, and ForfeiRCOs $1,226 $1,263 $1,1(11 $1,1In $1,1811 $1,421 Licenses and Permits $147 $151 .$155, $160 $165 $170 Use of Property S ?,073 j',I ;5 $2,199 $2,_65 $2,133 $ 2,403 Other Revenue $218 $224 $231 $238 $245 $253 Interest Income $18,30? $18,851 $19,416 $19,990 $' -11.399 $ 21,217 SUBTOTAL GENERAL FUND $1,246,54. $1,283,593 41,323,272 $1,3(111,54: $i,- luu,.i62 $1,4431020 TIDELANDS FUND Licenses, Permits, and Fees $ V)2 $ 166 $480 $494 $5119 $524 Charges for Service $13 $1.1 $14 $1.1 $15 $15 Use of Money and Property, $13119,581 $1,149,18_' $1. il) 1, 160 $1,431,62- $I;l- l. IQ8 $1,519,791 GAS TAX $0 $0 $0 . $0 $0 $0 MEASURE '.1 51.0:16 $1115" $11189 $1,12: $I,1SS $1,19U SUBTOTAL OTHER FUNDS $1,311,0i2 $1,350,i18 $1,392,749 $1,433,25, $1,4i6,1ii $1,521,521 TOTAL REVENUE $2,557,62_0 $2,634,311 $2,716,021 $2,793,804 $2,876,639 $2,96x1,541 Expenditures GENERAL FUND General Government $2,'111 $2. -�12 $2,896 $2,983 $3,073 $3,165 Police $9,280 $9,558 $9,845 $10,140 $10,444 $10,758 Fire $5;)l i8 $r, tins $6,267 $6,455 $6,649 $6,848 Public Works $7,998 $8,238 $8,485 $8,739 $9,002 $9,272 Community Development $881 $910 $937 $966 $99:1 $1,024 Community Services $0 40 $0 $0 $0 $0 CIP Streets SI (1119 $1!139 $1,1)70 $1,102 $1,135 $1,170 Other. CIP Projects $1,135 $1,169,: $1,204, . $1,240 :." "$1,277 $1,316 SUBTOTAL GENERAL FUND $28; ).l2 $29,81 i $311,7$)5 $31,626 $32,575 $33,552 TIDELANDS FUND Harbor Resources $0 s0 $0 $() $u $11 Oil and Gas $0 $0 $U $0 $0 $n CIP $303 $312 6322 $331 $341 $352 GAS TAX $1,205 $1,241 $1,278 $1,316 $1,356 61,397 MEASURE M $816 $841 5866 $892 $919 $946 SUBTOTAL OTHER FUNDS $2,324 $2,394 $2,466 $2,540 $21616 $2,695 TOTAL EXPENDITURES $31,267 $32,205 $33,171 $34,166 $35,191 J36,247 NET (COST) /REVENUE $2,526,353 $2,602,106 $2,682,850 $2,759,638 $2,841,448 $2,928,294 CUMULATIVE NET $9,074,418 $11,676,524 $14,359,374 $17,119,012 $19,960,460 $22,888,754 Source: ADF, City of Ncalhort Beat), Kcescr Marston Associates, PRP Consulting 'Revenues from Use of Money and Property may change based on credits given to the developer for option Payments. 12 0 SFISCAL ANALYSIS METHODOLOGY The Newport Beach fiscal impact model, developed for the City's General Plan Update, was used as the framework for the analysis. Known characteristics about existing and proposed uses —such as building square footages, assessments, population, and number of employees —were input into the model to generate costs and revenues. Where costs and revenue items specific to the project were known, they were substituted for the model - generated outputs. In the case of the proposed project, this procedure was followed for property tax, sales tax, transient occupancy tax (TOT), and use of property. The first portion of the analysis looks at fiscal impacts of the existing site and proposed site at stabilization, and calculates the difference between the two. For a valid comparison, both of these impacts were calculated in 2004 dollars. The second portion of the analysis looks at the fiscal impacts of the proposed project over time and, thus, must take inflation into account. To this end, we utilized the three percent inflation rate assumed by PKF Consulting in their calculations. This rate is consistent with Consumer Price Index trends over the past several years. PKF AND KMA MODEL INPUT ASSUMPTIONS As noted above, out fiscal impact analysis utilized data and projections from reports previously prepared by PKF Consulting and Keyser Marston Associates. These inputs included annual occupancy rates, average daily room rates, annual food and beverage income, and other annual income, as well as the expected rate of inflation. In conducting their market analysis of the proposed hotel, PKF utilized data from a variety of sources. These included information from PKF's proprietary database, a five -year history of occupancy and average daily rate trends in the project submarket, and interviews with management of key competitive hotels, developers and city officials. Due to its location, facilities, and services, the project was assumed to be a destination resort and part of the area's coastal resort • market. Competitive supply data was thus drawn from similar properties judged to be part of the same market. 13 Based on population, job, tourism, and other economic trends in the area, PKF believes that Newport Beach will experience continued modest economic growth combined with overall economic stability. Using these economic projections combined with the above market data, PKF estimated future occupancies, average daily room rates, and income from food, beverages, and other sources. In their pro forma review of the Marina Park Hotel, Keyser Marston concurred with the average daily room rates and stabilized occupancy levels presented in the PKF report. They also did not make adjustments to income estimates for food and beverage and other hotel departments. KMA's analysis did include additional revenue from hotel parking, and noted the potential for revenue from boat slips. However, as these revenue sources have not yet been confirmed or fully analyzed, we have excluded them from our analysis. REVENUES Property Tax Because of their public and nonprofit status, most of the existing uses on the Marina Park site are exempt from paying property taxes. However, personal property and improvements related to the mobile home park are taxable, as are boats. The sutra of these assessments was multiplied by the County tax rate of one percent and then by 17 percent to obtain the City share of property tax. According to Keyser Marston's estimate, at stabilization the project will generate a property tax of $394,000 (in 2004 dollars), which is equal to one percent of the property's assessed value. ADE applied a rate of 17 percent to this value to determine the portion of the property tax allocated to the Newport Beach General Fund. For the fiscal impact projections, property taxes were inflated by two percent each year (with 2004 as the base year) in accordance with PropositionlV Because we projected to only five years after I Under the provisions of Proposition 13, property assessments may only be raised by a maximum of two percent each year until the property changes ownership (with a few exceptions). Once sold, the property is reassessed to market value and the two - percent increases begin again. Taxes are limited to one percent of assessed value, plus any additional taxes up to two percent passed by two- thirds of the voters. 14 . stabilization, we assumed that the property would not be sold and reassessed during the period of out analysis. Sales and Use Tax The existing uses on the site generate no taxable sales onsite, but our analysis accounts for off -site purchases by the mobile home park residents. The sales tax estimate for the proposed project is based on the food and beverage revenue projection prepared by PKF, Inc. The figure is about 20 to 25 percent higher than average for existing hotels in Newport Beach, reflecting the upper end market segments the project is anticipated to serve.' TOTTax A TOT of ten percent is levied on guest room receipts in Newport Beach. This rate was applied to PKF's projected room rental revenue for each year of the proposed development. Use of Property A significant portion of the revenues generated by both the . existing and proposed uses comes from use of property, or lease payments. In the case of the existing uses, mobile home park residents pay the City a total of roughly $700,000 per year in rent, while the Balboa Power Squadron pays an annual rent of $1,935. The proposed Marina Park resort is expected to pay an annual base land lease of $550,000 per year during the construction phase and increasing to $1.1 million per year once the project begins operation. The base rent would be credited against additional "percentage rents" equal to 7 percent of room income, 3 -5 percent of food and beverage income, and 10 percent of other miscellaneous income. In addition, the developer would make option payments during the initial years following voter approval of the project and receipt of the requited permits. 2 CIC Research, Inc. Profile of Visitors to Newport Beach 2001. p. 31. Based on surveys conducted by CIC Research, hotel /motel guests in Newport Beach generated about $108.3 million in taxable sales in 2001. For • the projected stabilization year of 2010, this would equate to about $478 per room, vs. the $590 per room projected by PKF, Inc. `• 15 Other Revenues 0 The remaining revenue categories were calculated based on per - capita and per - employee factors as described above. EXPENDITURES As with the revenues, the General Fund expenditures in Tables 3 through 6 were estimated based on per - capita and per - employee cost factors that were developed for the Newport Beach General Plan Update. According to the Draft EIR prepared by Michael Brandman Associates, existing fire and police capacities will be sufficient to serve the needs of the proposed project. Consequently, the project is not expected to incur significant expenditures in these categories. The cost figures shown for these services reflect the average cost of additional calls for service anticipated for the project. 0 0 16 REFERENCES "Proposed Marina Park Hotel and Fractional Ownership Units, Newport Beach, California." PKF Consulting, May 19, 2004. "Marina Park Hotel and Timeshare Pro Forma Review." Keyser Marston Associates, Inc., June 3, 2004. 1] 17 E. CLEMENT SHUTE, JR. MARK I. WEINBERGER MARC B. MIHALY, P.C. FRAN M. LAYTON RACHEL B. HOOPER ELLEN J. GARBER CHRISTY H. TAYLOR TAMARA S. GALANTER ELLISON FOLK RICHARD S. TAYLOR WILLIAM J. WHITE ROBERT S. PERLMUTTER OSA L. ARMI BRIAN J. JOHNSON JANETTE E. SCUUE MATTHEW D. ZINN SHUTE, MIHALY & WEINBERGER LLP ATTORNEYS AT LAW 3945 HAYES STREET SAN FRANCISCO. CALIFORNIA 94102 TELEPHONE: (415) 552 -7272 FACSIMILE: (41 5) 552 -58145 WWW. SMWLAW. COM TO: Bob Burnham FROM: Christy Taylor RE: Marinapark EIR MEMORANDUM July 21, 2004 CATHERINE C. ENGBERG MATTHEW D. VESPA ROBIN A. SALSBURG AMY J. BRICKER JENNY K. HARBINE MADELINE O. STONE LAUREL L. IMPIETY, AICP CARMEN J. BORG URSAx PLANNERS DAVID NAWI OF COUNSEL I have reviewed the Draft EIR for the Marinapark project, the comments received and responses thereto. This EIR contains the required information regarding the proposed project and its environmental consequences, and is a legally adequate informational document satisfying the requirements of CEQA. The Marinapark EIR identifies the significant effects of the proposed project, feasible mitigation measures designed to avoid or lessen those effects, and a reasonable range of potentially feasible alternatives to the proposed project, as required by CEQA. Its contents include the elements set forth in the CEQA Guidelines, including the table of contents, summary, project description, environmental setting, list of organizations and persons consulted, and discussion of cumulative impacts. The public comments received on the Draft EIR did not involve significant new information regarding impacts or mitigation measures such that recirculation for additional public review would have been appropriate. The responses and revisions in response to the comments received address all significant environmental points raised in the comments; where corrections were necessary they have been provided, and additional mitigation measures have been incorporated into the project to further ameliorate impacts already identified as significant in the Draft EIR. EXHIBIT II 9 Bob Burnham July 21, 2004 Page 2 The mitigation measures proposed in the EIR are enforceable through permit conditions, agreements, or other legally binding mechanisms. They are well designed to reduce the impacts of this project, with the result that the record supports the conclusion that incorporation of the mitigation measures into the project will reduce all environmental impacts to levels that do not exceed the thresholds of significance. While commenters and project opponents can find some fault with any EIR, the document is not required to achieve perfection. An EIR should provide decisionmakers with the information they need to make a decision on the proposed project, which intelligently takes account of environmental consequences. The Marinapark EIR provides a legally sufficient analysis of impacts and mitigation measures and represents a good faith effort at full disclosure. As such, the Marinapark EIR is a legally adequate disclosure document, consistent with the requirements of CEQA. s..ss.•s.ss..s•ss • s • ss••s • ss • ss••ss • ss•• 0 tPANE W MMAT Mcht002 (memo 7 21 04).wpdj EXHIBIT A • RESOLUTION NO. 2004 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH CERTIFYING THE ENVIRONMENTAL IMPACT REPORT AND ADOPTING A MITIGATION MONITORING PROGRAM REGARDING THE MARINAPARK RESORT AND COMMUNITY PLAN ON THE NORTH SIDE OF BALBOA BOULEVARD BETWEEN FIFTEENTH AND EIGHTEENTH STREETS (STATE CLEARINGHOUSE NO. 200311021). WHEREAS, Marinapark LLC (formerly Talla Sutherland Hospitality), 4500 Campus Drive, Suite 650, Newport Beach, California, has applied to the City of Newport Beach for approvals necessary to develop a 110 -room luxury resort hotel, related ancillary facilities and community facilities on an 8.1 acre site on the north side of Balboa Boulevard between 15"' and 18`h Streets; and WHEREAS, in accordance with CEQA requirements, a Notice of Preparation (NOP) of a Draft Environmental Impact Report (EIR) was filed with the State Clearinghouse, which assigned State Clearinghouse Number 200311021; and WHEREAS, the NOP and an Initial Study were distributed to all responsible and trustee agencies and other interested parties for a 30 -day public review period commencing on November 4, 2003, and ending on December 3, 2003; and . WHEREAS, in accordance with CEQA requirements, a Notice of Completion (NOC) of the Draft EIR was filed with the State Clearinghouse, and the Draft EIR was distributed to agencies, interested organizations, and individuals by the City. The distribution list is available at the City of Newport Beach Planning Department; and WHEREAS, a 45-day public review period for the Draft EIR was established pursuant to State law, which commenced on April 26, 2004 and ended on June 9, 2004; and WHEREAS, all comments received during the public review period for the Draft EIR were responded to in the Response to Comments document dated July 2, 2004; and WHEREAS, on June 3, 2004, the Planning Commission held a study session to review the Draft EIR. Notice of time, place and purpose of the public meeting was given and testimony was presented to and considered by the Planning Commission at the meeting; and WHEREAS, on June 8, 2004, the City Council held a study session to review the Draft EIR. Notice of time, place and purpose of the public meeting was given and testimony was presented to and considered by the City Council at the meeting; and WHEREAS, on July 8, 2004, the Planning Commission held a public hearing at which time the Final Environmental Impact Report, comprised of the Draft Environmental . Impact Report, a listing of persons and organizations that provided written comments on the Draft Environmental Impact Report during the public circulation period, a compilation of those comments, and responses to those comments, was considered. Notice of time, place and purpose of the public hearing was duly given and testimony was presented to and considered by the Planning Commission at the hearing; and WHEREAS, at the conclusion of the public hearing, the Planning Commission adopted Resolution No. 1640, recommending that the City Council certify the EIR as complying with the requirements of CEQA; and WHEREAS, the City Council held a public hearing on July 13, 2004, which hearing was continued to July 27, 2004, at which time the draft Final Environmental Impact Report recommended by the Planning Commission was considered. Notice of time, place and purpose of the public hearing was duly given and testimony was presented to and considered by the City Council at the hearing; NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Newport Beach has reviewed and considered the information in the final EIR, and in the full administrative record, prior to taking any action on the project. The documents and other materials that constitute the record of proceedings on which the City Council's Findings and decision are based are located at Newport Beach City Hall, 3300 Newport Boulevard, Newport Beach, California 92658. The custodian for these documents is the Planning Department Executive Secretary. This information is provided in compliance with Public Resources Code section 21081.6(a)(2) and CEQA Guidelines section 15091(e). The following documents are also attached to this Resolution for ease of reference, and by reference made a part of this Resolution: . EIR - 1 Draft Environmental Impact Report (Distributed separately due to bulk. Available for public review at the City's Planning Department) EIR - 2 Responses to Comments on Draft EIR dated July 2, 2004 (Distributed separately due to bulk. Available for public review at the City's Planning Department) EIR-3 Planning Commission Staff Report for June 3, 2004 EIR-4 Minutes of Planning Commission Study Session of June 3, 2004 EIR-5 City Council Staff Report for June 8, 2004 EIR-6 Supplemental City Council Staff Report for June 8, 2004 EIR-7 Minutes of City Council Study Session of June 8, 2004 EIR-8 Planning Commission Staff Report for July 8, 2004 EIR-9 Memorandum of July 7, 2004, transmitting Phase II assessments to Planning Commission and City Council (Available for public review at the City's Planning Department) EIR - 10 Minutes of Planning Commission Public Hearing of July 8, 2004 EIR - 11 City Council Staff Report for July 13, 2004 EIR — 12 Supplemental City Council Staff Report for July 13, 2004 EIR - 13 Transcript of City Council Public Hearing of July 13, 2004 • EIR— 14 City Council Staff Report for July 27, 2004 2 BE IT FURTHER RESOLVED that the City Council does hereby make the findings attached to this Resolution as Exhibit "A ". and finds and certifies as follows: 1. That t he M arinapark R esort & C ommunity P Ian E nvironmental I mpact Report (State Clearinghouse Number 200311021) has been prepared in compliance w ith t he C alifornia E nvironmental Q uality A ct ( CEQA) and the CEQA Guidelines; and 2. That the EIR reflects the City Council's independent judgment and analysis. BE IT FURTHER RESOLVED the City Council does hereby adopt the Mitigation Monitoring Program attached to this Resolution as Exhibit "B ". ADOPTED this 27th day of July 2004, by the following vote, to wit: E ATTEST: CITY CLERK 0 AYES: NOES: ABSENT TOD W. RIDGEWAY, MAYOR 3 0 Exhibit A Findings 9 Exhibit A CEQA Findings and Findings of Fact for the Marinapark Resort & Community Plan Prepared for: City of Newport Beach Planning Department 3300 Newport Boulevard Newport Beach, CA 92659 Contact: James Campbell, Senior Planner Prepared by: Michael Brandman Associates 220 Commerce, Suite 200 Irvine, CA 92602 714.508.4100 Contact: Jason M. Brandman, Senior Project Manager July 21, 2004 Marinapark Resort 8 Community Plan CEQA Findings and Findings of Fact Table of Contents TABLE OF CONTENTS Section1: Introduction ......................................................................... ..............................1 Section 2: Mitigated Project -Level and Cumulative Adverse Impacts .............................3 2.1 - Geology and Soils .............................................................. ............................... 3 2.2 - Hydrology and Water Quality ............................................... ..............................4 2.3 - Bological Resources ........................................................... .............................10 2.4 - Air Quality ........................................................................... .............................19 2.5 - Hazards and Hazardous Materials .................................... ............................... 20 Section 3: Additional Measures Incorporated into the Project to Further Reduce Less Than Significant Impacts .............................................. .............................21 3.1 - Hazards and Hazardous Materials .................................... ............................... 21 3.2 - Land Use .......................................................................... ............................... 21 Section 4: Feasibility of Project Alternatives ..................................... .............................23 4.1 - No Project/No Development Alternative ............................ ............................... 23 4.2 - Marinapark Marine Recreation Alternative .......................... .............................23 4.3 - Reduced Intensity Alternative ........................................... ............................... 24 4.4 - Environmentally Superior Alternative ................................ ............................... 24 Michael Brandman Associates I:W rar.p.&WO 0ER20_R.0 gs.dm 0 • • E Marinapark Resort 8 Community Plan CEQA Findings and Findings of Fact Introduction SECTION 1: INTRODUCTION In compliance with the requirements of the California Environmental Quality Act (CEQA) and the CEQA Guidelines, the City of Newport Beach has conducted an environmental review of the proposed Marinapark Resort & Community Plan. An Initial Study was completed in October 2003. In April 2004, the Draft EIR was released. After receiving public comment on the Draft EIR, the City prepared a document entitled "Responses to Comments on the Draft EIR." The "Responses" document includes the verbatim comments received on the Draft EIR, a list of those commenting, and the City's responses to the significant environmental points raised in the review and consultation process. In response to certain comments, the Draft EIR was modified, as set forth in the responses to comments. The Final EIR for the Marinapark project consists of the Draft EIR, the "Responses" document, and supplemental information correcting minor errors identified by staff or in public hearings. These Findings are based upon the information in the record of proceedings, including the Final EIR, staff reports, project applicant's materials, Mitigation Monitoring Program, and the testimony presented at public hearings. CEQA provides in relevant part, at Public Resources Code Section 21081, that: [N]o public agency shall approve or carry out a project for which an environmental impact report has been certified which identifies one or more significant effects on the environment that would occur if the project is approved or carried out unless both of the following occur: (a) the public agency makes one or more of the following findings with respect to each significant effect: 1. Changes or alterations have been required in, or incorporated into, the project which mitigate or avoid the significant effects on the environment. 2. Those changes or alterations are within the responsibility and jurisdiction of another public agency and have been, or can and should be, adopted by that other agency. 3. Specific economic, legal, social, technological, or other considerations, including considerations for the provision of employment opportunities for highly trained workers, make infeasible the mitigation measures or project alternatives identified in the environmental impact report. (b) With respect to significant effects which were subject to a finding under paragraph (3) of subdivision (a), the public agency finds that specific overriding economic, legal, social, technological, or other benefits of the project outweigh the significant effects on the environment. Michael Brandman Associates J.\MwinapaK \0064FR20 Findings.doc Marinapark Resort & Community Plan CEQA Findings and Findings of Fact Introduction Because the Marinapark Resort & Community Plan project Environmental Impact Report (EIR) identified significant effects that may occur as a result of the project, and in accordance with the provisions of CEQA and the CEQA Guidelines, the City Council of the City of Newport Beach hereby adopts these Findings. For each of the significant effects associated with the proposed project, as set forth in greater detail in these Findings below, the City Council makes the finding under paragraph (1) of subdivision (a) above. CEQA requires that the EIR reflect the City's own independent judgment and review. Accordingly, the City Council expressly finds that the Final EIR for the Marinapark Resort & Community Plan reflects the City's independent judgment. In accordance with the provisions of CEQA and the CEQA Guidelines, the City Council of the City of Newport Beach has independently reviewed the record of proceedings and based on the evidence in the record adopts these Findings. The City Council, in certifying the Final EIR and adopting these Findings, is not itself approving the Marinapark Project. The City Council will place before the voters of the City for their approval or disapproval the General Plan Amendment that is necessary for the Marinapark Project to move forward. In making their determination, the voters may consider all the information available to them, including the Final EIR. Should the electorate approve the General Plan Amendment and should other conditions to development, such as the issuance of a Coastal Development Permit, the . approval of a lease and the execution of a boundary line agreement with the State Lands Commission, be satisfied, the City Council will be able to implement that approval, including the imposition of the necessary mitigation measures and conditions of approval, based on the documentation in the Final EIR and Mitigation Monitoring Plan. • Michael Brandman Associates 7:\ Mminapark \0064ER20_Findings -cim Marinapark Resort B Community Plan CEQA findings and Findings of Fact Mitigated Project -Level and Cumulative Adverse Impacts 0 SECTION 2: MITIGATED PROJECT -LEVEL AND CUMULATIVE ADVERSE IMPACTS E The EIR identified significant project -level and cumulative adverse impacts of the proposed Project, and proposed mitigation measures to avoid or substantially lessen those impacts. Those impacts and mitigation measures are set forth in the following sections. The Newport Beach City Council finds, based on the record and on the facts as set forth below, that the incorporation of identified mitigation measures will mitigate or avoid all the identified significant project -level and cumulative adverse impacts to a level that is considered less than significant. 2.1 - GEOLOGY AND SOILS (EIR, Section 5.1.) 2.1.1 -Potentially Significant Impact Development of the proposed project would result in a high probability of liquefaction during a major seismic event. Finding Changes or alterations have been required in, or incorporated into, the project, which mitigate or avoid the significant effects on the environment. Facts in Support of Finding The significant effect has been eliminated or substantially lessened to a level that is less than significant by virtue of the following mitigation measures as identified in the final EIR and incorporated into the project. GS -1 Prior to issuance of a grading permit, the grading plans shall state that prior to receiving fill, the bottom of the excavated area shall be ripped 6 inches, watered as required, and compacted to at least 90 percent of maximum density. A geotextile fabric material shall be placed over the bottom of the over excavation. The fabric shall be placed at 6 -inch intervals to 30 inches below finished grade. GS -2 Prior to the issuance of a building permit, the project structures shall be designed with a slab that will be either a stiffened structural slab or a post- tensioned slab. Michael Brandman Associates 9 J:%1arinapark \0064Ek20_Fmdmgs.dw Marinapark Resort 8 Community Plan CEQA Findings and Findings of Fact Mitigated Project -Level and Cumulative Adverse Impacts 2.2 - HYDROLOGY AND WATER QUALITY (EIR Section 5.2.) 2.2.1 - Potentially Significant Impact The proposed project would have a potentially significant short-term project -level and cumulative impact on water quality related to construction activities, as a result of soil erosion, trash and debris leaving the site, and dredging which will increase turbidity and resuspend bottom sediment. Finding Changes or alterations have been required in, or incorporated into, the project, which mitigate or avoid the significant effects on water quality that could be caused by construction activities. Facts in Support of Finding The project -level and cumulative significant effects have been eliminated or substantially lessened to a level that is less than significant by virtue of the following mitigation measure as identified in the final EIR and incorporated into the project. The following mitigation measure was revised during the preparation of the Responses to Comment document. Construction timing was added to clarify when construction activities could not occur within the Bay. This revision will further reduce potential impacts to marine life by avoiding construction disturbance during the reproductive season. HWQ -1 Prior to the issuance of a grading permit, a stormwater pollution prevention plan ( SWPPP) for construction activities that describes best management practices (BMPs) to reduce the release of potential pollutants into surface water shall be prepared by the project applicant for approval by the City of Newport Beach. The plan shall also identify how the BMPs will be implemented. The SWPPP shall not preclude incorporation of additional BMPs. • Dust Control: Water will be sprayed in newly graded areas to prevent dust from grading activities dust to be blown to adjacent areas. • Construction Staging: Specific areas will be delineated for storage of material and equipment, and for equipment maintenance, to contain potential spills. • Construction Timing: In -water construction activities shall not occur between March 31 and October 1. • • Sediment Control: Sand bags or silt fences will be located along the perimeter of the site. Existing inlets and proposed area drains will be protected against intrusion of sediment. 0 Michael Bmndman Associates 4 J:\Madnapa k \00&FR20_F.dmp.do Marinapark Resort 8 Community Plan CEQA Findings and Findings of Fact Mitigated Project -Level and Cumulative Adverse Impacts • Tracking: Tracking of sand and mud on the local street will be avoided by tire washing and/or road stabilization. Street cleaning will be done if tracking occurs. • Waste Disposal: Specific area and/or methods will be selected for waste disposal. Typical construction waste include concrete, concrete washout, mortar, plaster, asphalt, paint, metal, isolation material, plants, wood products and other construction material. Solid waste will be disposed of in approved trash receptacles at specific locations. Washing of concrete trucks will be done in a contained area allowing proper cleanup. Other liquid waste will not be allowed to percolate into the ground. • Construction dewatering: Construction dewatering will require approved permits by the California Regional Water Quality Control Board and the City. • Maintenance: Maintenance of BMPs will take place before and after rainfall events to insure proper operation. • Training: The SWPPP will include directions for staff training and checklists for scheduled inspections. • Construction Vehicles: Construction vehicles will be inspected daily to ensure there are no leaking fluids. If there are leaking fluids, the construction vehicles will be serviced outside of the project site area. • Turbidity: Activities shall not cause not cause turbidity increases in bay waters that exceed: a) 20 percent if background turbidity is between 0 and 5 Nephelometric Turbity Units (NTUs); b) 10 percent if background is between 50 and 100 NTUs; c) 10 percent if background turbidity is greater than 100 NTUs. Monitoring of turbidity in bay water adjacent to boat slip construction will be conducted daily during construction activities that may cause turbidity. If activities exceed the above criteria, construction activities associated with causing turbidity will be discontinued until the above criteria is met. • Grease: Construction activities will not cause visible oil, grease, or foam in the work area or in the bay. • Silt curtains: Silt curtains will be placed within the bay so that all effluent from excavation activities will be contained within the construction zone. • Hauling Trucks: The project construction contractors will ensure that trucks hauling soil material to and from the project site will be covered and will maintain a 2 -inch differential between the maximum height of any hauled material and the top of the haul trailer. Haul truck drivers will water the load prior to leaving the site in order to prevent soil loss during transport. • Heavy Equipment: Limit heavy equipment use on the beach to areas away from the high -tide line during construction. • Hydrogen Sulfide: Provisions shall be made, as necessary, for the treatment of hydrogen sulfide to comply with water quality standards and to control odors from the dewatering process. • Dredged Material: Project operations will require that the scow doors used to release dredged material remain closed until the scows are towed to the disposal site. Michael Brandman Associates 1:\N a napark \0064FR20 Findings.do Martnapark Resort 6 Community Plan CEQA Findings and Findings of Fact Mitigated Project -Level and Cumulative Adverse Impacts 2.2.2 - Potentially Significant Impact The implementation of the proposed project would result in increased stormwater flows and the potential for pollutants from hotel operations (i.e., pollutants from landscape and parking areas) to cause a potentially project -level and cumulative significant adverse impact on water quality. Finding Changes or alterations have been required in, or incorporated into, the project, which mitigate or avoid the significant effects on the environment, by reducing or eliminating pollutants that would affect offsite water quality. Facts in Support of Finding The project -level and cumulative significant effects have been eliminated or substantially lessened to a level that is less than significant by virtue of the following mitigation measures as identified in the final EIR and incorporated into the project. HWQ -2 Prior to the issuance of a grading permit, a Resort Water Quality Management Plan (WQMP) for long -term activities within the resort and on the beach shall be prepared by the project applicant for approval by the City of Newport Beach. The Resort WQMP shall control urban constituents entering the existing storm drain system or entering surface water flows to the bay. The Resort WQMP shall identify BMPs and how they will be implemented. The WQMP shall not preclude incorporation of additional BMPs. • Access: Provide easily accessible restrooms and trash receptacles. • Fire Fighting: Provide fire fighting and spill containment equipment. • Litter: Keep litter, pet waste, leaves, and debris out of street gutters and storm drains. • Chemicals: Apply lawn and garden chemicals sparingly and according to directions. • Household Hazardous Waste: Dispose of used oil, antifreeze, paints, and other household chemicals properly. Avoid spills of hazardous or polluting material and prepare guidelines for remediation of such occurrences. • Erosion Control: Control soil erosion by planting ground cover and stabilizing erosion -prone areas. • Signage: Affix signs educating user of the property about BMPs. • Street Sweeping: Street sweeping of the grounds and trash collection. • Inspection: Schedule regular inspections. • Trash Enclosures: Design trash container storage areas so that drainage from adjoining roofs and pavement is diverted around the storage. • Long -Term Maintenance: As design progresses, the owner's plan for the long- term and continuous maintenance of all onsite BMPs requiring ongoing Michael arandman Associates JAMarbWwk \0064ER20_Findings.dm Marinapark Resort 6 Community Plan CEQA Findings and Findings of Fact Mitigated Project -Level and Cumulative Adverse Impacts maintenance must be developed. This plan will include his acceptance of the responsibility for the onsite maintenance of all structural and treatment control BMPs. • WQMP Distribution: Distribution of the Water Quality Management Plan report to the hotel staff and assignment of specific responsibilities by the owner. • Irrigation: Design irrigation systems that: l) include rain - triggered shut -off devices; 2) match irrigation requirements of specific plant species; 3) and include flow reducers or shut -off valves triggered by a pressure drop to control water loss in the event of broken lines or sprinkler heads. Percolation: The project will decrease the amount of existing impervious areas and increase pervious landscaped areas. During the design of the project, special consideration will be given to maximize the use of the landscaped areas as infiltration areas. Percolation of runoff into the ground through permeable areas will be maximized with such means as biofilters, green strips, landscaped swales, planters, and other retention/ percolation devices. Roof drains will be oriented towards permeable surfaces, grading of the site will take into consideration diverting runoff to permeable areas. The site will be graded so that the runoff flows through grassy swales before being collected in an underground system. Consequently, the surface flow travel time will be lengthened and peak discharges reduced. At inlets to underground drains, pollutants will be removed through installation of inlet basket/filters inserts to remove trash and organic material. • Water Quality Systems: Two water quality systems are proposed for the project. The proposed units will be located towards the end of the proposed onsite storm drain system, as shown on Figure 4, and designed to treat runoff water from paved parking areas that cannot be directed to pervious landscape. Typical systems consist of diverting the storm drain low flows, the "first flush" or dry weather flows, to an off -line unit where treatment occurs. Treatment can be provided by filtration or settlement of pollutants, or a combination of both. Following the "fast flush ", for storm event with peaks exceeding the capacity of the diversion structure, clean runoff will bypass the water quality system and flow to the bay. Common systems are off -line CDS Technology® units, on -line VortechsTM units, on -line CSR Stormceptor® units or equivalent The two proposed systems will remove pollutants flowing to the 18th Street and 15th Street storm drains, respectively. Pollutants removed by these units include trash, sediment, heavy metals, organic compounds and oil and grease. Catch Basin Filter Inserts: The City of Newport Beach has been implementing the installation of catch basin filter inserts in West Balboa Boulevard. The Ultra - Urban® Filter with Smart Sponge®, developed and manufactured by AbTech Industries, has been used for effective filtration, efficient application, and moderate maintenance. The Ultra - Urban® Filter captures oil, grease, trash, and sediment from stormwater runoff before it enters the storm drain system. Trash and sediment accumulate in the internal basket while oil and grease are captured in the filtration media. Filter inserts are or will be installed in 18th Street and 15th Street existing inlets. The City of Newport Beach will provide maintenance of the filters within the street right -of -way. • Curb Drains: Curb drains, as a means of draining sump areas and roof drains via subsurface piping systems directly to the street gutter, will not be used for this project. Areas immediately adjacent to Balboa Boulevard, such as the Girl Scout Michael Brandman Associates J:\ivl aparkWOMER20_Findings,doc Marinapark Resort 6 Community Plan CEQA Findings and Findings of Fact Mitigated Project -Level and Cumulagve Adverse Impacts site, Park and entrance driveway to the project, will be designed to direct runoff to landscaped areas. Small portions may use curb drains directing runoff to the City inlets and filter inserts. The curb drains, if used, will have a French drain system of perforated pipe and gravel to increase percolation. • Sump Pump: In case the proposed Tennis/Parking Structure needs installation of a sump pump, direct discharge to the public right of way will not be permitted. Rather, discharge from the sump pump will be directed to the proposed water quality unit. Storage and Maintenance Areas: Design will insure that runoff does not come into contact with loading and unloading dock areas, and repair and maintenance areas. Storage of material that may contribute pollutants to the stormwater will be placed in an enclosure such as a cabinet, shed, or similar structure that prevents contact with runoff or spillage to the stormwater conveyance system. These areas will also protected by secondary containment structures such as berms, dikes, or curbs. Outdoor material storage is not anticipated for this project. Trash receptacles will be protected from drainage from adjoining roofs and pavement and covered with roof or awning. • Irrigation System: A moisture - detecting or weather -based irrigation system will be used to eliminate over watering and dry weather flow. The landscaped areas will be graded to maximize percolation and avoid direct drainage to the local storm drain system. • Storm Drain Signage: Provide stenciling or labeling of all storm drain inlets and catch basins, constructed or modified, within the project area with prohibitive language such as: "NO DUMPING - DRAINS TO OCEAN ". HWQ-3 Prior to the issuance of a grading permit, a Marina Water Quality Management Plan (WQMP) for long -term activities at the boat slips shall be prepared by the project applicant for approval by the City of Newport Beach. The Marina WQMP shall control pollutants from the boat slips from entering the bay. The Marina WQMP shall identify BMPs and how they will be implemented. The WQMP shall not preclude incorporation of additional BMPs. • Boat Maintenance: Prohibit in -water boat maintenance and discharge of waste. • Harbor Permit: The Permittee of the Harbor Permit shall keep the area delineated on the harbor permit free from beached or floating rubbish, debris, or litter at all times. • Trash Enclosures: Provide trash receptacles located on the dock for refuse collection and provide for these receptacles to be emptied a minimum of once per week. • Waste Collection Bags: Provide plastic collection bags on the dock for the collection and disposal of pet waste. • Detergents: Use only biodegradable detergents and cleaning products when performing boat cleaning activities. • Fish Waste: Deposit fish waste only in designated trash receptacles or at designated fish cleaning stations. • Bilge Water: Avoid the pumping of bilge water in the harbor. Michael Brandman Associates 7:\blmiwuk \00"ER20_Finduw.d. Marinapark Resort 8 Community Plan CEQA Findings and Findings of Fact Mitigated Project -Level and Cumulative Adverse Impacts • Holding Tanks: On boats equipped with a holding tank equipped with a Y -valve and through -hull fitting, the valve should be closed and locked within the 3 -mile limit from shore. • Bait Buckets: Empty bait buckets only in designated trash receptacles or at designated fish cleaning stations. • Signage: Post signs on the dock stating that it is illegal to discharge plastics or garbage containing plastics, discharge oil, or discharge raw sewage into any waters. • Educational Pamphlet: Create and distribute educational pamphlet describing activities that are allowed and activities that are prohibited regarding minor maintenance and cleaning activities. HWQ-4 Prior to the issuance of a grading permit, a water quality monitoring program shall be developed and implemented to ensure that all BMPs approved in the SWPPP and WQMPs are being used to lessen water quality impacts on Newport Bay. This program shall also include a water quality monitoring program during "first flush" rainstorms following significant dry weather periods during construction and for a period of 5 years following construction, and monthly water turbidity sampling along the beachfront. If it is determined that Newport Bay water quality has been degraded, adaptive management techniques shall be implemented to correct water quality violations in order to prevent adverse effects on the bay's water quality. HWQS Prior to issuance of a building permit, the project applicant shall design an elevated walkway to the boat slips that are supported by piles. This would allow tidal circulation to pass underneath the proposed walkway and alleviate potential water quality stagnation. 2.2.3 - Potentially Significant Impact The proposed project would increase stormwater flows and potentially cause a significant project - level and cumulative adverse effect on the existing storm drain system. Finding Changes or alterations have been required in, or incorporated into, the project, which mitigate or avoid the significant effects on the environment. Facts in Support of Finding The project -level and cumulative significant effects have been eliminated or substantially lessened to a level that is less than significant by virtue of the following mitigation measure as identified in the final EIR and incorporated into the project. HWQ-6 Prior to the issuance of a grading permit, the project applicant shall demonstrate through a drainage plan that onsite detention basins will be constructed so that peak stormwater flow concentrations to the existing 18th Street and 15th Street storm drains will not be increased from flow concentrations prior to development of the project. Michael Brandman Associates J.\Madnapuk \0064ER20_FindingsAm Marinapark Resort 8 Community Plan CEQA Findings and Findings of Fact Mitigated Project -Level and Cumulative Adverse Impacts 2.3 - BOLOGICAL RESOURCES (EIR Section 5.3.) 2.3.1 -Significant Impact The proposed cement walkway from the resort hotel to the boat slips will result in loss of approximately 490 square feet of sandy shoreline, which is foraging habitat for shorebirds. This loss is considered a significant project -level and cumulative impact. Finding Changes or alterations have been required in, or incorporated into, the project, which mitigate or avoid the significant effects on the environment. Facts in Support of Finding The project -level and cumulative significant effects have been eliminated or substantially lessened to a level that is less than significant by virtue of the following mitigation measures as identified in the final EIR and incorporated into the project. BR-6 Prior to issuance of a building permit, the project applicant shall design an elevated walkway to the boat slips that is supported by piles. This would allow tidal circulation to pass underneath the proposed walkway and alleviate potential water quality stagnation. The following mitigation measure was revised during the preparation of the Responses to Comment Document. This measure was revised to reflect a request by the California Coastal Commission for a greater soft bottom benthic habitat and shorebird habitat replacement ratio as well as to reflect the habitat replacement requirements assuming implementation of mitigation measures BR -5 and LU -1. BR-6 Prior to approval of the boat dock construction permit issued by the U.S. Army Corps of Engineers and the California Coastal Commission, the project applicant shall identify the location of a suitable soft bottom benthic habitat and shorebird habitat replacement site. Furthermore, the replacement site shall be approved by the U.S. Fish and Wildlife Service, California Department of Fish and Game, and National Marine Fisheries Service. Based on the project's potential effect and a mitigation ratio of 4:1 (as recommended by the California Coastal Commission), 41,344.24 square feet (0.95 acre) would need to be replaced. In accordance with Public Resources Code 21081.6, a mitigation monitoring plan shall be developed to monitor the success of the habitat replacement. A monitoring plan in accordance with the requirements identified in the boat dock construction permit shall be implemented. 0 With the implementation of mitigation measures HWQ -5 and BR -5, the project's . potential effect would be 9,846.06 square feet. With a mitigation ratio of 4:1 (as Michael Brandman Associates 10 J:\Manoapmk \0%4FR20_Findings.du Marinaparh Resort 8 Community Plan CEQA Findings and Findings of Fact Mitigated Pmiect•Level and Cumulative Adverse impacts recommended by the California Coastal Commission), 39,384.24 square feet (0.90 acre) of suitable soft bottom benthic habitat and shorebird habitat would need to be replaced. With the implementation of mitigation measure LU -1, the project's potential effect would be 13.6 square feet. With a mitigation ratio of 4:1 (as recommended by the California Coastal Commission), 54.4 square feet (0.001 acre) of suitable soft bottom benthic habitat and shorebird habitat would need to be replaced. 2.3.2 - Significant Impact The placement of the boat slip bulkhead, emplacement of 9 cement pilings, and a cement walkway leading to the boat slips will impact benthic (bottom- dwelling) organisms because there will be a long -term loss of soft bottom habitat including a long -term loss of benthic invertebrates and food sources for fish, shorebirds and seabirds. This long -term loss is considered a significant project -level and cumulative impact. Finding Changes or alterations have been required in, or incorporated into, the project, which mitigate or avoid the significant effects on the environment. 0 Facts in Support of Finding The project -level and cumulative significant effects have been eliminated or substantially lessened to a level that is less than significant by virtue of the following mitigation measures as identified in the final EIR and incorporated into the project. BR-6 Prior to approval of the boat dock construction permit issued by the U.S. Army Corps of Engineers and the California Coastal Commission, the project applicant shall identify the location of a suitable soft bottom benthic habitat and shorebird habitat replacement site. Furthermore, the replacement site shall be approved by the U.S. Fish and Wildlife Service, California Department of Fish and Game, and National Marine Fisheries Service. Based on the project's potential effect and a mitigation ratio of 4:1 (as recommended by the California Coastal Commission), 41,344.24 square feet (0.95 acre) would need to be replaced. In accordance with Public Resources Code 21081.6, a mitigation monitoring plan shall be developed to monitor the success of the habitat replacement. A monitoring plan in accordance with the requirements identified in the boat dock construction permit shall be implemented. With the implementation of mitigation measures HWQ -5 and BR -5, the project's potential effect would be 9,846.06 square feet. With a mitigation ratio of 4:1 (as recommended by the California Coastal Commission), 39,384.24 square feet (0.90 acre) of suitable soft bottom benthic habitat and shorebird habitat would need to be replaced. With the implementation of mitigation measure LU -1, the project's potential effect would be 13.6 square feet. With a mitigation ratio of 4:1 (as recommended by the California Michael Brandman Associates 11 J:\Mannapark \0064ER20_Fwding.dm Madnapark Resort 6 Community Plan CEQA Findings and Findings of Fact Mitigated Project -Level and Cumulative Adverse Impacts Coastal Commission), 54.4 square feet (0.001 acre) of suitable soft bottom benthic habitat and shorebird habitat would need to be replaced. • BR-6 Prior to issuance of a building permit, the project applicant shall design an elevated walkway to the boat slips that is supported by piles. This would allow tidal circulation to pass underneath the proposed walkway and alleviate potential water quality stagnation. The following mitigation measure was added during the preparation of the Responses to Comments Document. Although the above mitigation measures would reduce the project -level and cumulative long -term loss of soft bottom habitat including a long -term loss of benthic invertebrates and food sources for fish, shorebirds and seabirds to less than significant, the following measure has been incorporated into the project to further reduce these impacts. LU -1 Prior to the approval of a planned community development plan, the project applicant will modify the proposed boat dock so that no permanent structure extends beyond the U.S. Pierhead Line. The proposed features are illustrated in Exhibits A and B. The floating dock is comprised of an 8 -foot by 260 -foot platform anchored inside the pierhead line by eight (8) fourteen -inch pre- stressed guidepiles embedded in the bay bottom. The floating dock is anticipated to accommodate up to six (6) 30 -foot boats, or a greater number of shorter watercraft. An 80 -foot pivoting, American with Disabilities Act - compliant gangway provides pedestrian access to the floating dock from a stationary 10'by 14' platform anchored through intertidal sands on four (4) pre- stressed concrete guidepiles. The platform is connected by stationary walkway supported on four (4) pre- stressed concrete guidepiles and extending from the upland side of the sandy beach at • elevation approximately 9 feet. 2.3.3 - Significant Impact Localized long -term impacts to fish resources will occur as a result of the long -term loss of soft bottom fish foraging habitat. This long -term loss is considered a significant project -level and cumulative impact. Finding Changes or alterations have been required in, or incorporated into the project, which mitigate or avoid the significant effects on the environment. Facts in Support of Finding The project -level and cumulative significant effects have been eliminated or substantially lessened to a level that is less than significant by virtue of the following mitigation measures as identified in the final EIR and incorporated into the project. BR-6 Prior to approval of the boat dock construction permit issued by the U.S. Army Corps of • Engineers and the California Coastal Commission, the project applicant shall identify the Michael Brandman Associates 12 J:\Nlannapmk\0064ER20-Findings.da Marinapark Resort 8 Community Plan CEQA Findings and Findings of Fact Mitigated Project -Level and Cumulative Adverse Impacts location of a suitable soft bottom benthic habitat and shorebird habitat replacement site. Furthermore, the replacement site shall be approved by the U.S. Fish and Wildlife Service, California Department of Fish and Game, and National Marine Fisheries Service. Based on the project's potential effect and a mitigation ratio of 4:1 (as recommended by the California Coastal Commission), 41,344.24 square feet (0.95 acre) would need to be replaced. In accordance with Public Resources Code 21081.6, a mitigation monitoring plan shall be developed to monitor the success of the habitat replacement. A monitoring plan in accordance with the requirements identified in the boat dock construction permit shall be implemented. With the implementation of mitigation measures HWQ -5 and BR -5, the project's potential effect would be 9,846.06 square feet. With a mitigation ratio of 4:1 (as recommended by the California Coastal Commission), 39,384.24 square feet (0.90 acre) of suitable soft bottom benthic habitat and shorebird habitat would need to be replaced. With the implementation of mitigation measure LU -1, the project's potential effect would be 13.6 square feet. With a mitigation ratio of 4:1 (as recommended by the California Coastal Commission), 54.4 square feet (0.001 acre) of suitable soft bottom benthic habitat and shorebird habitat would need to be replaced. The following mitigation measure was added during the preparation of the Responses to Comments Document. Although the above mitigation measure would reduce the project -level and cumulative long -term impacts to fish resources that would occur due to the long -term loss of soft bottom fish foraging habitat to less than significant, the following measure has been incorporated into the project to further reduce these impacts. LU -1 Prior to the approval of a planned community development plan, the project applicant will modify the proposed boat dock so that no permanent structure extends beyond the U.S. Pierhead Line. The proposed features are illustrated in Exhibits A and B. The floating dock is comprised of an 8 -foot by 260 -foot platform anchored inside the pierhead line by eight (8) fourteen -inch pre - stressed guidepiles embedded in the bay bottom. The floating dock is anticipated to accommodate up to six (6) 30 -foot boats, or a greater number of shorter watercraft. An 80 -foot pivoting, American with Disabilities Act - compliant gangway provides pedestrian access to the floating dock from a stationary IO'by 14' platform anchored through intertidal sands on four (4) pre- stressed concrete guidepiles. The platform is connected by stationary walkway supported on four (4) pre- stressed concrete guidepiles and extending from the upland side of the sandy beach at elevation approximately 9 feet. 2.3.4 - Significant Impact Grading and dredging activities, stormwater turbidity plumes and construction- related noise would result in changes to the federal and state listed endangered species California least tern and California brown pelican's foraging behavior. These construction activities would result in significant project- level and cumulative impacts to these species' foraging behavior. Michael Brandman Associates 13 J: .i.apark \0064ER20_Findings.dm Marinapark Resort 8 Community Plan CEQA Findings and findings of Fact Mitigated Project -Level and Cumulative Adverse Impacts Finding Changes or alterations have been required in, or incorporated into, the project, which mitigate or • avoid the significant effects on the environment. Facts in Support of Finding The project -level and cumulative significant effects have been eliminated or substantially lessened to a level that is less than significant by virtue of the following mitigation measures as identified in the final EIR and incorporated into the project. BRA Prior to the issuance of a grading permit, a stormwater pollution prevention plan (SWPPP) for construction activities that describes best management practices (BMPs) to reduce the release of potential pollutants into surface water shall be prepared by the project applicant for approval by the City of Newport Beach. The plan shall also identify how the BMPs will be implemented. The recommended list of BMPs is provided in mitigation measure HWQ -1 as described above. BR-4 Prior to the issuance of a grading permit, a water quality monitoring program shall be developed and implemented to ensure that all BMPs approved in the S WPPP and WQMPs are being used to lessen water quality impacts on Newport Bay. The monitoring program shall include provisions to monitor the health of marine life in the boat slip basin and the channel waters in front of the sand beach. This program shall also include a water quality monitoring program during "first flush" rainstorms following significant dry weather periods during construction and for a period of 5 years following construction, and monthly water turbidity sampling along the beachfront. If it is determined that Newport Bay water quality or marine life has been degraded, adaptive management techniques shall be implemented to correct water quality violations in order to prevent adverse effects on the bay's water quality and marine resources. 2.3.5 - Significant Impact Maintenance dredging or other maintenance in the boat slips would likely result in the periodic loss of eelgrass. This loss of eelgrass is considered a significant project -level and cumulative impact. Finding Changes or alterations have been required in, or incorporated into, the project, which mitigate or avoid the significant effects on the environment. Facts in Support of Finding The project -level and cumulative significant effects have been eliminated or substantially lessened to a level that is less than significant by virtue of the following mitigation measure as identified in the final EIR and incorporated into the project. Michael Brandman Associates 1:N1arutapaik \OWER20 Findings.dx Marinapark Resort B Community Plan CEQA Findings and Findings of Fact Mitigated Project -Level and Cumulative Adverse Impacts BR -7 Prior to maintenance dredging or other maintenance in the boat slips, the project applicant shall develop a plan to restore eelgrass habitat according to the Southern California Eelgrass Mitigation Policy. 2.3.6 - Significant Impact The long -term loss of the soft bottom habitat in the project area will result in a reduction of halibut nursery habitat. Finding Changes or alterations have been required in, or incorporated into, the project, which mitigate or avoid the significant effects on the environment. Facts in Support of Finding The project -level and cumulative significant effects have been eliminated or substantially lessened to a level that is less than significant by virtue of the following mitigation measures as identified in the final EIR and incorporated into the project. BR-6 Prior to approval of the boat dock construction permit issued by the U.S. Army Corps of Engineers and the California Coastal Commission, the project applicant shall identify the location of a suitable soft bottom benthic habitat and shorebird habitat replacement site. Furthermore, the replacement site shall be approved by the U.S. Fish and Wildlife Service, California Department of Fish and Game, and National Marine Fisheries Service. Based on the project's potential effect and a mitigation ratio of 4:1 (as recommended by the California Coastal Commission), 41,344.24 square feet (0.95 acre) would need to be replaced. In accordance with Public Resources Code 21081.6, a mitigation monitoring plan shall be developed to monitor the success of the habitat replacement. A monitoring plan in accordance with the requirements identified in the boat dock construction permit shall be implemented. With the implementation of mitigation measures HWQ -5 and BR -5, the project's potential effect would be 9,846.06 square feet. With a mitigation ratio of 4:1 (as recommended by the California Coastal Commission), 39,384.24 square feet (0.90 acre) of suitable soft bottom benthic habitat and shorebird habitat would need to be replaced. With the implementation of mitigation measure LU -1, the project's potential effect would be 13.6 square feet. With a mitigation ratio of 4:1 (as recommended by the California Coastal Commission), 54.4 square feet (0.001 acre) of suitable soft bottom benthic habitat and shorebird habitat would need to be replaced." BR -2 Prior to the issuance of a grading permit, a Resort Water Quality Management Plan (WQMP) for long -term activities within the resort and on the beach shall be prepared by the project applicant for approval by the City of Newport Beach. The Resort WQMP shall control urban constituents entering the existing storm drain system or entering surface water flows to the bay. The recommended list of BMPs is provided in mitigation measure HWQ -2 as described in Section 2.2.2. Michael Brandman Associates 15 J:\Marinapark\0064rR20-Findings.do Marinapark Resort 6 Community Plan CEQA Findings and Findings of Fact Mitigated Project-Level and Cumulative Adverse Impacts BR -3 Prior to the issuance of a grading permit, a Marina Water Quality Management Plan (WQMP) for long -term activities at the boat slips shall be prepared by the project applicant for approval by the City of Newport Beach. The Marina WQMP shall control pollutants from the boat slips from entering the bay. The recommended list of BMPs is provided in mitigation measure HWQ -3 as described in Section 2.2.2. The following mitigation measure was added during the preparation of the Responses to Comments Document. Although the above mitigation measure would reduce the project -level and cumulative impact to halibut nursery habitat due to the long -term loss of soft bottom habitat to less than significant, the following measure has been incorporated into the project to further reduce these impacts. LU -1 Prior to the approval of a planned community development plan, the project applicant will modify the proposed boat dock so that no permanent structure extends beyond the U.S. Pierhead Line. The proposed features are illustrated in Exhibits A and B. The floating dock is comprised of an 8 -foot by 260 -foot platform anchored inside the pierhead line by eight (8) fourteen -inch pre- stressed guidepiles embedded in the bay bottom. The floating dock is anticipated to accommodate up to six (6) 30 -foot boats, or a greater number of shorter watercraft. An 80 -foot pivoting, American with Disabilities Act - compliant gangway provides pedestrian access to the floating dock from a stationary 10'by 14' platform anchored through intertidal sands on four (4) pre - stressed concrete guidepiles. The platform is connected by stationary walkway supported on four (4) pre- stressed concrete guidepiles and extending from the upland side of the sandy beach at elevation approximately 9 feet. 0 2.3.7 - Potentially Significant Impact Eelgrass beds are planned to be transplanted along the shoreline between 15th Street and 19th Street as part of the U.S. Army Corps of Engineers Lower Newport Harbor Eelgrass Restoration Project in 2004. Potential significant project -level and cumulative impacts to the transplanted eelgrass can occur through stormwater and turbidity - related impacts associated with construction activities on the land. Furthermore, construction activities associated with the boat slips and cement walkway could potentially have significant project -level and cumulative, short -term impacts on eelgrass bed resources related to (1) vessel movement and damage from propellers and (2) increased levels of turbidity. Short -term increases in turbidity would lower levels of ambient light, creating less favorable growing conditions. Finding Changes or alterations have been required in, or incorporated into, the project, which mitigate or avoid the significant effects on the environment. 0 Michael Brandman Associates 16 7:\Mad.apwk \O%4ER20 Fiadwgs.dm Marinapark Resort & Community Plan CEQA Findings and Findings of Fact Mitigated Project -Level and Cumulative Adverse Impacts Facts in Support of Finding The project -level and cumulative significant effects have been eliminated or substantially lessened to a level that is less than significant by virtue of the following mitigation measures as identified in the final EIR and incorporated into the project. BR -1 Prior to the issuance of a grading permit, a stormwater pollution prevention plan (SWPPP) for construction activities that describes best management practices (BNIPs) to reduce the release of potential pollutants into surface water shall be prepared by the project applicant for approval by the City of Newport Beach. The plan shall also identify how the BNIPs will be implemented. The recommended list of BNWs is provided in mitigation measure HWQ -1 as described above. BR-4 Prior to the issuance of a grading permit, a water quality monitoring program shall be developed and implemented to ensure that all BNIPs approved in the SWPPP and WQNIPs are being used to lessen water quality impacts on Newport Bay. The monitoring program shall include provisions to monitor the health of marine life in the boat slip basin and the channel waters in front of the sand beach. This program shall also include a water quality monitoring program during "first flush" rainstorms following significant dry weather periods during construction and for a period of 5 years following construction, and monthly water turbidity sampling along the beachfront. If it is determined that Newport Bay water quality or marine life has been degraded, adaptive management techniques shall be implemented to correct water quality violations in order to prevent adverse effects on the bay's water quality and marine resources. The following mitigation measure was added during the preparation of the Responses to Comments Document. Although the above mitigation measure would reduce project -level and cumulative impacts to transplanted eelgrass to less than significant, the following measure has been incorporated into the project to further reduce these impacts. LU -1 Prior to the approval of a planned community development plan, the project applicant will modify the proposed boat dock so that no permanent structure extends beyond the U.S. Pierhead Line. The proposed features are illustrated in Exhibits A and B. The floating dock is comprised of an 8 -foot by 260 -foot platform anchored inside the pierhead line by eight (8) fourteen -inch pre - stressed guidepiles embedded in the bay bottom. The floating dock is anticipated to accommodate up to six (6) 30 -foot boats, or a greater number of shorter watercraft. An 80 -foot pivoting, American with Disabilities Act - compliant gangway provides pedestrian access to the floating dock from a stationary Why 14' platform anchored through intertidal sands on four,(4) pre- stressed concrete guidepiles. The platform is connected by stationary walkway supported on four (4) pre- stressed concrete guidepiles and extending from the upland side of the sandy beach at elevation approximately 9 feet. 2.3.8 - Significant Impact The long -term presence of the 3 17 -foot long bulkhead, the addition of 9 support pilings for the docks, and the 70 -foot long concrete walkway to the boat slips will result in the loss of sand beach and soft Michael Brandman Associates 17 JAMadaapa& \0064ER20_Findings.dw Marinapark Resort 8 Community Plan CEQA Findings and Findings of Fact Mitigated Project -Level and Cumulative Adverse Impacts bottom habitat. This loss of sand beach and soft bottom habitat is considered a significant project - level and cumulative impact. 0 Finding Changes or alterations have been required in, or incorporated into, the project, which mitigate or avoid the significant effects on the environment. Facts in Support of Finding The project -level and cumulative significant effects have been eliminated or substantially lessened to a level that is less than significant by virtue of the following mitigation measures as identified in the final EIR and incorporated into the project. BR-6 Prior to issuance of a building permit, the project applicant shall design an elevated walkway to the boat slips that is supported by piles. This would allow tidal circulation to pass underneath the proposed walkway and alleviate potential water quality stagnation. BR-6 Prior to approval of the boat dock construction permit issued by the U.S. Army Corps of Engineers and the California Coastal Commission, the project applicant shall identify the location of a suitable soft bottom benthic habitat and shorebird habitat replacement site. Furthermore, the replacement site shall be approved by the U.S. Fish and Wildlife Service, California Department of Fish and Game, and National Marine Fisheries Service. Based on the project's potential effect and a mitigation ratio of 4:1 (as recommended by the California Coastal Commission), 41,344.24 square feet (0.95 acre) would need to be replaced. In accordance with Public Resources Code 21081.6, a mitigation monitoring plan shall be developed to monitor the success of the habitat replacement. A monitoring plan in accordance with the requirements identified in the boat dock construction permit shall be implemented. With the implementation of mitigation measures HWQ -5 and BR -5, the project's potential effect would be 9,846.06 square feet. With a mitigation ratio of 4:1 (as recommended by the California Coastal Commission), 39,384.24 square feet (0.90 acre) of suitable soft bottom benthic habitat and shorebird habitat would need to be replaced. With the implementation of mitigation measure LU -1, the project's potential effect would be 13.6 square feet. With a mitigation ratio of 4:1 (as recommended by the California Coastal Commission), 54.4 square feet (0.001 acre) of suitable soft bottom benthic habitat and shorebird habitat would need to be replaced." The following mitigation measure was added during the preparation of the Responses to Comments Document. Although the above mitigation measure would reduce project -level and cumulative impacts to loss of soft bottom habitat to less than significant, the following measure has been incorporated into the project to further reduce these impacts. LU -1 Prior to the approval of a planned community development plan, the project applicant will modify the proposed boat dock so that no permanent structure extends beyond the Michael Brandman Associates 18 7:\Ma apark \O%4ER20_Findings.doc Marinapark Resort 8 Community Plan CEQA Findings and Findings of Fact Mitigated Pro /ect -Level and Cumulative Adverse Impacts U.S. Pierhead Line. The proposed features are illustrated in Exhibits A and B. The floating dock is comprised of an 8 -foot by 260 -foot platform anchored inside the pierhead line by eight (8) fourteen -inch pre- stressed guidepiles embedded in the bay bottom. The floating dock is anticipated to accommodate up to six (6) 30 -foot boats, or a greater number of shorter watercraft. An 80 -foot pivoting, American with Disabilities Act - compliant gangway provides pedestrian access to the floating dock from a stationary 10'by 14' platform anchored through intertidal sands on four (4) pre- stressed concrete guidepiles. The platform is connected by stationary walkway supported on four (4) pre- stressed concrete guidepiles and extending from the upland side of the sandy beach at elevation approximately 9 feet. 2.4 - AIR QUALITY (EIR section 5.6.) 2.4.1 - Potentially Significant Impact The proposed project has the potential to generate dust and exceed the SCAQMD established thresholds for ROG during the construction phase. Finding Changes or alterations have been required in, or incorporated into, the project, which mitigate or avoid the significant effects on the environment. Facts in Support of Finding The significant effect has been eliminated or substantially lessened to a level that is less than significant by virtue of the following mitigation measures as identified in the final EfR and incorporated into the project. During construction activities, the following dust control measures are required to comply with the South Coast Air Quality Control District's Rule 403. • Water all active construction areas at least twice daily; • Cover all haul trucks or maintain at least two feet of freeboard; • Pave or apply water four times daily to all unpaved parking or staging areas; • Sweep or wash any site access points and public roadways within 30 minutes of any visible dirt deposition on any public roadway; • Cover or water twice daily any onsite stockpiles of debris, dirt or other dusty material; • • Suspend all operations on any unpaved surface if winds exceed 25 mph; or Michael Brandman Associates 19 J:\Nfannapuk\OD64ER20_Fuidmgs.dm Marinapark Resort 6 Community Plan CEQA Findings and Findings of Fact Mitigated Project-Level and Cumulative Adverse Impacts Hydroseed or otherwise stabilize any cleared area which is to remain inactive for more than 96 hours after clearing is completed. 0 Following are the measures to reduce shod -term construction emissions of reactive organic gases during the application of architectural coatings related to finish work. AQ -1 Prior to the issuance of building permits, the building plans shall state that pre- coated building materials shall be used. AQ -2 Prior to the issuance of building permits, the building plans shall state that high pressure low- volume (HPLV) paint applicators with 50% efficiency shall be used. AQ-3 Prior to the issuance of building permits, the building plans shall state that lower volatility paint not exceeding 100 grams of ROG per liter shall be used. AQ-4 Prior to the issuance of building permits, the building plans shall state that adopt a construction traffic management plan shall be used. 2.5 - HAZARDS AND HAZARDOUS MATERIALS (EIR section 1.6.) 2.5.1 - Potentially Significant Impact 0 The proposed project will include the removal of structures on the project site. These structures may contain lead and asbestos materials. The presence of these materials could result in potentially significant impacts. Finding Changes or alterations have been required in, or incorporated into, the project which mitigate or avoid the significant effects on the environment. Facts in Support of Finding The significant effect has been eliminated or substantially lessened to a level that is less than significant by virtue of the following mitigation measure as identified in the final EIR and incorporated into the project. • Prior to the issuance of a demolition permit, the project applicant shall retain a lead and/or asbestos removal specialist to develop and implement a plan to remove any onsite lead and/or asbestos. • Michael Brandman Associates 20 1 \Marivapvk \0064ER20_Findings.do Marinapark Resort 8 Community Plan Additional Measures Incorporated into the Project CEQA Findings and Findings of Fact to Further Reduce Less Than Significant Impacts 0 SECTION 3: ADDITIONAL MEASURES INCORPORATED INTO THE PROJECT TO FURTHER REDUCE LESS THAN SIGNIFICANT IMPACTS The EIR analyzed the impacts identified as potentially significant during the preparation of the Initial Study/NOP for the proposed Project, and environmental issues raised by agencies and the general public in response to the Initial Study/NOP. Certain issues of concern to the public were determined not to raise significant adverse environmental impacts. For some of these less than significant impacts, the City has incorporated measures to further reduce a less than significant impact. Those issues and measures are discussed in this section of these Findings. 3.1 - HAZARDS AND HAZARDOUS MATERIALS (EIR SECTION 1.6.) 3.1.1 - Less Than Significant Impact The project is located within a quarter mile of Newport Elementary School. Certain materials used in the construction and operation of the Project may be hazardous. The following measure is incorporated into the project to further reduce the less than significant impact by allowing the City to more effectively monitor the materials used on the site. Additional Measure • During construction activities and operation of the proposed project, an inventory of material identified as inherently hazardous or hazardous that is stored or handled onsite as well as the quantity will be provided to the City. 3.2 - LAND USE (EIR section 5.4.) 3.2.1 - Less Than Significant Impact The EIR determined that the Project would have no significant adverse impacts on land use. In particular, with respect to the proposed construction of a dock outside of the U.S. Pierhead Line, the EIR determined that if the Project proceeded in accordance with U.S. Army Corps of Engineers . permits, it would not conflict with applicable land use regulations. Despite the lack of a significant adverse land use impact, however, the EIR identified significant adverse environmental impacts that Michael Brandman Associates 21 1:VlazinapWW641WO Fiadinp.do Madnapark Resort B Community Plan Additional Measures Incorporated into the Project CEQA Findings and Findings of Fact to Further Reduce Less Than Significant Impacts would be caused by the construction of the initially proposed twelve boat slips. These impacts include the following: 0 • Long -term loss of soft bottom habitat including a long -term loss of benthic invertebrates and food sources for fish, shorebirds and seabirds. • Localized long -term impacts to fish resources as a result of the long -term loss of soft bottom fish foraging habitat. • Periodic loss of eelgrass caused by maintenance dredging or other maintenance in the boat slips. • Reduction of halibut nursery habitat due to the long -term loss of the soft bottom habitat in the project area. • Potential significant, short-term impacts from construction of the boat slips to eelgrass beds planned to be transplanted along the shoreline between 15th Street and 19th Street as part of the U.S. Army Corps of Engineers Lower Newport Harbor Eelgrass Restoration Project in 2004. These impacts would be related to (1) vessel movement and damage from propellers and (2) increased levels of turbidity. Short-term increases in turbidity would lower levels of ambient light, creating less favorable growing conditions. • Loss of sand beach and soft bottom habitat resulting from the long -term presence of the • 317 -foot long bulkhead and the addition of 9 support pilings for the docks. Additional Measure To further mitigate the adverse environmental impacts identified above, the following measure is incorporated into the Project as an altemative to obtaining a U.S. Army Corps of Engineers permit to allow the proposed boat dock to extend beyond the U.S. Pierhead Line. LU -1 Prior to the approval of a planned community development plan, the project applicant will modify the proposed boat dock so that no permanent structure extends beyond the U.S. Pierhead Line. The proposed features are illustrated in Exhibits A and B. The floating dock is comprised of an 8 -foot by 260 -foot platform anchored inside the pierhead line by eight (8) fourteen -inch pre - stressed guidepiles embedded in the bay bottom. The floating dock is anticipated to accommodate up to six (6) 30 -foot boats, or a greater number of shorter watercraft. An 80 -foot pivoting, American with Disabilities Act - compliant gangway provides pedestrian access to the floating dock from a stationary 10'by 14' platform anchored through intertidal sands on four (4) pre - stressed concrete guidepiles. The platform is connected by stationary walkway supported on four (4) pre- stressed concrete guidepiles and extending from the upland side of the sandy beach at elevation approximately 9 feet. i !Michael Brandman Associates 22 l:vwi..wnk\OWEa20 Fiadings.dM Marinapark Resort 8 Community Plan CEQA Findings and Findings of Fact Feasibility of Project Alternatives • SECTION 4: FEASIBILITY OF PROJECT ALTERNATIVES CEQA requires that an EIR include an analysis of a reasonable range of feasible alternatives to a proposed project capable of avoiding or substantially lessening any significant adverse environmental impact associated with the project. The discussion of alternatives is required to include the "No Project" alternative. CEQA requires further that the City identify an environmentally superior alternative. If the "No Project" alternative is the environmentally superior alternative, an environmentally superior alternative must be identified from among the other alternatives. (CEQA Guidelines, section 15126.6.) As set forth in these Findings, the Project, with the Mitigation Measures incorporated, will have no remaining significant adverse environmental impact. Nonetheless, the City has, in addition to incorporating the recommended measures to mitigate the identified impacts, reviewed a range of potential alternatives to the proposed project. The Marinapark EIR discussed the No Project/No Development Alternative, the Marinapark Marine Recreation Alternative, and the Reduced Intensity Alternative. Each was designed to reduce some of the impacts identified as significant and adverse. • The City Council rejects each of the Alternatives, on the grounds that they are infeasible, fail to meet the objectives of the Project, or fail to avoid adverse environmental impacts, as set forth in greater detail below. 4.1 -NO PROJECT/NO DEVELOPMENT ALTERNATIVE This alternative would leave the existing mobile home park and recreational facilities in place, and would not allow any new land uses. No new environmental impacts would be created. The recreational facilities are consistent with the existing General Plan Land Use and Recreation and Open Space Elements. This alternative does not achieve the project objectives of redeveloping the site with uses permitted by tidelands restrictions, reducing the deficit in the City's tidelands fund, providing additional general fund revenue, or providing for additional marine - related facilities. Although this alternative is environmentally superior to the project, the City finds it to be less desirable than the proposed Project, and rejects it because it fails to meet several project objectives. This alternative will also not provide the economic benefits to the City, improved public access, and increased marine recreational facilities offered by the proposed project. 4.2 - MARINAPARK MARINE RECREATION ALTERNATIVE . This alternative was formulated by City staff to be consistent with the existing General Plan and with the intent of putting a City -owned property to use in satisfying needs and demands the City has heard Michael Brandman Associates 23 1:\Mainaparkk0064E1t2U Findings.dm Marinapark Resort & Community Plan CEQA Findings and Findings of Fact Feasibility of Project Alternatives from various segments of the community, including recreation facilities, marine facilities, slips for charter boats to support an existing commercial activity in the harbor. The alternative would remove . the mobile home park and develop 1.64 acres of parkland, 1.92 acres for a Girl Scout House /Community Center, 1.2 acres of tennis/basketball courts, 2.77 acres of beach/slip parking area, .50 acre of metered parking area, and 20 boat slips and a public boat launch. This alternative would have lesser impacts than the project on geology and soils because there would be fewer buildings subject to potential liquefaction. Hydrology and water quality impacts would be greater due to more impervious surfaces, surface parking lot and boat engine oil and gasoline released into the bay. Impacts to water quality and biological resources would be greater because of larger boat slips and the boat launch, causing more dredging and greater turbidity. Because a greater number of trips would result from this alternative than from the project, air quality and noise impacts also would be greater. This alternative is consistent with the General Plan Land Use and Recreation and Open Space Elements. It would have lesser impacts on aesthetics because there would be fewer buildings, and it would demand fewer public services than the project. This alternative would meet many of the project objectives, but it is uncertain whether it would reduce the tidelands deficit or provide additional general fund revenue. The City Council rejects this alternative because of its significant adverse environmental impacts and its inability to meet all project objectives. 4.3 - REDUCED INTENSITY ALTERNATIVE This alternative was developed to satisfy many of the project objectives, but with a lesser intensity of . visitor accommodations, with the intent of reducing environmental impacts that would result from the project. The alternative includes a smaller hotel, with 80 rooms, a 4,500 square foot freestanding restaurant and 12 boat slips, as well as the community facilities included in the project. This alternative would have lesser impacts than the project on geology and soils because there would be fewer buildings subject to potential liquefaction. Hydrology impacts would be similar to those of the project because impervious surfaces would be similar. The boat slips and their operation also would be similar to the hotel and cause similar impacts to biological resources. The large freestanding restaurant would generate more trips than the project, resulting in greater impacts on traffic, noise and air quality. This feature of the alternative also would result in more impacts on public services. Aesthetic impacts would be lesser because there would be fewer structures than the project includes. This alternative, like the project, would require amendments to the General Plan Land Use and Recreation and Open Space Elements. This alternative would meet many project objectives. The City Council rejects this alternative because although it would reduce certain environmental impacts, it would still have worse environmental impacts than the project as mitigated. 4.4 - ENVIRONMENTALLY SUPERIOR ALTERNATIVE CEQA requires further that the City identify an environmentally superior alternative. if the "No Project' alternative is the environmentally superior alternative, as in this case, the City must identify Michael Brandman Associates 24 7:\Marivapa lk \0064ER20_Findinp.d. Madnapark Resort d Community Plan CEQA Findings and Findings of Fact Feasibility of Project Alternatives an environmentally superior alternative among the other alternatives considered in the E1R (CEQA IsGuidelines, section 15126.6.). Comparing the remaining two alternatives, the Reduced Intensity Alternative generates less traffic than the Marine Recreation Alternative, and therefore has less severe 0 air quality and noise impacts. The Reduced Intensity Alternative also has fewer boat slips, which results in less dredging and fewer impacts to water quality and biological resources. Therefore, the City Council identifies the Reduced Intensity Alternative as the environmentally superior alternative. As set forth above, however, although each alternative was designed to avoid certain environmental impacts, the alternatives fail to reduce impacts to below the level of the proposed project, as mitigated. Michael Brandman Associates 25 JWacinapad< \0064U20_Finding.doc Exhibit B Mitigation Monitoring Program Cl 0 Exhibit B Mitigation Monitoring Program for the Marinapark Resort & Community Plan Prepared for: City of Newport Beach Planning Department 3300 Newport Boulevard Newport Beach, CA 92659 949.644.3210 Contact: James Campbell, Senior Planner Prepared by: Michael Brandman Associates 220 Commerce, Suite 200 Irvine, CA 92602 714.508.4100 Contact: Jason M. Brandman, Senior Project Manager July 21, 2004 Marinapark Resort B Community Plan - Mitigation Monitoring Program MITIGATION MONITORING PROGRAM When making "findings" pursuant to the California Environmental Quality Act (Public Resources Code §21081 of the), the public agency "shall adopt a reporting or monitoring program for the changes to the project or conditions of project approval, adopted in order to mitigate or avoid significant effects on the environment." This monitoring plan complies with Section 21081.6 of the California Public Resources Code. The responsible party for implementation of all mitigation measures is the City of Newport Beach and /or its designee. Mitigation Monitoring Program for the Marinapark Resort & Community Plan M tion itiga 40 r 40. ..: — ' . — — ti.. Mitigation Measure. Comments Ctbj ayppAment ::Sign Y• tWe for ', Off r!66 ," .. . GEOLOGY AND SOILS (SECTION 5.1) Prior to issuance of a grading permit, the grading plans shall state Building GS -1 that prior to receiving fill, the bottom of the excavated area shall be Department ripped 6 inches, watered as required, and compacted to at least 90 percent of maximum density. A geotextile fabric material shall be placed over the bottom of the over excavation. The fabric shall be placed at 6 -inch intervals to 30 inches below finished grade. GS -2 Prior to the issuance of a building permit, the project structures Building shall be designed with a slab that will be either a stiffened Department structural slab or a post- tensioned slab. HYDROLOGY AND WATER QUALITY (SECTION 5.2) HWQ -1 Prior to the issuance of a grading permit, a stormwater pollution Building prevention plan ( SWPPP) for construction activities that describes Department & best management practices (BMPs) to reduce the release of Code and Water potential pollutants into surface water shall be prepared by the Quality project applicant for approval by the City of Newport Beach. The Enforcement plan shall also identify how the BMPs will be implemented. The Division SWPPP shall not preclude incorporation of additional BMPs. • Dust Control: Water will be sprayed in newly graded areas to prevent dust from grading activities dust to be blown to adjacent areas. • Construction Staging: Specific areas will be delineated for storage of material and equipment, and for equipment maintenance, to contain potential spills. • Construction Tinting. Restrict in -water construction activities between March 31 and October I . • .Sediment Control: Sand bags or silt fences will be located along the perimeter of the site. Existing inlets and proposed area drains will be protected against intrusion of sediment. Michael Brandman Associates 1 l.'.MalmapakM64 ER_MWMP.do< r� • • 0 0 0 Marinapark Resort B Community Plan - Mitigation Monitoring Program Mitigation No. — ... — — - —I City Department ' Sign Mitigation Measure Comments Responsible for '"' Monitoring Off • I nun,,; I rackuig of ,and and stud on the local succt vs ill be avoided by tire washing and/or road stabilization. Street cleaning will be done if tracking occurs. • Ifasle Disposal. Specific area and /or methods will be selected for waste disposal. Typical construction waste include concrete, concrete washout, mortar, plaster, asphalt. paint, metal. isolation material. plants. wood products and other construction material. Solid waste will be disposed of in approved trash receptacles at specific locations. Washing of concrete trucks will be done in a contained area allowing proper cleanup. Other liquid waste will not be allowed to percolate into the ground. • Construction dewatering: Construction dewatering will require approved permits by the California Regional Water Quality Control Board and the City. • dfaintenance: Maintenance of BMPs will take place before and after rainfall events to insure proper operation. • Training: The SWPPP will include directions for staff training and checklists for scheduled inspections. • Construction l'Llucles: Construction vehicles will be inspected daily to ensure there arc no leaking fluids. If there are leaking fluids, the construction vehicles will be serviced outside of the project site area. • Turbidih•: Activities shall not cause not cause turbidity increases in bay waters that exceed: a) 20 percent if background turbidity is between 0 and 5 Nephelometric Turbity Units (NTUs): bl 10 percent if background is between 50 and 100 NTUs: c) 10 percent if background turbidity is greater than 100 NTUs. Monitoring of turbidity in bay water adjacent to boat slip construction will be conducted daily during construction activities that may cause turbidity. If activities exceed the above criteria. construction activities associated with causing turbidity will be discontinued until the above criteria is met. • Grease: Construction activities will not cause visible oil. grease, or foam in the work area or in the bay. • Silt curtains: Silt curtains will be placed within the bay so that all effluent from excavation activities will be contained within the construction zone. • Hauling Trucks: The project construction contractors wil I ensure that trucks hauling soil material to and from the project site will be covered and will maintain a 2 -inch differential between the maximum height of any hauled material and the top of the haul trailer. Haul neck drivers will water the load prior to leaving the site in order to prevent soil loss during transport. • Hecn� Equipment; Limit heavy equipment use on the beach to areas away from the high -tide line during construction. • H•cirogen Sidfide: Provisions shall be made, as necessary. for the treatment of hydrogen sulfide to comply with water quality standards and to control odors from the dewatering process. Michael Brandman Associates 2 1:Ularinapark�0061GR'_0 MM1tY.Jnc Marinapark Resort 8 Community Plan - Mitigation Monitoring Program Mitlgation No. �k — -- — — — — Mitigation Measure Comments . City Department Responsible for Monitoring Sign Off • Dre</Sr: /.1laa rl.11. Project operations will require that the scow doors used to release dredged material remain closed until the scows are towed to the disposal site. HWQ -2 Prior to the issuance of gradin-, permit, a Resort Water Quality Building Management Plan (WQMP) for long -term activities within the Department & resort and on the beach shall be prepared by the project applicant Code and Water for approval by the City of Newport Beach. The Resort WQMP Quality shall control urban constituents entering the existing storm drain Enforcement system or entering surface water flows to the bay. The Resort Division WQMP shall identify BMPs and how they will be implemented. The WQMP shall not preclude incorporation of additional BMPs. • Access: Provide easily accessible restrooms and trash receptacles. • Fire Fighting: Provide fire fighting and spill containment equipment. • Litter: Keep litter, pet waste, leaves, and debris out of street gutters and storm drains. • Chemicals. Apply lawn and garden chemicals sparingly and according to directions. • Household Hazardous Waste: Dispose of used oil, antifreeze, paints, and other household chemicals properly. Avoid spills of hazardous or polluting material and prepare guidelines for remediation of such occurrences. • Erosion Control: Control soil erosion by planting ground cover and stabilizing erosion -prone areas. • Signage. Affix signs educating user of the property about BMPs. • .Street Sweeping. Street sweeping of the grounds and trash collection. • inspection: Schedule regular inspections. • Trash Enclosures: Design trash container storage areas so that drainage from adjoining roofs and pavement is diverted around the storage. • Lang -Term Maintenance: As design progresses, the owner's plan for the long -term and continuous maintenance of all on -site BMP's requiring ongoing maintenance must be developed. This plan will include his acceptance of the responsibility for the on- site maintenance of all structural and treatment control BMPs. • lVOMP Distribution. Distribution of the Water Quality Management Plan report to the hotel staff and assignment of specific responsibilities by the owner. • Irrigaliar Design irrigation systems that: 1) include rain - triggered shut -off devices; 2) match irrigation requirements of specific plant species; 3) and include flow reducers or shut -off valves triggered by a pressure drop to control water loss in the event of broken lines or sprinkler heads. • Percolation: The project will decrease the amount of existing impervious areas and increase pervious landscaped areas. During the design of the project, special consideration will be Michael Brandman Associates JftMninpark \0064ER'_0_N M ,do 0 0 Marmapark Resort B Community Plan - Mitigation Monitoring Program • Mitigation � No. Mitigation Measure Comments ­i�cn to inaximire the use ufthe landxaped arca5.i> infiltraliun areas. Percolation of runoff into the ground through permeable areas will be maximized with such means as biofilters, green strips, landscaped swales, planters, and other retention/ percolation devices. Roof drains will be oriented towards permeable surfaces, grading of the site will take into consideration diverting runoff to permeable areas. The site will be graded so that the runoff flows through grassy swales before being collected in an underground system. Consequently, the surface flow travel time will be lengthened and peak discharges reduced. At inlets to underground drains, pollutants will be removed through installation of inlet basket/fifters inserts to remove trash and organic material. • !t'ater Quedit'v Systems: Two water quality systems are proposed for the project. The proposed units will be located towards the end of the proposed on -site storm drain system, as shown on Figure d, and designed to treat runoff water from paved parking areas that cannot be directed to pervious landscape. Typical systems consist of diverting the storm drain low flows, the "first [lush" or dry weather flows, to an off -line unit where treatment occurs. Treatment can be provided by filtration or settlement of pollutants, or a combination of both. Following the "first flush ", for storm event with peaks exceeding the capacity of the diversion structure, clean runoff will bypass the water quality system and flow to the bay. Common systems are off -line CDS Technology* units, on -line VortechsTM units, on -line CSR Stonnceptoi­Clu units or equivalent. The two proposed systems will remove pollutants flowing to the 18th Street and 15th Street storm drains, respectively. Pollutants removed by these units include trash, sediment, heavy metals, organic compounds and oil and grease. • Catch Basin F'illcr Inserts. The City of Newport Beach has been implementing the installation of catch basin filter inserts in West Balboa Boulevard. The Ultra- UrbamS) Filter with Smart Spongeli, developed and manufactured by AbTech Industries, has been used for effective filtration, efficient application, and moderate maintenance. The Ultra - Urbane Filter captures oil, grease, trash, and sediment from stormwater runoff before it enters the storm drain system. Trash and sediment accumulate in the internal basket while oil and grease are captured in the tltration media. Filter inserts are or will be installed in 18th Street and 15th Street existing inlets. The City of Newport Beach will provide maintenance of the filters within the street right -of -way. • Curb Drains. Curb drains, as a means of draining sump areas and roof drains via subsurface piping systems directly to the street gutter, will not be used for this project. Areas immediately adjacent to Balboa Boulevard. such as the Girl Scout site, Park and entrance driveway to the project. will be designed to direct runoff to landscaped areas. Small portions may use curb drains directing runoff to the City inlets and filter inserts. The curb drains, if used, will have a French drain system of perforated pipe and gravel to increase percolation. Michael Brandman Associates J:,Marin p,,k'0064HR20_MMR.doc City Department Sign Responsible for Off Monitoring Marinapark Resort 8 Community Plan - Mitigation Monitoring Program Mitigation No. Mitigation Measure Comments City Department city Responsible for Monitoring Off _ • .Sump Pump: In case the proposed I ennis.- Parking Structwc needs installation of a sump pump, direct discharge to the public right of way will not be permitted. Rather, discharge from the sump pump will be directed to the proposed water quality unit. • Storage and Maintenance Areas, Design will insure that runoff does not come into contact with loading and unloading dock areas, and repair and maintenance areas. Storage of material that may contribute pollutants to the storm water will be placed in an enclosure such as a cabinet, shed, or similar structure that prevents contact with runoff or spillage to the storm water conveyance system. These areas will also protected by secondary containment structures such as berms, dikes, or curbs. Outdoor material storage is not anticipated for this project. Trash receptacles will be protected from drainage from adjoining roofs and pavement and covered with roof or awning. • Irrigation Svstetn: A moisture - detecting or weather -based irrigation system will be used to eliminate over watering and dry weather flow. The landscaped areas will be graded to maximize percolation and avoid direct drainage to the local storm drain system. • Storm Drain Signage: Provide stenciling or labeling of all storm drain inlets and catch basins, constructed or modified, within the project area with prohibitive language such as: "NO DUMPING - DRAINS TO OCEAN ". HWQ -3 Prior to the issuance of a grading permit, a Marina Water Quality Harbor Management Plan (WQMP) for long -term activities at the boat Resources slips shall be prepared by the project applicant for approval by the Division & Code City of Newport Beach. The Marina WQMP shall control and Water pollutants from the boat slips from entering the bay. The Marina Quality WQMP shall identify BMPs and how they will be implemented. Enforcement The WQMP shall not preclude incorporation of additional BMPs. Division • Boat Afaintenance: Prohibit in -water boat maintenance and discharge of waste. • Harbor Permit: The Permittee of the Harbor Permit shall keep the area delineated on the harbor permit free from beached or floating rubbish, debris, or litter at all times. • Trash Enclosures: Provide trash receptacles located on the dock for refuse collection and provide for these receptacles to be emptied a minimum of once per week. • Waste Collection Bags: Provide plastic collection bags on the dock for the collection and disposal of pet waste. • Detergents. Use only biodegradable detergents and cleaning products when performing boat cleaning activities. • Fish Waste, Deposit fish waste only in designated trash receptacles or at designated fish cleaning stations. • Bilge Hater: Avoid the pumping of bilge water in the harbor. • Holding Tanks: On boats equipped with a holding tank equipped with a Y -valve and through -hull fitting, the valve should be closed and locked within the 3 -mile limit from shore. Michael Brandman Associates I.'.Mannapari,%0064 ERN MhlPAu i 0 0 0 9 Marmapark Resort 8 Community Plan - Mitigation Monitoring Program MitMitigation gatlo No. Mitigation Measure Comments City Department Responsible for Sign Monitoring � Ban Buckcis 1 nipty bait [)tickets unly in desiLtiated trash receptacles or at designated fish cleaning stations. • S'ignage. Post signs on the dock stating that it is illegal to discharge plastics or garbage containing plastics, discharge oil, or discharge raw sewage into any waters. • Educational Pamphlet: Create and distribute educational pamphlet describing activities that are allowed and activities that are prohibited regarding minor maintenance and cleaning activities. HWQ -4 A water quality monitoring program shall be developed and Building & Code implemented to ensure that all BMPs approved in the SWPPP and and Water WQMPs are being used to lessen water quality impacts on Newport Quality Bay. This program shall also include a water quality monitoring Enforcement program during "first flush" rainstorms following significant dry Division weather periods during construction and for a period of 5 years following construction, and monthly water turbidity sampling along the beachfront. If it is determined that Newport Bay water quality has been degraded, adaptive management techniques shall be implemented to correct water quality violations in order to prevent adverse effects on the bay's water quality. HWQ -5 Prior to issuance ofa building permit, the project applicant shall Building & design an elevated walkway to the boat slips that are supported by Planning piles. This would allow tidal circulation to pass underneath the Department proposed walkway and alleviate potential water quality stagnation. HWQ -6 Prior to the issuance of a grading permit, the project applicant shall Building & demonstrate through a drainage plan that onsite detention basins Public Works will be constructed so that peak storm water flow concentrations to Department the existing 18th Street and 15th Street storm drains will not be increased from flow concentrations prior to development of the project. BIOLOGICAL RESOURCES (SECTION 5.3) BR -1 Prior to the issuance of a grading permit, a stormwater pollution Building prevention plan (S WPPP) for construction activities that describes Department & best management practices (BMPs) to reduce the release of Code and Water potential pollutants into surface water shall be prepared by the Quality project applicant for approval by the City of Newport Beach. The Enforcement plan shall also identify how the BMPs will be implemented. The Division recommended list of BMPs is provided in mitigation measure HWQ -I in Section 5.2.5 in the Draft EIR. BR -2 Prior to the issuance of a grading permit, a Resort Water Quality Building Management Plan (WQMP) for long -term activities within the Department & resort and on the beach shall be prepared by the project applicant Code and Water for approval by the City of Newport Beach. The Resort WQMP Quality shall control urban constituents entering the existing storm drain Enforcement system or entering surface water flows to the bay. The Division recommended list of BMPs is provided in mitigation measure HWQ ? in Section 5.2.5 in the Draft EIR. Michael Brandman Associates Ji',Niarinapark \0064ER20 NII IPA« Marinapark Resort 8 Community Plan - Mitigation Monitoring Program Mitigati on - — - — Mitigation Measure Comments City Department Responsible for Sign No- Monitoring .Off BK -3 Prior to the issuance of a grading permit, a Marina Rater Quality Harbor Management Plan ( WQMP) for long -term activities at the boat Resources slips shall be prepared by the project applicant for approval by the Division S Code City of Newport Beach. The Marina WQMP shall control and Water pollutants from the boat slips from entering the bay. The Quality recommended list of BMPs is provided in mitigation measure Enforcement HWQ -3 in Section 5.2.5 in the Draft EIR. Division BR -4 A water quality monitoring program shall be developed and Code & Water implemented to ensure that all BMPs approved in the SWPPP and Quality WQMPs are bein, used to lessen water quality impacts on Newport Enforcement Bay. The monitoring program shall include provisions to monitor Division the health of marine life in the boat slip basin and the channel waters in front of the sand beach. This program shall also include a water quality monitoring program during "first flush" rainstorms following significant dry weather periods during construction and for a period of 5 years following construction, and monthly water turbidity sampling along the beachfront. If it is determined that Newport Bay water quality or marine life has been degraded, adaptive management techniques shall be implemented to correct water quality violations in order to prevent adverse effects on the bay's water quality and marine resources. BR -5 Prior to issuance of a building permit, the project applicant shall Building R design an elevated walkway to the boat slips that is supported by Planning piles. This would allow tidal circulation to pass underneath the Department proposed walkway and alleviate potential water quality Stagnation. BR -6 Prior to approval of the boat dock construction permit issued by the Planning U.S. Army Corps of Engineers and the California Coastal Department Commission, the project applicant shall identify the location of a suitable soft bottom benthic habitat and shorebird habitat replacement site. Furthermore, the replacement site shall be approved by the U.S. Fish and Wildlife Service, California Department of Fish and Game, and National Marine Fisheries Service. Based on the project's potential effect and a mitigation ratio of 4:1 (as recommended by the California Coastal Commission), 41,344 24 square feet (0.95 acre) would need to be replaced. In accordance with Public Resources Code 2108 1.6, a mitigation monitoring plan shall be developed to monitor the success of the habitat replacement. A monitoring plan in accordance with the requirements identified in the boat dock construction permit shall be implemented. With the implementation of mitigation measure BR -5, the project's potential effect would be 9,846.06 square feet. With a mitigation ratio of 4:1 (as recommended by the California Coastal Commission), 39,384.24 square feet (0.90 acre) of suitable soft bottom benthic habitat and shorebird habitat would need to be replaced. With the implementation of mitigation measure LU -1, the project's potential effect would be 13.6 square feet. With a mitigation ratio of 4:1 (as recommended by the California Coastal Commission), Michael Brandman Associates J AMarinap:uk10064 EF-10MMP.dec O 10 9 1 0 0 Marinapark Resort 8 Community Plan - Mitigation Monitoring Program Mitigation No. Mitigation Measure Comments City Department Responsible for Sign Monitoring Off 54. 1 square feet (0 001 acre) of suitable soil bottom he1l0iie hahiml and shorebird habitat would need to be replaced." BR -7 Prior to maintenance dredging or other maintenance in the boat Harbor slips, the project applicant shall develop a plan to restore eelgrass Resources habitat according to the Southern California Eelgrass Mitigation Division Policy. LAND USE AND PLANNING (SECTION 5.4) LU -1 Prior to the approval of a planned community development plan, Planning the project applicant will modify the proposed boat dock so that no Department permanent structure extends beyond the U.S. Pierhead Line. The proposed features are illustrated in Exhibits A and B. The floating dock is comprised of an 8 -foot by 260 -foot platform anchored inside the pierhead line by eight (8) fourteen -inch pre- stressed guidepiles embedded in the bay bottom. The floating dock is anticipated to accommodate up to six (6) 30 -foot boats, or a greater number of shorter watercraft. An 80 -foot pivoting, American with Disabilities Act - compliant gangway provides pedestrian access to the floating dock from a stationary 10'by 14' platform anchored through intertidal sands on four (4) pre - stressed concrete guidepiles. The platform is connected by stationary w'alkw'ay supported on four (4) pre - stressed concrete guidepiles and extending from the upland side of the sandy beach at elevation approximately 9 feet. AIR QUALITY (SECTION 5.6) During construction activities, the following dust control measures Planning and are required to comply with the South Coast Air Quality Control Building District's Rule 403. Department S • Water all active construction Water all active construction areas Code &Water at least twice daily; Quality • Cover all haul trucks or maintain at (east two feet of freeboard; Enforcement Division • Pave or apply water four times daily to all unpaved parking or staging areas; • Sweep or wash any site access points and public roadways within 30 minutes of any visible dirt deposition on any public roadway; • Cover or water twice daily any on -site stockpiles of debris, dirt or other dusty material; • Suspend all operations on any unpaved surface if winds exceed 25 mph; or • Hydroseed or otherwise stabilize any cleared area which is to remain inactive for more than 96 hours after clearing is completed. AQ -1 Prior to the issuance of building permits, the building plans shall Planning state that pre- coated building materials shall be used. Department Michael Brandman Associates J:`.Man napark10064 MO_MNIPA)c Marinapark Resort & Community Plan - Mitigation Monitoring Program Mitigation No. Mitigation Measure Comments City Department Responsible for Sign Monitoring Off AQ-2 Prior to the issuance of building permits, the building plans shall Planning state that high pressure low - volume (HPLV) paint applicators with Department 50% efficiency shall be used. AQ -3 Prior to the issuance of building permits, the building plans shalt Planning state that lower volatility paint not exceeding 100 grams of ROG Department per liter shall be used. AQ -4 Prior to the issuance of a grading permit, the grading plans shall Planning include a construction traffic management plan. Department S Traffic Division HAZARDS AND HAZARDOUS MATERIALS Prior to the issuance of a demolition permit, the project applicant Building shall retain a lead and/or asbestos removal specialist tc develop and Department implement a plan to remove any onsite lead and/or asbestos. During constriction activities and operation of the proposed Building project, an inventory of material identified as inherently hazardous Department or hazardous that is stored or handled onsite as well as the quantity will be provided to the City. Michael Brandman Associates J:\ Winapa,kM64ER20_MMP.doc 0 0 EIR =1 Draft Environmental Impact Report (Distributed separately due to bulk. Available for public review at the City's Planning Department) 0 EIR -2 Responses to Comments on Draft EIR dated July 2, 2004 (Distributed separately due to bulk. Available for public review at the City's Planning Department) 0 EIR =3 Planning Commission Staff Report for June 3, 2004 E CITY OF NEWPORT BEACH PLANNING COMMISSION STAFF REPORT Agenda Item No. 4 June 3, 2004 TO: HONORABLE CHAIRMAN AND MEMBERS OF THE PLANNING COMMISSION FROM: James Campbell, Senior Planner SUBJECT: Marinapark Resort and Community Plan and Draft Environmental Impact Report (PA 2003 -218) APPLICANT: Marinapark LLC (Formerly Sutherland Talla Hospitality) RECOMMENDATION Review the proposed project and DEIR, receive public comments, and provide direction on issues to be addressed for the public hearing on July 8, 2004. DISCUSSION Background Under terms of the agreement between the City of Newport Beach and Sutherland Talla Hospitality (now Marinapark LLC), the City is required to hold one Planning Commission public hearing and one City Council public hearing on the project EIR. Pursuant to the agreement, the Planning Commission will recommend to the City Council whether or not the EIR should be certified, but will not recommend whether to approve or disapprove the project. The City Council is to certify the EIR, if appropriate, and schedule the election on the General Plan amendment, but will not approve or disapprove the project. In making its decision on the details of the ballot measure, the City Council will have the ability to make some changes to the General Plan amendment request submitted by Marinapark LLC. Therefore, it would be appropriate for the Planning Commission to recommend changes to the General Plan amendment request, if the Commission believes changes would improve the project or reduce environmental impacts. 9 Marinapark Resort and Community Plan Planning Commission Staff Report June 3, 2004 Page 2 of 8 The Study Session is intended to give the Planning Commission and the public the opportunity to understand the project proposal, to begin reviewing the potential environmental impacts of the project, and to identify issues that need to be addressed for the Planning Commission's public hearing on the Final EIR on July 8, 2004. Project Description The Marinapark Resort Hotel and Community Plan is proposed on property currently occupied by the Marinapark Mobile Home Park, Las Arenas Park, Balboa Community Center, the Neva B. Thomas Girl Scout House, four public tennis courts, one -half basketball court, a children's play area, and a metered parking lot on an 8.1 -acre site on Balboa Blvd. between 15th and 18th Streets. The project applicant, Marinapark LLC, proposes to remove and /or demolish existing structures on the property and build a 110 -room luxury resort hotel that will include a lobby and registration area, a cafe, a restaurant, a bar, a ballroom, a swimming pool, separate spa and administration buildings, 12 boat slips and a subterranean parking garage. The following public facilities would be included in the project: surface parking lot, four tennis courts, a new two -story Community Center and Girl Scout facility, and a tot lot. EIR Certification Process 0 A Draft Environmental Impact Report (DEIR) has been prepared for the project and circulated for public comment on April 26, 2004. The DEIR was transmitted to the Commission previously. As required by the California Environmental Quality Act, the review period is 45 days and will end on June 9, 2004. During this time, affected government agencies and the public may submit written comments on the Draft EIR. To date, the City of Newport Beach Environmental Quality Affairs Citizens Advisory Committee and the Southern California Association of Governments have provided written comments on the Draft EIR (Attachment A). At the end of the Draft EIR circulation period on June 9th, written comments received and written responses to these comments will be included with the Draft EIR document in the form of the Final EIR for the project. On July 8, 2004, the Planning Commission will hold a public hearing and make its recommendation to the City Council as to whether or not to certify the Final EIR. The City Council will hold public hearings and consider the Planning Commission recommendation on the Final EIR on July 13, 2004 and on July 27, 2004. On July 27th, the City Council may certify the Final EIR if it determines that, after reviewing the document, the EIR was completed in compliance with CEQA and reflects the City Council's independent judgment and analysis. 9 0 Marinapark Resort and Community Plan Planning Commission Staff Report June 3, 2004 Page 3 of 8 Draft EIR Summary. The Marinapark Resort and Community Plan Draft EIR identifies the range of potential environmental impacts that could result from construction and operation of the proposed project. The range of impacts analyzed in the DEIR was based on an Initial Study (included in the DEIR) that concluded that no further analysis was needed for environmental issues related to agricultural resources, cultural resources, hazards and hazardous materials, mineral resources, population and housing, and recreation. The DEIR includes a description and analysis, by subject area (Land Use, Biological Resources, Air Quality, Traffic, etc.), of each impact determined to be potentially significant. Based on this analysis, a level of significance is assigned to each potential impact: "No Impact," "Less than Significant," or "Significant." Mitigation measures are identified for "significant' impacts. A level of significance is again assigned to each potential impact according to the extent that proposed mitigation measures may reduce the severity of the impact. Alternatives to the project that may result in lesser impacts on the environment than the proposed project are also evaluated in the Draft EIR. As shown in the "Executive Summary" (Page 2 -1) of the DEIR, the analysis concludes that, with implementation of recommended mitigation measures, no significant impacts to the environment would result from construction and operation of the proposed project. Potential environmental effects of the proposed project which can be mitigated so that no significant impacts result are indicated below. Mitigated Impacts Impact Mitigation Measure Geology and Soils Liquefaction of soils during an Building design and construction earthquake incorporating structural components that resist soil collapse Hydrology and Water Quality Degradation of water quality Preparation and implementation of a Stormwater Pollution Prevention Plan and Water Quality Management Plan incorporating best management practices Marinapark Resort and Community Plan Planning Commission Staff Report June 3, 2004 Page 4 of 8 Mitigated /in Impact Mitigation Measure Overload storm drain system Construction of on -site detention basins Biological Resources Cement walkway results in loss of Development of shorebird foraging shoreline habitat for shorebirds habitat replacement site Disruption of benthic resources Development of benthic habitat through loss of soft bottom replacement site and revision of slip plans habitat to include elevated walkway from beach to slips Long -term impacts to fish Development of benthic habitat resources through loss of soft replacement site bottom foraging habitat Disruption of California least tern Stormwater Pollution Prevent Plan and California brown pelican including Best Management Practices foraging behavior through site grading and bay dredging and construction noise Periodic loss of eelgrass through Development of a plan for restoration of maintenance dredging eelgrass habitat pursuant to Southern California Eelgrass Mitigation Policy. Loss of halibut nursery habitat Development of a benthic habitat replacement site and preparation and implementation of a Stormwater Pollution Prevention Plan and Water Quality Management Plan incorporating best management practices Construction, vessel movement, and increased turbidity levels could affect Eelgrass Restoration Project Bulkhead and support pilings for boat slips will result in long -term loss of sand beach and soft bottom habitat Preparation and implementation of a Stormwater Pollution Prevention Plan and Water Quality Management Plan incorporating best management practices Development of benthic habitat replacement site and revision of slip plans to include elevated walkway from beach to slips and development of a benthic habitat and shorebird foraging habitat replacement site 0 Impact Air Qualit Dust resulting from construction activities Exceed thresholds for Reactive Organic Gases through use of paint and other coatings in construction phase Mannapark Resort and Community Plan Planning Commission Staff Report June 3, 2004 Page 5 of 8 Mitigated Impacts Mitigation Measure Compliance with Air Quality Management District Rule 403 and adopt and implement a construction traffic management plan Use pre- coated materials, high pressure low- volume paint applicators with 50% efficiency, lower volatility paint The Executive Summary of the DER also includes environmental components that would not be adversely affected by project development and operation as shown below. Areas of No ImpactlLess Than Significant Impact . . Land Use: Project development is consistent with General Plan Policies and the Harbor and Bay Element and the Newport Beach Municipal Code and with the Local Coastal Program Land Use Plan policies on public access, views, parking, dock facilities, public restrooms and historic resource inventory; project complies with Zoning Code for Community Plans; project is compatible with nearby land uses and maintains public beach access and replaces existing recreation facilities; structures nearest the Bay will be one -story and structures adjacent to 1 5r and 18" Streets will be similar in scale to nearby buildings; Transportation: The project will generate a net increase of 520 average daily trips during the "shoulder' e.g. fall and spring season which, compared to existing traffic, does not represent a significant impact. The project would generate a net increase of 360 average daily trips during the summer season which, compared to existing traffic, does not represent a significant impact; Noise: The project is consistent with the City's performance standards for locating land uses in noisy environments; restriction of construction hours would reduce adverse effect of equipment noise to less than significant level; noise modeling indicates no increase in traffic-related noise levels; Aesthetics: Marinapark Resort and Community Plan Planning Commission Staff Report June 3, 2004 Page 6 of 8 The architectural features of buildings included with the project are consistent in size and scale with existing development and existing views to the bay from public rights - of -way will be substantially maintained; Public Services and Utilities: Existing public facilities and resources for police and fire protection were deemed adequate to serve the project based on interviews with the respective department representatives; facilities and infrastructure for solid waste disposal, water service, wastewater service, natural gas, and electricity were all deemed adequate for the needs of the project based on information from the respective service providers. Alternatives to the Marinapark Resort project are analyzed in the DEIR and their potential impacts are compared with those of the proposed project. Any of the alternatives may be determined to be environmentally superior if, overall, the magnitude of impacts is less than that of the proposed project. Each alternative, however, must also be evaluated in light of the project objectives identified by the applicant and City of Newport Beach and set forth in the DEIR as follows: • Complement efforts to revitalize Balboa Village and enhance other commercial areas on the Peninsula; 0 • Redevelop the site with land uses that are consistent with, and permitted by, the legal restrictions on the use of tidelands; • Reduce the current and anticipated future deficit between t6ideland revenue and tideland expenditures; • Provide additional general fund revenue that will help the City maintain or enhance the high level of public safety and municipal services provided to Newport Beach residents; • Enhance public access and community faci8lities on the site without any expenditure of tax revenue and without any fiscal impact on the Girl Scouts and other users; • Ensure that site redevelopment does not generate noise, glare or traffic that could adversely impact the residents in the vicinity or the American Legion adjacent to the site; • Provide for additional marine - related facilities that can be used by coastal visitors for sailing and boating. 0 Marinapark Resort and Community Plan Planning Commission Staff Report June 3, 2004 10 Page 7 of 8 Alternatives analyzed in the DEIR, the magnitude of overall impact compared with the project, and the extent to which each meets project objectives identified above are as follow: "No ProiecUNo Development Alternative" This alternative assumes that existing mobile homes and recreational facilities remain. No additional environmental impacts would result but this alternative would not meet project objectives for area revitalization, consistency with tidelands restrictions, reduction of tidelands deficit, generation of additional revenue, or provision of additional marine - related facilities. "Marinapark Marine Recreation Alternative" This alternative assumes removal of the mobile homes and development of new recreational facilities including 2 charter boat moorings, 20 boat slips, boat launch area, parkland, a Girl Scout/Community Center building, tennis/basketball courts, beach and boat slip parking area. This alternative would result in lesser impacts to geology and soils, aesthetics, and public services and utilities as compared with the proposed project. Impacts associated with land use and planning would be similar to those of the project. Impacts associated with hydrology and water quality, geological resources, transportation, air quality, and noise would be greater as compared with the proposed project. The Marine Recreation Alternative would meet project objectives related to area revitalization, consistency with tidelands restrictions, and provision of additional marine - related facilities. This alternative, however, may not reduce the tidelands revenue deficit and may not generate additional general fund revenue or enhance public access without an expenditure of tax revenue. "Reduced Intensity Alternative" This alternative assumes development of an 80 -room luxury resort hotel, a 4,500 square -foot restaurant, and 12 boat slips. This alternative would result in lesser impacts to geology and soils and to aesthetics as compared with the proposed project. Impacts associated with traffic, air quality, noise, and public services and utilities would be Mgreater for this alternative than for the proposed project. Similar impacts Marinapark Resort and Community Plan Planning Commission Staff Report June 3, 2004 Page 8 of 8 would be incurred for hydrology and water quality, geological resources, and land use and planning. Based on consideration of the relative impacts of each alternative compared with the proposed project, and on the extent to which each alternative and the proposed project satisfy the objectives set forth by the City of Newport Beach for redevelopment of the proposed project site, the proposed Marinapark Resort and Community Plan is deemed to be the Environmentally Superior Alternative consistent with guidelines set forth in CEQA. CONCLUSION The Study Session will allow members of the Planning Commission and the public to better understand the proposed project and to evaluate the basis for conclusions about potential environmental impacts set forth in the Draft EIR for the Marinapark Resort and Community Plan. The Study Session will prepare Planning Commissioners for the public hearing on the Final EIR on July 8, 2004, and for the ensuing recommendation to City Council on the Final EIR. Staff hopes for an extensive dialog where as many issues as possible can be highlighted so as to better prepare for the hearing scheduled for July 8, 2004. Prepared by: �l/ll C(Z41-W mes W. Campbefil, Senior Planner Attachments Submitted by: Patricia L. Temple, Nanning Director 1. Correspondence 2. Project conceptual plans — separate large format drawings 1] J 0 E This Page Left Intentionally Blank • l0 SOUTHERN CALIFORNIA ASSOCIATION of GOVERNMENTS Main Office 818 West Seventh Street 12th Floor Los Angeles, California 90017 -3435 t (213) 236 -i800 f(213) 236 -1825 www.scag.ca.goY BBrrers: President Counoilmember Ron Roberts. Temecula • Rust Yu President, Supervisor Hank Ill Imperial County • Second Vice President: Mayor Toni Young. Port Hueneme • Immediate Past PresidenL Cmncilmember Bev Perry. Brea Imperial Camur. Hank Wiper. Imperial County - Is Shields. Bawlw lips Angeles County: Ywnne Brathwaite Burke. Los Angeles County • ZwYamstanky, Lis Angeles County • Harry Baldwin. 'San Gabriel • Paul Bowler. Cerrtos • Tom Cardenas. Los Angeles - Magaret Clark Rosemead • Gene Daniels. Paramount • Mike Dispenza. Palmdale • Judy Dunlap. Inglewood • Eric Garcetli, Jas Angeles - Weedy Greuel. Los Angeles • Frank Guru@. Cudahy • James Hahn, Jas Angeles • Janice Hahn. Los Angeles • Isadore Hall, Compton • Tom Underlie. Los Angeles • Bonnie Lowentbal Lang Beach • Martin clefim Los Angeles • Keith McCorthy, Cowie, • ❑.1fi p Miller. Claremont - Candy Miscikmvski. Los Aegeles • Paul HOMtka. Ru nna • Pam O'Connor. same Monica • Au Padilla. Los Angeles • Bernard Parks, Ws Angeles Rm Perry, Los Angeles • Beatrice Prona.P co Rivea Ed Reyes, Ws Angeles • Greig Smith, Us Angeles Dirk Stanford Azusa • Tom Sykes. Walnut • Paul TalboL Altmmba• SidneyTyler. Par saena d• To m RJ uanga. lone Beach • Antonio Vdlawilm, Ices Angeles • Dennis washbum. Calabasas • lark W4iss, Los Angeles • Bob Youselfian. Glendale - Dennis Zinn. Los Angeles Dodge County. Chris Nmby, Orange County bnald Bates, Us Admires • Lou Bone, Tustin M Brown. Bue" park - Richard Chavez, Maheim Debbie Cook. Huntington Beach • Cathryn Delsoung, Muna Niguel • Richard Diaan. Like forest • Aha Duke. Le Palma • Bw Pert.. Brea - Tod Ridges Wy. Newport 8ea6 Iiveside Uunty: Marion Ashley. Riverside County • Thomas Buckl, lake nsioore • Bonnie Rickingee Morena Valley • Ron Loeeridge, Rk,oside • Greg Pettis. Cathedral Cdy • Ron Roberts. Temecula An Bernardino County: Paul &one, San Bernardino County • Bill Aluasder, Rancho �Rbonga • Edward Bulgarian, Town of Apple 40ey • Uwrmce Dale. Bara w • Les Ann Garcia. Sonal Terbe,- Sown langdlk. San Bemardino• Say Wit Ontano • Deborah Robertson. Rialto Aeadraa Comfy: Judy Millets, Ventura County - Slen Becerrz. Simi Valley• Cad Morehouse. San 4¢ndrenWa • Toni young. Port Hueneme kaoge County Transportation Authority: tonics Smith. Charlie County twmside County Ransportatgn Commiesion: fobiu Uwe, Hemet Visa County transportation CommBsuid: Bill hews, Srmi Valley I IYUd meaMee lacer M"hMrn May 19, 2004 Mr. James Campbell Senior Planner Newport Beach Planning Department 3300 Newport Boulevard Newport Beach, CA 92658 -8915 RE: SCAG Clearinghouse No. Community Plan Dear Mr. Campbell: RECEIVED BY PLANNING DEPARTMENT CITY OF NEWPORT BEACH MAY 2 6 2DD4 PM 71819110 1111121112,3141516 1 20040258 Marinapark Resort & Thank you for submitting the Marinapark Resort & Community Plan for review and comment. As areawide clearinghouse for regionally significant projects, SCAG reviews the consistency of local plans, projects and programs with regional plans. This activity is based on SCAG's responsibilities as a regional planning organization pursuant to state and federal laws and regulations. Guidance provided by these reviews is intended to assist local agencies and project sponsors to take actions that contribute to the attainment of.regional goals and policies. We have reviewed the Marinapark Resort & Community Plan, and have determined that the proposed Project is not regionally significant per SCAG Intergovernmental Review (IGR) Criteria and California Environmental Quality Act (CEQA) Guidelines (Section 15206). The proposed project is not a residential development of more than 500 dwelling units. Therefore, the proposed Project does not warrant comments at this time. Should there be a change in the scope of the proposed Project, we would appreciate the opportunity to review and comment at that time. A description of the proposed Project was published in SCAG's April 16 -30, 2004 Intergovernmental Review Clearinahouse Report for public review and comment. The project title and SCAG Clearinghouse number should be used in all correspondence with SCAG concerning this Project. Correspondence should be sent to the attention of the Clearinghouse Coordinator. If you have any questions, please contact me at (213) 236 -1867. Thank you. Sincerely, JEFFREY M. SMITH, AICP Senior Regional Planner Intergovernmental Review 0 0 li MEMORANDUM To: James Campbell, Senior Planner Planning Department, City of Newport Beach From: Environmental Quality Affairs Citizens Advisory Committee ( "EQAC ") City of Newport Beach Subject: The City of Newport Beach's Draft Environmental Impact Report ( "DEIR ") for the implementation and development of the Marinapark Resort and Community Plan (the "Project ") Date: May 28, 2004 Thank you for the opportunity to provide these comments on the captioned DEIR for the Project. I. A Brief Summary of Our Concerns. We recommend that the City reconsider and revise the DEIR and/or respond to the following concerns during the public review process for the DEIR. Because of the concerns listed below, we believe that the City should revise the document and re- circulate the revised document for public review and comment. We make these recommendations for several reasons: (1) The DEIR fails to describe the Project fully and accurately, thereby undercutting the public's and decision maker's ability to understand the Project, determine impacts of the Project and evaluate mitigation measures. (2) The DEIR fails to recognize and analyze potentially significant impacts discussed in the Initial Study/Notice of Preparation for the DEIR including impacts regarding hazards and hazardous materials, and recreation. (3) The DEIR fails to discuss and analyze all Project related impacts including those associated with Transportation/Circulation, Land Use, Hydrology and Water Quality and other issues, as well as cumulative impacts for all issues analyzed. (4) The DEIR fails to analyze fully the growth inducing impacts of the Project and/or provide mitigation for such impacts. (5) The DEIR fails to analyze and discuss fully the Project alternatives and assess objectively the environmentally superior alternative. 12 EQAC Page 2 May 28, 2004 H. Introduction: EIR Standards. which: An EIR constitutes the heart of CEQA: An EIR is the primary environmental document ".. serves as a public disclosure document explaining the effects of the proposed project on the environment, alternatives to the project, and ways to minimize adverse effects and to increase beneficial effects." CEQA Guidelines section 15149(b). See California Public Resources Code section 21003(b) (requiring that the document must disclose impacts and mitigation so that the document will be meaningful and useful to the public and decision makers.) Further, CEQA Guidelines section 15151 sets forth the adequacy standards for an EIR: "An EIR should be prepared with a sufficient degree of analysis to provide decision - makers with information which enables them to make a decision which takes account of the environmental consequences. An evaluation of the environmental effects of a proposed project need not be exhaustive, but sufficiency of an EIR is to be reviewed in the light of what is reasonably feasible. Disagreement among experts does not make an EIR inadequate, but the EIR should summarize the main points of disagreement among the experts. The courts have looked not for perfection but for adequacy, completeness, and a good faith attempt at full disclosure." Further, "the EIR must contain facts and analysis, not just the agency's bare conclusions or opinions." Concerned Citizens of Costa Mesa. Inc. v. 32nd District Agricultural Association (1986) 42 Cal. 3d 929 (Emphasis supplied). In addition, an EIR must specifically address the environmental effects and mitigation of the Project. But "[t]he degree of specificity required in an EIR will correspond to the degree of specificity involved in the underlying activity which is described in the EIR." CEQA Guidelines section 15146. The analysis in an EIR must be specific enough to further informed decision making and public participation. The EIR must produce sufficient information and analysis to understand the environmental impacts of the proposed project and to permit a reasonable choice of alternatives so far as environmental aspects are concerned. See Laurel Heights Improvement Association v. Regents of the University of California (1988) 47 Cal. 3d 376. Also, to the extent that an EIR proposes mitigation measures, it must provide specific measures. It cannot defer such measures until some future date or event. "By deferring environmental assessment to a future date, the conditions run counter to that policy of CEQA which requires environmental review at the earliest feasible stage in the planning process." Sundstrom v. County of Mendocino (1988) 202 Cal. App. 3d 296, 308. See Bozung v. Local Agency Formation Com.(1975) 13 Cal.3d 263, 282 (holding that "the principle that the environmental impact should be assessed as early as possible in government planning. "); Mount Sutro Defense Committee v. Regents of University of California (1978) 77 Cal. App. 3d 20,34 (noting that environmental problems should be considered at a point in the planning process "where genuine flexibility remains'). CEQA requires more than a promise of mitigation of significant impacts: mitigation 13 EQAC Page 3 May 28, 2004 measures must really minimize an identified impact. II. Section 1: Introduction and Effects Found Not to be Siznificant (Section 1.6). The Introduction discusses general CEQA issues, formatting of the DEM, the IS/NOP, the scoping process and effects found not to be significant. The latter— "Effects Found Not to be Significant' — raises substantive concerns. Section 1.6 notes that, during the scoping process, various impacts were found to be potentially significant, whereas others were found not to be significant. These latter include "Hazards and Hazardous Materials," and "Recreation." For various reasons discussed below, these are potentially significant impacts: the DEIR should include a detailed discussion and analysis of such impacts, and propose necessary mitigation. A. Hazards and Hazardous Materials. Appendix A of the DEIR includes the Initial Study, Environmental Checklist and the Discussion of Environmental Evaluation. The Checklist Item No. VII addresses Hazards and Hazardous Materials. Item No. VII b) indicates that it is less than significant that the Project would create a significant hazard to the public or the environment through reasonably foreseeable upset and accident conditions involving the release of hazardous materials. However, Item No. VII c) indicates that the Project may have a potentially significant impact by emitting hazardous emissions 40 or handling hazardous or acutely hazardous materials, substances, or waste within one - quarter mile of an existing school. Item No. VII d) indicates that the Project may have a potentially significant impact unless mitigated in that the Project is located on a site which is included on a list of hazardous materials sites and as a result would create a significant hazard to the public or the environment. The Discussion of these Items is helpful. Under Item No. VII b), the Discussion notes that, because of the presence of motorized construction equipment, there is a small risk of gasoline or diesel spillage. However, the Discussion concludes that such is less than significant. Under Item No. VII c), the Discussion notes that the Project is within one - quarter mile of Newport Elementary School. It states that an inventory of materials and quantities used in construction and operation of the Project will be created. If necessary, any hazardous materials will be identified and mitigation measures proposed. As for Item No. VII d), the Discussion explains that past or present on -site and off -site uses have the potential to result in the release of toxic substances. "[P]roject implementation will require the removal of onsite structures, which depending on date of construction may contain lead or asbestos materials. A regulatory database review will be conducted for the proposed project, results of the database review will be summarized in the EIR and the review results included in their entirety as an appendix to the document. Mitigation measures will be recommended as appropriate." 'ti EQAC Page 4 May 28, 2004 The DEIR does not address the IS/NOP analysis. Instead, the DEIR concludes that the Project's impacts on hazards and hazardous materials are insignificant For gasoline or diesel spillage, the DEIR includes a similar analysis as the IS/NOP: the risk is less than significant. For proximity to schools including Newport Elementary, the DEIR is silent. As discussed below, it refers to a (Limited) Phase II Soils Assessment but concludes no significant impact. The .Phase II assessment is not attached as an appendix. The DEIR notes that the analysis identified small concentrations of trace petroleum hydrocarbons, metals and organocholorine pesticide in and around portions of the Project site. Submarine sediment samples indicated low concentrations of various but unidentified hydrocarbons. The DEIR fails to keep the promise of the IS/NOP: the DEIR includes no "regulatory database review and summary." Moreover, it fails to include the Phase II study or make such available for public review. Incidentally, the DEIR states that such contaminants are below action levels; yet it provides no indication as to what those action levels are. Given the promise of the IS/NOP, the DEIR should be revised to include items discussed above, and the revised DEIR should include a thorough analysis of all such impacts. Moreover, the conclusions of the Phase II study seems implausible. The Project's location is near the mouth of the Rhein Channel which we understand is regarded as highly polluted. Although the IS/NOP appeared to recognize this challenge, the DEIR fails to consider and analyze the Project's impacts including destruction and removal of existing docks and structures, construction and installation of new docks and structures, and other Project related activities on submarine sediment in and around this problematic water body. In addition, we understand that Chevron or another company had a storage facility near the Project site in the past. The DEIR should include an analysis and/or study of any emissions from the storage site and any Project related impacts arising from disturbance and/or release of any hazardous materials from such site or contamination from such site as a result of the construction and operation of the Project. Also, as discussed below, notwithstanding the DEIR's conclusion that the Project will have no significant impact on hazards and hazardous materials, the DEIR discusses the Project's hazards and hazardous materials impacts in relation to biological resources. The DEIR's analysis of hazards in relation to biological resources undercuts the DEIR's conclusions that Project's impacts on hazards and hazardous materials are insignificant. B. Recreation. The DEIR also regards the Project's impacts on recreational opportunities as insignificant However, Project features and configuration themselves require environmental analysis in order to make such conclusion. The Project "will replace all recreational facilities except the basketball half - court." DEIR, 1 -6. This raises several problems. At the outset, the demolition and replacement of existing facilities will have short-term construction impacts on all of these recreational opportunities. Without more analysis and jS EQAC Page 5 May 28, 2004 • discussion, such impacts appear to be significant, at least in the short term. Further, the replacement of such facilities is problematic: without further analysis and perhaps mitigation, it is unclear that the replaced facilities will provide access and have features similar to the existing facilities. Further, the elimination of the half -court basketball facility requires further analysis and discussion. This resource appears to be unique: it's configuration and alignment may make it more popular than full court facilities in the area. Also, the Project's resort proposes joint use of the recreational facilities. Without more analysis, such use may significantly and adversely affect residents' use of the Project facilities. Finally, a crucial Project alternative is a recreation alternative. In order to assess, analyze and evaluate the alternatives, the DEIR should include an analysis of the Project's impacts on recreational opportunities. C. Conclusion. The DEIR should be revised to include a full environmental analysis of the Project's impacts on hazards and hazardous materials, and recreation. III. Section 2: Executive Summary. The Executive Summary attempts to summarize the Project Description (discussed below), the areas of controversy /issues to be resolved, and a summary of impacts and mitigation. Section 2.2 addresses areas of controversy /issues to be resolved. It notes: "The area of controversy associated with the proposed project is the intensification of land uses on the project site. The location of the tideland boundary is an issue that is to be resolved." Both of these are problematic. As to the area of controversy, "intensification of land use" improperly simplifies the issues: the area of controversy is the replacement of the current designated use— Recreational and Environmental Open Space — with a commercial use which requires a General Plan Amendment and other approvals. The DEIR's statement about the issue to be resolved— tideland boundary— is surprising. The DEIR should resolve this issue in its analysis of the existing site. The DEIR's failure to resolve this issue undercuts its usefulness. Moreover, Section 3.4 indicates that, among other permits, the Project will require a lease of tidelands. In order for the public and decision makers to understand the Project's impacts on tideland boundaries and the impacts of this lease, the DEIR should include a detailed discussion of the tidelands location, and the nature and extent of such lease. Without resolving this issue in the DEIR the document cannot fulfill its own requirements. • Section 2.5 includes a table which identifies Project impacts and mitigation. For a discussion of Project impacts, see our discussion below. However, as to mitigation, Table 2 -1 raises a general problem: deferral of mitigation measures. As indicated above, CEQA requires i� EQAC Page 6 May 28, 2004 environmental review at the earliest feasible stage in the planning process. For each mitigation • measure identified in Table 2 -1, each measure is deferred to some future event or permit issuance. In order to understand the nature and extent of mitigation and to assess whether the proposed mitigation fully and adequately addresses the impact, the DE1R should fully identify and discuss all mitigation measures, discuss how such measures will lessen impacts to a level of insignficance, and if necessary, provide alternative mitigation measures for any measure which does not fully mitigate identified impacts. W. Section 3: The Project Description Section 3. 1.1 discusses Site Characteristics. Among other things, the DE1R notes that the Project site is bound by "a public beach and Newport Bay to the north." Although Section 3. 1.1 discusses many of the current site characteristics, it fails to discuss the location and character of the tidelands issue. This issue may affect the Project, the analysis of the Project impacts, the alternatives analysis and related matters. The DE1R should include a full discussion of the tidelands boundary issue, resolve the issue, locate the boundary, and discuss all Project related impacts. Among other features, the Project includes twelve (12) new boat slips and replacement of public tennis courts on the deck of the proposed parking structure. As to the boat slips, the DE1R states that this feature will require dredging of approximately 1,250 to 1,750 cubic yards of bay sediment to create the boat basin; this "clean sand" will be placed on shore side of a proposed Project related bulkhead. This raises several issues. The Project includes twelve (12) new marina slips with four (4) available for public use and eight (8) available for Project guests. The current forty -six (46) American Legion slips will remain. However, the DE1R fails to discuss the relation of the American Legion slips to the Project feature slips. Also, the IS/NOP and the DE1R recognize that the Project may affect hazards and hazardous materials. As discussed above, these two documents are inconsistent in their assessment of the Project's impacts on hazards. However, given that the Project requires removal and relocation of 1,250 to 1,750 cubic yards of bay sediment, the DE1R should fully address the character of this sediment, analyze any impact to hazards and hazardous materials, and, if necessary, provide mitigation. Further, it is unclear where this excavation will occur especially in relation to the tidelands boundary. As noted above, the DE1R fails to discuss the tidelands location. The DE1R should provide a clear description of the location of this excavation in relation to the tidelands, and if necessary, provide adequate mitigation. Regarding the tennis court, the Project description notes their location but fails to address public access to this Project feature. Indeed, the Project description fails to discuss all sorts of public access issues. How does the public gain access to the beach? Does the beach remain a public beach? What are the public access features for all Project related structures including the community center, tot lot, and parking? 17 EQAC Page 7 May 28, 2004 Also, the Project is entitled the "Marinapark Resort & Community Plan." The Project description includes no reference to the "Community Plan." The revised DEIR should fully explain the Project including the "Community Plan." Incidentally, the Project description includes some internal inconsistencies which require explanation and resolution: First, exhibit 3 -3, Site Plan, shows the Girl Scout House and the Spa Villa to be 4,166 square feet each; however Table 3? -1 on the next page states that the Girl Scout House /Community Center and the Spa Villa will be 6,191. Second, the Site Plan shows shared parking at the comer of 18"` Street and Balboa Boulevard, but further in the document, in the Aesthetics section, the computer - generated visual simulations shows two -story villas at this comer. Section 3.3 discusses Project Objectives. These Objectives include several economic/commercial objectives: "Complement efforts to revitalize Balboa Village and enhance other commercial areas on the Peninsula; Provide additional general fund revenue that will help the City maintain or enhance the high level of public safety and municipal services provided to Newport Beach residents. • Enhance public access and community facilities on the site without any expenditure of tax revenue and without any fiscal impact on the Girl Scouts and other users." DE1R, 3 -8. The DEIR includes no detailed discussion of these and other objectives. However, it is unclear that such objectives are appropriate for the Project site and the current environmental analysis. The only Project Alternative in the DEIR which meets these economic objectives is the Project Given these economic objectives, the DEIR should include an economic analysis which shows how and why the Project meets these and other objectives, pro -rides a detailed discussion of City revenues from the Project including lease payments, taxes and other sources of revenue, and other economic considerations appropriate. Section 3.4 addresses "Intended Uses" of the DEIR. The section identifies various discretionary approvals by the City. It notes: "Other actions necessary to implement the project are identified later in the section under `Other Discretionary and Ministerial Actions. "' DE1R, 3 -9. However, the DEIR contains no such section. The DEIR should be revised to include a full fist of all discretionary approvals by all agencies. Finally, the DEIR inadequately covers permitting and approvals: the election requirement. We understand that the City proposes to submit this Project to the voters. The DEIR should discuss this requirement, and explain its relation to the CEQA process and Project approval. u I's EQAC Page 8 May 28, 2004 V. Section 4: General Description of Environmental Setting. Section 4.1 addresses the environmental setting. As indicated above, nothing in the DEIR locates the tidelands boundary. These section should be revised to include a discussion and, perhaps, a map of such boundary. Further, we understand that the Marinapark mobile home park is a park on City owned land with a lease. The DEIR recognizes that the park is a 40 -year facility but fails to discuss the lease hold, its term, the landlord and other crucial and important terms. Section 4.2 discusses related projects. It notes that the City provided several related projects; presumably, Table 4 -1 is the list provided. However, it is incomplete. First, as indicated in the Project objectives, DEIR recognizes that in the Project vicinity, the City and others are engaged in "efforts to revitalize Balboa Village and enhance other commercial areas on the Peninsula" These efforts are related projects and should be included in the cumulative impacts list. Among other efforts, we understand that several plans to develop live /work projects in and around the Project vicinity are pending. Likewise, these plans should be included in the cumulative impacts list. VI. Section 5: Proiect Impacts, Mitigation Measures, and Level of Significance After Mitigation. A. Section 5.1: Geology and Soils. • Section 5.1 address geotechnical impacts of the Project. The DEIR includes a geotechnical report for the site. Among other things, the DEIR notes that "[ Liquefaction occurs when shallow, fine to medium - grained sediments saturated with water are subjected to strong seismic shaking. Liquefaction usually occurs when the underlying water table is 50 feet or less below the surface." DEII; , 5.1 -2. Also, the DEIR notes that expansive soils are those which can give up or take on water. Id. The DEIR notes that, although the onsite soils are not expansive, "[t]he potential for liquefaction during a major seismic event is considered to be high." As noted above, liquefaction may depend on depth to groundwater. The DEIR should state depth to groundwater at the site, discuss the soils character, explain why, though the sands will hold water, they are not expansive and related issues. Moreover, Section 5.1.4 considers two mitigation measures. As before, this section fails to discuss depth to groundwater. The two mitigation measures depend upon permit issuance: the first depends upon issuance of a grading permit and concerns aspects of the grading plans. However, it fails to state the depth if any of such grading. The second depends upon issuance of a building permit and concerns slab alteratives. However, the section fails to determine which slab type will be employed. lot EQAC Page 9 May 28, 2004 B. Section 5.2: Hvdroloey and Water Quality. Section 5.2 concerns hydrology and water quality. This section notes that the Project will have short-term construction impacts on water quality and hydrology, long term operational impacts and cumulative impacts. Construction impacts include soils erosion, trash and debris which may leave the Project site. In addition, construction activities in connection with the marina will include re- introduction of contaminants through construction activities which may "resuspend" bottom sediment as well as increase in turbidity. Long term operational impacts include increased flow concentrations at a majority of Project related storm drains with a decrease in several such drains. In addition, the Project will increase peak flows during 100 -year storm events along 18a' and 15"` Streets while flows along Balboa Boulevard would decrease somewhat. Water quality impacts of the Project include trash, debris, oil and grease, and other pollutants including heavy metals, oxygen demanding substances, nutrients and organic compounds. Further, installation of a cement walkway from the resort to the marina will interrupt tidal flows and water circulation, and may create stagnant water conditions. Finally, the DE1R recognizes that the Project "will substantially contribute to a potential significant cumulative impact on existing storm drain systems." It will "also increase urban pollutants that would substantially contribute to a potential significant cumulative impact on surface water quality." The DE1R includes five mitigation measures. Most of these mitigation measures defer mitigation measures until issuance of grading permits. This analysis and mitigation is problematic for several reasons. The impacts analysis fails to discuss current drainage and percolation, as well as the proposed drainage and percolation of the Project. Also, the DE1R fails to consider several potential mitigation measures. Increasing pervious surfaces may limit surface water run -off. Indeed, Section 7, the Alternatives Analysis, states that the Project is superior to the Marine Alternative due to its increase of pervious surfaces. Yet the DE1R fails to discuss this issue, analyze the nature and extent of such surfaces, and, if necessary, propose mitigation. In addition, the Project together with other revitalization efforts may significantly affect the storm drain capacity. Yet, the DE1R does not consider whether the Proj ect may require re- sizing of storm drains in the vicinity. Also, none of the mitigation measures address the Project's cumulative impacts on hydrology and water quality. Mitigation of such impacts could include establishment of stormwater mitigation program for a comprehensive upgrade of the storm drains on the Peninsula. The Proj ect could contribute its fair share to such a mitigation program. MON EQAC Page 10 May 28, 2004 Further, as indicated above, such deferral of specific mitigation measures does not comply with the requirements of CEQA which requires full discussion of all impacts and mitigation. Deferral of the development of various mitigation measures until some permitting or pursuant to various regulatory bodies including the City and/or the Regional Water Quality Control Board is not informative: precise Project features and mitigation are deferred until after the public and decision makers have had an opportunity to review, comment and in the case of decision makers, decide on the DER and the Project. The DER should be revised to discuss fully all water quality and hydrology impacts, and provide specific and enforceable mitigation measures to lessen any such impacts. C. Section 5.3: Biological Resources. Section 5.3 concerns the Project's potential impacts on biological resources. Section 5.3.1 addresses existing conditions including sediments and habitats and marine biological communities near the Project As indicated above, the DER includes no detailed discussion of hazards and hazardous materials. Section 5.3.1 repeats the earlier discussion regarding low levels of pollutants. Further, in discussing sub -tidal bay floor sediments, the DER states that environmental site assessment indicates the presence of low concentrations of petroleum hydrocarbons in the upper one -half foot of the bay mud. This is inadequate: as indicated above, the Project will require excavation of between 1,250 to 1,750 cubic yards of "bay mud." Testing on the upper one -half foot fails to test the full extent of • this excavation. The DER should be revised to include a full analysis of hazards and hazardous materials so that the entire environmental analysis of the Project's impacts including hazards and hazardous materials and biological resources. Also as indicated above, the analysis indicates that contaminates including those in sub -tidal bay sediments are below action levels for soils on land but fails to provide the action levels. The revised DER should provide this information, or indicate that they are the same as those for soils on land. In addition, in connection with the existing conditions regarding bay fishes, the DER relies on a otter trawl net sampling of fish species known to occur in Newport Bay that was conducted for eighteen (18) months between 1974 and 1975. This sampling would seem to be too out -of -date to be of any value in assessing the number of species in the Bay and the proposed Project's potential impact on those fish species. The DER should be revised to include a more recent sampling or more recent information on the fish species known to occur in Newport Bay and consider the Project's impacts on identified species. Also, if for some reason the thirty year old study remains useful, the revised DER should explain the utility of this thirty year old study and alternatives. In assessing the Project's impacts on shoreline habitats and resources, the DER states that "(t)he proposed cement walkway from the resort hotel to the boat slips will result in the loss of approximately 490 square feet of sandy shoreline which is foraging habitat for shorebirds. This • long -term loss is considered significant." Page 5.3 -7 Since the site currently has an existing concrete walkway, it is unclear how the new walkway will have this kind of impact Based on the %( EQAC Page 11 May 28, 2004 conclusion that there will be this significant impact, it appears that the Project walkway must differ from the existing walkway, e.g. project out further into the shoreline. This is not clear from the Project Description or anywhere else in the DEIR. Further, the DEIR is inconsistent in discussing this impact. As stated above, on Page 5.3 -7, the DEIR characterizes the loss of foraging habitat for shorebirds as significant. However, on Page 5.3 -9, the DEIR states: "No direct mortality of shorebirds and seabirds will occur. The long -term presence of the boat slips, bulkhead and concrete walkway will however, reduce shorebird and seabird resting and foraging habitat, however, this is not considered a significant impact." An accurate assessment of the impacts to birds should be provided in the Final EIR, and this inconsistency should be corrected. The DEIR contains another and important inconsistency. Section 5.3.3 recognizes that Project construction will have an impact on benthic communities in the Project area However, Section 53.3 concludes that "[t]he loss of benthic infauna and epifauna due to dredging will be a short-term less than significant impact." This conclusion is problematic: dredging Aill continue through the life of the Project. Thus, such impact may be more than short term. Moreover, Section 5.3.6 states that regarding biological resources, "[w]ith the implementation of the above mitigation measures, only one significant unavoidable adverse impact would remain." DEM, 5.3 -13. "This impact would occur during the short-term and would be on the benthic resources that would be removed from the bayfloor during proj ect and maintenance dredging activities." Id. However, Section 6.1 concludes that there are no significant and unavoidable impacts. The DEIR should be revised to resolve this inconsistency: either the impact on benthic resources is significant or not. Moreover, such impacts will be more than long term: impacts on benthic resources will occur during Project construction as well as maintenance dredging. Also, as indicated above, all Biological Resources Mitigation Measures are deferred until the issuance of either a grading permit or a permit from a resource agency. This deferral of mitigation is not permissible under CEQA. In addition, most of the Mitigation Measures list various regulator} plans, e.g. stormwater pollution prevention plan ( "SWPPP ") which describes best management practices ( "BMPs "). However, the analysis is incomplete and generic; all of these Mitigation Measures appear to be boilerplate, with no direct reference to the impacts to biological resources present at the proposed Proj ect site or the actual mitigation proposed. The DEIR should include an appropriate expert analysis to discuss Project specific impacts and mitigation as well as to develop the various regulatory plans. The discussion of mitigation measures in this section seems more appropriate for a program level analysis. The Final EIR should more fully discuss the impacts and mitigation proposed. 2Z EQAC Page 12 May 28, 2004 D. Section 5.4: Land Use and Plannine. Section 5.4 addresses the proposed Project's consistency with various elements of the General Plan. Section 5.4.1 describes existing conditions including the Land Use Element of the General Plan. It provides regarding the Project site: "The existing mobile home park use will be allowed to continue until the end of the existing lease. At that time the City will make the decision as to whether the lease should be further extended, or the property converted to public use." DEIR, 5.4 -4. The DEIR then states that this description "indicates that the existing mobile home park is not consistent with the existing land use designation for the site." Id. However, in Section 5.4.3 which addresses Project impacts, the DEIR fails to discuss and analyze the Project's consistency with this requirement of conversion "to public use" at the end of the existing lease. Also, this section indicates that the Project will not divide the community, because "[a]ccess to and through the project site is maintained." DEIR, 5.4 -8. However, as indicated above, public access to and through the Project is unclear. Moreover, as discussed in Section 5.7, Noise, the Project will serve as a sound barrier which will block vehicular noise from Balboa Blvd. to the Project. If the Project serves as such a barrier, it likely will divide the community. The DEIR should be revised to show the access points and routes from Balboa Blvd. through the Project to the Bay. In addition, Section 5.4.3 discusses the Land Use Element, Policy C which provides: "Commercial, recreation or destination visitor serving facilities in and around the harbor shall be controlled and regulated to minimize congestion and parking shortages, to ensure access to the water for residents and visitors, as well as maintain the high quality of life and the unique and beautiful residential areas that border the harbor." DEIR, 5.4.9. Emphasis added. However, the DEIR's discussion of parking requirements shows that although the Project will provide a total of 209 surface and subterranean parking spaces, the Project demand is only 92 spaces under the current Code requirements; the Project will result in a total of 117 excess parking spaces. 0 This raises a few problems or questions. First, the code requirements appear at odds with Policy C's requirements. Moreover, the Code requirements seem skimpy: one space for every two rooms; one space for 300 square feet of the proposed Community Center and Girl Scout House; and four spaces for the four tennis courts. Likely, each visitor enjoying a Project/resort room will require one parking space; likely, each individual using the tennis courts will require parking. The DEM should include a further study regarding the parking demand of the Project to ensure that Policy C of the Land Use Element is met. 0 v EQAC Page 13 May 28, 2004 In our earlier comments on the NOP for the proposed Project, we noted that the Project Description failed to discuss employee, contractor and supplier parking and access. The DEIR also fails to discuss how parking and access will be provided within the proposed Project for these groups. The Section goes on to say that the proposed Project will provide 117 parking spaces beyond what is required by the code. Perhaps these "excess" parking spaces are intended to accommodate employees, contractors and suppliers, but this issue is not addressed in the DEIR. The DEIR should be revised to address the issue of parking for these groups, because parking on the Peninsula is such an important issue. As indicated here and below, Section 5.4 addresses the Project's parking demands and Section 5.5, Transportation/Circulation includes no parking analysis. This confusion creates another problem. Although Section 5.4 discusses the Project's parking requirements, it fails to discuss existing parking including street parking. We believe that the Project will result in a loss of parking spaces from current levels. Based upon our information and calculations, the following is a tabulation of the parking spaces which the Project will cause to be lost: Metered public parking at 18"' street curbside 5 Metered public parking at 18th street lot 23 Community Bldg. Staff 2 Girl Scouts dedicated and gated 10 Public Parking at Tot lot 2 Total Lost Spaces 42 Given this loss of 42 spaces as a result of the Project, there is an excess of only 75 spaces That is, the loss of parking spaces as a result of the Project must be counted against the excess parking spaces. The DEIR should be revised to include a thorough parking analysis under Section 5.6 and, if necessary, propose adequate mitigation. Further, the Project is proposed as a Five Star resort hotel with 110 rooms and fifty-eight (58) employees. We understand that other Five Star hotles in the area require a much higher ratio. As indicated above, the DEIR has eliminated Recreation from the environmental issues to be addressed, even though Recreation had been included in the NOP. The DEIR states that the half court basketball court doesn't get much use, according to City's recreation staff; and therefore, will not be replaced. Page 5.4 -12 However, residents of the Peninsula do, in fact, use the court. Because the court is protected from the wind by its location on the Bay side of the Peninsula and between the tennis courts, it is preferred over the full court located on the ocean side at the elementary school. In fact, the City has recently completed some repairs to the court, presumably because it is used. The Final E1R should address this impact and provide necessary mitigation. Further, the DEIR states that the proposed Project would replace the four tennis courts with the same number of courts, but the hotel would offer tennis lessons on the courts. How will this impact the current heavy use of the tennis courts? The Final ElR should include a Recreation section, which analyzes these proposed Project's impacts and provide necessary mitigation. Further, Section 5.4.1 and following sections include a discussion of the Recreation and Open Space Element of the General Plan stating that it has "been determined to be applicable to the zy EQAC Page 14 May 28, 2004 proposed project ..." In fact, the DEIR states that "(t)he project site is designated Recreation and Environmental Open Space." DEIR, 5.4 -3. The DEIR mentions that Charter Boats and Boat Tours may pass the Project. The Project may accommodate some of these boats. The DEIR should address all impacts associated with such large boats and propose necessary mitigation. In addition, any Project permit should condition such use so that any and all such impacts are mitigated, or if not, should restrict such use. One of the objectives of the Recreation and Open Space Element is to "[m]aintain and enhance the scenic character of the City." The policy which supports this objective seeks to "protect and enhance existing view opportunities, especially public views of the ocean, harbor, and upper bay ...." Section 5.4.3 states that the Project would provide view corridors from Balboa Boulevard to the Bay; and therefore, the proposed Project is consistent with the objective of the Recreation and Open Space Element. However, the views from Balboa Boulevard through the majority of the proposed Project site will be obstructed by 24 -foot, 27 -foot or 34 -foot buildings which will act as a sound barrier. The Final E1R should analyze this impact more realistically and provide necessary mitigation. Finally, the DEIR states that because the Project is compatible with surrounding land uses and consistent with the General Plan and the Local Coastal Program, Land Use Plan, the Project will not have any cumulative land use impacts. However, the Project requires discretionary actions, e.g. amendments, regarding the City's General Plan and Local Coastal Program, Land Use Plan as well as a Coastal Development Permit. As discussed above, the Project together with other projects listed in Table 4 -1 as well as the efforts to revitalize the Peninsula may create significant cumulative impacts in connection with land use. The DEIR should be revised to discuss and address such cumulative impacts. Incidentally, the DEIR offers inconsistent building setback requirements on IS th Street. In the discussion relating to land use compatibility, the DEIR states that "(t)he structures proposed along the 18'h Street will have a setback of 14 to 17 feet. Page 5.4 -8 However, the Aesthetics Section lists a building setback for 18th Street as 5 feet. This inconsistency should be corrected in the Final EIR. E. Section 5.5: Transportation/Circulation. Section 5.5 addresses transportation and circulation. This analysis is supported by a special traffic study, Appendix E: Marinapark Resort and Community Plan TP 0: Traffic Analysis. This analysis focuses on 7 intersections during weekdays of the "shoulder season," fall and spring when schools are in session. The intersection closest to the proposed project is Newport Blvd. and 32 0d St. Sections 5.5.5 concludes that the Project will have no significant transportation and circulation impacts; Section 5.5.6 concludes that therefore no mitigation measures are needed. However, Table A -1 to Appendix E recognizes what every summer visitor to the Peninsula and frill -time resident knows: the summer weekend traffic in the vicinity of Balboa Blvd. and 20"' St is already at LOS E or worse which exceeds the City's standard of acceptable service, LOS D. Although the Project traffic may not exceed the 1 % increase threshold, it likely will contribute to the existing traffic problem Moreover, as indicated above, the Project together with other projects `Z-S EQAC Page 15 May 28, 2004 identified in Table 4 -1 as well as the revitalization efforts on the Peninsula likely will have cumulative impacts which require mitigation. The City may wish to consider improved traffic flow measures in this area to include, for example, limited on- street parking, better turn -out lanes and improved traffic signal timing/synchronization. In our comments on the IS/NOP for the Project, we requested that the DEIR "analyze and, if necessary, propose mitigation for Project impacts on seasonal traffic problems ". It further requests that the DEIR "discuss and analyze the Projects design and impact on the intersections at 15", 161" , 17"' and 18v' streets with Balboa Blvd." The DEIR did not take the suggestion and none of these intersections were addressed. The DEIR should be revised to address these intersections, provide an environmental analysis of the Project's impacts on transportation in the vicinity, and, if necessary, propose mitigation. Further, traffic associated with Resort employee, construction and service vehicles is not mentioned in the DEIR. Are there plans to schedule deliveries and plans for off -site employee parking to minimize traffic impacts? Correlatively, the DEIR does not address traffic access and internal circulation at the site. As indicated above, the DEIR states that the Project will not have significant impacts on vehicular access and, by implication, no impacts on internal circulation. Yet, the document is silent on these issues. The DEIR should be revised to address and consider vehicular access and internal circulation, identify any Project related impacts, and propose necessary mitigation. Also, the Project may have short-term impacts on transportation and circulation. Section 5.6 suggests that the Project will require a construction traffic management plan. Yet, Section 5.5 contains no analysis of the short-term construction impacts of the Project on transportation and circulation. The DEIR should be revised to include an analysis of the short term construction impacts on traffic and circulation, discuss the construction traffic management plan, and, if necessary, propose adequate mitigation. Finally, as discussed briefly above, the DEIR attempts to address parking demands in connection with the Land Use analysis which discusses code requirements for the Project. However, the DEIR should include an actual study on the parking demands for the Project which considers and addresses all Project features. However, Section 5.5 should include a parking study which addresses the Project's parking demands, access to parking lots, and related issues. The DEIR should be revised to address these potentially significant impacts and, if necessary, propose mitigation. F. Section 5_6: Air Quality. Without any analysis of hazards and hazardous materials in or around the Project site, the DEIR concludes that the Project will have no impacts on air quality in that the Project will "not result in exposure of sensitive receptors to substantial concentrations of pollutants or generate objectionable odors." DEIR, 5.6 -12. • ZG EQAC Page 16 May 28, 2004 However, without the hazardous materials analysis, this conclusion is difficult to support. • As indicated above, the Project is near several areas subject to significant contamination. Such may have migrated to the site. The DEIR should be revised to include an analysis of such materials and pollutants, the air quality analysis should be revised to include and refer to the pollutant analysis, and if necessary, mitigation should be proposed. G. Section 5.7: Noise. Section 5.7 addresses potential noise impacts associated with the Project As indicated in Section 3. 1.1 and elsewhere, the Project is partially surrounded by residential neighborhoods. Such are sensitive noise receptors. Section 5.7.3 recognizes that the Project's heating, air conditioning and ventilation equipment may create minor amounts of noise but. concludes that such noise is commonplace. However, the Project's operations will include other non - commonplace noise sources including delivery and trash trucks, employee transportation and other vehicular noise sources not present under the current configuration. The DEIR should be revised to include a noise study of the Project impact on residences including those along 19th St. and Rest Bay, and 1 Ss' St. and Rest Bay. If necessary, the revised document should propose adequate mitigation measures. In addition, the Project may attract other noise sources including Charter Boats and Boat Tour operators. Such new sources likely will generate noise sufficient to adversely affect the residential neighborhoods. The DEIR should analyze all such impacts including noise impacts to • residential neighborhoods across the bay and propose adequate mitigation. Further, Section 5.7.3 indicates that a primary noise source is traffic and that the Project will not be affected by noise from traffic on Balboa Blvd., because the buildings will block noise from Balboa Blvd. However, given this sound barrier, the Project may generate noise from various events which noise may adversely affect neighbors across the bay. Section 5.7 contains no discussion or analysis of such noise generation and impacts. The DEIR should be revised to include such an analysis and, if necessary, propose mitigation. Section 5.7 shows that noise levels associated with the Project will not be significantly higher than they are now except during the construction phase. Since Municipal Noise Codes are formulated in terms of 24 -hour average noise levels, it is likely that short term noise impacts may be significant without mitigation. In view of this, we recommend that the DEIR include mitigation measures to ensure that construction companies and crews should be required to use all reasonable care to minimize noise generation by silencing loud equipment when feasible, avoiding early morning deliveries, controlling construction-site radios, and so forth. These considerations will minimize neighborhood disturbance and potential complaints. Construction companies should be encouraged to build subassemblies off -site when possible. The supporting noise impact analysis, Appendix G, notes that construction equipment noise will reach 90 dB when operating at full load. This will probably result in exceeding acceptable noise levels at the original or relocated Tot Lot(children's play area) during construction. Mitigation of this effect in the form of sound barriers around the Tot Lot should be required. Z7 EQAC Page 17 May 28, 2004 H. Section 5.8: Aesthetics. Section 5.8 concerns the potential aesthetic impacts of the Project. Section 5.8.2 discusses Project impacts including those associated with public views, building heights, and setbacks. Among other things, the DEIR indicates that the Project will enhance public views. However, the DEIR is silent on the manner of enhancement. As indicated above, the DEIR maintains that the Project will create sound barrier so that vehicular noise will not reach Project visitors. Given this feature, it is unclear how the Project will enhance public views but diminish noise from Balboa Blvd. As indicated above, the DEIR contains some inconsistencies regarding set backs. The computer - generated visual simulations are helpful in illustrating the type of architecture and the overall look of the buildings. However, the simulations appear to have altered the lighting between the before and after condition. For instance, Exhibit 5.8 -2 clearly shows the architectural features of the Project in the after condition; the lighting in the before condition makes it impossible to assess what is there. In addition, there are some inconsistencies with what is being said in the text and what is being illustrated in the simulations; and in some cases, the computer simulations are misleading. In addition, there are inconsistencies within the text. The text on Page 3 -5 states that "(t)he maximum height proposed for the two -level villas is 27 feet while the proposed tower will be 34 feet in • height." The text on Page 5.8 -2 states that "the hotel will have a maximum height of 24 feet. The main lobby will have a height of 34 feet." However, the computer simulation, Exhibit 5.8 -3 shows a tower that appears to be 10 feet taller than the surrounding buildings. Will the main lobby area be 10 feet taller than the other hotel buildings? Considering that the hotel lobby is almost 20,000 square feet, which is nearly 20 percent of the "Total Enclosed Floor Area," Table 3.2 -1, Page 3 -5, the height and overall scale are not accurately represented in the computer - generated visual simulations. Also, all of the computer simulations show no overhead utility lines, though such lines exist today. Yet the DEIR contains no discussion of this Project feature. Please confirm that these utilities will be placed underground as a part of the Project In our comments on the IS/NOP, we stated the DEIR should analyze and address Project related aesthetic impacts to the character of Balboa Blvd., which will be substantially altered by the volume and mass of the structures that are proposed. The DEIR states that the setback for the proposed Project from Balboa Boulevard is 15 feet. Does this include the main lobby with a height of 34 feet? Again, this is not clear from the computer simulations. However, if that is the case, that volume and mass will have a considerable aesthetic impact on the character of Balboa Boulevard. Finally, Section 5.8.3 addresses cumulative impacts. It concludes that, because the projects listed in Table 4 -1 are remote from the Project, it would not contribute to any cumulative impacts. However, as indicated throughout, additional projects must be considered including the revitalization efforts in the Peninsula. The DEIR should be revised to consider and assess the cumulative impact of the Project together with the efforts to revitalize the area, and if necessary, propose mitigation. 297 EQAC Page 18 May 28, 2004 1. Section 5.9: Public Services. . 1. Section 5.9.1: Police Services. Section 5.9.1 concludes that, based upon a discussion with and/or statement from a member of the City's Police Department, the Project will have no significant impact on police services. The DER fails to discuss the authorization and position of Lieutenant Klein and his authority regarding manpower and service levels. Further, in our comments on the IS/NOP, we requested information regarding the number of service calls both for the Project as well as the other Project Alternatives. The DER contains no such information. In addition, the City has experienced demands on police services during the summer including on the Fourth of July. The Project may require additional staffing at this time as well as others. The DER should be revised to include the requested information, provide additional information concerning peak demands on police services including the Fourth of July, and, if necessary, provide mitigation, e.g. private security for the Project. ` 2. Section 5.9.2: Fire Services. Section 5.9.2 concerning fire services draws a similar conclusion as above is for similar reasons: based upon a discussion with and/or statement from a member of the City's Fire Department, the Project will have no significant impact on police services. The DER fails to discuss the authorization and position of Mr. Lerch and his authority regarding manpower and service levels. In addition, Section 5.9.2 observes that: "[W]ith two fire stations located within one mile of the project site, emergency response time would be adequate." This may be misleading: we understand that the responding station may not be the closest station. Moreover, staffing at the stations differ: only one of the referenced stations has medical personnel. In addition, as indicated above, the DER does not discuss access and internal circulation. Although the DER promises that emergency access roads and resources will be provided, the DER contains no discussion for such access and resources. The DEIR should be revised to provide this discussion. Also, this section states that for fire suppression, "the municipal water supply should be adequate." DEM, 5.9 -3. This statement should be stronger. The DER should be revised to include a study of the availability of fire suppression resources to ensure that the water supply will be adequate in the event of a fire. . Z? EQAC Page 19 May 28, 2004 • Both Section 5.9.1 and 5.9.2 indicate that the Project together with others will have no cumulative impacts on these services. However, as indicated above, the DE1R's cumulative impacts analyses for all impacts focuses upon Table 4 -1. The DEIR's cumulative impacts analysis should also consider the revitalization efforts on the Peninsula to ensure that the Proj ect together with the Table 4 -1 projects as well as the revitalization efforts do not have cumulative impacts on various resources including fire and police services. 3. Section 5.93: Solid Waste. Section 5.9.3 addresses solid waste issues. Section 5.9.3 estimates that in the existing condition, the Project site generates 522.31 pounds per day of solid waste. This section estimates that the Project will generate 403.5 pounds per day. These totals come from Tables 5.9 -1 and 5.9 -2. However, the estimate of waste generation for the existing condition seems high. Table 5.9- 1 addresses the existing condition and projects that the mobile home park generates 481.6 pounds per day. Although this estimate is based upon State of California estimates that a household generates between 4 and 8.6 pounds per day. Table 5.9 -1 uses 8.6 pounds per day. This is problematic for several reasons. The DEIR fails to explain why the existing condition uses the maximum expected trash generation. Further, the DEIR fails to consider that . many residents in the existing condition are only part time residents. Both of these would significantly lessen the estimate of the existing condition. Also, the projection for the Project seems low and fails to consider the type of solid waste generated by the Project. Much of the waste generated by the Project would include wet kitchen trash which would require more frequent collection. Also, we are unaware of any similar resort or hotel within the City that would generate such a small amount of solid waste. Section 5.9.3's cumulative impact analysis is likewise inadequate. The section contains no cumulative impact analysis: it merely concludes that the amount of waste would be an incremental contribution and would not be significant. The DEIR should be revised to study the solid waste generation both for the existing condition and the Project condition, and if necessary, propose mitigation. 4. Section 5.9.4: Water Service. Section 5.9.4 addresses water supply and service. Further, this section indicates that the Project will require relocation of the existing water main to a different alignment on the site. It concludes that this relocation will have no impacts. However, without more explanation, this is questionable. Residents, schools and other businesses in the area will suffer during the construction and relocation process. The DEIR fails to . recognize this impact and provide mitigation for these short term impacts. 6 EQAC Page 20 May 28, 2004 5. Section 5.9.5: Wastewater Service. Section 5.9.5 addresses waste water issues. Under existing conditions, the site generates a total of 7,093 gallons per day; the Project is proposed to generate more than three times this much: 22,553 gallons per day without any increased capacity to handle the increase flows. Moreover, the cumulative impacts analysis concludes that the Project together with future development will not create significant impacts. However, given that the Project will significantly increase demands on an aging infrastructure and the cumulative effect of the revitalization efforts on the Peninsula, the DEIR should include a study to insure that capacity and infrastructure are adequate and that the Project will have no significant wastewater impacts. 6. Section 5.9.6: Gas; and Section 5.9.7: Electricity. Both sections conclude that the Project will have no impact on these services. Both sections recognize that the Project will require twice as much gas and electricity as the existing condition. Moreover, both sections indicate that even Math this doubling together with future development including the revitalization of the Peninsula, the Project will not have cumulative impacts. The DEIR should be revised to include an analysis of the adequacy of resource supply as well as consider alternative sources, e.g. solar to replace electric consumption. If necessary, the . DEIR should propose adequate mitigation. VII. Section 6: Other CEQA Considerations. Section 6.1 addresses significant and unavoidable impacts. It concludes that the Project will have no such impacts. As indicated above, Section 5.3 indicates that even after mitigation, "only one significant unavoidable impact would remain" on benthic resources in or around the Project site. DEIR, 53-11 The DEIR should be revised or explained so that this problem is resolved, and the public and decision makers may understand the Project's impacts as well as the need for any additional findings. Section 6.2 concerns growth inducing impacts. As indicated above, the Project is part of a revitalization effort for the Peninsula. As such, the Project may have growth inducing impacts. As elsewhere in the DEIR, Section 6.2 fails to consider the Project in relation to these revitalization efforts. The DEIR should be revised to consider the Project's growth inducing impacts when considered with these revitalization efforts, and if necessary, propose mitigation. VIII. Section 7: Alternatives to the Proposed Proiect. A. Section 7.1: The No Protect Alternative. Under the No Project Alternative, the existing state is the project alternative. Section 7.1.2 states that the No Project Alternative is the environmentally superior alternative because it maintains the site in its existing condition. Nonetheless, because the No Project 3i EQAC Page 21 May 28, 2004 toAlternative will not meet any Project Objectives; the DEIR concludes that the No Project Alternative is not feasible. However, Section 7.1 is inadequate. First, the DEIR's analysis of the existing site is inadequate. The DEIR fails to discuss and explain all of the environmental impacts associated with the current use and the existing condition including hazardous materials, water quality, land use, and other issues of the existing condition of the site. As to the Project Objectives, as indicated above, some of the Project Objectives are problematic: the advancement of economic goals do not seem to be appropriate environmental goals. Further, and more importantly, the DEIR fails to discuss exactly how the Project meets or advances these economic goals. B. Section 7.2: The Marinaaark Marine Recreation Alternative. Section 7.2.1 discusses the Marine Alternative which includes parkland, land for the Girl Scout Center /Community Center, tennis and basketball courts, over 248 parking spaces, boat moorings and a boat launch. Section 7.2.2 is the impacts analysis for the Marine Alternative. This section concludes that the Marine Alternative would result in: less impacts than the Project to geology and soils, aesthetics and public services; similar impacts as the Project for land use and planning; and greater impacts than the Project for hydrology and water quality, biological resources, transportation/circulation, air quality and noise. Many of these latter stem from the analysis' estimate that the Marine Alternative would generate more traffic. However, this estimate is without substantiation or analysis. Indeed, it seems unlikely that this alternative will generate significantly more traffic. The DER should be revised to provide a full and complete traffic analysis of the Marine Alternative including variants and discuss the impacts in relation to the Project. If the Marine Alternative generates less traffic, then other impacts including air quality, noise, traffic and other related issues would be lower. If so, then the Marine Alternative could be the environmentally superior Alternative. However, this conclusion is based upon specific features of the Marine Alternative which could be modified to eliminate such impacts. For instance, Section 7.2.2 notes that the Marine Alternative will have greater water quality impacts, because it would include greater parking areas and impervious surfaces. As discussed above, the DEIR fails to discuss the amount of pervious surfaces for the Project. Moreover, the Marine Alternative could use alternative paving methods for the parking spaces including pervious pavers. Such would lessen any water quality impacts for the Marine Alternative. Or again, this section indicates that the Marine Alternative will have greater impacts on biological resources, because it would include "larger boat slips and boat launch" than the Project. Again, these features can be changed. Section 7.2.2 recognizes that the Marine Alternative's impacts on biological resources could be mitigated. 32- EQAC Page 22 May 28, 2004 As for land use, the DEIR states that both the Project and the Marine Alternative are "compatible with surrounding land uses consistent with the General Plan." DEM, 7 -4. However, the analysis fails to discuss whether the Marine Alternative will require a General Plan Amendment The DEIR should be revised to provide more detail and analysis for the Marine Alternative, and reconsider and discuss the evaluation of its environmental rank and its feasibility. C. Section 73: The Reduced Intensity Alternative. Section 7.3 addresses the Reduced Intensity Alternative which would include an 88 room hotel, a 4,500 square foot restaurant and 12 boat slips. Section 7.3.3 concludes that the Reduced Intensity Alternative would result in greater environmental impacts than the Project. Among other things, Section 7.3.2 concludes that the Reduced Intensity Alternative would have greater transportation and circulation impacts, because it would result in 869 average daily trips as opposed to the Project's 640 average daily trips. However, many of those trips are associated with the large restaurant. A different project feature, e.g. a smaller restaurant and/or parkland, would reduce such trips, perhaps below the Project level. As before, the Reduced Intensity Alternative fixes on features that may create significant impacts whereas other possible features with fewer impacts are not anal }-zed. The DEIR should be revised to consider other features for the Reduced Intensity Alternative, and reconsider and discuss the evaluation of its environmental rank. IX. Miscellaneous Considerations. We note that the Project in the IS/NOP is entitled the Newport Regent Beach Hotel. The Project for the DEIR is entitled the Marinapark Resort Hotel and Community Plan. The DEIR should explain the change and the proposed Community Plan. X. Conclusion. Thank you for the opportunity to comment on the captioned document. For the foregoing reasons, we recommend that the DEIR be revised to address the issues raised above. 0 33 EIR - 4 Minutes of Planning Commission Study Session of June 3, 2004 0 Intentionally Left Blank Planning Commission Minutes 06/03/2004 Noes: None Absent: None Abstain: None SUBJECT: Marinapark Resort and Community Plan and Draft Environmental Impact Report (PA2003 -218) Review of the draft Environmental Impact Report for the proposed Marinapark Resort Hotel and Community Plan (formerly known as the Regent Newport Beach). The project applicant, Marinapark LLC, proposes to remove and /or demolish existing structures on the property and build a 110 -room luxury resort hotel that would include a lobby and registration area, a cafe, a restaurant, a bar, a ballroom, a swimming pool, separate spa and administration buildings, 12 boat slips and a subterranean parking garage. The following public facilities would be included in the project: surface parking lot, four tennis courts, a new two -story Community Center and Girl Scout facility, and a tot lot. Chairperson McDaniel noted that tonight, the Commission would be providing direction to staff and the applicant. Senior Planner, Jim Campbell noted the following: . Both the Draft Environmental Impact Report (EIR) and the project itself will be reviewed to provide direction to both staff and the consultants for the upcoming hearings. . Schedule - July 8th the Planning Commission will be hearing this item; City Council will be holding hearings on July 13th and 27th. . The City Council has decided to put this project on the November 2004 ballot. . At tonight's meeting and the one on July 8th, staff hopes to be able to formulate a recommendation to the City Council on the adequacy of the EIR as well as any proposed changes to the project. • Staff wants to provide an open forum for public input that will be provided at these two meetings. • At the conclusion of the meeting, staff would like to have any requests for additional data or questions that the public or Commission might have, for response at the next meeting. file: //H:\Plancomm\2004 \0603.htm Page 3 of 23 ITEM NO. 4 PA2003 -218 Continued to 07/08/2004 07/17/2004 i 0 Planning Commission Minutes 06/03/2004 • At Commission inquiry, he noted that the last date for response to comments on the EIR is June 9th. Any comments to be made should be submitted by the 9th in order for staff to respond. The following City consultants were in attendance: David Lepo from Hogle Ireland, the project manager; Mike Houlihan and Jason Brandman from Michael Brandman, Associates, the preparers of the Environmental Impact Report; Joe Foust, the traffic engineer. Stephen Sutherland, Marinapark Resort project manager, noted that this August marks the 6th year since the first site plan was drawn. He then made a Power Point presentation highlighting the project noting: • The project is the'Marinapark Resort and Community Plan', and will encompass an area on Balboa Peninsula from 16th Street to 18th Street and Balboa Boulevard to the public beach. • The architecture will be a Mediterranean villa style with a yachting resort theme. • Accommodations will be made for sail boats from Lido 14's up to vintage Americas Cup and sailing will be an activity for guests to enjoy. • He then pointed out the proposed site plan in relation to the American Legion facility that is not involved in the project, the boat slips that will not be beyond the American Legion line of slips; and the tennis courts that will be re -built over a subterranean parking facility for 100 cars. • He then displayed where additional surface parking will be noting the existing public lot on 18th Street (to be refurbished by the applicant ) with 21 metered stalls. • There will be a shared access for the Girl Scout/Community facility when it is not in use. • The existing tot lot will be moved next to the Girl Scout facility and will be separated by a wall. • The new Girl Scout facility will be larger and the grounds will be doubled with landscaping /gazebo /fire pit areas provided. The interior will be fully ADA accessible and have a modern commercial style kitchen; will have a stage and air conditioning, and will be outfitted with a security system. All of these arrangements are being made at the request/direction of the Girl Scout Council. Page 4 of 23 file : //H:\Plancomm\2004 \0603.htm 07/1712004 Planning Commission Minutes 06/03/2004 . There will be a spa building built next to the Scout facility and the buildings will be similar in style and two stories high. The spa will be for hotel guests but will also be available for residents and the public. . The dock area will have a concrete walkway and will not impede public access. There will be twelve slips, some wider than others, and will be operated for the yachting and rowing club. Four of the slips will be available as visitors' docking. . The number of guest rooms is 110. It is being designed as a five star level hotel. He noted his background in resort design with fifteen years experience in Europe and Mexico as well as in America. . The 110 guest rooms will be located in sixteen, one and two story villa style buildings. The buildings for the most part are lower than the surrounding homes. The density is less than the existing residential neighborhood. Many of the private homes in this area are about two square feet of structure for every square foot of land. We are at one third of square foot of structure for every square foot of land. . The traffic studies have shown that the added cars on the road from this project compared to the existing mobile home park is below what triggers the 'Measure S' threshold. . There are 60 spaces in the mobile home park, two of the mobile homes have been removed. Out of the remaining 58, two are management offices. There are currently 56 residents in the park. . He then presented before and after visual impact simulations on 18th Street; Girl Scout lot; 17th Street and Balboa Blvd.; and, views from the water. . The villas on the waterfront are one story except the one by the American Legion property, which is two story. The Girl Scout facility will have a second story for community li use and will be just over 2,000 square feet enclosed plus an outdoor terrace area of about 200 square feet. This building will be built and paid by the applicant, but will be turned over to the City. . The main resort lobby two story structure will have water fountain elements. file: //H:\Plancomm\2004 \0603.htm Page 5 of 23 07/17/2004 C] • C] Planning Commission Minutes 06/03/2004 . • The environmental advantages will reduce traffic on Balboa Blvd., the existing zoning allows public open space and marine recreational facilities. • The improvement of water quality is based on a number of issues such as underground vaults on the property that will capture new rainfall and skim the oil and debris from the parking lots, landscaping areas, etc. before it enters the bay. There will be an underground tank storage area and when there is flooding during the winter storms, the skimmed water will stay in the tanks until the tide is down and /or the storm drain recovers and then it will be put into the system. • The other issue is the State tidelands law, a hotel is considered a public use and visitor serving and is permissible in State tidelands. • Community improvements include the beautification of the Balboa Peninsula; and an agreement to fund a minimum of $500,000 to remodel the American Legion facility on approval. The tennis courts are being re -built and will remain open to the public. The City Recreation and Senior Services Department will run adult/child programs in these new courts and the new . community center. • There are two restaurants proposed on the property, one is the 'All Day Cafe' and is 515 net square feet and the specialty restaurant will be 1,100 square feet and will be open and available to residents, they both will have waterfront views. • Residents will have full access to the grounds and resort. • There will be improved access to the beach. • There will be two public view corridors on each side of the lobby. • This is publicly owned property and should benefit the residents. With this proposed use, we feel it does. These benefits include upwards of three million dollars in total revenue annually to the City of Newport Beach, and property values for the surrounding area will increase. The plan has been referred to as a gem and a shot in the arm that this area of the peninsula needs and is 'a landmark in waiting'. The following questions were asked by the Commissioners and • answered by the applicant: Commissioner Toerge asked: Page 6 of 23 file: //H:\Plancomm\2004 \0603.htm 07/17/2004 Planning Commission Minutes 06/03/2004 . What are the proposed site access control measures on 18th Street? . Please review the availability of parking for the public. Will the parking structure be available for the public. Commissioner Selich asked: . What is the size of the lounge and ballroom and how do they compare to other hotels? . What percentage of the property is tidelands? Commissioner Eaton asked: . Will there be a cap as to how many of the units will be time share? Commissioner Cole asked: . The height of the villas, does the lobby extend higher? . In the photos that were shown, what is the height of the residential buildings? Mr. Sutherland answered: . There will be no controls to get into the driveway to access either the public parking lot or the Girl Scout parking area. Beyond that there is a fire access gate that is permanently closed. There will be no access at all from the hotel to that driveway on 18th Street. Employees and deliveries will access the property from the 15th Street alley behind the American Legion under the tennis courts to the parking structure; the loading dock is right next to the tennis courts. There is no access at all for the hotel from 18th Street, that is only for emergency purposes or the public lot or Girl Scout lot. . The parking structure is not available for the public who use the beach. It will be available for a fee to the public that goes onto the resort grounds . . The lobby lounge is 1,100 square feet; the ballroom is on the second floor of the lobby and is 3,605 square feet. Comparing that to the Marriott, it is less than 10% of their public meeting space area. Comparing it to the St. Regis in Monarch Beach, this proposed project has just over 3% of the meeting /convention space as the St. Regis has just over file: //H:\Plancomm\2004 \0603.htm Page 7 of 23 07/17/2004 U • 0 Planning Commission Minutes 06/03/2004 100,000 square feet, which is almost the same size as this entire project. . It is proposed that twelve suites will be dedicated as interval shares, a minimum of 1/8 but most likely 1/4. For example, if we have a three month interval, then that suite would be sold for that three month time period. Mr. Burnham added: • This is the applicant's proposal for the time shares, but the City Council will have to approve this interval shares issue through the lease negotiations. • The tidelands have not been determined. The State Lands Commission staff believes that approximately 65% to 70% of the parcel is tidelands. There has been no adjudication of the mean high tide line and the opinion of the State Lands Commission staff is based on meander surveys and some old aerial photographs. It is still undecided. Continuing, Mr. Sutherland answered: • The building height of the lobby is 34 feet. It is still two stories, but it has a higher ceiling area. When you first walk into the lobby, you have a 34 foot high ceiling; then a grand stairwell that goes upstairs along with an elevator to the lobby upstairs. • There are many three story buildings in this neighborhood. Public comment was opened. Chairperson McDaniel addressed the audience noting that the Commission is looking only at environmental issues tonight. Louise Fundenberg, President of the Central Newport Beach Association, noted they would like to go on record that this area has always been General Plan Open Space Recreational. This is the last' open space on the peninsula. She noted the concerns of the members who live across the street from this proposed project that their view would be wiped out. At the annual meeting this project was discussed and the residents want this to stay open space. They looked at the EIR and saw an alternate plan for a marina, but that marina was in there to make the hotel look good. A different plan for a marina might be a better one than the one alternate put in the EIR. Commissioner Kiser noted that the association members are concerned about the loss of open space at the project site. What open space that is on the project site would be lost? file: //H: \Plancomm\2004 \0603. htm Page 8 of 23 07/17/2004 Planning Commission Minutes 06/03/2004 Ms. Fundenberg answered that the strip of beach, even though the applicant states it will be open to the public, the members feel that once a hotel is put in there, the public will not come in to use that beach. It will not be available to the general public, it will be blocked. It is a matter of access to the public beach and the need for more open space than is currently proposed. Tim Collins, resident of Balboa Peninsula, noted: . The project is characterized as a resort hotel with docks. . He would like to see the water side of the tidelands and the bay and harbor impacts studied in more detail in the EIR. This analysis is relevant to the environmental impacts of the project overall. . The alternative contained in the EIR as exhibit 7 -1 is a better alternative, but by no means the best alternative for the bay. . There could be better design and more visitor serving boating. . It could have more revenue potential and have less environmental impacts as the docks designed and presented in the EIR. . A better design would be more suited to the real demand for the public from the water side. It would accommodate larger and more boats, and with ample guest docks could be overall better serving. . The applicant commented he sees this as a yachting resort, I don't think that 28, 30 foot boats as configured in these docks will allow it to meet the objective as a yachting destination. . There is a potential to improve the financial viability. . The protection of the environment is going to be a function of how successful this property is. In his opinion, this dock area would be a loser when you consider the cost to build it and the fees that should be paid for the tidelands use. . He suggested that the applicant should be asked to challenge its consultants and study alternatives, submit market research and analysis to support those alternatives. . Exploring said options could reduce the environmental impact for example, dredging. And a re- designed dock would be more responsive to the Harbor Element of the General Plan as to which the original scoping of the EIR was lacking. file: //H:\P1ancomm\2004 \0603.htm Page 9 of 23 07/17/2004 C, 0 Planning Commission Minutes 06/03/2004 . This property is the gem of the peninsula and we need to get it right. At staff inquiry, the speaker clarified that he is speaking to both types of dock, those as part of the resort hotel and what is described in the marine recreation alternative in the EIR. The alternate is preferable and the docks as designed as part of the hotel resort are not the best public use of the waterfront. John Corrough, resident of Balboa Island, noted he agrees with the comments made by the previous speaker adding the following: • An analysis of the EIR shows that the presumed attainment of the various Harbor and Bay Element sections is not supported by the facts or analysis or conclusionary statements that are in the EIR. • One of the most basic aspects of this project that is linked to the Harbor and Bay Element that needs to be discussed is this is not in fact a water dependent use. This is a water enhanced use under the definition of the Harbor and Bay Element and under the definition of the Local Coastal Land Use Plan (LCP), it is not a coastal dependent use. . The hotel is the primary use on the site and by itself does not meet the criteria of those two important documents (Harbor and Bay Element and the LCP). It is dependent on a very small marina for its water dependency. • You do not get Americas cup boats in 30 foot or 26 foot slips. • You do not get a lot of revenue out of this project when the cost to create is somewhere between 8 to 10 times the cost per slip of the typical high value marina such as the one recently constructed in front of the Balboa Bay Club. • Somewhere there is going to have to be a lot of costs to make up in the way in which that facility is either subsidized or in some other way justified. • With all of the money expended for the public good on site, the project is burdened by those costs as well as the marina costs. • This situation can be solved by further analysis of a marina opportunity and potential so that it is less environmentally' damaging and producing revenue to the City, tidelands fund and the resort. Commissioner Selich asked if the speaker is suggesting that the file: //H:\Plancomm\2004 \0603.htm Page 10 of 23 07/17/2004 Planning Commission Minutes 06/03/2004 marina component be larger and if you are, are you saying it should extend more into the bay or along the beach? Mr. Corrough answered that any or all of those options should be explored. However, none of those were examined as alternatives. There is not enough analysis shown or documented in the EIR to justify that. Commissioner Selich noting that the pier head line does not go to out to the end where the slips are proposed, asked as part of this project is the pier head line going to have to be moved and adjusted? Ms. Wood answered that staff will have to find that out. Mr. Burnham noted that on the issue of deep water slips or a substantially larger marina, the City is required to develop alternatives that could mitigate any potential impacts and also achieve project objectives. Some of the things that went into developing the alternatives in the EIR is to minimize the impact of the marine facilities on the public use of the beach and public access. Also minimizing the extent to which dredging or any alteration of the marine environment is necessary. The types of facilities the previous speaker referred to would have a substantially greater impact on the subtidal zone than the alternatives, that was a consideration. Marie O'Hora, resident of the peninsula, noted her concern of the bay that is already compromised. The 10th Street beach was closed one out of every two days in July and August of last year. It does not have anything to do with storm runoff. 1 don't know what is polluting the bay, but the addition of a 100 plus guestrooms plus the additional ) traffic of people using the bay makes it more dense. I don't . understand how a structure of this sort will reduce traffic. Parking on the peninsula is very troublesome. Concluding, she added that by having the election to approve this plan with the national election disenfranchises all the summer home owners who are taxpayers in Newport Beach and not able to vote for or against this project because they are voting in their own communities. Commissioner Kiser asked if her concerns of density and parking considered the fact that there would be 60 mobile home occupancies removed from the site. Ms. O'Hora answered that 100 guests are being added. This is being used as a destination resort, people will drive to it. She added that she has a sailboat that draws 6.2 feet and there are sections over by Lido where we barely skim the bottom. So whatever dredging that you are going to have to do in this area will be considerable. Commissioner Tucker noted that the assumption of the preceding file: //H:\Plancomm\2004 \0603.htm Page 11 of 23 07/17/2004 0 i 0 Planning Commission Minutes 06/03/2004 speaker was that the project would result in more intense use of the land than the existing use. He noted that he was not certain that was the case. He then asked how many bedrooms there are in the existing trailer park facility. Is there any way to find out how many? Ms. Clauson stated that staff is in the process of preparing a relocation impact report and are gathering information about the mobile homes for purpose of finding alternatives for relocation of them if the park is closed. We may have more information with regards to the bedrooms and also information on how many of them are second homes or summer vacation type residences versus permanent. She added that the rental agreement prohibits the subletting of the mobile homes. Commissioner Tucker stated that it would then be people showing up for the summer to use their facilities and guests while they were there. How many parking spaces are presently in the trailer park? He asked that this information be supplied at the next meeting. Ms. Clauson answered that parking is limited to the roadway access to each of the units. She will get the information for the next meeting. Mr. Burnham added that any resident who is registered to vote can . vote in any election. The rational the City Council had in wanting to schedule this issue for voter consideration was to maximize the turnout. It is fair to say this is going to be a fairly contested presidential election, there are a lot of other issues on the ballot that will draw people to the polls in November. Historically the presidential election gets about 75% of voter participation as opposed to 10 -15% for a standard /special election. Commissioner Tucker then asked who is going to own the Girl Scout House after it is completed? Ms. Clauson answered that the City owns and maintains the facility and currently has an annual lease with the Girl Scouts for that property. This lease will be negotiated for the use of the new facility once it is completed. Mr. Burnham added that the lease would require the lessee to maintain the property to a very high standard. Commissioner Tucker then asked about the views. People across the street that have views over the public land, are those public views that are protected? • Mr. Burnham answered that the view from a third story of a residence, would not be considered a public view, even as it looks across public property. file: //H:\Plancomm\2004 \0603.htm Page 12 of 23 07/17/2004 Planning Commission Minutes 06/03/2004 Page 13 of 23 Commissioner Tucker then asked about water dependency. If the project is approved by the voters, we still have to go through the zoning on the project. Would this be zoning that is water dependent or like a planned community text where the basic zoning would be tailored? Is the water dependency element relevant or not? Ms. Wood answered that the zoning for this project will be a Planned Community text and staff already has a draft. It is a General Plan issue, more so than a zoning issue because the zoning implements the General Plan. She then introduced the consultant team in attendance; David Lepo from Hogle Ireland, the project manager; Mike Houlihan and Jason Brandman from Michael Brandman, Associates, the preparers of the Environmental Impact Report; and Joe Foust, the traffic engineer. Seymour Beek, resident of Balboa Island, noted the following: • A yachting resort in the sense that people will come in their boats and use the marina, they don't really need a hotel. • The use of waterfront and slip area is not well thought out. • Where did the project objectives come from, where are they listed, and who thought them up? Mike Houlihan, Michael Brandman Associates, answered that the project objectives are listed in Section 3, page 3 -8. These objectives were set out by both the City and the project applicant. Through CEQA, project objectives can be set out by an applicant as well as the lead agency. Mr. Burnham added that this August the project will be 5 to 6 years in process. The City issued requests for proposals in 1999 for the redevelopment of the Marinapark and received 8 responses, went back to public hearing and received input and narrowed those to 4 proposals that Council wanted more information about. There were more public meetings and comments, meetings with community groups and these project objectives are a distillation of what staff heard over a 5 -6 year period as the interest and objectives of the community, City Council and others that participated in that process. It is typical for staff and the EIR preparer to develop project objectives based upon the history of the particular project taking into account what the project proponent wants. Ms. Wood added that this is an unusual project as the City is the property owner and so has a special interest that it wouldn't have on private property. Jan Vandersloot, resident of Newport Heights, noted the following file: //H:\Plancomm\2004 \0603.htm 07/17/2004 • • Planning Commission Minutes 06/03/2004 • Asked that the project objectives be considered leaving the area . open space. • The property is zoned Recreational and Environmental Open Space and that zoning should remain intact. He does not see an alternative that uses that zoning as a project objective. • We should look at the benefit of public views from the streets. The citizens own that property and should be able to view the water. • The Parks Commission submitted an alternative to the City Council but that is not listed in the EIR and it should be. • We are a wealthy City and should be able to keep the property that we own as open space for future generations. • Some of the other impacts would be the loss of foraging habitat, and some of the specifics of where the mitigation areas would go have not been defined. Mr. Burnham noted the property is zoned PC and is designated as recreational and environmental open space in the General Plan and • that designation in the Land Use Element authorizes a wide range of uses. Exhibit 7 -1 attempts to take the Land Use Element designation for the site and parcel out portions of the parcel for parkland, portions for beach and slip parking, it retains the Girl Scout and community center. It is the implementation of the General Plan designation for the site. Ms. Wood noted that the Parks, Beaches and Recreation Commission alternative was one of the 8 proposals submitted to the City Council in response to the RFP. When the City Council made the decision to work exclusively with Sutherland Talla now Marinapark, LLC, at that time they simply rejected that proposal. Since the General Plan Amendment is something that is going to the voters, then the people have the opportunity to decide whether it should be changed to allow the hotel development or whether it should remain open space. If the decision is to remain open space then more detailed plans of what that means in terms of future development will need to be discussed. Public comment was closed. Commissioner Eaton noted his concern with how the marine recreation alternative was treated, specifically that it is not the environmentally superior alternative based in large part on a . conclusion that it would generate more traffic without any data at all to back that conclusion up. Because of that you assume it has more negative impacts in terms of traffic, air quality and noise than the file: //H:\Plancomm\2004 \0603.hmn Page 14 of 23 07/17/2004 Planning Commission Minutes 06/03/2004 proposed project. Is there some basis upon which that conclusion was drawn? Mr. Houlihan answered information will be provided in the response to comments. Commissioner Eaton then commented about the alternative section. EQAC has made a comprehensive report on the EIR and the responders should respond and make additions where necessary and appropriate to the EIR where that can be done without requiring a, recirculation. CEQA guidelines state that if the environmentally' superior alternative is the no project alternative, the EIR shall also identify an environmentally superior alternative among the other alternatives. As an environmental professional that has been writing and reviewing EIRs for over thirty years he has never seen an EIR that declared the project as the environmentally superior alternative. In his opinion, the project is not an alternative, it is the project. The marine recreation alternative can easily be the environmentally superior project if the basis of the traffic is because they have created such a huge parking lot to serve such a huge water and entry point. Then the marine alternative could be reduced slightly so that it does not have those extra impacts which might also reduce the hydrology and water quality impact as well. You don't need to go through the manipulations to make that alternative less than an environmentally superior alternative. The project is strong enough, it is a handsome project and maintains virtually all the existing open space uses which are on the property now, you don't have to say it is the environmentally superior project as well. It is clearly an economically superior project. To create an open space project on this property, the City would lose all its revenue it gets now from the mobile home park, it would cost a lot of money to build it and to maintain it, where this project will provide stronger revenues to the City without any of the costs incurred. The project itself can stand on its own as the economically superior project and not manipulate the marine recreation alternative into something other than the environmentally superior project or alternative but which would cost the City a lot of money. The EIR would have stronger viability and the City would have stronger credibility if it admits that the open space marine recreation alternative is the environmentally superior alternative. Mr. Burnham noted that he attended some if not all the meetings during which the marine recreational alternative was discussed, its not accurate to say there was a manipulation of that alternative. Rather what staff and the EIR consultant attempted to do was identify the needs within the general area, and the needs the harbor has for additional parking for charter boat activities; a slip component that was greater than the project slip component to address some of the marine recreation issues directly; there is a park land component because that is consistent with the Recreation and Environmental Open Space; file: //H:\Plancomm\2004 \0603.htm Page 15 of 23 07/17/2004 0 9 Planning Commission Minutes 06/03/2004 and, then we expanded the Girl Scout and Community Center parking area and provided adequate parking for an expanded public park use, which is what we have heard some people in the community favor. It was an attempt to take the site and assign certain uses to that site that would meet needs that currently exists within and around the harbor. One of those is a need for additional parking for beach visitors, for bay visitors and for people who are using the harbor for recreational activities. That was the rational for developing this particular alternative, we did not attempt to come to an alternative that increased the environmental impacts, it was designed to meet the needs that currently exists. Commissioner Tucker asked: • How many more ADT's would have to be generated to trip the 1% analysis requirement at Newport Boulevard and Pacific Coast Highway in the P. M. peak and Newport Boulevard and Hospital Road in the A. M. peak. Those are the two locations closest to Level of Service (LOS) E. People are making claims about traffic generation numbers that have been used in the study. I would like to know how much latitude still is there to be able to say it really wouldn't make a difference if there was 50% more traffic. There is some number that gets to that point where • the two closest nearby intersections would require further analysis. • It would be helpful to have by the next meeting the responses to the EQAC letter. Their conclusion is that the document needs to be revised and recirculated and they have raised some interesting issues. There are a few things in the letter that need to be brought out. At the next meeting we have on this, we will spend time setting the record. I would like to have more lead time on responses to comment on the EQAC letter. • The parking issue and how delivery and service vehicles and where the employees park were big items at the public scoping meetings. The trip generation rates assume all the additional staff functions. The response to comments should be handled in detail. Commissioner Toerge asked: . In the Draft EIR on page 2.1 - the last sentence of one of the paragraphs reads, '.....in all the proposed project will include 352,962 square feet of development on 8.1 acres.' That is 8.1 . acres, so what is the number supposed to be? Mr. David Lepo of Hogle Ireland noted that number should be 110,000 square feet total. file : //fl:\Plancomm\2004 \0603.htm Page 16 of 23 07/17/2004 Planning Commission Minutes 06/03/2004 Continuing, Commissioner Toerge asked: . On Page 2.1 - We do not know the location of the tidelands, yet in a number of meetings I have listened to and participated in, the location of the tidelands has been used as the reason why we can't maintain the mobile home park. The proposed project includes twelve units available for fractional ownership. How is this allowed if the mobile homes are not? It is a matter of ratio, not location? How would the City participate in the sale of these fractional ownership share units? How will the buyers be determined? . On Page 2.11 - 520 daily trips is not considered significant, how is that determined and what amount would be significant? . On Page 3.8 - In my view the project does not serve to maintain a recreation and open space system that meets the needs of the recreation needs of the citizens as it is stated in the report. It may serve the paying public, but not the citizens. . On Page 5.4 -6 - The proposed project conflicts with the General Plan, specifically the Land Use Element, the Harbor and Bay Element and the Recreation and Open Space Element. .. On Page 5.4 -12 - under the Recreation and Open Space Element analysis, the project reduces recreational opportunities for the public it states it in the EIR. At this opportune time, the City should be attempting to increase parks and related recreational facilities rather than reducing them. . Under the City's Municipal Code 5.4.19 - the project proposes to change the existing General Plan designation from Recreation Environmental Open Space to General Plan designation Recreation Marine and Commercial. Other than to accommodate the proposed project, why would the City do this? Under 7.5 project alternatives - the conclusions in 7.2.3 claims that it is not known if marine recreational alternative is economically viable. I feel we should know whether the only alternative proposed in this EIR is economically viable. No studies have been presented to this Commission that support the economic viability of the proposed project. Where is the analysis? Land Use Element, page 26 - recreational and open space is defined, nowhere in this recreation and open space land use designation is there reference to the suitability of this zoned for a hotel. I don't see that. When I hear recreation, I don't think hotel. I hope that is explained. file: //H:\Plancomm\2004 \0603.htm Page 17 of 23 07/17/2004 i • Planning Commission Minutes 06/03/2004 file: //H:\Plancomm\2004 \0603.htm Page 18 of 23 07/17/2004 • Page 42, the major land use proposals for each area in our existing land use element, under Statistical Area D1 under Marinapark it is indicated that the existing mobile home park will be allowed to continue. The land is proposed to be used for aquatic facilities and expanded beach and community facilities, again no mention of a hotel or similar land use. • The Harbor and Bay Element, page 3 - proposed project is not consistent with goal HB -1, specifically policy HB- 1.1.2. Whereby the goal is to preserve the diverse uses of the harbor and water front that contribute to the charm and character of. Newport Bay and provide needed support for recreational boaters and visitors and residences with regulations limited to those necessary to protect the interest of all users. Further, the policy states that when reviewing proposals for land use changes the City shall consider the impact on water dependent and water related land uses and activities and the importance of providing adequate sites for facilities and services essential to the operation of the harbor. This shall include not only the proposed change on the subject property but also the potential to limit existing land uses, activities, facilities and services on adjacent properties. I feel the proposed project is not consistent with the Harbor and Bay Element. . The Recreation and Open Space Element, page 2-4 and 2 -5, the citywide needs are expressed as community pool facilities and boating facilities, no mention of a hotel. In the service area needs for Service Area 3, which is the Balboa Peninsula, it suggests that there is very little vacant land for recreational opportunities. • The Recreation and Open Space Element states that unmet park needs can be satisfied via renovation of facilities such as Los Arenas Park, the very property that is the subject of this application. Objective 4 on page 3 -10, policy 4.2 discusses the need for boat launching facilities, marine sanitation facilities, guest slips, showers, restrooms, drinking fountains, junior lifeguard facilities, no mention of a hotel. • Page 3 -11 of the Recreation and Open Space Element mentions maximizing the opportunities for launching and beaching of small boats. I don't see that opportunity in this plan. • In the Description of Planned Facilities on Page 4.5 of the Recreation and Open Space Element, under Marinapark - the Marinapark area encompasses the existing Los Arenas and Veterans' Memorial Park, the American Legion Hall, Balboa Community Center and the Girl Scout Base, the Marinapark, the mobile home park and the public beach from 15th Street to 19th file: //H:\Plancomm\2004 \0603.htm Page 18 of 23 07/17/2004 Planning Commission Minutes 06/03/2004 Street. In addition to retention of such existing facilities as the public beach and the four tennis courts, the area for its future opportunities for park, recreation and aquatic facilities are not yet fully planned. Seems to me the project is not consistent with this. He concluded asking that these issues be addressed as well as the suitability of this project as it relates to the existing General Plan at our next meeting. Mr. Burnham answered: . State Lands Commission staff has taken the position that approximately 70% of the existing parcel is tidelands. A substantial portion of the site that is currently devoted to the mobile home use is, according to State Lands Commission staff, tidelands. There has been no final determination as to where the actual tidelands boundary is. Throughout the bay, the majority of the tidelands boundaries were established by court decree in the late 1920's and early 30's and do not actually reflect the precise location of the line of mean tide when California was admitted to the Union. The only way to determine a boundary line is through legislation, litigation or boundary line agreement. In preliminary discussions with the State Lands Commission staff, they will support the use of 30% of the site for non - tideland uses. The Community center is not a tideland use, the Girl Scout facility is not a tideland use, the tennis courts are not a tideland use. The State Lands Commission staff have indicated that they will have no specific problem with the twelve time share units, but they would have a huge problem with any greater number. The revenue derived from this site he suspects will be designated entirely for tidelands purposes. The sale of the units would be determined through lease negotiations regarding receiving the TOT equivalent from each of those units and making sure that if other units are used for marketing purposes that the City receive full TOT when those rooms are occupied as well. Ms. Wood added that a hotel is not part of the existing land use designation, that is why there is a request to change the land use designation with this proposed project. Commissioner Selich noted that the Commission's job is to review the Environmental Impact Report and the alternatives, and make sure that we have an adequate EIR. A lot of things that Commissioner Toerge refers to are policy issues and that is exactly what is going to the voters to decide, the policy issues. file: //H:\Plancomm\2004 \0603.htm Page 19 of 23 07/17/2004 0 9 0 Planning Commission Minutes 06/03/2004 Ms. Wood noted staff and the consultants can take another look at the areas Commissioner Toerge mentioned and see if we need to add anything to the environmental analysis with regard to those comments. It is correct that in so far as they are policy issues, that is what the City Council has decided to put to the voters. Commissioner Selich asked about the no project development alternative 7.1 on page 7 -2. The description of the alternative states the existing mobile homes and recreation facilities would remain. If 70% of the property is tidelands, is that a correct description of that alternative? Did the State Lands staff ever develop a sketch, or working map? Mr. Burnham noted it is a correct description of the assumption that you need to make under the no project, no development alternative. There is always the possibility that there is no redevelopment of the site. There is some legislation processed sometime in the future that relieves the land from the restrictions on use that are associated with tidelands such as was done with Beacon Bay. That is not the desire of the City Council nor the State Lands Commission staff. For purposes of this alternative we assumed no project, no development, no change in the existing land use on site. Continuing, Mr. Burnham answered that what they have done was to review the old meander surveys that were conducted in the 1880's and 1890's and those have been overlaid onto the site to try and determine roughly what the tideland boundary was as of that time, and then assume it had not changed much since California was admitted to the Union, which is the perfect definition of the tideland boundaries. Looking at those surveys, aerial photos and the site today, 70% is roughly that percentage of the site that falls between the bayward extent of the property from the meander survey line. That line, meanders from the n/e corner of the site and comes about a third of the way down the easterly boundary and then proceeds on a diagonal to a point much closer to Balboa Blvd on the west side of the site. Commissioner Tucker noted: • The decisions will end up being made at the Council level. Commissioner Toerge's comments on the land use and planning section of the EIR need to be included in the response to comments. • The issue of parks is interesting. I think we have miles of park in that area, it is called the beach. • CEQA looks at the physical impacts of a project to the environment. The economics objective in the EIR does not fit in with the concept of physical impacts to the environment. file: //H:\Plancomm\2004 \0603.btm Page 20 of 23 07/17/2004 Planning Commission Minutes 06/03/2004 . At the next meeting, we will go through the process of examining the EIR; and assuming there are four of us who believe it covers everything, then we will certify that document. . That means we have come to a conclusion that the EIR fairly discloses what the consequences are of the project. It is entirely possible we may reach that conclusion even if all of us think it is a rotten project. . Whether you like it or not, what we are being asked to do is review the EIR for adequacy and what we will be looking for at the next meeting is substantial evidence. . It becomes a technical exercise when it comes to the certification process. He noted that any comments to be received at the next meeting should reference the page number in the EIR document itself as it would be helpful for clarification. Ms. Wood noted that the Planning Commission would be recommending to the City Council whether or not to certify the EIR. At Commission inquiry, she noted that for the voter approval, the General Plan Amendment will include some amendments to the Recreation and Open Space Element and staff will look at others previously mentioned. The Amendment will be one that would maintain consistency. Commissioner Eaton asked if there was going to be a fiscal impact analysis and if the terms of the lease would be provided. Mr. Burnham noted that there will be a fiscal impact analysis; however, the lease itself will certainly have a bearing on the ultimate amount of revenue received by the City. The contemplation will be an option to lease pending issuance of all permits and satisfaction of other conditions as was done for the Balboa Bay Club, or the lease itself would be subject to satisfaction of certain conditions. That probably would be done some ten days prior to City Council action on this item and would not come to the Planning Commission. It will be available to the public when they vote. Commissioner Selich asked if the City Council had to certify the EIR before they can decide to put the General Plan Amendment on the general ballot and what is the last date they can do that? Mr. Burnham answered yes. The only exception would be if the measure came to the City Council pursuant to an initiative petition and in that case the City Council has the mandatory duty, if the signatures are adequate, to place the measure on the ballot. Otherwise, after the Sierra Madre case, the City Council has to certify an appropriate environmental document prior to placing the measure on the ballot. file: //H:\Plancomm\2004 \0603.htm Page 21 of 23 07/17/2004 0 0 1] Planning Commission Minutes 06/03/2004 The last regular meeting of the City Council to take that action would by July 27th. Commissioner Cole noted: . The Commission is being asked to make a recommendation to the City Council at the July 8th meeting. . In the area of recreation there is need for more facts and analysis. There seemed to be a lot of conclusions drawn without support and seem more like an opinion. . In the land use section, the parking analysis needs to have more facts and analysis particularly as it relates to comments related to the project parking demand. . The marine recreational alternative needs to have more clear analysis on how you came up to the conclusions. . The reduced intensity alternative should also be addressed' more in detail. Motion was made by Commissioner Toerge to continue this item to July 8, 2004. Ayes: Eaton, Cole, Toerge, McDaniel, Selich, Kiser and Tucker Noes: None Absent: None Abstain: None ADDITIONAL BUSINESS: a. Council Follow -up - Ms. Temple noted that Council initiated an a dment to Districting Map and Specific Plan for Lido Marina Vi ; hearings on the Code Amendment to change the Districting Map that lot on the corner of Clay and Orange Streets, an update a Local Coastal Program Land Use Plan that was voted to ap ve and forward to the Coastal Commission; and, the Plan ' Commission action on The Newport Technology Center action sustained. b. Oral report from Planning Commission's Economic Development Committee - none. to the I c. Report from Planning Commission's representatives to General Plan Update Committee - No meetings. file: /!H:\Plancomm\2004 \0603.htm Page 22 of 23 ADDITIONAL BUSINESS 07/17/2004 0 EIR =5 City Council Staff Report for June 8, 2004 • 0 TO FROM SUBJECT CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item 33 June 8, 2004 HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL James Campbell, Senior Planner (949) 644 -3210, Campbell (a�city.newport- beach.ca.us Marinapark Resort and Community Plan and Draft Environmental Impact Report APPLICANT: Marinapark LLC (Formerly Sutherland Talla Hospitality) ISSUE: Review of the Marinapark Resort and Community Plan (formerly the Regent Newport Beach) and Draft Environmental Impact Report (DEIR). RECOMMENDATION: Review the proposed project and DEIR, receive public comments, and provide direction on issues to be addressed at the Planning Commission public hearing on July 8, 2004 and at City Council public hearings on July 13 and July 27, 2004. DISCUSSION: Background: Under terms of the agreement between the City of Newport Beach and Sutherland Talla Hospitality (now Marinapark LLC), the City is required to hold one Planning Commission public hearing and one City Council public hearing on the project EIR. Pursuant to the agreement, the Planning Commission will recommend to the City Council whether or not the EIR should be certified, but will not recommend whether to approve or disapprove the project. The City Council is to certify the EIR, if appropriate, and schedule the election on the General Plan amendment, but will not approve or disapprove the project. In making its decision on the details of the ballot measure, the City Council will have the ability to make some changes to the General Plan amendment request submitted by Marinapark LLC and the Planning Commission may include suggested changes to the General Plan amendment with its recommendation to City Council. The Marinapark site is zoned Planned Community (PC), and the required project approvals include a Planned Community Development Plan. The Planning Commission and /or City Council will have approval authority for this plan and any use permit, site plan or other subsequent approval required in the PC text. In addition, the City Council has the authority to approve a lease for use of this tidelands property. The Study Session is intended to give the City Council and the public the opportunity to understand the project proposal, to begin reviewing the potential environmental impacts of the project, and to identify issues that need to be addressed for the Planning Commission's public hearing on the Final EIR on July 8, 2004 and for the City Council's public hearings on the Final EIR on July 13 and July 27, 2004. Proiect Description The Marinapark Resort Hotel and Community Plan is proposed on property currently occupied by the Marinapark Mobile Home Park, Las Arenas Park, Balboa Community Center, the Neva B. Thomas Girl Scout House, four public tennis courts, one -half basketball court, a children's play area, and a metered parking lot on an 8.1 -acre site on Balboa Blvd. between 15th and 18th Streets. The project applicant, Marinapark LLC, proposes to remove and /or demolish existing structures on the property and build a 110 -room luxury resort hotel that will include a lobby and registration area, a cafe, a restaurant, a bar, a ballroom, a swimming pool, separate spa and administration buildings, 12 boat slips and a subterranean parking garage. The following public facilities would be included in the project: surface parking lot, four tennis courts, a new two -story Community Center and Girl Scout facility, and a tot lot. EIR Certification Process A Draft Environmental Impact Report (DEIR) has been prepared for the project and circulated for public comment on April 26, 2004. As required by the California Environmental Quality Act, the review period is 45 days and will end on June 9, 2004. During this time, affected government agencies and the public may submit written comments on the Draft EIR. To date, the City of Newport Beach Environmental Quality Affairs Citizens Advisory Committee and the Southern California Association of Governments have provided written comments on the Draft EIR (Attachment A). The Planning Commission and members of the public provided comment on the Draft EIR at a public study session on June 3, 2004; a summary of comments will be provided to the City Council on June 4. At the end of the Draft EIR circulation period on June 9th written comments received and written responses to these comments will be included with the Draft EIR document in the form of the Final EIR for the project. On July 8, 2004, the Planning Commission will hold a public hearing and make its recommendation to the City Council as to whether or not to certify the Final EIR. The City Council will hold public hearings and consider the Planning Commission recommendation on the Final EIR on July 13, 2004 and on July 27, 2004. On July 27 tH the City Council may certify the Final EIR if it determines that, after reviewing the document, the EIR was completed in compliance with CEQA and reflects the City Council's independent judgment and analysis. Draft EIR Summary. The Marinapark Resort and Community Plan Draft EIR identifies the range of potential environmental impacts that could result from construction and operation of the 110 - room Marinapark Resort. The range of impacts analyzed in the DEIR was based on an Initial Study (included in the DEIR) that concluded that no further analysis was needed for environmental issues related to agricultural resources, cultural resources, hazards and hazardous materials, mineral resources, population and housing, and recreation. The DEIR includes a description and analysis, by subject area (Land Use, Biological Resources, Air Quality, Traffic, etc.), of each impact determined to be potentially significant. Based on this analysis, a level of significance is assigned to each potential jmpact: "No Impact ", "Not Significant "; or "Significant." Mitigation measures are identified for "significant" impacts. A level of significance is again assigned to each potential impact according to the extent that proposed mitigation measures may reduce the severity of the impact. Alternatives to the project that may result in lesser impacts on the environment than the proposed project are also evaluated in the Draft EIR. As shown in the "Executive Summary" (Page 2 -1) of the DEIR, the analysis concludes that, with implementation of recommended mitigation measures, no significant impacts to the environment would result from construction and operation of the Marinapark Resort. Potential environmental effects of the proposed project which can be mitigated so that no significant impacts result are indicated below. Mitigated Impacts Impact Mitigation Measure Geoloov and Soils Liquefaction of soils during an Building design and construction earthquake incorporating structural components that resist soil collapse Hydrology and Water Quality Degradation of water quality 0 Overload storm drain system Preparation and implementation of a Stormwater Pollution Prevention Plan and Water Quality Management Plan incorporating best management practices Construction of on -site detention basins Mitigated Impacts Impact Mitigation Measure Biological Resources Cement walkway results in loss of Development of shorebird foraging habitat shoreline habitat for shorebirds replacement site Disruption of benthic resources through loss of soft bottom habitat Long -term impacts to fish resources through loss of soft bottom foraging habitat Development of benthic habitat replacement site and revision of slip plans to include elevated walkway from beach to slips Development of benthic habitat replacement site Disruption of California least tern Preparation and implementation of a and California brown pelican Stormwater Pollution Prevention Pian foraging behavior through site incorporating best management practices grading and bay dredging and construction noise Periodic loss of eelgrass through maintenance dredging Loss of halibut nursery habitat Construction, vessel movement, and increased turbidity levels could affect Eelgrass Restoration Project Bulkhead and support pilings for boat slips will result in long -term loss of sand beach and soft bottom habitat Development of a plan for restoration of eelgrass habitat pursuant to Southern California Eelgrass Mitigation Policy. Development of a benthic habitat replacement site and preparation and implementation of a Stormwater Pollution Prevention Plan and Water Quality Management Plan incorporating best management practices Preparation and implementation of a Stormwater Pollution Prevention Plan and Water Quality Management Plan incorporating best management practices Development of benthic habitat replacement site and revision of slip plans to include elevated walkway from beach to slips and development of a benthic habitat and shorebird foraging habitat replacement site 0 0 Mitigated Impacts Impact Mitigation Measure Air Quality Dust resulting from construction Compliance with Air Quality Management activities District Rule 403 and adopt and implement a construction traffic management plan Exceed thresholds for Reactive Organic Gases through use of paint and other coatings in construction phase Use pre- coated materials, high pressure low- volume paint applicators with 50% efficiency, lower volatility paint The Executive Summary of the DEIR also includes environmental components that would not be adversely affected by project development and operation as shown below. Areas of No Impact(Less Than Significant Impact Land Use: Project development is consistent with General Plan Policies and the Harbor and Bay Element and the Newport Beach Municipal Code and with the Local Coastal Program Land Use Plan policies on public access, views, parking, dock facilities, public restrooms and historic resource inventory; project complies with Zoning Code for Community Plans; project is compatible with nearby land uses and maintains public beach access and replaces existing recreation facilities; structures nearest the Bay will be one -story and structures adjacent to 15th and 18th Streets will be similar in scale to nearby buildings; Transportation: The project will generate a net increase of 520 average daily trips during the "shoulder" e.g. fall and spring season which, compared to existing traffic, does not represent a significant impact. The project would generate a net increase of 360 average daily trips during the summer season which, compared to existing traffic, does not represent a significant impact; Noise: The project is consistent with the City's performance standards for locating land uses in noisy environments; restriction of construction hours would reduce adverse effect of • equipment noise to less than significant level; noise modeling indicates no increase in traffic - related noise levels; Aesthetics: 0 The architectural features of buildings included with the project are consistent in size and scale with existing development and existing views to the bay from public rights - of -way will be substantially maintained; Public Services and Utilities: Existing public facilities and resources for police and fire protection were deemed adequate to serve the project based on interviews with the respective department representatives; facilities and infrastructure for solid waste disposal, water service, wastewater service, natural gas, and electricity were all deemed adequate for the needs of the project based on information from the respective service providers. Alternatives to the Marinapark Resort project are analyzed in the DEIR and their potential impacts are compared with those of the proposed project. Any of the alternatives may be determined to be environmentally superior if, overall, the magnitude of impacts is less than that of the proposed project. Each alternative, however, must also be evaluated in light of the project objectives identified by the City of Newport Beach and set forth in the DEIR as follows: • Complement efforts to revitalize Balboa Village and enhance other commercial areas on the Peninsula; Redevelop the site with land uses that are consistent with, and permitted by, the legal restrictions on the use of tidelands, • Reduce the current and anticipated future deficit between t6ideland revenue and tideland expenditures; • Provide additional general fund revenue that will help the City maintain or enhance the high level of public safety and municipal services provided to Newport Beach residents; • Enhance public access and community faci8lities on the site without any expenditure of tax revenue and without any fiscal impact on the Girl Scouts and other users; • Ensure that site redevelopment does not generate noise, glare or traffic that could adversely impact the residents in the vicinity or the American Legion adjacent to the site, • Provide for additional marine - related facilities that can be used by coastal visitors for sailing and boating. Alternatives analyzed in the DEIR, the magnitude of overall impact compared with the project, and the extent to which each meets project objectives identified above are as follow: "No Prolect/No Development Alternative" This alternative assumes that existing mobile homes and recreational facilities remain. No additional environmental impacts would result but this alternative would not meet project objectives for area revitalization, consistency with tidelands restrictions, reduction of tidelands deficit, generation of additional revenue, or provision of additional marine - related facilities. "Marinapark Marine Recreation Alternative" This alternative assumes removal of the mobile homes and development of new recreational facilities including 2 charter boat moorings, 20 boat slips, parkland, a Girl Scout/Community Center, tennis/basketball courts, and beach and boat slip parking area. • This alternative would result in lesser impacts to geology and soils, aesthetics, and public services and utilities as compared with the proposed project. Impacts associated with land use and planning would be similar to those of the project. Impacts associated with hydrology and water quality, geological resources, transportation, air quality, and noise would be greater as compared with the proposed project. The Marine Recreation Alternative would meet project objectives related to area revitalization, consistency with tidelands restrictions, and provision of additional marine- related facilities. This alternative, however, may not reduce the tidelands revenue deficit and may not generate additional general fund revenue or enhance public access without an expenditure of tax revenue. "Reduced Intensity Alternative" This alternative assumes development of an 80 -room luxury resort hotel, a 4,500 square -foot restaurant, and 12 boat slips. This alternative would result in lesser impacts to geology and soils and to aesthetics as compared with the proposed project. Impacts associated with traffic, air quality, noise, and public services and utilities would be greater for this alternative than for the proposed project. Similar impacts would be incurred for hydrology and water quality, geological resources, and land use and planning. 01 Based on consideration of the relative impacts of each alternative compared with the proposed project, and on the extent to which each alternative and the proposed project satisfy the objectives set forth by the City of Newport Beach for redevelopment of the proposed project site, the proposed Marinapark Resort and Community Plan is deemed to be the Environmentally Superior Alternative consistent with guidelines set forth in CEQA. CONCLUSION: The Study Session will allow members of the City Council and the public to better understand the proposed project and to evaluate conclusions about potential environmental impacts set forth in the Draft EIR for the Marinapark Resort and Community Plan. The Study Session will prepare the City Council for public hearings on the Final EIR on July 13, 2004 and July 27, 2004, and for City Council determination after public hearing on July 27, 2004 whether or not to certify the Final EIR. If the City Council certifies the Final EIR on July 27th, the City Council may at that time adopt a resolution calling for the proposed General Plan amendment for the Marinapark Resort and Community Plan to be placed before the Newport Beach electorate in November. Prepared by: Submitted by: ) W CaAW ��q ames W. Cam bell, Senior Planner Attachments �Jlzfx AA haron Z. Wood Assistant City age 1. Correspondence 2. Project conceptual plans —separate large format drawings 0 11 i J Ll Exhibit No. 1 Correspondence I This Page Left Intentionally Blank 0 0 /U 0. SOUTHERN CALIFORNIA ASSDCIATI DN of GOVERNMENTS Main Office 818 West Seventh Street 12th Floor Los Angeles. California 90017-3435 t (213) 236 -1600 f(213) 236 -1825 w .scag.ca.gov M cars: Im"idenC Ceundlmember Ron Roberts. Temeorre • Post vice President: Sopervisor dank led dal County' Second Vice PresidenL YWng. Pdrt Nueneme' immediate (nunPo' Huen Bev Peary, Brea Imp only. Hank kuipel. Imperial County in Shietdt, Bremer 05 Angeles county: Mine Bratbwahe Burke, 05 Angeles County - Ze, Ya mslav ky. Cos Angeles Wunry • Y 'r, 8aldxin, San Gabriel • Paul Bowlen. Cernbcs - Tony Cardenas, Cos Angeles Magarel Clark, Rosemead • Gene Daniels. ln; a. bm5t • Mike DiSPenan. Palmdale - ludy Burlap. Inglewood • Eri: Garcetli. Ins AngeleS Werdy Greuel, Ins Angeles . Frank Guru*. Cudahy • lames dahn. WS Angeles - lamed Mahn. Los Angeles •Isadore Nall. Comuton • Tom UBOnge, Ins Angeles • Bonnie Wwmtbal, Wng Beach • Manin Wd1ow. Los Angeles • Keith McCarthy, Downey- Llewellyn Miller, Claremont Cindy Miscikoeski. Ws Angeles ' Hour t fka. Tordnee •Pam O'Connor. Santa MmaCe • Alex Padilla. I.os Angeles • Bernard Parks. Los Angeles )an Potty, Los Angeles • 8eatria Prod. Pi to Rivera EC cde(M Ins Amuses • Greig Smith, Los Mgele5 Dick Stanford. Hausa • loco Sybes. Wain0 • Paul ialbaL Alhambra • Sidney Tyler. Pasadena • Tvnia Rges unnea, tang Beach • Pnrum. ellalaigosa. Ins Angular • Dennis Washbum Calabasas • lad Weiss. Ins Axg¢Ie5 • Bob Youseexn. Glerdxle Dennis Zino. WS Angeles Cnnge Cordrry: Chris Horny. orange County Donald Bates tm Alamitos • Lou Boat, Tustin Art Brawn. But. Park• Richard Cha.m.maheim Debbie Cook. Nunlington Beach . Cathryn DeYwhg. Laguna Niguel • RichaN Dimon. Laid. "vest • AM Duke. P Palma - Bev Pert, One Tod MdgewW, 11 w ." Beach glvmoide County: Nation Ashley, Riverside buntY • Thomas Buckler. lake asimre • Bonnie liCOPSM. Moreno Valley - Ron lov.dd¢. !6 Mlrse . Greg Pet6S. Cathedral Cry - Run :ebtM Tememle +n 8emardino Caunly: pact Blare, San .emardino County • Bip Aleaavder. Rancho Mad-0 • (award Bin Ren. Tam of Apple Why • LAWren¢ Dale. Barstow - Lee Ann Ge c a. and Susan IM,rville, San 8emardino• arY no• Deborah AObeMm. Itaio ed, . iudY Wells, Ventura County W B Simi VMIC/ • Cad Morehouse, San uennermurs • icni Young, Port Hueneme runic Coonty Transportation Authority. sena Smith Coined County —ide Ctdory, Transyonatm, Commission: .bin Cow•. Beme. nwra CaumyTraospomtion Camber "mr: Bill wc, Simi All, Inwd mend hem Sgj/rd/q May 19, 2004 Mr. James Campbell Senior Planner Newport Beach Planning Department 3300 Newport Boulevard Newport Beach, CA 92658 -8915 RECEIVED BY PLANNING DEPARTMcNT CITY OF NEWPORT BEACH MAY 2 6 2004 PM AM 19110 jl 1112 Il 12131415 16 RE: SCAG Clearinghouse No. 1 20040258 Marinapark Resort & Community Plan Dear Mr. Campbell: Thank you for submitting the Marinapark Resort & Community Plan for review and comment. As areawide clearinghouse for regionally significant projects, SCAG reviews the consistency of local plans, projects and programs with regional plans. This activity is based on SCAG's responsibilities as a regional planning organization pursuant to state and federal laws and regulations. Guidance provided by these reviews is intended to assist local agencies and project sponsors to take actions that contribute to the attainment of.regional goals and policies. We have reviewed the Marinapark Resort & Community Plan, and have determined that the proposed Project is not regionally significant per SCAG Intergovernmental Review (IGR) Criteria and California Environmental Quality Act (CEQA) Guidelines (Section 15206). The proposed project is not a residential development of more than 500 dwelling units. Therefore, the proposed Project does not warrant comments at this time. Should there be a change in the scope of the proposed Project, we would appreciate the opportunity to review and comment at that time. A description of the proposed Project was published in SCAG's April 16 -30, 2004 Intergovernmental Review Clearinahouse Report for Public review and comment. The project title and SCAG Clearinghouse number should be used in all correspondence with SCAG concerning this Project. Correspondence should be sent to the attention of the Clearinghouse Coordinator. If you have any questions, please contact me at (213) 236 -1867. Thank you. �Sincerely, JEFFREY M. SMITH, AICP Senior. Regional Planner In, e�governmental Review li MEMORANDUM 0 To: James Campbell, Senior Planner Planning Department, City of Newport Beach From: Environmental Quality Affairs Citizens Advisory Committee ("EQAC ") City of Newport Beach Subject: The City of Newport Beach's Draft Environmental Impact Report ( "DEIR ") for the implementation and development of the Marinapark Resort and Community Plan (the "Project') Date: May 28, 2004 Thank you for the opportunity to provide these comments on the captioned DEIR for the Project T. A Brief Summary of Our Concerns. We recommend that the City reconsider and revise the DEIR and/or respond to the following concerns during the public review process for the DEIR. Because of the concerns listed below, we believe that the City should revise the document and re- circulate the revised document for public review and comment We make these recommendations for several reasons: (1) The DEIR fails to describe the Project fully and accurately, thereby undercutting the public's and decision maker's ability to understand the Project, determine impacts of the Project and evaluate mitigation measures. (2) The DEIR fails to recognize and analyze potentially significant impacts discussed in the Initial Study/Notice of Preparation for the DEIR including impacts regarding hazards and hazardous materials, and recreation. (3) The DEIR fails to discuss and analyze all Project related impacts including those associated with Transportation/Circulation, Land Use, Hydrology and Water Quality and other issues, as well as cumulative impacts for all issues analyzed- (4) The DEIR fails to analyze fully the growth inducing impacts of the Project and/or provide mitigation for such impacts. (5) The DEIR fails to analyze and discuss fully the Project alternatives and assess objectively the environmentally superior alternative. /Z EQAC Page? May 28, 2004 . II. Introduction: EIR Standards. which: An EIR constitutes the heart of CEQA: An EIR is the primary environmental document .. serves as a public disclosure document explaining the effects of the proposed project on the environment, alternatives to the project, and ways to minimize adverse effects and to increase beneficial effects." CEQA Guidelines section 15149(b). See California Public Resources Code section 21003(b) (requiring that the document must disclose impacts and mitigation so that the document will be meaningful and useful to the public and decision makers.) Further, CEQA Guidelines section 15151 sets forth the adequacy standards for an EIR: "An EIR should be prepared with a sufficient degree of analysis to provide decision - makers with information which enables them to make a decision which takes account of the environmental consequences. An evaluation of the environmental effects of a proposed project need not be exhaustive, but sufficiency of an EIR is to be reviewed in the light of what is reasonably feasible. Disagreement among experts does not make an EIR inadequate, but the EIR should summarize the main points of disagreement among the experts. The courts have looked not for perfection but for adequacy, completeness, and a good faith attempt at full disclosure." Further, "the EIR must contain facts and analysis, not just the agency's bare conclusions or opinions." Concerned Citizens of Costa Mesa. Inc. v. 32nd District Agricultural Association (1986) 42 Cal. 3d 929 (Emnhasis supplied). In addition, an EIR must specifically address the environmental effects and mitigation of the Proj ect. But "[t]he degree of specificity required in an EIR will correspond to the degree of specificity involved in the underlying activity which is described in the EIR." CEQA Guidelines section 15146. The analysis in an EIR must be specific enough to further informed decision making and public participation The EIR must produce sufficient information and analysis to understand the environmental impacts of the proposed project and to permit a reasonable choice of alternatives so far as environmental aspects are concerned. See Laurel Heights hunrovement Association v. Regents of the University of California (1988) 47 Cal. 3d 376. Also, to the extent that an EIR proposes mitigation measures, it must provide specific measures. It cannot defer such measures until some future date or event. "By deferring environmental assessment to a future date, the conditions run counter to that policy of CEQA which requires environmental review at the earliest feasible stage in the planning process." Sundstrom v. County of Mendocino (1988) 202 Cal. App. 3d 296, 308. See Bozung v. Local Agency Formation Com.(1975) 13 Cal3d 263, 282 (holding that "the principle that the environmental impact should be assessed as early as possible in government planning. "); Mount Sutro Defense Committee v. • Reaents of University of California (1978) 77 Cal. App. 3d 20, 34 (noting that environmental problems should be considered at a point in the planning process "where genuine flexibility remains"). CEQA requires more than a promise of mitigation of significant impacts: mitigation 1� EQAC Page 3 May 28, 2004 measures must really minimize an identified impact. II. Section 1: Introduction and Effects Found Not to be Significant (Section 1.6). The Introduction discusses general CEQA issues, formatting of the DEIR, the IS/NOP, the scoping process and effects found not to be significant. The latter— "Effects Found Not to be Significant`'— raises substantive concerns. Section 1.6 notes that, during the scoping process, various impacts were found to be potentially significant, whereas others were found not to be significant: These latter include "Hazards and Hazardous Materials," and "Recreation." For various reasons discussed below, these are potentially significant impacts: the DEIR should include a detailed discussion and analysis of such impacts, and propose necessary mitigation. A. Hazards and Hazardous Materials. Appendix A of the DEIR includes the Initial Study, Environmental Checklist and the Discussion of Environmental Evaluation. The Checklist Item No. VII addresses Hazards and Hazardous Materials. Item No. VII b) indicates that it is less than significant that the Project would create a significant hazard to the public or the environment through reasonably foreseeable upset and accident conditions involving the release of hazardous materials. However, Item No. VII c) indicates that the Project may have a potentially significant impact by emitting hazardous emissions or handling hazardous or acutely hazardous materials, substances, or waste v6thin one - quarter mile of an existing school. Item No. VII d) indicates that the Project may have a potentially significant impact unless mitigated in that the Project is located on a site which is included on a list of hazardous materials sites and as a result would create a significant hazard to the public or the environment. The Discussion of these Items is helpful. Under Item No. VII b), the Discussion notes that, because of the presence of motorized construction equipment, there is a small risk of gasoline or diesel spillage. However, the Discussion concludes that such is less than significant. Under Item No. VII c), the Discussion notes that the Project is within one - quarter mile of Newport Elementary School. It states that an-inventory of materials and quantities used in construction and operation of the Project will be created. If necessary, any hazardous materials will be identified and mitigation measures proposed. As for Item No. VII d), the Discussion explains that past or present on -site and off -site uses have the potential to result in the release of toxic substances. "[P]roject implementation will require the removal of onsite structures, which depending on date of construction may contain lead or asbestos materials. A regulatory database review will be conducted for the proposed project, results of the database review will be summarized in the EIR and the review results included in their entirety as an appendix to the document. Mitigation measures • will be recommended as appropriate." EQAC Page 4 May 28, 2004 The DEIR does not address the IS/NOP analysis. Instead, the DEIR concludes that the Project's impacts on hazards and hazardous materials are insignificant. For gasoline or diesel spillage, the DEIR includes a similar analysis as the IS/NOP: the risk is less than significant. For proximity to schools including Newport Elementary, the DEIR is silent. As discussed below, it refers to a (Limited) Phase II Soils Assessment but concludes no significant impact. The .Phase II assessment is not attached as an appendix. The DEIR notes that the analysis identified small concentrations of trace petroleum hydrocarbons, metals and organocholorine pesticide in and around portions of the Project site. Submarine sediment samples indicated low concentrations of various but unidentified hydrocarbons. The DEIR fails to keep the promise of the IS/NOP: the DEIR includes no "regulatory database review and summary." Moreover, it fails to include the Phase II study or make such available for public review. Incidentally, the DEIR states that such contaminants are below action levels; yet it provides no indication as to what those action levels are. Given the promise of the IS/NOP, the DEIR should be revised to include items discussed above, and the revised DEIR should include a thorough analysis of all such impacts. Moreover, the conclusions of the Phase II study seems implausible. The Project's location is near the mouth of the Rhein Channel which we understand is regarded as highly polluted. Although the IS/NOP appeared to recognize this challenge, the DEIR fails to consider and analyze isthe Project's impacts including destruction and removal of existing docks and structures, construction and installation of new docks and structures, and other Project related activities on submarine sediment in and around this problematic water body. In addition, we understand that Chevron or another company had a storage facility near the Project site in the past. The DEIR should include an analysis and/or study of any emissions from the storage site and any Project related impacts arising from disturbance and/or release of any hazardous materials from such site or contamination from such site as a result of the construction and operation of the Project. Also, as discussed below, notwithstanding the DEIR's conclusion that the Project will have no significant impact on hazards and hazardous materials, the DEIR discusses the Project's hazards and hazardous materials impacts in relation to biological resources. The DEIR's analysis of hazards in relation to biological resources undercuts the DEIR's conclusions that Project's impacts on hazards and hazardous materials are insignificant. B. Recreation. The DEIR also regards the Project's impacts on recreational opportunities as insignificant However, Project features and configuration themselves require environmental analysis in order to make such conclusion. The Project "will replace all recreational facilities except the basketball half - court," DEIR, 1 -6. This raises several problems. At the outset, the demolition and replacement of existing facilities will have short-term construction impacts on all of these recreational opportunities. Without more analysis and 1S- EQAC Page May 28, 2004 discussion, such impacts appear to be significant, at least in the short term. Further, the replacement of such facilities is problematic: without further analysis and perhaps mitigation, it is unclear that the replaced facilities will provide access and have features similar to the existing facilities. Further, the elimination of the half -court basketball facility requires further analysis and discussion. This resource appears to be unique: it's configuration and alignment may make it more popular than full court facilities in the area. Also, the Project's resort proposes joint use of the recreational facilities. Without more analysis, such use may significantly and adversely affect residents' use of the Project facilities. Finally, a crucial Project alternative is a recreation alternative. In order to assess, analyze and evaluate the alternatives; the DEIR should include an analysis of the Project's impacts on recreational opportunities. C. Conclusion. The DEIR should be revised to include a full environmental analysis of the Project's impacts on hazards and hazardous materials, and recreation. III. Section 2: Executive Summary. The Executive Summary attempts to summarize the Project Description (discussed below), . the areas of controversy /issues to be resolved, and a summary of impacts and mitigation. Section 2.2 addresses areas of controversy /issues to be resolved. It notes: "The area of controversy associated with the proposed project is the intensification of land uses on the project site. The location of the tideland boundary is an issue that is to be resolved." Both of these are problematic. As to the area of controversy, "intensification of land use" improperly simplifies the issues: the area of controversy is the replacement of the current designated use— Recreational and Environmental Open Space — with a commercial use which requires a General Plan Amendment and other approvals. The DEIR's statement about the issue to be resolved— tideland boundary is surprising. The DEIR should resolve this issue in its analysis of the existing site. The DEIR's failure to resolve this issue undercuts its usefulness. Moreover, Section 3.4 indicates that among other permits, the Project will require a lease of tidelands. In order for the public and decision makers to understand the Project's impacts on tideland boundaries and the impacts of this lease, the DEIR should include a detailed discussion of the tidelands location, and the nature and extent of such lease. Without resolving this issue in the DEM, the document cannot fulfill its own requirements. Section 2.5 includes a table which identifies Project impacts and mitigation. Fora discussion of Project impacts, see our discussion below. However, as to mitigation, Table 2 -1 raises a general problem: deferral of mitigation measures. As indicated above, CEQA requires EQAC Page 6 May 28, 2004 environmental review at the earliest feasible stage in the planning process. For each mitigation measure identified in Table 2 -1, each measure is deferred to some future event or permit issuance. In order to understand the nature and extent of mitigation and to assess whether the proposed mitigation fully and adequately addresses the impact, the DEIR should fully identify and discuss all mitigation measures, discuss how such measures will lessen impacts to a level of insignficance, and if necessary, provide alternative mitigation measures for any measure which does not fully mitigate identified impacts. IV. Section 3: The Proiect Description. Section 3. 1.1 discusses Site Characteristics. Among other things, the DEIR notes that the Project site is bound by "a public beach and Newport Bay to the north." Although Section 3. 1.1 discusses many of the current site characteristics, it fails to discuss the location and character of the tidelands issue. This issue may affect the Project, the analysis of the Project impacts, the alternatives analysis and related matters. The DEIR should include a full discussion of the tidelands boundary issue, resolve the issue, locate the boundary, and discuss all Project related impacts. Among other features, the Project includes twelve (12) new boat slips and replacement of public tennis courts on the deck of the proposed parking structure. As to the boat slips, the DEIR states that this feature will require dredging of approximately 1,250 to 1,750 cubic yards of bay sediment to create the boat basin; this "clean sand" will be placed on shore side of a proposed Project related bulkhead. This raises several issues. The Project includes twelve (12) new marina slips with four (4) available for public use and eight (8) available for Project guests. The current forty -six (46) American Legion slips will remain. However, the DEIR fails to discuss the relation of the American Legion slips to the Project feature slips. Also, the IS/NOP and the DEIR recognize that the Project may affect hazards and hazardous materials. As discussed above, these two documents are inconsistent in their assessment of the Project's impacts on hazards. However, given that the Project requires removal and relocation of 1,250 to 1,750 cubic yards of bay sediment, the DEIR should fully address the character of this sediment, analyze any impact to hazards and hazardous materials, and, if necessary, provide mitigation. Further, it is unclear where this excavation will occur especially in relation to the tidelands boundary. As noted above, the DEIR fails to discuss the tidelands location. The DEIR should provide a clear description of the location of this excavation in relation to the tidelands, and if necessary, provide adequate mitigation. Regarding the tennis court, the Project description notes their location but fails to address public access to this Project feature. Indeed, the Project description fails to discuss all sorts of public access issues. How does the public gain access to the beach? Does the beach remain a public beach? What are the public access features for all Project related structures including the community center, tot lot, and parking? 1% EQAC Page 7 May 28, 2004 Also, the Project is entitled the "Marinapark Resort & Community Plan." The Project description includes no reference to the "Community Plan." The revised DEIR should fully explain the Project including the "Community Plan." Incidentally, the Project description includes some internal inconsistencies which require explanation and resolution: First, exhibit 3 -3, Site Plan, shows the Girl Scout House and the Spa Villa to be 4,166 square feet each; however Table 3.2 -1 on the next page states that the Girl Scout House /Community Center and the Spa Villa will be 6,191. Second, the Site Plan shows shared parking at the comer of 18th Street and Balboa Boulevard, but further in the document, in the Aesthetics section, the computer - generated visual simulations shows two -story villas at this comer. Section 3.3 discusses Project Objectives. These Objectives include several econorric%ommercial objectives: "Complement efforts to revitalize Balboa Village and enhance other commercial areas on the Peninsula; Provide additional general fund revenue that will help the City maintain or enhance the high level of public safety and municipal services provided to Newport Beach residents. Enhance public access and community facilities on the site without any expenditure of tax revenue and without any fiscal impact on the Girl Scouts and other users." DEIR, 3 -8. The DEIR includes no detailed discussion of these and other objectives. However, it is unclear that such objectives are appropriate for the Proj ect site and the current environmental analysis. The only Project Alternative in the DEIR which meets these economic objectives is the Project. Given these economic objectives, the DEIR should include an economic analysis which shows how and why the Project meets these and other objectives, provides a detailed discussion of City revenues from the Project including lease payments, taxes and other sources of revenue, and other economic considerations appropriate. . Section 3.4 addresses "Intended Uses" of the DEIR. The section identifies various discretionary approvals by the City: It notes: "Other actions necessary to implement the project are identified later in the section under `Other Discretionary and Ministerial Actions. "' DEIR, 3 -9. However, the DEIR contains no such section. The DEIR should be revised to include a full list of all discretionary approvals by all agencies. Finally, the DEIR inadequately covers permitting and approvals: the election requirement. We understand that the City proposes to submit this Project to the voters. The DEIR should discuss this requirement, and explain its relation to the CEQA process and Project approval. • 119 EQAC Page 8 May 28, 2004 V. Section 4: General Description of Environmental Setting. Section 4.1 addresses the environmental setting. As indicated above, nothing in the DEIR locates the tidelands boundary. These section should be revised to include a discussion and, perhaps, a map of such boundary. Further, we understand that the Marinapark mobile home park is a park on City owned land with a lease. The DEIR recognizes that the park is a 40 -year facility but fails to discuss the lease hold, its term, the landlord and other crucial and important terms. Section 4.2 discusses related projects. It notes that the City provided several related projects; presumably, Table 4 -1 is the list provided. However, it is incomplete. First, as indicated in the Project objectives, DEIR recognizes that in the Project vicinity, the City and others are engaged in "efforts to revitalize Balboa Village and enhance other commercial areas on the Peninsula_" These efforts are related projects and should be included in the cumulative impacts list. Among other efforts, we understand that several plans to develop live /work projects in and around the Project vicinity are pending. Likewise, these plans should be included in the cumulative impacts list. VI. Section 5: Project Impacts, Mitigation Measures, and Level of Significance After Mitigation. A. Section 5.1: Geologv and Soils. Section 5.1 address geotecbriical impacts of the Project. The DEIR includes a geotechnical report for the site. Among other things, the DER notes that "[liquefaction occurs when shallow, fine to medium - grained sediments saturated with water are subjected to strong seismic shaking. Liquefaction usually occurs when the underlying water table is 50 feet or less below the surface." DEIR, 5.1 -2. Also, the DEIR notes that expansive soils are those which can give up or take on water. Id. The DEIR notes that, although the onsite soils are not expansive, "[t]he potential for liquefaction during a major seismic event is considered to be high." As noted above, liquefaction may depend on depth to groundwater. The DEIR should state depth to groundwater at the site, discuss the soils character, explain why, though the sands will hold water, they are not expansive and related issues. Moreover, Section 5.1.4 considers two mitigation measures. As before, this section fails to discuss depth to groundwater. The two mitigation measures depend upon permit issuance: the first depends upon issuance of a grading permit and concerns aspects of the grading plans. However, it fails to state the depth if any of such grading. The second depends upon issuance of a building permit and concerns slab alternatives. However, the section fails to determine which slab type will be employed. 101' EQAC Page 9 May 28, 2004 B. Section .5.2.- Hydroloo-v and Water Quality. Section 5.2 concerns hydrology and water quality. This section notes that the Project will have short-term construction impacts on water quality and hydrology, long term operational impacts and cumulative impacts. Construction impacts include soils erosion, trash and debris which may leave the Project site. In addition, construction activities in connection -Mili the marina will include re- introduction of contaminants through construction activities which may "resuspend" bottom sediment as well as increase in turbidity. Long term operational impacts include increased flow concentrations at amajority of Project related storm drains with a decrease in several such drains. In addition, the Project will increase peak flows during 100 -year storm events along 18"` and 15u` Streets while flows along Balboa Boulevard would decrease somewhat Water quality impacts of the Project include trash, debris, oil and grease, and other pollutants including heavy metals, oxygen demanding substances, nutrients and organic compounds. Further, installation of a cement walkway from the resort to the marina will interrupt tidal flows and water circulation, and may create stagnant water conditions. Finally, the DEIR recognizes that the Project "will substantially contribute to a potential significant cumulative impact on existing storm drain systems." It will "also increase urban pollutants that would substantially contribute to a potential significant cumulative impact on surface water quality.' The DER includes five mitigation measures. Most of these mitigation measures defer mitigation measures until issuance of grading permits. This analysis and mitigation is problematic for several reasons. The impacts analysis fails to discuss current drainage and percolation, as well as the proposed drainage and percolation of the Project. Also, the DEIR fails to consider several potential mitigation measures. Increasing pervious surfaces may limit surface water run -off. Indeed, Section 7, the Alternatives Analysis, states that the Proj ect is superior to the Marine Alternative due to its increase of pervious surfaces. Yet the DEIR fails to discuss this issue, analyze the nature and extent of such surfaces, and, if necessary, propose mitigation. In addition, the Project together with other revitalization efforts may significantly affect the storm drain capacity. Yet, the DEIR does not consider whether the Project may require re- sizing of storm drains in the vicinity. Also, none of the mitigation measures address the Project's cumulative impacts on hydrology and water quality. Mitigation of such impacts could include establishment of stormwater mitigation program for a comprehensive upgrade of the storm drains on the Peninsula. The Project could contribute its fair share to such a mitigation program. LD EQAC Page 10 May 28, 2004 Further, as indicated above, such deferral of specific mitigation measures does not comply with the requirements of CEQA which requires full discussion of all impacts and mitigation. Deferral of the development of various mitigation measures until some permitting or pursuant to various regulatory bodies including the City and/or the Regional Water Quality Control Board is not informative: precise Project features and mitigation are deferred until after the public and decision makers have had an opportunity to review, comment and in the case of decision makers, decide on the DEIR and the Project. The DEIR should be revised to discuss fully all water quality and hydrology impacts, and provide specific and enforceable mitigation measures to lessen any such impacts. C. Section 5.3: Biological Resources. Section 5.3 concerns the Project's potential impacts on biological resources. Section 5.3.1 addresses existing conditions including sediments and habitats and marine biological communities near the Project. As indicated above, the DEIR includes no detailed discussion of hazards and hazardous materials. Section 5.3.1 repeats the earlier discussion regarding low levels of pollutants. Further, in discussing sub -tidal bay floor sediments, the DEIR states that environmental site assessment indicates the presence of low concentrations of petroleum hydrocarbons in the upper one -half foot of the bay mud. This is inadequate: as indicated above, the Project will require excavation of between 1,250 to 1,750 cubic yards of "bay mud." Testing on the upper one -half foot fails to test the full extent of this excavation. The DEIR should be revised to include a full analysis of hazards and hazardous materials so that the entire environmental analysis of the Project's impacts including hazards and hazardous materials and biological resources. Also as indicated above, the analysis indicates that contaminates including those in sub -tidal bay sediments are below action levels for soils on land but fails to provide the action levels. The revised DER should provide this information, or indicate that they are the same as those for soils on land. In addition, in connection with the existing conditions regarding bay fishes, the DER relies on a otter trawl net sampling of fish species known to occur in Newport Bay that was conducted for eighteen (18) months between 1974 and 1975. This sampling would seem to be too out -of -date to be of any value in assessing the number of species in the Bay and the proposed Project's potential impact on those fish species, The DEIR should be revised to include a more recent sampling or more recent information on the fish species known to occur in Newport Bay and consider the Project's impacts on identified species. Also, if for some reason the thirty year old study remains useful, the revised DEIR should explain the utility of this thirty year old study and alternatives. In assessing the Project's impacts on shoreline habitats and resources, the DEIR states that "(t)he proposed cement walkway from the resort hotel to the boat slips will result in the loss of approximately 490 square feet of sandy shoreline which is foraging habitat for shorebirds. This long -term loss is considered significant." Page 5.3 -7 Since the site currently has an existing concrete ,valkway, it is unclear how the new walkway will have this kind of impact. Based on the 2i EQAC Pale 11 May 28, 2004 conclusion that there will be this significant impact, it appears that the Project walkway must differ from the existing walkway, e.g. project out further into the shoreline. This is not clear from the Project Description or anywhere else in the DEIR. Further, the DEIR is inconsistent in discussing this impact. As stated above, on Page 5.3 -7, the DEIR characterizes the loss of foraging habitat for shorebirds as significant. However, on Page 5.3 -9, the DEIR states: "No direct mortality of shorebirds and seabirds will occur. The long -term presence of the boat slips, bulkhead and concrete walkway will however, reduce shorebird and seabird resting and foraging habitat, however, this is not considered a significant impact." An accurate assessment of the impacts to birds should be provided in the Final EIR, and this inconsistency should be corrected. The DEIR contains another and important inconsistency. Section 5.3.3 recognizes that Project construction will have an impact on benthic communities in the Project area. However, Section 5.3.3 concludes that "[t]he loss of benthic infauna and epifauna due to dredging will be a short-term less than significant impact." This conclusion is problematic: dredging A ill continue through the life of the Project. Thus, such impact may be more than short term. Moreover, Section 5.3.6 states that, regarding biological resources, "[v,]ith the implementation of the above mitigation measures, only one significant unavoidable adverse impact would remain." DEIR, 5.3 -13. "This impact would occur during the short-term and would be on the benthic resources that would be removed from the bayfloor during project and maintenance dredging activities." Id. However, Section 6.1 concludes that there are no significant and unavoidable impacts. The DEIR should be revised to resolve this inconsistency: either the impact on benthic resources is significant or not. Moreover, such impacts will be more than long term: impacts on benthic resources will occur during Project construction as well as maintenance dredging. Also, as indicated above, all Biological Resources Mitigation Measures are deferred until the issuance of either a grading permit or a permit from a resource agency. This deferral of mitigation is not permissible under CEQA. In addition, most of the Mitigation Measures list various regulatory plans, e.g. stormwater pollution prevention plan ( "S WPPP ") which describes best management practices ( "BMps "). However; the analysis is incomplete and generic; all of these Mitigation Measures appear to be boilerplate, with no direct reference to the impacts to biological resources present at the proposed Project site or the actual mitigation proposed. The DEIR should include an appropriate expert analysis to discuss Project specific impacts and mitigation as well as to develop the various regulatory plans. The discussion of mitigation measures in this section seems more appropriate for a program level analysis. The Final EIR should more fully discuss the impacts and_mitigation proposed. 9 2G EQAC Pase 12 May 28, 2004 • D. Section 5.4: Land Use and Plannins. Section 5.4 addresses the proposed Project's consistency with various elements of the General Plan. Section 5.4.1 describes existing conditions including the Land Use Element of the General Plan. It provides regarding the Project site: "The existing mobile home park use will be allowed to continue until the end of the existing lease. At that time the City will make the decision as to whether the lease should be further extended, or the property converted to public use." DEIR, 5.4 -4. The DEIR then states that this description "indicates that the existing mobile home park is not consistent with the existing land use designation for the site" Id. However, in Section 5.4.3 which addresses Project impacts, the DEIR fails to discuss and analyze the Project's consistency with this requirement of conversion "to public use" at the end of the existing lease. Also, this section indicates that the Project will not divide the community, because "[a]ccess to and through the project site is maintained." DEIR, 5.4 -8. However, as indicated above, public access to and through the Project is unclear. Moreover, as discussed in Section 5.7, Noise, the Project will serve as a sound barrier which will block vehicular noise from Balboa Blvd. to the Project If the Project serves as such a barrier, it likely will divide the community. The DEIR should be revised to show the access points and routes from Balboa Blvd. through the Project to the Bay. In addition, Section 5.43 discusses the Land Use Element, Policy C which provides: "Commercial, recreation or destination visitor serving facilities in and around the harbor shall be controlled and regulated to minimize congestion and parking shortages, to ensure access to the water for residents and visitors, as well as maintain the high quality of life and the unique and beautiful residential areas that border the harbor." DEIR, 5.4.9. Emphasis added. However, the DEIR's discussion of parking requirements shows that, although the Project will provide a total of 209 surface and subterranean parking spaces, the Proj ect demand is only 92 spaces under the current Code requirements; the Project will result in a total of 117 excess parking spaces. This raises a few problems or questions. First, the code requirements appear at odds with Policy C's requirements. Moreover, the Code requirements seem skimpy: one space for every two rooms; one space for 300 square feet of the proposed Community Center and Girl Scout House; and four spaces for the four tennis courts. Likely, each visitor enjoying a Project/resort room will require one parking space; likely, each individual using the tennis courts will require parking. The DEIR should include a further study regarding the parking demand of the Project to ensure that • Policy C of the Land Use Element is met. 73 EQAC Page 13 May 28, 2004 In our earlier comments on the NOP for the proposed Project, we noted that the Project Description failed to discuss employee, contractor and supplier parking and access. The DEIR also fails to discuss how parking and access will be provided within the proposed Project for these groups. The Section goes onto say that the proposed Project will provide 117 parking spaces beyond what is required by the code. Perhaps these "excess" parking spaces are intended to accommodate employees, contractors and suppliers, but this issue is not addressed in the DEIR. The DEIR should be revised to address the issue of parking for these groups, because parking on the Peninsula is such an important issue. As indicated here and below, Section 5.4 addresses the Project's parking demands and Section 5.5, Transportation/Circulation includes no parking analysis. This confusion creates another problem. Although Section 5.4 discusses the Project's parking requirements, it fails to discuss existing parking including street parking. We believe that the Project will result in a loss of parking spaces from current levels. Based upon our information and calculations, the following is a tabulation of the parking spaces which the Project will cause to be lost: Metered public parking at I e street curbside 5 Metered public parking at 18'' street lot 23 Community Bldg. Staff 2 Girl Scouts dedicated and gated 10 Public Parking at Tot lot 2 Total Lost Spaces 42 Given this loss of 42 spaces as a result of the Project, there is an excess of only 75 spaces That is, the loss of parking spaces as a result of the Project must be counted against the excess parking spaces. The DEIR should be revised to include a thorough parking analysis under Section 5.6 and, if necessary, propose adequate mitigation. Further, the Project is proposed as a Five Star resort hotel with 110 rooms and fifty -eight (58) employees. We understand that other Five Star hotles in the area require a much higher ratio. As indicated above, the DEIR has eliminated Recreation from the environmental issues to be addressed, even though Recreation had been included in the NOP. The DER states that the half court basketball court doesn't get much use, according to City's recreation staff, and therefore, will not be replaced. Page 5.4 -12 However, residents of the Peninsula do, in fact, use the court Because the court is protected from the wind by its location on the Bay side of the Peninsula and between the tennis courts, it is preferred over the full court located on the ocean side at the elementary school. In fact, the City has recently completed some repairs to the court, presumably because it is used. The Final E1R should address this impact and provide necessary mitigation. Further, the DEIR states that the proposed Project would replace the four tennis courts with the same number of courts, but the hotel would offer tennis lessons on the courts. How will this impact the current heavy use of the tennis courts? The Final EIR should include a Recreation section, which analyzes these proposed Project's impacts and provide necessary mitigation. 0 0 Further, Section 5.4.1 and following sections include a discussion of the Recreation and . Open Space Element of the General Plan stating that it has "been determined to be applicable to the ZL/ EQAC Page 14 May 28, 2004 proposed project ..." In fact, the DEIR states that "(t)he project site is designated Recreation and Environmental Open Space." DEIR, 5.4 -3. The DEIR mentions that Charter Boats and Boat Tours may pass the Project. The Project may accommodate some of these boats. The DEIR should address all impacts associated 'nrith such large boats and propose necessary mitigation. In addition, any Project permit should condition such use so that any and all such impacts are mitigated, or if not, should restrict such use. One of the objectives of the Recreation and Open Space Element is to " (m]aintain and enhance the scenic character of the City." The policy which supports this objective seeks to "protect and enhance existing view opportunities, especially public views of the ocean, harbor, and upper bay ...." Section 5.4.3 states that the Project would provide view corridors from Balboa Boulevard to the Bay; and therefore, the proposed Project is consistent with the objective of the Recreation and Open Space Element However, the views from Balboa Boulevard through the majority of the proposed Project site will be obstructed by 24 -foot, 27 -foot or 34 -foot buildings which will act as a sound barrier. The Final EIR should analyze this impact more realistically and provide necessary mitigation. Finally, the DEIR states that, because the Project is compatible with surrounding land uses and consistent with the General Plan and the Local Coastal Program, Land Use Plan, the Project will not have any cumulative land use impacts. However, the Project requires discretionary actions, e.g. amendments, regarding the City's General Plan and Local Coastal Program, Land Use Plan as well as a Coastal Development Permit. As discussed above, the Project together with other projects listed in Table 4 -1 as well as the efforts to revitalize the Peninsula may create significant cumulative impacts in connection with land use. The DEIR should be revised to discuss and address such cumulative impacts. Incidentally, the DEIR offers inconsistent building setback requirements on 18'h Street In the discussion relating to land use compatibility, the DEIR states that "(t)he structures proposed along the 18a' Street will have a setback of 14 to 17 feet. Page 5.4 -8 However, the Aesthetics Section lists a building setback for 18'1' Street as 5 feet. This inconsistency should be corrected in the Final EIR. E. Section SS: Transportation/Circulation. Section 5.5 addresses transportation and circulation. This analysis is supported by a special traffic study, Appendix E: Marinapark Resort and Community Plan TPO: Traffic Analysis. This analysis focuses on 7 intersections during weekdays of the "shoulder season," fall and spring when schools are in session. The intersection closest to the proposed project is Newport Blvd. and 32 °d St. Sections 5.5.5 concludes that the Project will have no significant transportation and circulation impacts; Section 5.5.6 concludes that therefore no mitigation measures are needed. However, Table A -1 to Appendix E recognizes what every summer visitor to the Peninsula and full-time resident knows: the summer weekend traffic in the vicinity of Balboa Blvd. and 2e St. is already at LOS E or worse which exceeds the City's standard of acceptable service, LOS D. Although the Project traffic may not exceed the 1 % increase threshold, it likely will contribute to the existing traffic problem. Moreover, as indicated above, the Project together with other projects 25 EQAC Pale 15 May 28, 2004 identified in Table 4 -1 as well as the revitalization efforts on the Peninsula likely w ll have • cumulative impacts which require mitigation. The City may wish to consider improved traffic flow measures in this area to include, for example, limited on- street parking, better turn-out lanes and improved traffic signal timing/synchronization. In our comments on the IS/NOP for the Project, we requested that the DEIR "analyze and, if necessary, propose mitigation for Project impacts on seasonal traffic problems ". It further requests that the DEIR "discuss and analyze the Projects design and impact on the intersections at 15th, 16th, 17th and 18'h streets with Balboa Blvd." The DEIR did not take the suggestion and none of these intersections were addressed The DEIR should be revised to address these intersections, provide an environmental analysis of the Project's impacts on transportation in the vicinity, and, if necessary, propose mitigation. Further, traffic associated with Resort employee, construction and service vehicles is not mentioned in the DEIR. Are there plans to schedule deliveries and plans for off -site employee parking to minimize traffic impacts? Correlatively, the DEIR does not address traffic access and internal circulation at the site. As indicated above, the DEIR states that the Project will not have significant impacts on vehicular access and, by implication, no impacts on internal circulation. Yet, the document is silent on these issues. The DEIR should be revised to address and consider vehicular access and internal circulation, identify any Project related impacts, and propose necessary mitigation. Also, the Project may have short-term impacts on transportation and circulation. Section 5.6 suggests that the Project will require a construction traffic management plan. Yet, Section 5.5 contains no analysis of the short-term construction impacts of the Project on transportation and circulation. The DEIR should be revised to include an analysis of the short term construction impacts on traffic and circulation, discuss the construction traffic management plan, and, if necessary, propose adequate mitigation. Finally, as discussed briefly above, the DEIR attempts to address parking demands in connection with the Land Use analysis which discusses code requirements for the Project. However, the DEIR should include an actual study on the parking demands for the Project which considers and addresses all Project features. However, Section 5.5 should include a parking study which addresses the Project's parking demands, access to parking lots, and related issues. The DEIR should be revised to address these potentially significant impacts and, if necessary, propose mitigation. F. Section 5_6: Air Oualitv. Without any analysis of hazards and hazardous materials in or around the Project site, the DEIR concludes that the Project will have no impacts on air quality in that the Project will "not result in exposure of sensitive receptors to substantial concentrations of pollutants or generate objectionable odors." DEIR, 5.6 -12. • %s EQAC Page 16 May 28, 2004 However, without the hazardous materials analysis, this conclusion is difficult to support. As indicated above, the Project is near several areas subject to significant contamination. Such may have migrated to the site. The DEIR should be revised to include an analysis of such materials and pollutants, the air quality analysis should be revised to include and refer to the pollutant analysis, and if necessary, mitigation should be proposed. G. Section 5.7: Noise. Section 5.7 addresses potential noise impacts associated with the Project As indicated in Section 3. 1. and elsewhere, the Project is partially surrounded by residential neighborhoods. Such are sensitive noise receptors. Section 5.7.3 recognizes that the Project's heating, air conditioning and ventilation equipment may create minor amounts of noise but-concludes that such noise is commonplace. However, the Project's operations will include other non - commonplace noise sources including delivery and trash trucks, employee transportation and other vehicular noise sources not present under the current configuration. The DEIR should be revised to include a noise study of the Project impact on residences including those along 19`x' St. and West Bay, and 18"' St. and West Bay. If necessary, the revised document should propose adequate mitigation measures. In addition, the Project may attract other noise sources including Charter Boats and Boat . Tour operators. Such new sources likely will generate noise sufficient to adversely affect the residential neighborhoods. The DEIR should analyze all such impacts including noise impacts to residential neighborhoods across the bay and propose adequate mitigation. Further, Section 5.7.3 indicates that a primary noise source is traffic and that the Project will not be affected by noise from traffic on Balboa Blvd., because the buildings vdll block noise from Balboa Blvd. However, given this sound barrier, the Project may generate noise from various events which noise may adversely affect neighbors across the bay. Section. 5.7 contains no discussion or analysis of such noise generation and impacts. The DEIR should be revised to include such an analysis and, if necessary, propose mitigation. Section 5.7 shows that noise levels associated with the Project will not be significantly higher than they are now except during the construction phase. Since Municipal Noise Codes are formulated in terms of 24 -hour average noise levels, it is likely that short term noise impacts may be significant without mitigation. In view of this, we recommend that the DEIR include mitigation measures to ensure that construction companies and crews should be required to use all reasonable care to minimize noise generation by silencing loud equipment when feasible, avoiding early morning deliveries, controlling construction -site radios, and so forth. These considerations will minimize neighborhood disturbance and potential complaints. Construction companies should be encouraged to build subassemblies off -site when possible. . The supporting noise impact analysis, Appendix G, notes that construction equipment noise will reach 90 dB when operating at full load. This will probably result in exceeding acceptable noise levels at the original or relocated Tot L.ot(children's play area) during construction. Mitigation of this effect in the form of sound barriers around the Tot Lot should be required. Z7 EQAC Page 17 May 28, 2004 H. Section 5.8: Aesthetics. Section 5.8 concerns the potential aesthetic impacts of the Project. Section 5.8.2 discusses Proj ect impacts including those associated with public views, building heights, and setbacks. Among other things, the DEIR indicates that the Proj ect will enhance public views. However, the DEIR is silent on the manner of enhancement As indicated above, the DEIR maintains that the Project will create sound barrier so that vehicular noise will not reach Project visitors. Given this feature, it is unclear how the Project will enhance public views but diminish noise from Balboa Blvd. As indicated above, the DEIR contains some inconsistencies regarding set backs. The computer - generated visual simulations are helpful in illustrating the type of architecture and the overall look of the buildings. However, the simulations appear to have altered the lighting between the before and after condition. For instance, Exhibit 5.8 -2 clearly shows the architectural features of the Project in the after condition; the lighting in the before condition makes it impossible to assess what is there. In addition, there are some inconsistencies with what is being said in the text and what is being illustrated in the simulations; and in some cases, the computer simulations are misleading. In addition, there are inconsistencies within the text. The text on Page 3 -5 states that "(t)he maximum height proposed for the two -level villas is 27 feet while the proposed tower will be 34 feet in height" The text on Page 5.8 -2 states that "the hotel will have a maximum height of 24 feet. The . main lobby will have a height'of 34 feet." However, the computer simulation, Exhibit 5.8 -3 shows a tower that appears to be 10 feet taller than the surrounding buildings. Will the main lobby area be 10 feet taller than the other hotel buildings? Considering that the hotel lobby is almost 20,000 square feet, which is nearly 20 percent of the "Total Enclosed Floor Area," Table 3.2 -1, Page 3 -5, the height and overall scale are not accurately represented in the computer - generated visual simulations. Also, all of the computer simulations show no overhead utility lines, though such lines exist today. Yet the DEIR contains no discussion of this Project feature. Please confirm that these utilities will be placed underground as a part of the Project In our comments on the IS/NOP, we stated the DEIR should analyze and address Project related aesthetic impacts to the character of Balboa Blvd., which will be substantially altered by the volume and mass of the structures that are proposed. The DEIR states that the setback for the proposed Project from Balboa Boulevard is 15 feet. Does this include the main lobby with a height of 34 feet? Again, this is not clear from the computer simulations. However, if that is the case, that volume and mass will have a considerable aesthetic impact on the character of Balboa Boulevard. Finally, Section 5.8.3 addresses cumulative impacts. It concludes that, because the projects listed in Table 4 -1 are remote from the Project, it would not contribute to any cumulative impacts. However, as indicated throughout, additional projects must be considered including the revitalization efforts in the Peninsula. The DEIR should be revised to consider and assess the cumulative impact of the Project together with the efforts to revitalize the area, and if necessary, propose mitigation. EQAC Page 18 May 28, 2004 1. Section 5.9: Public Services. 1. Section 5.9.1: Police Services. Section 5.9.1 concludes that, based upon a discussion with and/or statement from a member of the City's Police Department, the Project will have no significant impact on police services. The DEIR fails to discuss the authorization and position of Lieutenant Klein and his authority regarding manpower and service levels. Further, in our comments on the ISlNOP, we requested information regarding the number of service calls both for the Project as well as the other Project Alternatives. The DEIR contains no such information. In addition, the City has experienced demands on police services during the summer including on the Fourth of July. The Project may require additional staffing at this time as well as others. The DEIR should be revised to include the requested information, provide additional information concerning peak demands on police services including the Fourth of July, and, if necessary, provide mitigation, e.g. private security for the Project. 2. Section 5.9.2: Fire Services. Section 5.9.2 concerning fire services draws a similar conclusion as above for similar reasons: based upon a discussion with and/or statement from a member of the City's Fire Department, the Project will have no significant impact on police services. The DEIR fails to discuss the authorization and position of Mr. Lerch and his authority regarding manpower and service levels. In addition, Section 5.9.2 observes that: "[V,rjith two fire stations located within one mile of the project site, emergency response time would be adequate." This may be misleading: we understand that the responding station may not be the closest station. Moreover, staffing at the stations differ: only one of the referenced stations has medical personnel. In addition, as indicated above, the DEER does not discuss access and internal circulation. Although the DEIR promises that emergency access roads and resources will be provided, the DEIR contains no discussion for such access and resources. The DEIR should be revised to provide this discussion. Also, this section states that for fire suppression, "the municipal water supply should be adequate." DEM, 5.9 -3. This statement should be stronger. The DEIR should be revised to include a study of the availability of fire suppression resources to ensure that the water supply will be adequate in the event of a fire. Z� EQAC Page 19 May 28, 2004 Both Section 5.9.1 and 5.9.2 indicate that the Project together with others will have no cumulative impacts on these services. However, as indicated above, the DER s cumulative impacts analyses for all impacts focuses upon Table 4 -1. The DEIR's cumulative impacts analysis should also consider the revitalization efforts on the Peninsula to ensure that the Project together with the Table 4 -1 projects as well as the revitalization efforts do not have cumulative impacts on various resources including fire and police services. 3. Section 5.9.3: Solid Waste. Section 5.93 addresses solid waste issues. Section 5.9.3 estimates that, in the existing condition, the Project site generates 52131 pounds per day of solid waste. This section estimates that the Project will generate 403.5 pounds per day. These totals come from Tables 5.9 -1 and 5.9 -2. However, the estimate of waste generation for the existing condition seems high. Table 5.9- 1 addresses the existing condition and projects that the mobile home park generates 481.6 pounds per day. Although this estimate is based upon State of California estimates that a household generates between 4 and 8.6 pounds per day. Table 5.9 -1 uses 8.6 pounds per day. This is problematic for several reasons. The DEIR fails to explain why the existing condition uses the maximum expected trash generation. Further, the DEIR fails to consider that many residents in the existing condition are only part time residents. Both of these would significantly lessen the estimate of the existing condition. Also, the projection for the Project seems low and fails to consider the type of solid waste generated by the Project. Much of the waste generated by the Project would include wet kitchen trash which would require more frequent collection. Also, we are unaware of any similar resort or hotel within the City that would generate such a small amount of solid waste. Section 5.9.3's cumulative impact analysis is likewise inadequate. The section contains no cumulative impact analysis: it merely concludes that the amount of waste would be an incremental contribution and would not be significant. The DEIR should be revised to study the solid waste generation both for the existing condition and the Project condition, and if necessary, propose mitigation. 4. Section 5.9.4: Water Service. Section 5.9.4 addresses water supply and service. Further, this section indicates that the Project will require relocation of the existing water main to a different alignment on the site. It concludes that this relocation will have no impacts. However, without more explanation, this is questionable. Residents, schools and other businesses in the area will suffer during the construction and relocation process. The DEIR fails to recognize this impact and provide mitigation for these short term impacts. 30 EQAC Page 20 May 28, 2004 S. Section 5.9.5: Wastewater Service. Section 5.9.5 addresses waste water issues. Under existing conditions, the site generates a total of 7,093 gallons per day; the Project is proposed to generate more than three times this much: 22,553 gallons per day without any increased capacity to handle the increase flows. Moreover, the cumulative impacts analysis concludes that the Project together with future development dill not create significant impacts. However, given that the Project will significantly increase demands on an aging infrastructure and the cumulative effect of the revitalization efforts on the Peninsula, the DEIR should include a study to insure that capacity and infrastructure are adequate and that the Project will have no significant wastewater impacts. 6. Section 5.9.6: Gas; and Section 5.9.7: Electricity. Both sections conclude that the Project will have no impact on these services. Both sections recognize that the Project gall require twice as much gas and electricity as the existing condition. Moreover, both sections indicate that, even with this doubling together with future development including the revitalization of the Peninsula, the Project will not have cumulative impacts. The DEIR should be revised to include an analysis of the adequacy of resource supply as well as consider alternative sources, e.g. solar to replace electric consumption. If necessary, the DEIR should propose adequate mitigation. VII. Section 6: Other CEOA Considerations. Section 6.1 addresses significant and unavoidable impacts. It concludes that the Project will have no such impacts. As indicated above, Section 5.3 indicates that even after mitigation, "only one significant unavoidable impact would remain" on benthic resources in or around the Project site. DEIR, 5.3 -13. The DEIR should be revised or explained so that this problem is resolved, and the public and decision makers may understand the Project's impacts as well as the need for any additional findings. Section 6.2 concerns growth inducing impacts. As indicated above, the Project is part of a revitalization effort for the Peninsula. As such, the Project may have growth inducing impacts. As elsewhere in the DEIR, Section 62 fails to consider the Project in relation to these revitalization efforts. The DEIR should be revised to consider the Project's growth inducing impacts when considered with these revitalization efforts, and if necessary, propose mitigation. VIII. Section 7: Alternatives to the Proposed Project. A. Section 7.1: The No Project Alternative. Under the No Project Alternative, the existing state is the project alternative. Section 7.1.2 states that the No Project Alternative is the environmentally superior alternative because it maintains the site in its existing condition. Nonetheless, because the No Project si EQAC Page 21 May 28, 2004 Altemative will not meet any Project Objectives, the DEIR concludes that the No Project Alternative is not feasible. However, Section 7.1 is inadequate. First, the DEIR's analysis of the existing site is inadequate. The DEIR fails to discuss and explain all of the environmental impacts associated with the current use and the existing condition including hazardous materials, -water quality, land use, and other issues of the existing condition of the site. As to the Project Objectives, as indicated above, some of the Project Objectives are problematic: the advancement of economic goals do not seem to be appropriate environmental goals. Further, and more importantly, the DEIR fails to discuss exactly how the Project meets or advances these economic goals. B. Section 7.2: The Marinapark Marine Recreation Alternative. Section 7.2.1 discusses the Marine Alternative which includes parkland, land for the Girl Scout Center /Community Center, tennis and basketball courts, over 248 parking spaces, boat moorings and a boat launch. Section 7.2.2 is the impacts analysis for the Marine Alternative. This section concludes that the Marine Alternative would result in: less impacts than the Project to geology and soils, aesthetics and public services; similar impacts as the Project for land use and planning; and greater impacts than the Project for hydrology and water quality, biological resources, transportation/circulation, air quality and noise. Many of these latter stem from the analysis' estimate that the Marine Alternative would generate more traffic. However, this estimate is without substantiation or analysis. Indeed, it seems unlikely that this alternative will generate significantly more traffic. The DEIR should be revised to provide a full and complete traffic analysis of the Marine Alternative including variants and discuss the impacts in relation to the Project. If the Marine Alternative generates less traffic, then other impacts including air quality, noise, traffic and other related issues would be lower. If so, then the Marine Alternative could be the environmentally superior Alternative. However, this conclusion is based upon specific features of the Marine Alternative which could be modified to eliminate such impacts. For instance, Section 7.2.2 notes that the Marine Alternative will have greater water quality impacts, because it would include greater parking areas and impervious surfaces. As discussed above, the DEIR fails to discuss the amount of pervious surfaces for the Project Moreover, the Marine Alternative could use alternative paving methods for the parking spaces including pervious pavers. Such would lessen any water quality impacts for the Marine Alternative. Or again, this section indicates that the Marine Alternative will have greater impacts on biological resources, because it would include `larger boat slips and boat launch" than the Project Again, these features can be changed. Section 7.2.2 recognizes that the Marine Alternative's impacts on biological resources could be mitigated. ,32. 0 0 0 EQAC Page 22 May 28, 2004 As for land use, the DEIR states that both the Project and the Marine Alternative are "compatible with surrounding land uses consistent with the General Plan." DEIR, 7 -4. However, the analysis fails to discuss whether the Marine Alternative will require a General Plan Amendment. The DEIR should be revised to provide more detail and analysis for the Marine Alternative, and reconsider and discuss the evaluation of its environmental rank and its feasibility. C. Section 7.3: The Reduced Intensity Alternative. Section 7.3 addresses the Reduced Intensity Alternative which would include an 88 room hotel, a 4,500 square foot restaurant and 12 boat slips. Section 7.3.3 concludes that the Reduced Intensity Alternative would result in greater environmental impacts than the Project. Among other things, Section 7.3.2 concludes that the Reduced Intensity Alternative would have greater transportation and circulation impacts, because it would result in 869 average daily trips as opposed to the Project's 640 average daily trips. However, many of those trips are associated with the large restaurant. A different project feature, e.g. a smaller restaurant and/or parkland, would reduce such trips, perhaps below the Project level. As before, the Reduced Intensity Alternative fixes on features that may create significant impacts whereas other possible features with fewer impacts are not analyzed. The DEIR should be revised to consider other features for the Reduced Intensity Alternative, and reconsider and discuss the evaluation of its environmental rank- LX- Miscellaneous Considerations. We note that the Project in the IS/NOP is entitled the Newport Regent Beach Hotel. The Project for the DEIR is entitled the Marinapark Resort Hotel and Community Plan. The DEIR should explain the change and the proposed Community Plan. X. Conclusion. Thank you for the opportunity to comment on the captioned document. For the foregoing reasons, we recommend that the DEIR be revised to address the issues raised above. 33 0 EIR =6 Supplemental City Council Staff Report for June 8, 2004 • r TO: FROM: SUBJECT: CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Supplemental Report Agenda Item 33 June 8, 2004 HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL James Campbell, Senior Planner (949) 644 -3210, icampbell(a)-city.newport- beach.ca.us Marinapark Resort and Community Plan and Draft Environmental Impact Report APPLICANT: Marinapark LLC (Formerly Sutherland Talla Hospitality) The Planning Commission conducted a public meeting on the proposed Marinapark Resort and Community Plan on June 3, 2004. The meeting was noticed through a mailer to nearby properties and an advertisement in the Daily Pilot. Attendance by the public was less than anticipated with the Council Chambers being filled to approximately 2 /3rds capacity. Attached is a summary of comments that were either made by Planning Commissioners or members of the public. The minutes of the meeting will be prepared and forwarded to the Council for the public hearings scheduled for July. Prepared by: c es W. Campbell, Senior Planner Attachments Submitted by: Z-�Sharon Z. Woo , Assistant City pager 1. Summary of comments received at the Planning Commission meeting of June 3, 2004 0 Planning Commission and Public Comments Marinapark Resort and Community Plan EIR Planning Commission Study Session June 3, 2004 Project site is only remaining open space on peninsula and should remain open space; Project development will effectively block public access to beach; Views from 2 "d stories of homes on Balboa Blvd. will be blocked; More analysis of impacts on Harbor and Bay needed; Marine Recreation Alternative is better than project and could be improved upon to have lesser impacts than project; 28 -foot slips are not large enough to accommodate craft consistent with "yachting resort" description; Market research information should be submitted to show viability of project and project alternatives; Boat slips included for resort guests are not the best use for the general public; More emphasis on effect on the water part of tidelands is needed; Conclusions regarding consistency of project with Harbor and Bay Element of the General Plan are not supported in the analysis; Details on mitigation for biological impacts not yet known; Proposed project is a water - enhanced use, not a water - dependent or coastal- dependent priority use; Analysis is needed to determine if the boat slips are truly an integral part of the resort format; It appears the pierhead line would need to be moved to accommodate the boat slips; Need to determine how many bedrooms and parking spaces are included in Marinapark mobile home park; Bay water quality is already compromised and beach was closed one of every two days last July; Traffic can only be exacerbated by project; Owners of summer homes will not be here to vote in November election; 1 E 0 Planning Commission and Public Comments Marinapark Resort and Community Plan EIR Planning Commission Study Session June 3, 2004 Description of project as "yachting resort" is not meaningful; Yachters stay on their yachts, not at resorts; Retention of site as open space with no buildings would ensure retention of views to the bay; Parks Department submitted proposal in response to City Council Request for Proposal that is not included in the EIR as project alternative; Marine Recreation Alternative does not include back -up data supporting conclusion that more traffic is generated by this alternative than by project; Procedurally, EIR text should identify an environmentally superior alternative from among the alternatives to the project, not the project itself, Number of parking spaces in Marine Recreation Alternative could be reduced to lessen impacts; Project is clearly the economically superior alternative; Marine Recreation Alternative included to make project look good; Number of additional vehicular trips that would exceed 1% of movements at NewporbPCH in PM peak hour and at Hospital/Newport in AM peak hour should be indicated; EIR needs to indicate why additional 520 daily vehicle trips is determined to be "not significant' impact e.g. what number of additional trips would be significant; Project does not satisfy the "project objective" relating to additional marine- related facilities that can be used by coastal visitors for sailing and boating; Project does not meet recreation needs of citizens; Project conflicts with General Plan Land Use, Harbor and Bay, and Recreation and Open Space Elements; I* Project reduces public access to the beach and bay but should increase public access; 2 Planning Commission and Public Comments Marinapark Resort and Community Plan EIR Planning Commission Study Session June 3, 2004 City needs to provide justification for changing land use designation from Recreation and Environmental Open Space to Recreational and Marine Commercial other than simply to accommodate this project; Economic viability of Marine Recreation Alternative should be analyzed; Project is not consistent with Goals, Objectives, and Policies of the General Plan Harbor and Bay Element including those relating to impacts of land use changes on water - dependent and water - related land uses and with Recreation and General Plan Open Space Element relating to need for aquatics and swimming pool facilities, upgrading of Las Arenas Park, and not mentioning resort hotel, as well as the need for boat launching and bilge pumping facilities; The "No Project' alternative in the EIR assumes passage of legislation that would allow continued use of site as mobile home park; Per EQAC comments, "Recreation" section of EIR needs to be supplemented with facts and analysis to support conclusions therein; Impact on recreational opportunities needs to be addressed; Parking analysis needs to be expanded as relates to loss of current parking and to documentation of demand generated by project; Marine Recreation Alternative conclusions require qualitative or quantitative support in EIR; Conclusion that smaller resort hotel will entail lesser impacts needs to be supported by facts. 9 0 EIR =7 Minutes of City Council Study Session of June 8, 2004 0 0 City of Newport Beach Regular Meeting June 8, 2004 INDEX Assessment District No. 69; declaring the improvements to be of special benefit; describing the district to be assessed to pay the costs and uses thereof; providing for the issuance of bonds; and designating the area derground utilities district; c)Resclution No. 2004 -50 giving prelimin roval to the report of the assessment engineer, setting the time and pla a public hearing as July 27, 2004; and ordering the intention of assessmen of procedure for Assessment District No. 69; 2) approve the Bond Cou Agreement with Robert Hessell; and 3) approve a Professional Services ement Amendment with Harris and Associates for an additional fee of $ , The motion carried by the following roll call vote: Ayes: Adams, Bromberg, Webb, Nichols, Mayor Ridgeway Noes: None Abstain: Heffernan, Rosansky None 33. MARINAPARK RESORT AND COMMUNITY PLAN AND DRAFT ENVIRONMENTAL IMPACT REPORT. Senior Planner Campbell reported that the comment period ends June 9, 2004, for the Environmental Impact Report (EIR) for the proposed Marinapark Resort. He announced that in addition to the presentation at the current meeting, public hearings would be held before the Planning Commission on July 8, 2004, and the City Council on July 13 and 27, 2004. Senior Planner Campbell introduced David Lepo, the project manager, and Mike Houlihan of Michael Brandman & Associates, who prepared the EIR. Council Member Heffernan asked what hearings would be held before the project is submitted to the voters, in addition to the hearings already announced. He specifically asked when the voters would learn about the ground lease terms and other issues. City Attorney Burnham stated that the City Council would consider the ground lease, the fiscal impact report and certification of the EIR at the meeting of July 27, 2004. In addition, the election would be called by resolution. He stated that the City Council could hold additional public meetings if the City Council determines that more information should be provided. City Attorney Burnham stated that there is also the potential to adopt the Planned Community (PC) text. Council Member Heffernan asked if there would be a vote by the City Council on the project prior to it being presented to the voters. City Attorney stated that the lease and the fiscal impact report would be considered and discussed by the City Council, and that the lease could be approved subject to the other permits and land use approvals being issued. Council Member Heffernan asked if the voters in the City would know who on the City Council is supportive of the project and who is not. City Attorney Burnham stated that it would be up to the City Council, but that most likely opinions would be expressed during the process. City Attorney Burnham noted that the agreement between the City and Marinapark LLC approved an exception to the normal practice. Council Member Heffernan asked if the site plan, layout and other detail 0 Volume 56 - Page 989 C -3389 Marinapark Resort and Community Plan (38/100.2004) City of Newport Beach Regular Meeting June 6, 2004 INDEX would be approved prior to the project being submitted to the voters. City Attorney Burnham responded in the affirmative, but stated that the City Council could include a requirement for final approval of the site plan in the terms and conditions of the lease, which would be approved on July 27, 2004. Council Member Heffernan asked what the voters would be approving if they haven't approved the site plan. City Attorney Burnham stated that they would be approving a general plan amendment to allow for the construction of a 110 -room resort consisting of approximately 110,000 square feet. He added that they would be approving the concept, understanding that if all other permits are obtained by the project proponent, the lease would guide the development and operation of the property. Mayor Ridgeway asked if the PC text had been submitted for the project. Senior Planner Campbell stated that the draft PC text is available and subject to review and amendment. He stated that the timing of when the PC text will be presented to the City Council is up to the City Council. Council Member Webb asked when the first copy of the lease and the fiscal impact report would be available. City Attorney Burnham stated that the terms and conditions of the lease should be available within the next thirty days. Council Member Webb noted that the lease won't be available until approximately two weeks before the City Council will need to make the final decisions and approvals. Mayor Ridgeway stated that the lease will also be available in summary form. Council Member Webb asked when the fiscal impact report would be available. Assistant City Manager Wood stated that it should be available within the next couple of weeks. Council Member Webb again noted that both the lease and the fiscal impact report won't be available until approximately two weeks before the City Council will need to make the final decisions and approvals. Council Member Nichols asked how much the project could change before the EIR would be inapplicable. City Attorney Burnham stated that the project reviewed in the EIR would be the project that would be developed, if all approvals are received. Council Member Webb stated that the approval from the Coastal Commission could require some substantial changes. City Attorney Burnham stated that unless the approvals increase the size of the project, the approvals would be within the scope of the analysis in the EIR. If the approvals would cause the project to have impacts that weren't evaluated or increase the severity of the impacts, the EIR would have to be revised. Mayor Pro Tem Adams noted that it's only dealing with the general plan amendment, and not necessarily with the specifics of the project. Council Member Heffernan asked how voter approval would be affected if the Coastal Commission, for example, reduces the size of the project, Volume 66 - Page 990 0 0 E City of Newport Beach Regular Meeting June 8, 2004 making the project less economically feasible City Attorney Burnham stated that voter approval is for the general plan amendment, which authorizes the development of a project up to a certain size. He added that the City Council will approve the lease before the matter is submitted to the voters, which will indicate to the voters what the City intends to do if the project is approved. He stated that the lease is an administrative function, which cannot be delegated to the voters. The voters are only approving a general plan amendment, which is a conceptual approval of the project. In response to Mayor Ridgeway's question, Senior Planner Campbell stated that the purpose of the presentation at the current meeting is to provide information on the project, and receive feedback from the City Council on the adequacy of the EIR and issues that should possibly be addressed prior to the upcoming public hearing meetings. City Attorney Burnham added that the presentation is also intended to provide information to the voters. Steve Sutherland, applicant and partner of the Marinapark Resort and Community Plan, stated that the project has been before the City for a number of years. Using a PowerPoint presentation, Mr. Sutherland displayed the location of the project on the Balboa Peninsula, as well as the site plan. He reviewed the various aspects of the site plan, and stated that the plan is for a 110 -guest room luxury destination resort. He stated that the 110 rooms will be located in 16 villa -style buildings, all designed in residential scale, and lower in height and density than many of the neighboring homes. Mr. Sutherland stated that the project will help to beautify the surrounding area and the traffic generated by the project will be below the Measure S thresholds. He stated that the current use at the site includes a mobile home park with 56 tenants. He displayed several before and after view simulations. Mr. Sutherland stated that the community improvements of the proposed project include beautification of the area, commitment to fund a minimum of $500,000 to remodel the existing American Legion facility, rebuilding the public tennis courts, and construction of a new Girl Scout House and community center. He stated that the City currently operates tennis and sailing programs at the site and that this will continue. He additionally noted that the public will have access to the resort's specialty restaurant and grounds, and that public beach access will be improved and new view corridors and walkways will be provided. Mr. Sutherland reported that the total annual revenue to the City is anticipated to be close to $3 million, and would include Transient Occupancy Tax (TOT), sales tax and property tax. He stated that it is also expected that property owners will benefit from increased land values, and that the project will help with the revitalization of the area. Council Member Webb stated that there appears to be no room for landscaping to camouflage the wall around the tennis courts. Mr. Sutherland stated that there is a 3 -foot setback that can be layered with different types of groundcover, trees and foliage, and that he also is concerned about how the project will look, to both the residents and the guests of the property. Council Member Webb stated that the wrought Volume 56 - Page 991 INDEX City of Newport Beach Regular Meeting June 8, 2004 INDEX iron fence that is proposed at the view corridors would substantially block the views. Mr. Sutherland stated that the view corridor is 30 to 35 feet on each side. Council Member Webb stated that he's anxious to see the fiscal impact report to see how the $3 million revenue figure is justified. Council Member Nichols stated that it appears that the project does not have adequate parking. Mr. Sutherland stated that there are no other Five Star resorts in Orange County to base a comparison on and that the proposed project will not need the number of employees needed at the larger resorts. In response to Council Member Nichols' question, Mr. Sutherland stated that the resort's employee pool is expected to be approximately 150, but the number on the site at any given time would be approximately 50. He emphasized that the project is for a small luxury resort. Referring to the staff report, Council Member Heffernan asked how the issues raised by the Environmental Quality Advisory Committee (EQAC) regarding the EIR would be addressed. Assistant City Manager Wood stated that those comments along with all other comments received will have written responses, and that the consultants at Michael Brandman & Associates are already working on those. The comments should be available well before the July 8, 2004, Planning Commission meeting. in response to Council Member Heffernan's question, Assistant City Manager Wood noted that the concerns of the Planning Commission i included additional backing for the conclusions on traffic and parking, more information in the analysis of consistency with the general plan, •) and more facts and analysis regarding the alternatives. She stated that the comment period for the EIR is 45 days and ends on June 9, 2004. Council Member Nichols stated that EQAC wanted an additional chance to review the EIR after their initial questions were answered. Assistant City Manager Wood stated that their comments will be responded to, which is a requirement of the California Environmental Quality Act (CEQA) guidelines. The City Council has the authority to approve the final EIR. EQAC does not make the decision on whether an EIR should be recirculated, or found to be adequate and certified, Assistant City Manager Wood additionally noted that there is a lack of clarity on whether EQAC actually recommended that the EIR be recirculated. Council Member Heffernan asked if EQAC will provide responses to the responses by the consultant. Assistant City Manager Wood stated that the City's procedure does not include a provision for the EIR to go back to EQAC for a second review. City Attorney Burnham added that the City's procedures also do not include a provision for EQAC to comment on the responses. The adequacy of the EIR and the adequacy of the responses to all of the comments received on the EIR are decisions made by the City Council, which has the full discretion to determine if the document is in compliance with CEQA. In response to Council Member Heffernan's question, City Attorney Burnham stated that the City Council will need to weigh the comments made and review the responses to determine if they adequately address those comments. Council Member Heffernan stated that it would be more efficient for the individual that made the 40 Volume 56 - Page 992 • 0 City of Newport Beach Regular Meeting June 8, 2004 comment to review the response. City Attorney Burnham emphasized that the decision on the adequacy of the document is strictly that of the City Council. The Planning Commission will make a recommendation, but they will not make the determination. Council Member Bromberg noted that EQAC is a diverse group of individuals and they all realize that they are not the decision makers or the policymakers. Council Member Nichols noted that the City Council does have the option of recirculating the document, which would include recirculation to EQAC. Assistant City Manager Wood encouraged the council members and the public to provide comments on the EIR at the current meeting. Robert Walchli stated that he's a proponent of public use of public property and is generally against conversion to private control. He stated that he's not opposed to a compromise, noting that a hotel with increased public access could be feasible. He asked what the revenue from the proposed hotel would be used for and what the analysis of leaving the property as open space is. He suggested that there be provisions to restrict the use of the boat slips by charter boats and to provide increased public access. Mr. Walchli stated that the people should be able to vote on what they want the site to used for. He, additionally, asked what would happen if the project goes bankrupt and if the community center would be free. Lastly, he stated that there doesn't seem to be any guarantee that what the voters approve is what will be developed. Jim Hildreth stated that he was glad to see that boats would be allowed. He felt, however, that parking dinghy's at the site should also be considered. Laura Dietz, EQAC member, stated that when EQAC formed the subcommittee to review the Marinapark draft EIR, she felt that one of the members might have a conflict of interest because of their vocal opposition to the project. She learned that this matter is not relevant for EQAC, which is an advisory committee. Ms. Dietz stated that she missed the meeting when EQAC compiled their recommendations and that she disagrees with a number of them. She stated that the EQAC members still need to learn more about EIR's and the CEQA process. In response to Council Member Heffernan's question, City Attorney Burnham stated that vocal opposition to a project is meaningless when looking at the legal definition of conflict of interest by a member of an advisory committee. He stated, however, that opposition to a particular project on the part of a decision maker could potentially constitute a denial of due process. Council Member Nichols stated that he was at the EQAC meeting when the project was reviewed. He stated that a concern was expressed for the possibility of the charter boats being able to utilize the piers at the site. Volume 56 - Page 993 INDEX City of Newport Beach Regular Meeting June 8, 2004 Mayor Ridgeway stated that the largest dock that is being designed is 28 feet. Council Member Nichols stated that the plan is not to berth the boats, but to pick up charter passengers. Assistant City Manager Wood stated that it is not a part of the project description. Council Member Nichols stated that EQAC also questioned using the underground parking lot for temporary water storage in the case of a major rain storm and how well it would work. Assistant City Manager Wood stated that all of EQAC's concerns will receive a response and that these will be provided to the Planning Commission and the City Council. Council Member Webb stated that two of the project objectives will eliminate the recreation public use alternatives from being considered or feasible, because they do not generate revenue. He specifically cited the two objectives, which were to reduce the current and anticipated future deficit between tidelands revenue and expenditures, and to provide additional general fund revenues that will help the City maintain high levels of public safety and municipal services. He stated that he has previously requested that an alternative be shown in the document for a "no project" alternative that followed the recreation and open space element without a mobile home park. He stated that the "no project" alternative included in the document includes the mobile home park and the other existing uses. City Attorney Burnham explained that the City is obligated to evaluate the impacts of "no project ", or no development. pursuant to CEQA, which is why the current use at the site is included in the document. Council Member Webb stated that a fourth alternative could still have been included, and that the public use alternative in the document is for marine - related use and not park use. In response to Council Member Heffernan's question, City Attorney Burnham stated that the lease revenue would be tidelands revenue and would be required to be used for tidelands purposes. The TOT revenue would go into the general fund. ot'on b or Pro Tern Adams to continue through the agenda until midnight, if n ary. The motion carried by acclamation. P. ITE MOVED FROM THE NT ALEN 3. ORDIN AMENDING SECTIONS 12.24.065 AND 12.24.080 OF THE NBMC R DING REDUCING THE PRIMA FACIE SPEED LIMIT OF RIDGE K ROAD FROM SAN JOAQUIN HILLS ROAD TO NEWPORT C DRIVE. Jim Hildreth stated that he hoped the s>s4jimits weren't being changed just to generate revenue. He asked how not on would be made and stated that signs are often not adequate. He sug d that the speed limits be placed on the roadways themselves. Motion by Ma99r_Pm Tem Adams to introduce Ordinance No. Volume 56 - Page 994 INDEX (100 -2004) •I 0 9 EIR- 8 Planning Commission Staff Report for July 8, 2004 9 CITY OF NEWPORT BEACH PLANNING COMMISSION STAFF REPORT Agenda Item No. 3 July 8, 2004 TO: HONORABLE CHAIRMAN AND MEMBERS OF THE PLANNING COMMISSION FROM: James Campbell, Senior Planner SUBJECT: Marinapark Resort and Community Plan and Final Environmental Impact Report (PA 2003 -218) 1700 West Balboa Boulevard APPLICANT: Marinapark LLC (Formerly Sutherland Talla Hospitality) RECOMMENDATION Review the Final Environmental Impact Report (EIR), receive public comments during the public hearing, and adopt the attached draft resolution recommending City Council certification of the Marinapark Resort and Community Plan Final Environmental Impact Report. DISCUSSION Background: The project background, project description, and a summary of the Draft EIR are provided in the report provided to the Planning Commission for the June 3`d study session. EIR Certification Process A Draft Environmental Impact Report (EIR) was prepared for the project and circulated for public comment from April 26, 2004, through June 9, 2004, as required by the California Environmental Quality Act (CEQA). During that time, affected government agencies and the public submitted written comments on the Draft EIR. The Planning Commission received public comments on the Draft Environmental Impact Report for this project at a study session on June 3, 2004, and then provided comment and requested clarification and additional information on various impacts analyzed in the document. Planning Commission comments and responses to those comments are included in the Final Environmental Impact Report together with comments received during the public circulation period for the Draft EIR and the respective responses to those comments. The Planning Commission now should recommend to the City Council whether or not to certify the Final EIR. A recommendation to certify the FEIR is appropriate upon finding that: 1) the Final EIR has been completed in compliance with the California Environmental Quality Act (CEQA); 2) the Planning Commission reviewed and considered information contained in the Final EIR; and, 3) the Final EIR reflects the independent judgment of the Planning Commission as a representative body of the City as lead agency in preparation of the Final EIR. The City Council will hold public hearings and consider the Planning Commission recommendation on the Final EIR on July 13, 2004 and on July 27, 2004. On July 27tH the City Council may certify the Final EIR if, after reviewing the document and considering the Planning Commission recommendation, the Council makes the three findings noted above. Final EIR Summary: The Marinapark Resort and Community Plan Final EIR is comprised of the Draft EIR, a listing of persons and organizations that commented on the Draft EIR during the public circulation period, a compilation of those comments, and responses to those comments provided by the City as lead agency for the project pursuant to CEQA. Comments and Responses to Comments The Final EIR includes all written comments on the Draft EIR received through June gth and comments received from three agencies after that date. Correspondence from each commenter is accompanied by responses to comments set forth in that correspondence. Responses were prepared by the City's EIR consultant and City staff. Responses may provide clarification on an issue by referral to an EIR section, may include additional discussion as clarification of an issue raised by the commenter and addressed in the EIR, or may indicate an additional or revised mitigation measure formulated in response to a comment. Comments not relating to environmental impacts may simply be noted for the record. In response to comments received, additional mitigation measures have been formulated and previously defined mitigation measures have been modified to further reduce adverse impacts. These mitigation measures and the reasons for their inclusion or modification are as follow: Mitigation Measure LU -1 Environmental impacts identified in the Draft EIR included those associated with bulkhead and groin wall placement, dredging, fill placement on the sandy beach, and 10 extension of the slips beyond the pierhead line. Although the impacts associated with placement of this structure were determined to be less than significant, the project proponent has agreed to incorporate the modified dock specifications into the project as set forth in Mitigation Measure LU -1 to further reduce potential impacts. The modified dock eliminates the twelve boat slips originally proposed and replaces them with a 260 - foot long "marginal' dock. This will reduce the amount of dredge material from 1,750 cubic yards to a maximum of 500 cubic yards, reduce the amount of bay bottom that will be disturbed, and eliminate the need for approval to construct improvements beyond the pierhead line. Mitigation Measure HM -1 This new mitigation measure requires that the project proponent provide a listing of all hazardous materials and their quantities that may be used or stored on the project site during construction. The impact relative to hazardous materials used or stored on site during construction previously was determined to be less than significant with mitigation and the new mitigation measure was added to further reduce the potential impact level in response to comments received on the Draft EIR. Mitigation Measure BR -6 Modification of the dock plan as in Mitigation Measure LU -1 results in a reduction in the area of benthic and shorebird foraging habitat that is disturbed and a consequent reduction in the amount of replacement habitat that must be developed off -site. Revision of this mitigation measure reflects the reduced habitat replacement area. Mitigation Measure HWQ -1 Modification of this mitigation measure adds a requirement that in -water construction activities be limited to the period from October 1 to March 31. This mitigation measure was modified in response to comments from the Regional Water Quality Control Board indicating this would be a condition of permit approval for construction of the dock. The time period restriction will prevent construction activities that would interfere with wildlife reproductive activities. Prepared by: Jarffes W. Camp ell, Senior Planner Attachments 1. Draft Resolution Submitted by: ""A�� Sharon Z. Wood Assistant City ager R, 0 • A ATTACHMENT 0 RESOLUTION NO. A RESOLUTION OF THE PLANNING COMiVIISSION OF THE CITY OF NEWPORT BEACH RECOMMENDING THAT THE CITY COUNCIL CERTIFY THE ENVIRONMENTAL IMPACT REPORT REGARDING THE MARINAPARK RESORT AND COMMUNITY PLAN ON THE NORTH SIDE OF BALBOA BOULEAVARD BETWEEN FIFTEENTH AND EIGHTEENTH STREETS (STATE CLEARINGHOUSE NO. 200311021). WHEREAS, Marinapark LLC (formerly Talla Sutherland Hospitality), 4500 Campus Drive, Suite 650, Newport Beach, California, has applied to the City of Newport Beach for approvals necessary to develop a 110 -room luxury resort hotel, related ancillary facilities and community facilities on an 8.1 acre site on the north side of Balboa Boulevard between 15th and 18th Streets; and WHEREAS, in accordance with CEQA requirements, a Notice of Preparation (NOP) of a Draft EIR was filed with the State Clearinghouse, which assigned State Clearinghouse Number 200311021; and wWHEREAS, the NOP and an Initial Study were distributed to all responsible and trustee agencies and other interested parties for a 30 -day public review period commencing on November 4, 2003, and ending on December 3, 2003; and WHEREAS, in accordance with CEQA requirements, a Notice of Completion (NOC) of the Draft EIR was filed with the State Clearinghouse; and WHEREAS, the Draft EIR was distributed to agencies, interested organizations, and individuals by the City. The distribution list is available at the City of Newport Beach Planning Department; and WHEREAS, a 45 -day public review period for the Draft EIR was established pursuant to State law, which commenced on April 26, 2004 and ended on June 9, 2004; and WHEREAS, all comments received during the public review period for the Draft EIR were responded to in the Response to Comments document dated July 2004, distributed separately due to bulk and hereby designated by reference as Exhibit EIR -2 of this Resolution as if fully set forth herein. All comments and responses were considered by the Planning 0 Commission during its review of the Environmental Impact Report; and WHEREAS, on July 8, 2004, the Planning Commission held a public hearing at which time • the Final Environmental Impact Report, comprised of the Draft Environmental Impact Report, a listing of persons and organizations that provided written comments on the Draft Environmental Impact Report during the public circulation period, a compilation of those comments, and responses to those comments, was considered. Notice of time, place and purpose of the public hearing was duly given and testimony was presented to and considered by the Planning Commission at the hearings. WHEREAS, the Final Environmental Impact Report identifies potential significant impacts to the environment and certain mitigation measures designed to reduce or avoid these impacts. NOW, THEREFORE, BE IT RESOLVED that the Planning Commission of the City of Newport Beach does hereby find that Environmental Impact Report (State Clearinghouse Number 200311021) designated by reference as Exhibit EIR -1 of this Resolution has been prepared in compliance with the California Environmental Quality Act (CEQA) and the CEQA Guidelines. In addition, the Planning Commission finds that the EIR adequately analyzes project - related impacts, identifies feasible mitigation measures and discusses project alternatives, and that the Final EIR • reflects the independent judgment of the Planning Commission. The Planning Commission hereby recommends that the City Council certify Environmental Impact Report identified by State Clearinghouse No. 200311021. ADOPTED this 8"' day of July 2004, by the following vote, to wit: BY: Secretary AYES: NOES: U-1191 • �4 2 0 ExmIT EIR -1: ENVIRONMENTAL L"PACT REPORT [Distributed separately due to bulls Available for public review at the City's Planning Department] • ki EX=IT EIR -2: RESPONSES TO COMAIENTS ON DRAFT EIR [Distributed separately due to bulls Available for public review at the City's Planning Department] I E EIR = 9 Memorandum of July 7, 2004, transmitting Phase II assessments to Planning Commission and City Council (Available for public review at the City's Planning Department) 0 To: Planning Commission From: James Campbell, Senior Planner' Date: July 7, 2004 IIJJ Re: Marinapark Resort & Community Plan Environmental Impact Report City of Newport Beach Planning Department Attached are the two Limited Phase II Environmental Site Assessments (one dated February 17, 2004 and the other dated April 9, 2004) for the Marinapark project EIR (SCH# 200311021). `s. Memorandum To: City Council From: James Campbell, Senior Planner Date: July 7, 2004 Re: Marinapark Resort & Community Plan Environmental Impact Report City of Newport Beach Planning Department 0 Attached are the two Limited Phase II Environmental Site Assessments (one dated February 17, 2004 and the other dated April 9, 2004) for the Marinapark project EIR (SCH# 200311021). 0 1 is EIR -10 Minutes of Planning Commission Public Hearing of July 8, 2004 n u Planning Commission Minutes 07/08,/2004 DRAFT Page 3 of 39 file: //H:\Plancomm\2004 \0708.htm 07/20/2004 SUBJECT: Marinapark Resort and Community Plan Draft ITEM NO.5 Environmental Impact Report (PA2003 -218) PA2003 -218 1700 W. Balboa Blvd. Recommended Marinapark LLC, requests entitlements to remove and /or demolish certification of existing structures on the property and build a 110 -room luxury resort the EIR hotel that would include a lobby and registration area, a cafe, a restaurant, a bar, a ballroom, a swimming pool, separate spa and administration buildings, 12 boat slips and a subterranean parking garage. The following public facilities would be included in the project: surface parking lot, four tennis courts, a new two -story Community Center and Girls Scout facility, and a tot lot. Chairperson Tucker described the goals of the hearing and then went through some provisions of the California Environmental Quality Act, which is referred to as CEQA, so that everyone is clear what is before the Planning Commission tonight and the type of testimony that is relevant for what is before us. Goals of Heating: The sole purpose of this hearing is to review for adequacy the Marinapark Resort EIR (including proposed mitigation measure), comments and responses to comments which have been provided to the Commission (collectively, the Final EIR, or FEIR). We are not here tonight to hear about whether or not you or we like the project. To be candid about it, it doesn't really make much difference what anyone in this building thinks about the project, since if the Council decides to put this matter on the ballot in November, all who live in Newport Beach and vote will have the final say. Our charge tonight is to review the FEIR for adequacy. If we find that the FEIR adequately addresses the potential impacts to the environment of the construction of the project, then we should recommend that the Council certify the FEIR. If not, then we will make a different recommendation to the Council. Certification of the FEIR is not an approval of the project, merely that the FEIR adequately summarizes the effects the project would have on the environment, after mitigation measures are implemented. I would like the administrative record to demonstrate that a discussion of the issues took place at the Commission level and that we understood the consequences of the project before us for consideration. I intend for us to demonstrate that understanding by discussing substantive issues raised in the EIR, the public's written comments to the EIR, the responses to comments as well as credible and relevant verbal comments from the public at this hearing. The foregoing will provide the basis for the Commission to make a recommendation to the Council and, as required by CEQA, will be file: //H:\Plancomm\2004 \0708.htm 07/20/2004 Planning Commission Minutes 07/08/2004 DRAFT Page 4 of 39 based upon substantial evidence in the record. I have worked up a list of issues to be discussed. These are the issues which I believe are most substantive and therefore most worthy of discussion at this hearing. The list is based upon comments received on the EIR. Please keep in mind that not every impact is a 'significant' impact. The EIR addresses what is significant and what is not and how one knows. Some of the effects are judged on empirical data (i.e. traffic and noise) and some of them are judgment calls (i.e. land use compatibility). Substantial evidence is defined by CEQA and does not include personal opinions not supported by fact, no matter how heartfelt. The Planning Commission is bound by CEQA to disregard argument, speculation, unsubstantiated opinion and other evidence which is not credible. After we review the issues list, as it may be supplemented by the Commission, we will then take public testimony. Each speaker may raise EIR related issues which the speaker believes merit further discussion. Finally, we will close the public hearing and bring the matter back to the Commission to provide any comments a Commissioner has on the list of issues, or otherwise. After that, we will consider whether recirculation is necessary. Finally, we will vote. • 1 apologize in advance for what I expect will be a rather formal proceeding. However, if the FEIR is certified and thereafter challenged in court, the administrative record will include an actual verbatim transcript of our hearing, so I want the record to be complete and to demonstrate that we understood our responsibilities under CEQA and that we considered all substantial evidence that was presented to us before we reached our decision. Thanks to the diligence of our staff and consultants and the sophistication of the commenting public, I believe we and the public will easily be able to understand the consequences of the project. That is the goal of this hearing. He then read the following excerpts from the CEQA Guidelines that govern how these documents are prepared. The Basic purposes of CEQA are to: • Inform governmental decision - makers and the public about the potential, significant environmental effects of proposed activities. • Identify the ways that environmental damage can be avoided or significantly reduced. • Prevent significant, avoidable damage to the environment by file: //11:\Plancomm\2004 \0708.htm 07/20/2004 Planning Commission Minutes 07/08/2004 DRAFT . requiring changes in projects through the use of alternatives or mitigation measures when the governmental agency finds the changes to be feasible. • Disclose to the public the reasons why a governmental agency approved the project in the manner the agency chose if significant environmental effects are involved. • The purpose of CEQA is not to generate paper, but to compel government at all levels to make decisions with environmental consequences in mind. • CEQA does not require technical perfection in an EIR, but rather adequacy, completeness, and a good -faith effort at full disclosure. • CEQA requires that decisions be informed and balanced. It must not be subverted into an instrument of the oppression and delay of social, economic, or recreational development or advancement. • An EIR is an informational document which will inform public agency decision - makers and the public generally of the significant environmental effects of a project, identify possible ways to minimize the significant effects, and describe reasonable alternatives to the project. • In reviewing draft EIRs, persons and public agencies should focus on the sufficiency of the document in identifying and analyzing the possible impacts on the environment and ways in which the significant effects of the project might be avoided or mitigated. Comments are most helpful when they suggest additional specific alternatives or mitigation measures that would provide better ways to avoid or mitigate the significant environmental effects. At the same time, reviewers should be aware that the adequacy of an EIR is determined in terms of what is reasonably feasible, in light of factors such as the magnitude of the project at issue, the severity of its likely environmental impacts, and the geographic scope of the project. CEQA does not require a lead agency to conduct every test or perform all research, study, and experimentation recommended or demanded by commentators. When responding to comments, lead agencies need only respond to significant environmental issues and do not need to provide all information requested by reviewers, as long as a good faith effort at full disclosure is made in the EIR. • • Reviewers should explain the basis for their comments, and should submit data or references offering facts, reasonable file: //H:\Plancomm\2004 \0708.htm Page 5 of 39 07/20/2004 Planning Commission Minutes 07/08/2004 DRAFT assumptions based on facts, or expert opinion supported by facts in support of the comments. Pursuant to Section 15064, an effect shall not be considered significant in the absence of substantial evidence. . An EIR should be prepared with a sufficient degree of analysis to provide decision - makers with information which enables them to make a decision which intelligently takes account of environmental consequences. An evaluation of the environmental effects of a proposed project need not be exhaustive, but the sufficiency of an EIR is to be reviewed in light of what is reasonably feasible. Disagreement among experts does not make an EIR inadequate, but the EIR should summarize the main points of disagreement among the experts. The courts have looked not for perfection but for adequacy, completeness, and a good faith effort at full disclosure. . Arguments, speculation, unsubstantiated opinion or narrative, or evidence that is clearly inaccurate or erroneous, or evidence that is not credible, shall not constitute substantial evidence. Substantial evidence shall include facts, reasonable assumptions predicated upon facts, and expert opinion supported by facts. . Evidence of economic and social impacts that do not contribute to or are not caused by physical changes in the environment is not substantial evidence that the project may have a significant effect on the environment. Chairperson Tucker then noted that staff and the Commission will talk about the issues and acknowledge the issues raised in the comments and some of the responses to comments. Following that, it will be time to take public testimony. List of issues: . Traffic: . a. Standard of significance - what is the standard that the City uses and how is it implemented? Mr. Edmonston answered that the standard of significance that the City uses is a two -fold standard provided for in the City's Traffic Phasing Ordinance. The first step is to see of the project traffic would add 1% or more to the traffic expected to be at the intersection one year after project completion. If it exceeds 1% at any intersection, then it goes to an intersection capacity utilization (ICU) calculation. The City's standard is level of service (LOS) D or ICU greater than .90. file: //H:\Plancomm\2004 \0708.htm Page 6 of 39 07/20/2004 • 0 • Planning Commission Minutes 07/08/2004 DRAFT . b. Series of intersections selected for analysis, comment on how those were selected. Mr. Edmonston answered that the standard process is that his office looks at their knowledge of the City, the size of the project, and comes up with an initial list. If during the traffic study, it is found that the intersections at the edge away from the project still are exceeding 1 %, then we would add additional intersections to where we would clearly go out far enough to where we have defined the threshold area. The same methodology and protocol was used for this project as for all other projects in the City. . c. Trip generation rate - there were several comments that the EIR did not take account of the various types of uses within the building such as the meeting space, restaurants, etc. Why was the trip generation rate used the proper rate? Mr. Edmonston, referring to the Trip Generation Rate Table in the DEIR, said there is a reference that all those rates are to be found in the 7th Edition, Institute of Transportation Engineers, 2003 (ITE). The resort hotel rate came from a study conducted by the engineering firm of Austin Foust Associates who also did the study for this specific project. They surveyed a number of well known resort areas across the country and came up with the trip rates used. Comparing those for the peak hour traffic to what is in the ITE, they are somewhat higher in both the AM and PM peak periods, so the numbers used in the report are somewhat more conservative than ITE would provide for. The way those numbers get into the ITE or into the study that Austin Foust and Associates did was actually counting driveway traffic. The driveway traffic would include patrons of the hotel, delivery trucks, employees of the hotel, all the traffic going on and off the hotel property is represented in those counts and they are averaged by the count of the rooms. That is the same process used for establishing the anticipated traffic for this project. Commissioner Tucker noted that during the last meeting he had asked a question about how many more vehicle trips needed to be generated before it tripped the intersections that were performing closest to level D. The response was that at Newport Boulevard and Coast Highway an additional 131 AM peak hour trips and at Newport Boulevard and Hospital Road an additional 931 PM peak hour trips would need to be generated. He then asked, is that a small amount of increase from a project, a moderate amount, a huge amount? Mr. Edmonston answered that they looked at the most critical of the critical intersections and based on the peak hours, backed into the number it would take for an additional 340 rooms to exceed the 1 % in cause of the next level of analysis. It would take roughly four times the size of this project to have that impact. The other issue is that the file: //H:\Planeomm\2004 \0708.htm Page 7 of 39 07/20/2004 Planning Commission Minutes 07/08/2004 DRAFT consultant did counts over this past holiday weekend of the actual mobile home park because that was one of the other questions raised during the previous hearings is how much traffic really is in that mobile home park. They found it never exceeded about 50 cars per hour, which is the peak traffic that is forecasted for this project. Based on that comparison of the site, there really would be no increase, but based on using the standardized rates the City typically uses, there is a small increase in traffic but no increase great enough to be significant. Ms. Wood added to the question on how comparing the impact from this project versus what it would take to bring those two intersections to Level of Service E. As Mr. Edmonston said, the numbers that it would take are 131 at Newport Boulevard and Coast Highway and this project contributes 3 trips during the AM peak hour at that intersection; and at Newport Boulevard and Hospital Road it would be 931 trips to have the peak hour reach Level of Service E and the project contributes 16 trips. Chairperson Tucker noted that is a stark contrast. Lastly, there were some questions that some of the commenters had about not analyzing Seventeenth and Eighteenth and Twentieth Streets. Why weren't those analyzed? Mr. Edmonston answered that the response to that is the way traffic is assumed to arrive at this site, we were looking at approximately 12 vehicles in the peak hours that they would be traveling on that segment of Newport Boulevard. It is significantly less than I% of what is out there. It wouldn't be noticeable. It was so much below the 1% threshold, which is again our first threshold we look at. Chairperson Tucker noted that under the Traffic Phasing Ordinance (TPO) you can have a significant amount of traffic increase from a project, but if it does not rise to the level where the project is worse than Level of Service D, then under the City's ordinances, it is not a significant impact. Mr. Edmonston answered that is correct. There are two criteria, one is the 1% threshold with the assumption that if the project adds less than 1% of the traffic that is a number too small to even look further. If it exceeds 1 % you would look further. Chairperson Tucker asked the Commission for any other comments', or concerns on traffic issues; there were none. Chairperson Tucker then continued: • Boat Slips: . a. Comments in terms of the configuration of the boat slips and the impacts of installing those boat slips. One of the file: //H:\Plancomm\2004 \0708.htm Page 8 of 39 07/20/2004 9 0 0 Planning Commission Minutes 07/08/2004 DRAFT Page 9 of 39 recommendations of the Harbor Commission was to come in with a floating longitudinal dock. Mitigation measure LU -1 has that as the dock profile. One of the questions raised was that this new dock profile has not been analyzed in the EIR. Can staff say how this measure is addressed in the prior comments on impacts. Ms. Wood answered that it has been analyzed especially in response to comment B20. This mitigation measure answers some of the concerns about dredging and reduces the amount of dredge material from 1,750 cubic yards to a maximum of 500 cubic yards. It eliminates the need to do the bulkhead and any fill and also does not extend beyond the pier head line where the previous proposal would have required some approval to extend beyond the pier head line. Chairperson Tucker asked the Commission for any other comments or concerns on boat slip issue; there were none. Chairperson Tucker continued. . Review of contaminated substances: EQAC questioned why the level 2 studies weren't available with the Technical Appendices with the EIR. The Commission now has received the Level 2' studies, which were quite brief in nature. Will staff comment on the sufficiency of that material for review. Mr. Houlihan of Michael Brandman and Associates, consultant for the City answered. He noted that his firm had prepared the Draft Environmental Impact Report as well as the Responses to Comments document. The question regarding the Level 2 Studies, both studies were prepared by Petra Geotechnical. There were two different studies because there were two different locations of samples taken. The first set of samples were taken at the low tide line and the second set of samples were taken in the area where the dredging is going to occur. Under both sets of samples they were tested for various concentrations of hazardous materials. There are four types of hazardous materials tested for and included semi - volatile organic compounds, organochlorine pesticides, polychlorinated biphenyls and total petroleum hydrocarbons. For each one of those on both sets of samples, none exceeded any of the action levels for those constituents. Chairperson Tucker noted it was not included in the original data that was available because it was really by way of background information and there was nothing that indicated there was anything further to study. Mr. Houlihan answered there was no further analysis to do as there was a determination that the levels were pretty low and didn't need action. They were referenced in the Bibliography as two separate studies. Chairperson Tucker asked the Commission for any other comments or concerns on the contaminated substances issue. file: //H:\P1ancomm\2004 \0708.htm 07/20/2004 Planning Commission Minutes 07/08/2004 DRAFT Commissioner McDaniel noted the samples were taken from five feet. Is there any reason why you would need to go deeper than that? I am looking why you went to five feet. Mr. Houlihan answered that five feet was determined as the amount of excavation that was needed. It is the lower level of excavation. Chairperson Tucker continued: Tideland boundary - the tideland boundary was covered by the City Attorney at the last meeting and to summarize it the tideland boundary has not been identified. It either gets identified by agreement, which doesn't seem to happen or litigation, which I guess is the more common approach. It is an issue that was out there and to my mind the project, whether it is on tidelands or not you can pretty well tell what is going to be dug up and what is not going to be dug up. Tidelands seems to have a lot more to do with the types of uses that can occur and who gets the revenue than per se a pure environmental impact. Chairperson Tucker asked the Commission for any other comments or concerns on tidelands issue. There were none. Chairperson Tucker continued: . Loss of recreational facilities. . a. There is a temporary loss of all facilities when the construction is taking place. And a permanent loss of the basketball court area, the tot lot and tennis court will be back with the new project. There will be some green area along the tennis court frontage that will be gone. He then asked the Commission if anyone needed further analysis than what was in the Response to Comments. He was answered no. He noted that it seems all we have lost is a half court basketball court and it is hard to view that as a significant affect. Chairperson Tucker continued: . Parking - could staff review what is the replacement for the currently metered parking lot and how that works. Ms. Wood answered that the replacement will actually increase the number of spaces. Right now, the parking lot is metered and available for the general public. What is proposed as part of the project is a larger lot that roughly doubles the number of spaces. Part of it would continue to function as metered parking for the general public. What the applicant is trying to provide with the new half of it, is to provide more secure, more guaranteed parking for people who are coming to use the Girl Scout House and Community Center. He has proposed some sort of access gate to make that work and then at times when the Girl Scouts or the Community Center did not need that file: //H:\Plancomm\2004 \0708.htm Page 10 of 39 07/20/2004 �J r 0 Planning Commission Minutes 07/08/2004 DRAFT Page 11 of 39 parking, it like the other half would be available for the general public. For most of the time we would have a greater supply of parking for the general public. The details on how to handle the reservation system still need to be worked out. The number of parking spaces is actually increased and the goal is to provide a system where some of them are secured and always available for the Girl Scout and Community Center needs. Chairperson Tucker noted that basically the metered parking spaces are in a bigger lot and are still more or less the way they are. In a few places the parking needs for the patrons was brought up and the parking needs of the staff for the facility and suppliers were brought up. Would staff answer? Ms. Wood answered that similar to the trip generation for the traffic analysis, the parking requirements on our Zoning Code are designed to meet the needs of not only the guests or the people coming to the restaurant or people who might be coming to a function in the ballroom, it also includes employees. What we require for hotels is one space for every two rooms, so for this 110 room hotel proposal it would be 55 spaces. Then if we add what is required by Code for the Community Center and the Girl Scout House that is a requirement of 21 spaces; for the tennis courts it would be a requirement of 16, spaces so we have a total requirement for the entire project of 92' spaces. What is being provided in this proposal is 209 spaces so there are over 100 spaces more than our Code requires. Even if the Code is somehow not on the mark, and I am not aware that we have parking problems in any of our other hotels that meet our standard, we still have a greater number than required. Chairperson Tucker noted that what is available is over twice what the requirements are. Say we had instead of a car for every two rooms, we had a car per room, we should still be okay. He then asked if any Commissioners had issues with the comments or responses to comments on parking; there were none. Chairperson Tucker continued: • Alternatives: • a. Why wasn't there a greener alternative which is less intense? For instance, Dr. Vandersloot suggested tearing up what is there and leaving it in its natural state after hauling out the debris, presumably sand. Why wasn't an alternative such as that proposed? Ms. Wood answered that the EIR is supposed to analyze alternatives that would be feasible and could have the potential to have fewer effects than the proposed project. Part of being feasible is to meet the project objectives. The process of redeveloping this site, which the City owns, started at least in my memory in 1997 with a Revenue Study that was done for the City Council which concluded that a hotel on the site would produce the greatest amount of revenue for the City. Since then the City Council has taken a lot of steps to pursue file: //H:\Plancomm\2004 \0708.htm 07/20/2004 Planning Commission Minutes 07/08/2004 DRAFT that alternative beginning with issuing the request for proposals, working with the State Lands Commission to determine the tidelands boundary to decide where various kinds of uses would be appropriate, receiving the proposal from Sutherland Talla Hospitality and others and then finally selecting this hotel proposal over some others including one from our Parks, Beaches and Recreation Commission, which people might consider greener. I think it has been clear for a while that one of the City's objectives for this property is to have something that would generate some revenue and having a completely vacant or natural site is not going to do that. So that did not seem to be a reasonable alternative to analyze for comparative purposes.. Chairperson Tucker noted that Councilman Webb noted that with the project objectives that existed that there really wouldn't be a project that could be an alternative that wasn't a commercial project in large measure that would measure up, if you will, to the project. It is basically the same answer is, that is what the Council has decided is the project and objective. Ms. Wood noted that although the marine recreation alternative that was included in the Draft EIR does not achieve those economic project objectives or would not to the extent of the proposed project, so there has been something considered that would be less commercial. Chairperson Tucker then asked for an explanation of the rationale of the staff in terms of what was included in that marine recreational alternative in terms of facilities. Ms. Wood answered that what we tried to do in putting that alternative together is to include facilities that we have heard a demand or the desire for from various segments of the community. So there was recreation such as the facilities that are there today with some expansion of those, some provision of marine facilities to satisfy the boating segment of the community, and slips for charter boats to tie up which would address some of the concerns that we hear about an existing commercial use in the harbor and provide a better facility for that. We were looking at a rare piece of land that could become vacant and how would we use that best to satisfy a number of recreational needs that we have heard in the community. Chairperson Tucker noted that Commissioner Eaton had comments at the last meeting regarding alternatives and environmentally superior alternatives. He asked if he was satisfied with the response to comments or do you have some additional comments you would like to make and we'll see if we can get you some responses here. Commissioner Eaton answered he was not satisfied. All his comments were grouped together and the comment about the environmentally superior alternative being called the project as opposed to an alternative, which is what the Guidelines require, was not responded to at all. So I was going to ask if we can now have some supplemental response as to that particular issue. file: //H:\Plancomm\2004 \0708.htm Page 12 of 39 07/20/2004 0 • Planning Commission Minutes 07/08/2004 Page 13 of 39 DRAFT Mr. Robert Burnham, City Attorney, answered he does not understand Commissioner Eaton's question. He said he had tried to respond. Commissioner Eaton answered he would repeat what he said at the last meeting. What the Guidelines say is that, if the environmentally superior alternative is the no project, which was the case here, the EIR shall also identify an environmentally superior alternative among the other alternatives. In this case what the EIR has designated as the environmentally superior alternative is the project itself, which in my opinion is not from among the other alternatives and my question then and now is how does that relate to the requirements of the Guidelines? Chairperson Tucker noted that we only have two choices. Commissioner Eaton answered, right and I have some follow -up comments if you think this is the appropriate time to ask those questions. Chairperson Tucker told him to go ahead and ask and we'll see if we can't come up with a response. Are you still on alternatives, if so, go ahead and discuss all you want about alternatives. Commissioner Eaton answered, yes he is still on alternatives. In the response to B96, you will recall one of the questions was how was it determined, and this was an EQAC comment, that there was going to be more traffic from the marine recreational alternative than from the project and the response was well that will be stated in the response document and the response document talks about how big the parking lot is and then an assumption as to how many times those parking spaces would turn over. My first question is, the numbers don't seem to match what the assumption is. It talks about two or three times per day turning over but the numbers in the paragraph don't seem to match that. The second question is, a number of comments in the document particularly talking about the traffic projections from the project itself refer to the fact that they attempted to provide traffic generation rates in accordance with the TPO which calls out for using the ITE Seventh Edition and we just heard tonight that actually one of those came from a different study, not the ITE. My question is why weren't the ITE rates also used for the marine recreation alternative, as an example, why didn't you use rates from the beach park alternative plus the marina alternative, combine those and compare that to the ITE rates for the hotel? As a matter of fact what happens when you do that, if you assume the full 8 acres as beach alternative and 20 full slips in the marina -- with a horizontal dock it will be less than that but assume that -- the traffic is less if you use those rates and obviously Mr. Edmonston will have to go back to verify that. My question is, if the traffic generation is less using the ITE generation rates that were used for the project and which several of your responses said you should use and you felt compelled to use • for the hotel itself, does that then suggest that if the traffic rates are less that then the traffic, air quality and noise impacts are less and that therefore in fact the marine alternative is the environmentally superior alternative, which would then comply with the CEQA section file: //H:\Plancomm\2004 \0708.htm 07/20/2004 Planning Commission Minutes 07/08/2004 DRAFT that talks about the environmentally superior alternative being selected from among the alternatives? Difficult question and complicated. Chairperson Tucker stated I guess if that is what the Guidelines say and my recollection is they do, then I guess one of those two other alternatives was the environmentally superior alternative. As I recall, the reduced sized project because it had a free standing restaurant also carried more trips than the project. Am I correct in that? Ms. Wood answered, yes. Mr. Joe Foust from Austin Foust Associates who prepared the traffic study is ready to respond. Mr. Joe Foust, principal of Austin Foust Associates prepared the traffic study. He noted that the comment Mr. Eaton is referring to and specifically the marine recreational use could be quite variable but in particular we were talking about a 250 car parking lot with some 8,000 square feet of the Girl Scout uses and some other things. Trip rates, I started out looking at it that way but if you are going to build a 250 space parking lot in that area,. parking being what it is, I'm sure that unless you have severe enforcement, that parking lot is going to get used. If you have 250 spaces and it is used just one time a day, that is 500 trips, 250 cars in and 250 cars out. So where that trip generation comes from is simply the use of that parking lot, if each space is used only once a day somebody parked there all day long or parked for five minutes and then it was used again, you have 500 trips there. That is the same as the size of the project that we are talking about . In that area my experience and I think your experience too is that the turnover which I am conservatively estimating at two to three times a day, in other words each one of those spaces will be used two or three times. Each time that you use that space and fill that lot you are talking about a multiple of 500. So conservatively I think you could expect to generate 1,000 to 1,500 out of that parking lot alone, which is substantially in excess of the size trip generation for the marina hotel we are talking about which is at 500. So that is where that comes from. As far as adding on top of that, then the 250 car parking lot is going to cover the uses of the 8,000 square feet more or less of the various types of buildings that are going to be there. The trip generation came from the use of the parking lot and a reasonable expectation that lot would be heavily used and turn over two or three times a day. If it only turned over once, then it's a push on the project in comparison with the project. Chairperson Tucker asked if that was reasonably responsive to Commissioner Eaton. Commissioner Eaton answered yes as far as the traffic generation aspect, but he would still like to hear about the alternative. Commissioner McDaniel asked Mr. Foust if a parking lot has X amount of spaces, you are considering that non -users of the hotel will be parking there as well? If this project was a swimming pool and the parking spaces were there people would be using them to go to the beach and do other things. I am concerned that these trip Page 14 of 39 file: //H:\Plancomm\2004 \0708.htm 07/20/2004 0 0 • Planning Commission Minutes 07/08/2004 DRAFT Page 15 of 39 generations that you are talking about are specific to the use of the hotel and the facility that is there. Or, is the hotel getting adversely impacted with these trip generations because it will be open for other facilities? Am I making sense? Chairperson Tucker noted that what Commissioner Eaton is talking about is the alternative where there isn't a hotel there. It is just a marine recreation facility. Commissioner McDaniel answered okay. I want to separate those two to make sure we are talking about the project or something else. Mr. Foust added the hotel project has its own parking which is part of the hotel and that parking will be for the hotel. It then has the replacement of the existing lot and then some metered parking that is being replaced. We are not building or putting in parking that is not already there except for the hotel. I understood the alternative would be to have in addition to some 8,000 square feet of buildings to replace the uses that are already there, the Girl Scouts, that we would also be building a 250 space parking lot. Commissioner McDaniel answered I got it, thank you. Chairperson Tucker noted that with a hotel, the presumption is that you are bringing people into the area that might not otherwise be there. But with the parking lot when you are talking trips you usually are talking just who crosses the drive or how many people cross the drive and not try and figure out who they are. You have seen the alternative uses that are proposed, is it your opinion that the number of new trips into the area as opposed to people that drive into the area and say wow, look they have a new parking lot here I was coming' down here anyway and I don't know where else I was going to park. Are there people that would have been in the area anyway versus new trips or do you believe the new trips by the uses that are shown on the alternative still equate to the conservative number of trips that you have assumed? Mr. Foust answered the conservative 500 that I am talking about is the net. That is the net increase over what the mobile home park is generating now. In total it is a little over 600, so there is a credit for the mobile home park down there of its trip generation on its limited usage. There are 24 full time uses and that generates about 120 trips a day. So, when I talk 500 trips that is the net increase over what is there today. The existing parking is already there today. The 500 does not include the existing trips into those parking lot spaces used, we are calling that a wash in terms of the public parking. Chairperson Tucker noted his confusion. I thought the marine recreation alternative use also generated at least as many trips or more trips than the hotel project. Mr. Foust answered, again I'm saying the 250 space parking lot if you just filled up each space just once a day that is 500 trips. That is a net push right there, I am saying that it would turn over more then that. In file: //H:\Plancomm\2004 \0708.htm 07/20/2004 Planning Commission Minutes 07/08/2004 DRAFT my estimation, it is likely that that 250 space parking lot of the new alternative that you are talking about, new spaces, would produce substantially more traffic than the hotel would produce. I don't feel I have convinced you yet. Chairperson Tucker stated okay. Intuitively, I am still a little troubled by the fact that the hotel is going to bring in people that weren't in the area and that the 250 space lot -- I am just looking for some comfort- - that there is enough other uses on the site where you will at least have as many new people introduced to the area that weren't already down here that just happened to stumble across these new parking spaces. Mr. Foust answered that in addition to that lot we have 8,000 square feet of building. Chairperson Tucker noted that there are other uses on site, such as the boat launch. Mr. Burnham added that you have to assume that if there is a new parking lot down there and it is open to the public and there are no restrictions limiting its use to guests or patrons of a particular facility, it will fill up with persons who would otherwise not be in the area. You have to assume that, just like we assumed that of those mobile homes that aren't being used as full time residences, we assume no trips for those. You have to assume kind of worst case in terms of a public lot on the peninsula. It's going to turn over multiple times during any given day if you have access to the beach as you would under those circumstances in the other facilities. It is a pretty conservative assumption and because I wanted to address Mr. Eaton's comments on alternatives, I have always considered the project to be an alternative that you would measure the no project alternative against. But, after looking at the Guidelines, I think he is correct, I think you have to select an environmentally superior alternative out of the alternatives to the project as opposed to the alternatives and the project. I believe Mr. Houlihan is prepared to do that. Commissioner Eaton clarified that for the traffic generation the mobile home park was not assumed to be full occupancy, but I believe it was for the purposes of deducting from the generation of the hotel. Is that correct Mr. Foust? Mr. Foust answered no. We only assumed that the mobile home park generated about 120 daily trips out of 24 that were occupied. The others were not occupied, generating no trips. Chairperson Tucker noted that's today. Who knows what is going to happen ten years from now? It could be fully occupied if it were a mobile home park and people could be living there full time. Mr. Foust answered that as Mr. Edmonston pointed out because that issue was raised at the last meeting, and has been raised a number of times, I took the liberty to go out and count it over the July 4th holiday weekend. I did not count how many were occupied but 50 - 60 file: //H:\Plancomm\2004 \0708.htm Page 16 of 39 07/20/2004 0 0 Planning Commission Minutes 07/08/2004 DRAFT Page 17 of 39 vehicles an hour going in and out of that facility is a little bit more than what the marine hotel will generate. Chairperson Tucker noted his comment at the last meeting was how many bedrooms and how much occupancy. To me I wasn't convinced that fully occupied for the mobile home park wouldn't be more intense. Mr. Foust noted that based on this past weekend, there wouldn't be a change, you wouldn't see anything. You would see actually a minor reduction. Mr. Burnham noted that the result of all of this is the EIR would overstate the traffic impacts of the project compared to the existing conditions. Chairperson Tucker noted he understands what it does. It is important to put it on the record so that it is there and what is used today was very conservative. Commissioner Eaton noted that quoting from pages 5.5 -2 and -3, it says, 'to be conservative related to the project's traffic contribution, the net increase in trips was determined by the difference of the number of trips associated with a fully occupied hotel and the number of trips associated with a fully occupied mobile home park'. Are you now saying that is not correct? Mr. Foust answered we assumed only the 24 units were actually occupied in the winter. That sentence is not correct. Chairperson Tucker noted the sentence is not correct but the schedules are correct. Mr. Foust answered yes. Continuing Chairperson Tucker noted in other words you were assuming 5ADT per occupied mobile home. Mr. Foust answered pretty much, yes. I would have to look at the exact numbers, I thought it was 5.22, but whatever, it is close enough. Chairperson Tucker asked if there was anything else on the alternatives. Commissioner Toerge noted that at the June 3rd public hearing, I raised a couple of concerns about statements in the conclusions for the alternatives to the proposed project. Namely, the conclusions state that the marine recreation alternative would meet many of the project objectives. However, it is not known if the marine recreation alternative is economically viable and therefore it is unclear if it meets the objectives related to the City revenues. In the response to comments, it is stated that it is not known if the marine recreation alternative is economically viable because an economic analysis was not conducted for this alternative. However, this alternative was included because it was expected to be able to be economically viable file: //H:\P1aneomm\2004 \0708.htm 07/20/2004 Planning Commission Minutes 07/08/2004 DRAFT and a feasible alternative. It is a very important reference to me. I do have a question of staff and that is can you share with the commission and the public the relevance of economic feasibility in an EIR at all. Is it a relevant issue, or is it not? Ms. Wood answered that Mr. Burnham should answer that when he returns. Chairperson Tucker continued with land use compatibility issues. We had several comments by the Harbor Commission that had to do with the Harbor and Bay Element. It led me to want to have staff comment on the applicability on the Harbor and Bay Element polices, new development on land not previously used for harbor related purposes. Ms. Wood answered that as noted in your introductory remarks Mr. Chairman, some of these things are judgment calls and I think the land use compatibility is one of those areas where it is more of a judgment call than an empirical data driven planning decision. To me, the comments from the Harbor Commission seem to express a view that it is only first priority water dependent uses that should be allowed on waterfront property. I think that the policies actually provide a priority system which includes water enhanced uses such as the proposed hotel use. I think that is a question for the decision makers, whether that is something that is going to be acceptable and in this case as the people vote on this general plan amendment. Some of the other policies in the Harbor and Bay Element direct the City's decision makers to consider the continued viability of the harbor in making land use decisions. It doesn't say that you can only allow uses that are essential to the operation of the harbor, but they are looking to protect existing uses of that nature. I don't think that the proposed hotel does threaten any of those kinds of uses. It's not a case where we are instituting residential use next to a boat yard where you would be bringing in people who would then be complaining about the noise or smell that might be coming from that operation. The hotel use is completely compatible with the American Legion that is next door, there is no impact on the American Legion Marina and by the way, this is an opportunity for me to note that our public notice on this hearing included a map that showed the entire property the City owns including the American Legion site and I just wanted to clarify that the American Legion is not part of this project. It will remain as it is except to the extent that the developer works with the American Legion to make improvements to their existing facility. Chairperson Tucker noted that if you have something that prioritizes uses but lists this particular type of use as a third priority, it is still listed as a potential use. Ms. Wood answered it is not prohibited. It is consistent with that general plan policy, it may or may not be what the decision makers want the use of this site to be. That is to be decided later, but it is not an environmental question as long as it is not a prohibited use. Chairperson Tucker asked Commissioner Toerge if he was satisfied with the responses to your questions you asked at the previous Page 18 of 39 file: //H:\Plancomm\2004 \0708.htm 07/20/2004 0 9 Planning Commission Minutes 07/08/2004 Page 19 of 39 DRAFT meeting. Now that the City Attorney is back we will go through the previous one. Are your concerns sufficiently addressed? Commissioner Toerge answered that his concerns at the last meeting revolved around the conflict of the proposed project with a number of elements in the General Plan. In the responses to comments, to summarize it briefly, that is why this is before the Planning Commission and why there is going to be a General Plan Amendment and a Zone change to accommodate this project. He then summarized for the City Attorney, in the conclusions related to the alternatives of the project proposal there was a statement in the draft EIR that the marine recreation alternative would meet many of the project objectives; however, it was not known whether the marine recreational alternative would be economically viable. In the response to comments there is a statement that it is not known if it is economically viable because an economic analysis was not conducted. However, this alternative was included because it was expected to be able to be economically viable and a feasible alternative, which satisfies my concern of last meeting. The question that I have is, is economic viability relevant in the review of an EIR? Mr. Burnham answered it is relevant in determining whether an alternative is feasible. Economic viability is a specific consideration in the Guidelines in determining if an alternative is feasible both in terms of whether you should consider that alternative in the draft EIR and whether the alternative feasibly attains project objectives. Commissioner Toerge asked how do we know? There is no economic data, no feasibility study on either the proposed project or the alternative in the EIR in the public record. Mr. Burnham answered it is assuming that the alternative is economic feasible. Chairperson Tucker noted it assumes viability for purposes of the environmental analysis. Commissioner Toerge asked how do we make those leaps of assumption that either project is economically viable, either the proposed project or the alternative without data? How does the EIR make that representation without data in the public arena? Mr. Burnham answered that to some extent there are some assumptions that are not fully supported by fiscal impact reports. You are not required to do a full blown fiscal analysis of an alternative or the project in the EIR. To some extent the rule of reason is used in another context, but typically hotels do provide more of a potential for economic viability than say a parking lot that is adjacent to sand, which is the so- called green alternative. Even unsuccessful hotels may be required to pay rent where the lenders may be required to operate an unsuccessful hotel or if an unsuccessful hotel is turned . over to the City, maybe the City can operate it successfully. Chairperson Tucker noted it is my understanding that there is no need file: //H:\Plancomm\2004 \0708.htm 07/20/2004 Planning Commission Minutes 07/08/2004 DRAFT to have an economic analysis for a project because if someone wants to do a project that is stupid, that is their prerogative, as long as it is not environmentally damaging. The reason you have a feasibility feature on an alternative is so that you don't end up with something whacky or highly unusual alternatives that may sound great but there is no feasibility to it. Anything else on that Commissioner Toerge? Continuing, Chairperson Tucker asked how do you propose that we deal with the environmentally superior issue now that we have to select something other than the project? Mr. Burnham answered you should hear from the consultant who prepared the EIR who is probably most familiar with its contents and I believe that is Mr. Houlihan. Mr. Houlihan with Michael Brandman and Associates answered that while you were discussing I was going through and comparing both the marine recreation alternative to reduced alternative to see which one would be environmentally superior. As CEQA states you are basically doing a comparison between the proposed project and the alternative. What we had identified was that each of the alternatives, the marine recreation alternative as well as the reduced alternative, were not environmentally superior. So going through that evaluation, I was going through the various issue areas that we evaluated. Of the issue areas, they are geology and soils, hydrology and water quality, biological resources, land use and planning, transportation or traffic, air quality and noise, aesthetics and public service or utilities. Going through a brief review or a brief overview, I identified a greater amount of impacts related to the marine recreation alternative. Again, the impacts are still considered less than significant for both the alternatives and can be mitigated. However, again all we are doing is comparing which one might have greater for example traffic effects. There is traffic information provided in the response to comments for the marine recreational alternative and in the draft EIR for the reduced alternative. For the reduced alternative there is less traffic. As a result there would be less air emissions created. As a result there would be less noise impacts in the area. In addition the reduced alternative has a smaller boat slip component compared to the marine recreation alternative; therefore, less dredging would be required and less impacts on biological marine resources. In addition because of less dredging associated with the reduced alternative there would be less water quality impacts to the bay. So, through that evaluation I have come up with the conclusion that the reduced alternative is environmentally superior to the marine recreation alternative. Chairperson Tucker stated that in either event, so I am understanding this, it is still your opinion that the one with the least amount of environmental impact is the project. You are saying as between the other two, we need to designate the one that your analysis comes up with as a reduced project which is the smaller hotel with a free- standing restaurant. Mr. Houlihan answered yes. Page 20 of 39 file: //H:\Plancomm\2004 \0708.htrn 07/20/2004 0 0 0 Planning Commission Minutes 07/08/2004 DRAFT Page 21 of 39 Chairperson Tucker asked if there were any questions on comments on the discussion, there were none. I think we were at noise now. Commissioner Cole asked to hear from staff the so- called controversy relating to the changing in the land use designation from recreation and environmental open space to recreation and marine use. Particularly addressing some of the comments I thought were not in my opinion weren't overly well addressed as it relates to the concern regarding the housing that is demolished in the Coastal zone if those houses are occupied by low and moderate income housing. Just a thought on the General Plan need for that. Ms. Wood noted that the need to replace housing in the Coastal zone arises only if those units are called, in that section of the law,'. affordable. For the Coastal zone replacement housing it's whether the occupants of the housing units are of low and moderate income, it has nothing to do with what the rental or other costs of the housing are. We have received some information since the response to comments document went out from a report we are doing on the relocation impact study, which is not complete yet. But, it has found that there is sufficient replacement rental housing in the region and in fact has found that in the surrounding communities, with the exception of Newport Beach, that a lot of the rents for existing housing are actually less than some of the people are actually paying now for their housing costs in the mobile home park. Commissioner Cole asked to walk through the need for a General Plan Amendment and the process and why the change in land use designation is necessary. Ms. Wood answered that the current designation of recreational and environmental open space does not allow for the development of a hotel. It would allow the tennis courts and even allow some commercial recreational facilities but not visitor accommodations. The proposed land use designation, which is recreational marine commercial, does allow for visitor accommodations, so the project could not be approve without the General Plan being amended to change that land use designation. The project also requires an amendment to the Recreation and Open Space Element because it talks about future and additional recreational facilities on this site with particular reference to aquatic facilities and so if the project is to go forward that Element needs to be amended as well and have that language changed. Commissioner Toerge asked the Harbor and Bay Element as well or any element of the General Plan that is affected? Ms. Wood answered any Element that is affected. We believe the only two are the Land Use and the Recreation and Open Space. We believe it is consistent with the Harbor and Bay Element. Chairperson Tucker noted I guess that was a direct question that I had asked earlier. Noise is the next one. file : //11:\Plancomm\2004 \0708.htm 07/20/2004 Planning Commission Minutes 07/08/2004 DRAFT . Noise . a. What amount of noise finally gets to the point it's a significant problem or significant for environmental purposes. I think people expect that if there is an increase in noise that somehow that is allowed, well it actually is allowed. Describe briefly for us how noise is dealt with in our ordinances. Ms. Wood answered, the standard in environmental review is that increases of less than 3 decibels are not detectable to the human ear. In this case, because we have not had a significant increase in traffic from the project, and traffic is usually the greatest contributor to noise increase, then we also do not have a significant noise impact. There will be short term impacts during the construction period and there may be some noise from hotel operations such as things like live entertainment or deliveries. Those kinds of noise impacts are controlled by the provisions of our Municipal Code and the EIR has found that following the Municipal Code will keep those impacts to less than a significant level. Chairperson Tucker asked if there were any questions or comments on how noise was dealt with in the response to comments, there were none. Continuing he asked staff to go through the four additional mitigation measures that have now been recommended with this last staff report. Ms. Wood answered: That the first one is Land Use 1 on page 35 of the response to comments document in response to comment B20. This is the mitigation measure that involves re- design of the marina to what is called the longitudinal or marginal dock and that was done in response to comments with regard to dredging and fill. It eliminates the fill impact and reduces significantly the dredging impact and also does not extend beyond the pier head fine. The next is Hazardous Materials 1 on page 30 of the response to comments document in response to comment B3. This requires that the project proponent provide a list of all hazardous materials and their quantities that may be used or stored on the project site during construction. The draft EIR had not found that there would be significant impact from hazardous materials but because of the concern raised in the comments, especially with proximity to the elementary school, this mitigation measure was added to further reduce those impacts. The next is Biological Resources 6 on page 62 in response to comment C2. It is related to the first new mitigation measure with regard to the longitudinal dock and this is with regard to the mitigation for the biological impacts. The ratio of mitigation is increased from 3:1 to 4:1 in response to the California Coastal Commission; that would be their requirement. With that Page 22 of 39 file: //H:\Plancomm\2004 \0708.htm 07/20/2004 0 is E • • Planning Commission Minutes 07/08/2004 DRAFT increase in the ratio, even though the amount of dredging has been reduced, the area of mitigation required does increase from .71 acre to .95 acre. The final one is Hydrology and Water Quality 1 on page 63 in response to comment C6. This is an addition to an existing mitigation measure which just restricts the construction activities in the water between October 1 through March 31, so that it does not interfere with wildlife reproductive activities. Commissioner Eaton noted the way it is worded, shouldn't the words 'to the period' be added between activities and between? The way it's worded it is not quite clear whether you are talking about between October and March or between March to October. Ms. Wood said yes. Chairperson Tucker asked if there were any other issues that a Commissioner would like to raise at this point or any other comments just generally on the responses to comments. Commissioner Eaton noted this is an opportunity to fill in if there are any gaps and it becomes part of the administrative record, is that correct? So, if I perceive there are any gaps this would be the place to attempt to fill them in. Mr. Burnham answered it is always a good idea to try to highlight what you believe are needs for additional information. I am not sure that we would refer normally to this as an opportunity to fill in the gaps. Chairperson Tucker noted there are not gaps. Mr. Burnham added that we need to know if there are and then we assess those in terms of providing additional information or maybe it is in the document elsewhere. Commissioner Eaton noted he has a few of those: The first one is on page 55 - it talks about the marine recreation alternative being designed to be consistent with the existing General Plan designation and tidelands restrictions. Later on in the tidelands restrictions you talk about marine water tidelands restrictions as well as upland tidelands restrictions. My question is if the marine recreation alternative exceeds the pier headline is that a tideland restriction? Mr. Burnham answered no. Did we talk about upland tideland restrictions because that is definitely an oxymoron. There are uplands, there are tidelands, but there is no upland tidelands. • Commissioner Eaton answered that in the response to comments on page 101, in response to G4, you did. Continuing, file://11:\Plancormn\2004\0708.htm Page 23 of 39 07/20/2004 Planning Commission Minutes 07/08/2004 DRAFT On Page 62 you are re- wording either a description or a mitigation measure but at the bottom of C2 you are talking about replacement benthic habitat at the ratio of 4:1 to what had originally been proposed before you had revised the pier so that it did not have the displacement of the benthic habitat that the original pier proposal had in the project. My question is that still necessary to have that 4:1 ratio which results in 41,344.24 square feet of mitigation? Ms. Wood answered, yes it does. Although the re- designed dock reduces the amount of dredging it doesn't eliminate it completely and the ratio has increased from 3:1 to 4:1. Commissioner Eaton asked if you need to have such an extensive amount of mitigation if the displacement wasn't as great because of the LU1 mitigation that took out the fact that you would have to dredge in order to make room for the dock. Therefore, if you don't have to dredge nearly as much of the benthic habitat I assume you don't have to replace as much of the benthic habitat. Ms. Wood answered no we don't have to replace as much but because the mitigation ratio has increased, those two factors combined still. Commissioner Eaton stated that it looked to me like you had based even the 4:1 based on the original displacement. Mr. Houlihan answered that the comment related to C2, there is a proposed project with mitigation measures. The mitigation measure modifies or reduces the size of the dock. We still have a proposed project but with the mitigation measure it is modified. It was still necessary to go back and identify what the proposed project's effect was. We looked at the total amount of effect that we identified in the EIR and included the Coastal Commission recommendation 4:1. What we had done in this mitigation was three tiers and I noticed that on page 63 the second and third paragraphs of that mitigation measure were not indented but there is a quotation after the third paragraph that was to be included as a mitigation. Basically it identifies the proposed project and what is the need for mitigation; and then the second paragraph is if the mitigation measure BR -5 is included, then what if the off -site mitigation is required; and then the third paragraph if BR5 and LU1 is included what is the off -site mitigation requirement. It is a three tier. Commissioner Eaton noted that those are alternative measures in effect depending on if LU1 is included. Am I transposing that correctly? Mr. Houlihan answered as long as the mitigation measures LU1 and BR5 are approved by the City Council. Commissioner Eaton answered that explains it. He then continued: Page 24 of 39 file: //H:\Plancomm\2004 \0708.htm 07/20/2004 Planning Commission Minutes 07/08/2004 DRAFT Page 25 of 39 . On page 69 your response to D1 from the Coastal Commission. This might be too small except that the Coastal Commission comments are going to become important later on in the comment. The last part of their comment D1, asked whether or not you had made the delineation of the wetlands based upon their definition or the Corps of Engineers definition. I suspect that will become an issue later on and you didn't respond to that question. Mr. Burnham answered that every improvement that is occurring within the water would be considered wetlands under either definition. I am not sure that it would have any environmental significance. Ms. Wood added that the end of that comment from the Coastal Commission is concerned about fill and with the implementation of the new mitigation measure LU1, then there would be no fill. That is what the response indicates. Commissioner Eaton answered okay and continued: . On page 102, your response to G13. The comment was that the additional access through the hotel is beneficial and is basically related to access between Balboa Boulevard and the beach. It is pointed out that there will be two new accesses through the hotel. The comment was that is great as long as the hotel security doesn't restrict that access. Is there going to be a mitigation measure or lease provision making sure that doesn't happen, and that was not responded to in that response. Mr. Burnham answered that he could guarantee that the lease will provide that the lessee comply with all laws. Those will include mitigation measures that are approved by the City Council, conditions imposed by the City Council, Coastal Commission, Army Corps, etc. Being the landlord we have the ability to enforce those provisions by declaring a default or breach of the lease. We will augment the response accordingly. Commissioner Eaton continued: . On page 120, the response to H26. The comment of H26 was that in the opinion of the commentator, to maintain perceived fully public access to the beach there should be some mitigation measure or lease restriction or some measure to prevent the hotel from, in effect, taking over the beach by starting to provide services, such as umbrellas, chairs, etc., in effect occupying the public beach with their private facilities and that was not responded to. Mr. Burnham stated he would make the same comment. The lease will, and in fact, they have talked to the project proponent about providing the public some amenities on the beach. But, the lease will • make it clear that the hotel shall not interfere with the public's ability to use the beach and that will include putting any thing on the beach that is not available to the public. file: //H:\Plancomm\2004 \0708.him 1 07/20/2004 Planning Commission Minutes 07/08/2004 DRAFT Page 26 of 39 Commissioner Eaton answered okay and continued: . On page 137, the last sentence in response to K5 says please also see response to comment K7 regarding emergency evacuations. But there is not a word in K7 about emergency evacuations, so I was wondering if that was intended to refer to some other response. You will clarify that before it gets to Council I assume? Mr. Burnham noted we will clarify that. I think it is fair to say that the additional number of folks on site will not have a material impact on the evacuations in the event of emergency given the number of folks generally on the peninsula at any given point in time. Commissioner Eaton answered he would not quarrel with that and continued: . On page 149, the next to last sentence of the response to 02, says please see response to comment B22 regarding land to water access. But the response to comment B22 talks about hazardous materials and doesn't seem to have anything to do with land to water access. I was wondering again if that was intended to refer to some other response? Ms. Wood answered yes, we will get the correct referral in that. Commissioner Eaton continued: . On page 166, which is the start of the U comments. The first comment was not numbered and therefore not responded to. Was that because you determined that wasn't an environmental comment that needed to be responded to, or did you just miss it? Mr. Burnham answered that in response to the observation, I believe we need to provide a brief response. I think the comment does raise some environmental issue. But those are environmental issues that we have addressed in other responses. Commissioner Eaton continued: . On page 173, the response to U4. It says the tennis courts are at grade. Did you really mean to say that? It is my understanding and most of the other responses talk about them being four or five feet above grade. Ms. Wood answered that is an error. The tennis courts will be atop the parking structure that is five feet above grade. Commissioner Eaton continued: . On page 105, in the response to G23, it says if the decision makers wish to consider the possibility of additional file: //H:\Plancomm\2004 \0708.htm 07/20/2004 0 • Planning Commission Minutes 07/08/2004 DRAFT modifications to the Marine Recreation Alternative as they evaluate the impacts and the desirability of the Marinapark proposal, they may do so based on the information provided. Can the recommenders to the decision makers also do that, namely us? Mr. Burnham answered that the agreement the City Council struck with Sutherland Talla really focuses the attention of the Commission on the recommendations relative to the certification of the environmental document, but, certainly any Planning Commissioner can offer comments in the record as to his or her feelings about the project or the alternatives. Chairperson Tucker asked if anyone else had any comments or questions on the response to comments. Commissioner Daigle noted she would just like to thank the community for all their input and comments and looks forward to any additional comments in any areas you believe that continue to need to be addressed. Chairperson Tucker noted next will be the public testimony part of the hearing and it is a standard operating procedure and as our agenda indicates the time allotted to speakers at Planning Commission meetings is three minutes per person and that is the time allotted tonight as.well. Questions that you may have, you ought to ask and then move onto something else. We won't answer the questions as you are standing there, you will need to use your three minutes or however much of that you care to use. We will attempt to answer the questions after you are through. The lights on the podium will start off green and turn yellow when you have one minute left and red when your time is up and you will need to wrap it up right when your time is up so we can move on with this hearing item. When you do come up, keep in mind as I indicated earlier that argument and unsubstantiated opinion and speculation are things that CEQA specifically tells us we can not consider. The more technical and directed your comments, the better. With that, come up, introduce yourself for the record and take your three minutes or however much of that you need and give us any comments that you want tonight. Public comment was opened. Louise Fundenberg, president of Central Newport Beach Community Association thanked the Commission for receiving their three page document which you got today via fax. Our group is concerned particularly about the statement that there are only fifty employees. It was stated in the draft EIR and also in the responses. Yet, at the City Council meeting of June 8th, in response to a question made by Councilmember Nichols, Mr. Sutherland stated he would have a pool of 150 employees but anticipated only 50 of the employees would be on site at any one time. We are concerned because this makes the shift changes if you have that many employees and we feel an analysis should be made on the fact that there are 150 employees and not just 50 employees. It affects the parking and the traffic and is file://11:\Plancomm\2004\0708.htm Page 27 of 39 07/20/2004 Planning Commission Minutes 07/08/2004 a concern to us. Thank you for your time. DRAFT Page 28 of 39 Chairperson Tucker asked those of you who want to speak to come on down and fill the front seats so that we can move this along, if anybody wants to speak. I'm not seeing anybody. Jan Vandersloot, representing himself and the citizens group SPON, Stop Polluting Our Newport. I live in Newport Heights and I am wanting to pass out two documents; one is my comments and one is SPON's comments. The first thing I would like to say is I have not been able to receive a hard cover copy of the EIR and I have not been able to access the Internet to see what the Environmental Impact Report says on the Internet. I am on the Internet a lot. The fact that the site is unavailable so much of the time makes it not a good tool for public access or public input. Basically I would like to ask that you seriously consider whether or not the recreation and environmental open space alternative is not actually the environmentally superior alternative. The fact that the consultant is now saying that a development alternative is the environmentally superior alternative to open space and recreation just is astounding to me. I have never heard of that in twenty -five years of looking at environmental impact reports. I just can not understand that and 1 think the basic reason is that the marine and recreational alternative you have before you may be too big and have too many boat slips on it. But the fact that you have open space devoted to recreation, how that can not be the environmentally superior alternative to me just boggles my mind. One of the reasons I think for that also is that what you are comparing this hotel project and I should say hotel timeshare project, you are comparing that to existing conditions, you are not comparing it to what the way it is zoned. It is zoned and is designated on the Land Use Plan as recreation and environmental open space without the mobile' homes there. That is what this project ought to be looking at as a comparison, what is a hotel compared to entirely open space without the mobile homes. All this is addressed in the SPON comments, I would like you to read that part of it. But that is the basic reason why you are saying that the environmental open space alternative is not the environmentally superior alternative. I would like to mention that. I live in Newport Heights and I have a hard time getting parking down at the beach on the peninsula and if you are thinking about the citizens of Newport Beach and our children and our grandchildren, we don't want to be driving around the peninsula around and around and around looking for a parking spot and have a potential parking lot on this REOS designated land built up with a hotel and having people coming in from Japan and Germany coming to that hotel and we don't even have enough parking space for our own citizens to be there. Thank you for choosing the REOS alternative as the environmentally superior. Mr. Burnham noted that CEQA does require the EIR to evaluate the project against what is on the ground, a plan to ground comparison as opposed to a plan to plan comparison. Craig Raiger, 1721 West Balboa. Needless to say, this project would have a huge impact on my quality of life. The gentlemen here spoke file: //H:\Plancomm\2004 \0708.htm 07/20/2004 0 9 Planning Commission Minutes 07/08/2004 DRAFT Page 29 of 39 about how many people were counted coming out of the trailer park over the holiday. He failed to mention that I sat on my patio and watched gridlock for 3 1/2 hours over the weekend every evening, which severely impacts not only myself but everybody downwind of me. So that is a severe impact not only just myself but everyone downwind of me on the peninsula. We also receive overflow parking from everyone who comes to visit the Newport Pier that can't find parking in that small parking lot. They park out in front of our place at the blue meters down as far as they can. Everybody that is going to be coming to visit the people in the hotel are now going to impact people farther downwind more and more as people try to come and visit the pier have to search for parking much further down. One of the things I haven't seen anyone mention so far is the visual impact. It isn't my right to have a view of the harbor, but this will take a one story trailer park and turn it into a two story facility which will severely impact my view of the harbor, which wasn't my God given right, but currently I enjoy that along with everybody else along that part of 18th and 17th block and part of 16th block. Once again I think the parking, the in and out you are comparing a 26 unit trailer park to a 110 unit facility. I believe the parking will just make our gridlock completely unbearable and affect the property values of everyone in Newport Beach. My final comment is I don't know why anyone is considering this project, the City of Newport Beach has been experiencing a 15% increase in revenue over the last couple of years. Why do we need this project, it isn't for the revenues we don't need it. It impacts the entire peninsula community adversely, I don't see anything good about it. Dolores Otting, a resident of Newport Beach, stated she had called to get a copy of the document on Friday as she was going away for the weekend and the document wasn't ready on Friday, it was ready on Saturday. I believe a copy of the document was placed in the library, which met the Brown Act requirement of 72 hours prior to the meeting on Thursday. I have not been able to access it on line either, so it isn't anything that's really been available for the public and I haven't had time to go to the City to get it. So, my concerns might already be addressed that's why I preface that. First of all, car rentals. Normally, when you go to a five star hotel or any hotel, you can go downstairs to the concierge and they can get you a car. If you can experience 3 1/2 hours of gridlock, nobody in the hotel is going to want to have to wait 3 1/2 hours to get their car rental. So, I am wondering if there are accommodations in the hotel to have car rentals on site available for rental. Another thing that people do when they go to a hotel, since you only have one parking space per two rooms, is they get a cab. I don't remember in the document reading anything about taxis, cabs, where they are going to park, how they are going to park. Another thing that I have noticed is because I travel past Hoag Hospital a lot and I sometimes go early in the morning or late in the afternoon, is they're building a new tower there. The construction traffic, I don't remember anything in the document and I could be wrong, that designated how they were going to deal with the construction employees. Okay? Because you go around Hoag and on Hospital Road and stuff and all those areas, everything is filled up with construction employees that walk then too. So, I am wondering how that's going to be accommodated for parking for the people that live file: //H:\Plancomm\2004 \07081tm 07/20/2004 Planning Commission Minutes 07/08/2004 DRAFT there. These are my concerns with the document without having read the responses. So thank you very much. Chairperson Tucker noted you will have the opportunity to raise any issues that you discover between now and the Council meeting next week. Marie O'Hora, thanked the Commission for recording her responses at the last meeting. It is the first time in recorded history that they spelled my name right, she really appreciates that. I thank you for over the weekend, I did notice the trip wires, and I thought really you are taking our comments seriously. You've asked for an additional study on the traffic on Balboa Boulevard and I was very grateful and we drove over them a lot. There is just one little problem with where they were placed. They were placed across from the tennis courts. Now, that is not access into the Marina Park and I spent most of my 4th of July in the Marina Park and I am very sorry that in my 35 years of residency I did not get one of those units because it is one of the quietest spots in Newport Beach. And I don't know who was counting traffic but there was no traffic. I had a very lovely tour and spent three hours at the park and thought if they ever renew these leases, boy, I'm going to be first on the list. Now, the other thing that I would really comment about is a parking space for every two rooms. Now is this going to be the carpool destination resort? I really find that very difficult, you are going to have this many rooms and people really do bring their cars. Now, the other thing is I called around to what I consider elaborate hotels, and asked if you have a five star hotel, how much staff do you have per person? Because obviously at a five star hotel you do more than a one star hotel. And, what they explained to me is that they have two to three and a half staff for every person that comes and uses the hotel as a guest. Now, unless you have a great number of employees who are using our rapid transit system, that's going to mean a lot of cars. Now, my last comment is who owns this property? I know the City of Newport Beach owns this property. I consider myself just a teeny tiny part of the City of Newport Beach, so I feel that we own this property. I think we have a right to say how it will be used and I don't know what the best use is, but I don't feel the best use is a hotel. Thank you. Tom Billings, with Protect Our Parks, noted we will find out in November whether the public wants to put a hotel on public park land or whether they want to have a park and stay a park for their community benefit and use. I realize that is not an EIR question at this point. Although, if you look at economic viability, is that the only criteria, which was brought up by Mr. Eaton, and I would say no, it should not be. Let me just hit on a couple of key points that I found as grievous faults in the EIR results and again Mr. Eaton thank you for clarifying which to me seems crystal clear, it seems like it wasn't to the others. Mr. Toerge thank you, you reflected on it as well. Number 1, the objectives are written so that only a hotel proposal would be selected as the preferred alternative. The objectives over - emphasized the need for the site to generate revenues for the City which is inappropriate for the future use of Page 30 of 39 file: //H:\Plancomm\2004 \0708.htm 07/20/2004 9 1] 0 Planning Commission Minutes 07/08/2004 DRAFT the park. The code, I guess it is 21.001 requires government' agencies to develop standards or procedures to consider) alternatives. It was spoken of a marine use alternative but that there wasn't enough information and never got into economic viability. Currently there is an alternative use that is being developed by a group of people in Newport Beach that care about this community use and it is called Las Arenas Aquatic Center. I won't go into detail about that right now, but it is an alternative marine use and recreational use which falls into the category of what the General Plan calls for at this time. Of course, I know that in the election in November we will decide on whether the public wants to change the General Plan and give away this property to a developer for a hotel. Number two, the Impact Analysis should also assume that the mobile homes are removed. I guess you call this plan to plan versus plan to ground. I don't know EIR or DEIR rules specifically without getting advice from a CEQA counsel at the time, but if you are looking at plan to plan hotel or recreational use to General Plan well then you are comparing a hotel to a park. Is economic revenue generation to take care of City insolvency the justification or is what the public wants a criteria? I realize this is not an EIR issue at this time but I consider it in my mind that it should be. Georgine Vaught, resident of Newport Beach, noted her recollection is that Mr. Sutherland said that there were going to be timeshares built on this property. Nowhere in the information that I have received tonight does the word timeshare appear. Is that going to have any effect on the EIR? Chairperson Tucker answered that he was not sure of what the speaker received tonight, but he has stacks of information that does mention the timeshare use. Ms. Wood added that the draft EIR and in a few places in the Response to Comments it does indicate that the project description includes the potential for twelve of the units to be fractional ownerships, which is a different way of saying timeshares. Madelene Arakelian, resident on the peninsula and has spent 60 years down in Newport Beach. I remember when we changed the Fun Zone that was the beach my husband courted me on. And now I have a deep concern that this strip of land that is supposed to be for marine use is going to be designated for a hotel. Last night I walked it and I don't know how many of you have walked it, but it is absolutely gorgeous. And to think that we are taking this away from the public gets me very angry. I have a question for Sharon. The General Plan Amendment has not been done yet? If it hasn't been done, and at the moment it is designated for marine use, and has the tideland issues and everything else, shouldn't that have been done already so that we could go forward with this project? Or, is it when we vote on it in November we're voting for the General Plan Amendment and not for a hotel? file: //H: \Plancomm\2004 \0708.btm Page 31 of 39 07/20/2004 Planning Commission Minutes 07/08/2004 DRAFT Mr. Burnham answered that in November, if the EIR is certified and Council calls an election, yes the General Plan Amendment would be what the voters would either approve or disapprove to amend the Land Use and Recreation Elements to allow the construction of the resort. Public comment was closed. Chairperson Tucker asked if staff wanted to respond to any of the comments or would any Commissioner like a response to any of the comments. He then noted he would like to hear about car rentals and taxis. I guess car rentals we don't know what the use is going to be on the inside of the hotel but just as a matter for hotel trip generation rates, I would guess the concept of a taxi service would be included or should be if it wasn't? Mr. Edmonston answered that again typically the determination of these rates, all traffic entering and leaving the property is tabulated and then divided by the number of rooms to come up with the trip rate per room. Yes, to the extent that the other sites were studied to determine this rate, I would expect they would have the same sort of uses, whether it's limousines or airport shuttles or rental cars. It would have been the same other than if a rental car is coming from an off site location it would have four trips, two coming and two leaving associated with the stay versus if it was on -site it would come back and stay there. There might be some minor difference again depending on whether these other sites had on site storage of rental vehicles or if they were always in a situation where they came from some off -site location when a client wanted one. Chairperson Tucker noted that we did discuss earlier in a fair amount of detail the exact or at least our best estimate how much more traffic would have to occur before we had a recognizable level of service degredation under the TPO. I don't think additional taxi trips is going to get to that level that we are going to trip something. Your answer basically is that it is included in the base trip generation rates. It may not have specifically called out taxis, the manner in which the people come to and fro, but it contemplated all trips. Mr. Edmonston answered yes, the studies were done at resort hotels, which we felt was the most appropriate category for this project. Ms. Wood noted that another potential impact of rental cars could be if they are stored on site then they are occupying parking places. But in this case where the parking that is provided is more than twice what the Code requires, I don't see that that would have a potential to have a significant impact. Mr. Burnham added I don't think it would be a significant impact either, but that use is not listed as part of the project description. So as far as I am concerned if that use were something that the hotel operator wanted to develop on site, they would need the environmental document reviewed and we would have to look at that as an amendment to the project. I don't think it is permitted given this Page 32 of 39 file: //H:\Plancomm\2004 \0708.htm 07/20/2004 0 0 0 Planning Commission Minutes 07/08/2004 DRAT Page 33 of 39 project description. Commissioner Eaton asked about Mr. Billings' comments and Dr. Vandersloot's comments and particularly the SPON letter referring to the no project alternative. Having been in this practice I can remember two cases in particular, one in Anaheim and one in El Dorado County where it said where you have a situation where you have a likelihood of a plan that could be implemented, and an existing situation, you really need to do two no projects to look at both. In both of those cases, the existing plan had a much higher intensity and density allowed. What they did in those two cases, they compared only to the higher plan and said, well we have nothing but benefits here by reducing that as opposed to what was actually on the ground. I believe that the essential character of those cases were taken into account in Section 15126.6 Paragraph E subsection 3, sub b, where it says, "If disapproval of the project under consideration would result in predictable actions by others, (in this case I'm interpreting that to mean like eventually requiring the displacement of the mobile homes because they conflict with tidelands restrictions) such as a proposal of some other project, this no project consequence should also be discussed." It reiterates it saying, "However, where the failure to proceed with the project will not result in the preservation of the existing environmental conditions that analysis should identify the practical result of the project's non - approval." Do you feel this EIR runs the risk of not taking that into account? Mr. Burnham answered, no, because I think the marine recreational alternative is the flip side to the no development, no project alternative, which is the retention of the mobile home park. The marine recreation alternative would be a no project as a no General' Plan Amendment. It would be a project that is consistent with the existing General Plan designation for the site both in the Rec and Open Space Element and the Land Use Element. I think that takes into account what could happen if the mobile home park were removed as part of this process and I also think it is somewhat remote to conclude that the mobile home park -- let's assume the voters reject the General Plan Amendment -- at that point in time my suspicions are that the City would try to figure out what to do and potentially develop • marine recreation alternative, either the one proposed in the EIR or • different one. That I suspect would take a substantial amount of time during which the mobile home park would remain in place. Chairperson Tucker noted that the Guidelines say about alternatives to the proposed project, "An EIR shall describe a range of reasonable alternatives to the project, or the location of the project which would feasibly attain most of the basic objectives of the project but would avoid or substantially lessen any of the significant effects of the project, and evaluate the comparative merits of the alternatives. An EIR need not consider every conceivable alternative to a project. Rather it must consider a reasonable range of potentially feasible alternatives that will foster informed decision making and public participation." I think that, back to the Guidelines, the nature out of the project and the objectives, I think that staff has picked o and justified, as they are required to do, is to publicly disclose their reasoning for selecting alternatives. At least in my opinion, they have file: //H:\Plancomm\2004 \0708.htm 07/20/2004 Planning Commission Minutes 07/08/2004 Page 34 of 39 DRAFT met the burden here. They could have picked a lot of other alternatives and maybe they should have picked a lot of other alternatives, but in terms of what is required by CEQA, which is really all that is before us tonight, it seems to me that they have given an alternative that allows comparison to the project. That is kind of the nature of the beast that we are dealing with here. Does anybody else have questions? Commissioner Selich noted on the letter from the Central Newport Association, paragraph 3 on the second page where they were requesting the analysis on the impact of 150 and not on 50 employees, I thought an interesting point was brought up on the shift changes. I don't think it would be 150, but 50 if everyone changes shift at the same time. I was wondering if staff had any comments on that. Ms. Wood noted she actually has had some.experience working in a hotel. Perhaps we should have Mr. Foust talk about this too, but I do not believe that these employees are going to all change shifts at the same time. The majority of the chamber maids are there in the morning and then some come for the evening turn down service and depending on what day of the week it is you may have fewer or greater number of employees working in the restaurant. You may or may not have a function going on in the ballroom, which is not a very big one in this case, and so people would come at different times and perhaps not even every day for that sort of thing. Some of the employees are going to be the grounds maintenance crew and they will have different schedules than the people working in the rooms or restaurant. I don't think it is reasonable to assume that all of those will turn over on a shift as if they were working in a factory. Commissioner Selich noted that one of the comments made various times on the EIR is the fact that it is a five star facility so there is going to be a greater ratio of employees to guests then you would have in a normal hotel. Also, earlier in the information that was brought out it was indicated that we are parking this hotel at twice the ratio than normally we require a hotel to be parked at so we probably have that covered in any event. Ms. Wood added that it is also important to keep in mind the size of the ancillary facilities, the amenities that are included in this hotel versus what you might find in other hotels, which also affects the employee count. In many hotels such as the Ritz Carlton, the St. Regis, even the Montage that we have in the region, those hotels include large ballroom space and can accommodate large functions and even business meetings. Where in this case even though it is called a ballroom, given the size I am not sure that is a good term -- it is only 3600 square feet, which is a little bit smaller than the building we are in. Given that information, I think the lower employee count per room is reasonable for this proposal versus what you would see in one where you need to have a lot more food service people for those facilities. Commissioner Daigle noted should more units become timeshares file: //H:\Plancomm\2004 \0708.htm 07/20/2004 0 0 Planning Commission Minutes 07/08/2004 DRAFT Page 35 of 39 over time, how would that affect traffic? Mr. Burnham answered that we would again have to look at any potential environmental impacts associated with a conversion of more resort units to fractional ownerships which I do not believe would happen and will not be allowed by any lease. Mr. Foust can address any impacts. Mr. Foust answered we have assumed a full 100% occupancy of the hotel, so all the rooms would be occupied all the time every day of the year. A little bit of research into that suggests it is 85 or 90% is probably realistic. Again, everything we have done traffic wise has been done on the conservative side. In terms of timeshares, they do not achieve 100% occupancy all the time. The probability is although you might get a few more families come in and maybe have a guest or two, I suspect that the trip rate for the timeshare throughout the year would result in a lower than 100% of all of the hotel rooms. It probably would be a net traffic benefit to have the timeshare compared to a fully occupied five star hotel. Chairperson Tucker then addressed the consideration and the need to make substantial changes to the draft EIR and to recirculate the draft EIR. Ultimately, the purpose of CEQA is a disclosure law. Really in its most simplistic form it's an effort to try and make sure the decision makers and the public understand the nature of the project involved and the consequences to the environment if the project were to have been built. And so, when I look at the issue of recirculation, it needs to be in accordance with the Guidelines as well, that the agency is required to recirculate when significant new information is added to the EIR after the public notice is given of the availability of the draft EIR for public review. In this particular case, I believe that just the level of sophistication of the comments, the number of comments we have had, the detail that we have been through and the discussion that we have had, I am not seeing a significant omission that needs to be corrected at this point. It's not that the document is perfect; it is far from perfect because it is not possible to make one of these things' perfect. I think the public's participation in pointing out errors and failure to recognize nuances and to look at every aspect of this project is just testament to the fact that no matter how hard you try, you can't get to perfection. CEQA does not require perfection. This is a re- development of a project where the ground has already been developed. It's not like it's 500 acres with coastal sage scrub, wetlands and environmentally endangered species, which is a lot harder to understand than this project. I feel in this particular case, at this point, there is no aspect of this project that I do not have a good understanding of what its consequences will be. There were some areas that I think we pointed out tonight where the document and the administrative record could be strengthened and I think we have done that. I am not seeing the need to recirculate. I will throw this open to the rest of the Commissioners and see if we have any other feelings on that or any comments on the EIR generally but particularly we need to come to the conclusion of whether or not to make substantial changes and we need to recirculate the EIR. file: //H:\Plancomm \2004 \0708.htm 07/20/2004 Planning Commission Minutes 07/08/2004 DRAFT Commissioner Eaton noted he disagrees with the selection of the reduced alternative as the environmentally superior alternative. I think the marine recreational alternative is the environmentally superior alternative because I think the wrong traffic analysis was used. They should have stuck with the ITE generation as they did for the project and the other alternatives. That would have demonstrated, if they had done that, that there was actually less traffic and therefore less traffic impacts and less air quality impacts and less noise impacts and that should have been the environmentally superior alternative. However, my real concern was that we were not identifying one of the alternatives as an alternative and that has now been taken care of. An alternative has been identified as the environmentally superior alternative. In terms of looking at the basic impacts of the project itself, I don't think which alternative is the environmentally superior alternative is that relative. I think we do have a comprehensive view of the impacts of the project itself and therefore, I don't think the document needs to be recirculated and I am prepared to eventually recommend certification. Commissioner Cole noted he generally concurs. The environmental consultants and the City did an admirable job of putting this together and have in my opinion adequately addressed potential impacts to the environment and I have found there is no significant evidence to show that there has been any kind of impacts in any areas. I think they have also adequately addressed the threshold regarding alternatives so I am also in favor of not recirculating the EIR and I would recommend that we proceed with the certification and send this to the City Council. Commissioner Toerge noted he agrees. We have had some exhaustive testimony and some very good quality input from the public and from staff and environmental consultants and the Commissioners and I don't see any significant omission. I also appreciate very much our Chairman's summation tonight of our charge this evening, that our responsibility is to be sure the document adequately brings forth the environmental impacts and potential mitigation measures. That is really our charge, does this document do this? A vote to certify this EIR is not a vote for the project. It is simply representation that the project EIR does indeed address those impacts and the potential and likely mitigation measures. At this point, I am not in favor of a re- circulation of the draft EIR. Commissioner Selich noted he was not going to make any kind of speech. He supports what the Chairman's comments were on it and I think it is in adequate condition to move on to the Council. Commissioner McDaniel noted he agrees. Commissioner Daigle noted she also would not be in support of re- circulating the document. Chairperson Tucker noted that concludes that part of it. Are there any final comments on the draft EIR? He noted once again, as Commissioner Toerge points out, our charge is to come to a Page 36 of 39 file: //H:\Plancomm\2004 \0708.htm 07/20/2004 u Planning Commission Minutes 07/08/2004 DRAFT Page 37 of 39 conclusion on the adequacy of the document. There are a lot of people that feel strongly that this property should not be used for a hotel project. Ultimately, if they show up at the ballot box, assuming it gets through Council, which I shouldn't assume because it might not, then it will be up to everybody to express their opinion as to the project. In doing that, certainly those who have participated in the project understand what its consequences are and they have kept us honest by making sure we understand what the consequences are. Hopefully you have seen that we did read the document, we read the comments, we read the response to comments and we spent a lot of time on this matter to discharge our duty which is to pass a recommendation along to the Council as to the adequacy of the EIR. I do have a question of the City Attorney before we make a motion and that is how do we deal with the environmentally superior alternative? We have the consultant recommending one alternative and Commissioner Eaton has a different opinion and I guess right now we have a resolution that doesn't refer to either choice. I am not exactly sure how we correct the record to pick the environmentally superior alternative. Mr. Burnham answered I would suggest that you straw vote that issue and adopt a resolution revised to reflect the straw vote. I understand Commissioner Eaton's point of view. If you use an ITE rate maybe you could come to the conclusion that the marine recreational alternative is environmentally superior. There is evidence to support either determination. Chairperson Tucker stated we would then just adopt the resolution that is in the staff report modified to reflect the environmentally superior alternative we select. Mr. Burnham answered yes. Motion was made by Commissioner Eaton that the environmentally superior alternative be the marine recreation alternative based upon the ITE generation rates. Commissioner Cole - would be in favor of supporting the City Attorney and the consultant's recommendation and keep the environmentally superior alternative the proposed one presented by the consultant. (no) Commissioner Toerge - in favor of the straw vote that the marine recreation alternative is the environmentally superior alternative. (yes) Mr. Burnham noted for the record he does not have an opinion, just to clarify. Commissioner Selich - noted that though it might seem counter intuitive I think that the consultant's recommendation makes sense. It is analytically consistent with the rest of the document so I support that one. file: //H :\P1ancomm\2004 \0708.htm 07/20/2004 Planning Commission Minutes 07/08/2004 DRAFT Page 38 of 39 Commissioner McDaniel - in favor of this consultant's project as it is. Commissioner Daigle - supports the consultant's recommendation. I le Chairperson Tucker noted he guesses it doesn't matter what he thinks, it sounds like the consultant's recommendation is the way we are going. Motion was made by Chairperson Tucker to adopt the resolution recommending City Council certification of the Marinapark Resort and Community Plan Final Environmental Impact Report that is attached to our staff report as attachment 1 and that we modify that resolution to reflect that we have selected the environmentally superior alternative of the reduced project alternative. Are there any comments? Ms. Varin noted that Commissioner Daigle has listened to all the previous meetings on our tapes and is able to vote on this item tonight. Commissioner Eaton added his commendation to the commentators, particularly EQAC and the Harbor Commission. The Harbor Commission really went to a lot of work and a lot of their comments unfortunately aren't really going to pertinent unless ultimately the hotel is voted down and the alternatives for the site are considered. They have a wealth of good information in there that can be used in that circumstance. Chairperson Tucker noted we all can second that. We had a great participation level with very good comments. Anybody else, wish to say anything? Ayes: Eaton, Cole, Toerge, Tucker, McDaniel, McDaniel Noes: and Daigle Absent: None Abstain: None None *** I I ,DDITIONAL BUSINESS: ADDITIONAL BUSINESS a. Ci ouncil Follow -up - Ms. Wood reported that at the meeting of June nd the City Council adopted the amendment to the Corporate with regard to medical and dental uses. b. Planning Commissio representative to the Economic Development Committee - missioner Selich noted that at the next meeting there will a fiscal impact analysis presentation on Marinapark. The me is on the 21st at 8 a.m. here in the Chambers. c. Report from Planning Commission's representativ to the General Plan Update Committee - no meeting. Ms. d file: //H:\Plancomm\2004 \0708.htm 07/20/2004 0 EIR -11 City Council Staff Report for July 13, 2004 0 CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item 18 July 13, 2004 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: James Campbell, Senior Planner SUBJECT: Marinapark Resort & Community Plan Final Environmental Impact Report (PA 2003 -218) 1700 West Balboa Boulevard APPLICANT: Marinapark LLC (Formerly Sutherland Talla Hospitality) ISSUE Should the City Council certify the Final Environmental Impact Report (EIR).for the Marinapark Resort and Community Plan (formerly the Regent Newport Beach)? RECOMMENDATION Review the Final Environmental Impact Report (EIR), receive public comments during the public hearing, and continue the public hearing to July 27, 2004. DISCUSSION Background The project background, project description, and a summary of the Draft EIR are provided in the report provided to the City Council for the June 8th study session (Attachment 1). EIR Certification Process A Draft Environmental Impact Report (EIR) was prepared for the project and circulated for public comment from April 26, 2004, through June 9, 2004, as required by the California Environmental Quality Act (CEQA). During that time, Marinapark EIR July 13, 2004 Page 2 Draft EIR. The Planning Commission received public comments on the Draft Environmental Impact Report for this project at a study session on June 3, 2004, and then provided comment and requested clarification and additional information on various impacts analyzed in the document. Planning Commission comments and responses to those comments are included in the Final Environmental Impact Report together with comments received during the public circulation period for the Draft EIR and the respective responses to those comments. The City Council also held a study session on June 8; no additional comments on the DEIR were received. On July 8tn, the Planning Commission will hold a public hearing, and recommend to the City Council whether or not to certify the Final EIR. A summary of Planning Commission deliberations and the adopted Resolution recommending City Council action on the EIR will be sent to City Council members on July 9th. In order to provide adequate opportunity for public input, the City Council will hold public hearings on the Final EIR on July 13, 2004 and on July 27, 2004. On July 27tH the City Council may certify the Final EIR if, after reviewing the document and considering the Planning Commission recommendation, the Council finds that: 1) the Final EIR has been completed in compliance with the California Environmental Quality Act (CEQA); 2) the City Council reviewed and considered information contained in the Final EIR; and, 3) the Final EIR reflects the independent judgment of the City Council as the legislative body of the City as lead agency in preparation of the Final EIR. At that time, the City Council may also take action as appropriate to place the General Plan Amendment proposed with this project on the November ballot. Final EIR Summary: The Marinapark Resort and Community Plan Final EIR is comprised of the Draft EIR, a listing of persons and organizations that commented on the Draft EIR during the public circulation period, a compilation of those comments, and responses to those comments provided by the City as lead agency for the project pursuant to CEQA. Comments and Responses to Comments The Final EIR includes all written comments on the Draft EIR received through June 9tn and comments received from three agencies after that date. Correspondence from each commenter is accompanied by responses to comments set forth in that correspondence. Responses were prepared by the City's EIR consultant and City staff. Responses may provide clarification on an issue by referral to an EIR section, may include additional discussion as Marinapark EIR July 13, 2004 Page 3 clarification of an issue raised by the commenter and addressed in the EIR, or may indicate an additional or revised mitigation measure formulated in response to a comment. Comments not relating to environmental impacts may simply be noted for the record. In .response to comments received, additional mitigation measures have been formulated and previously defined mitigation measures have been modified to further reduce adverse impacts. These mitigation measures and the reasons for their inclusion or modification are as follow: Mitigation Measure LU -1 Environmental impacts identified in the Draft EIR included those associated with bulkhead and groin wall placement, dredging, fill placement on the sandy beach, and extension of the slips beyond the pierhead line. Although the impacts associated with placement of this structure were determined to be less than significant, the project proponent has agreed to incorporate the modified dock specifications into the project as set forth in Mitigation Measure LU -1 to further reduce potential impacts. The modified dock eliminates the twelve boat slips originally proposed and replaces them with a 260 -foot long "marginal' dock. This will reduce the amount of dredge material from 1,750 cubic yards to a maximum of 500 cubic yards, reduce the amount of bay bottom that will be disturbed, and eliminate the need for approval to construct improvements beyond the pierhead line. Mitigation Measure HM -1 This new mitigation measure requires that the project proponent provide a listing of all hazardous materials and their quantities that may be used or stored on the project site during construction. The impact relative to hazardous materials used or stored on site during construction previously was determined to be less than significant with mitigation and the new mitigation measure was added to further reduce the potential impact level in response to comments received on the Draft EIR. Mitigation Measure BR -6 Modification of the dock plan as in Mitigation Measure LU -1 results in a reduction in the area of benthic and shorebird foraging habitat that is disturbed and a consequent reduction in the amount of replacement habitat that must be developed off -site. Revision of this mitigation measure reflects the reduced habitat replacement area. El Marinapark EIR July 13, 2004 Page 4 Mitigation Measure HWQ -1 Modification of this mitigation measure adds a requirement that in -water construction activities be limited to the period from October 1 to March 31. This mitigation measure was modified in response to comments from the Regional Water Quality Control Board indicating this would be a condition of permit approval for construction of the dock. The time period restriction will prevent construction activities that would interfere with wildlife reproductive activities. PUBLIC NOTICE A Notice of Public Hearing was published on July 3, 2004, in the Daily Pilot. The notice was also mailed on July 2, 2004, to owners of property within 300' of the proposed project and to those who previously requested notification of public hearings on this matter and the notice was posted at the site in multiple locations. Submitted by: James Camp ell Sharon Wood Senior Planner Assistant City Manager Attachments: 1. June 8, 2004, staff report to City Council 2. Draft Environmental Impact Report 3. Response to Comments 0 • ATTACHMENT 1 [June 8, 2004, staff report to City Council] 0 0 b CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item 33 June 8, 2004 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: James Campbell, Senior Planner (949) 644 -3210, Campbell Ocity.newport- beach.ca.us SUBJECT: Marinapark Resort and Community Plan and Draft Environmental Impact Report APPLICANT: Marinapark LLC (Formerly Sutherland Talla Hospitality) ISSUE: Review of the Marinapark Resort and Community Plan (formerly the Regent Newport Beach) and Draft Environmental Impact Report (DEIR). RECOMMENDATION: Review the proposed project and DEIR, receive public comments, and provide direction on issues to be addressed at the Planning Commission public hearing on July 8, 2004 and at City Council public hearings on July 13 and July 27, 2004. DISCUSSION: Backqround: Under terms of the agreement between the City of Newport Beach and Sutherland Talla Hospitality (now Marinapark LLC), the City is required to hold one Planning Commission public hearing and one City Council public hearing on the project EIR. Pursuant to the agreement, the Planning Commission will recommend to the City Council whether or not the EIR should be certified, but will not recommend whether to approve or disapprove the project. The City Council is to certify the EIR, if appropriate, and schedule the election on the General Plan amendment, but will not approve or disapprove the project. In making its decision on the details of the ballot measure, the City Council will have the ability to make some changes to the General Plan amendment request submitted by Marinapark LLC and the Planning Commission may include suggested changes to the General Plan amendment with its recommendation to City Council. The Marinapark site is zoned Planned Community (PC), and the required project approvals include a Planned Community Development Plan. The Planning Commission and /or City Council will have approval authority for this plan and any use permit, site plan or other subsequent approval required in the PC text. In addition, the City Council has the authority to approve a lease for use of this tidelands property. The Study Session is intended to give the City Council and the public the opportunity to understand the project proposal, to begin reviewing the potential environmental impacts of the project, and to identify issues that need to be addressed for the Planning Commission's public hearing on the Final EIR on July 8, 2004 and for the City Council's public hearings on the Final EIR on July 13 and July 27, 2004. Protect Description The Marinapark Resort Hotel and .Community Plan is proposed on property currently occupied by the Marinapark Mobile Home Park, Las Arenas Park, Balboa Community Center, the Neva B. Thomas Girl Scout House, four public tennis courts, one -half basketball court, a children's play area, and a metered parking lot on an 8.1 -acre site on Balboa Blvd. between 15th and 18th Streets. The project applicant, Marinapark LLC, proposes to remove and /or demolish existing structures on the property and build a 110 -room luxury resort hotel that will include a lobby and registration area, a cafe, a restaurant, a bar, a ballroom, a swimming pool, separate spa and administration buildings, 12 boat slips and a subterranean parking garage. The following public facilities would be included in the project: surface parking lot, four tennis courts, a new two -story Community Center and Girl Scout facility, and a tot lot. EIR Certification Process A Draft Environmental Impact Report (DEIR) has been prepared for the project and circulated for public comment on April 26, 2004. As required by the California Environmental Quality Act, the review period is 45 days and will end on June 9, 2004. During this time, affected government agencies and the public may submit written comments on the Draft EIR. To date, the City of Newport Beach Environmental Quality Affairs Citizens Advisory Committee and the Southern California Association of Governments have provided written comments on the Draft EIR (Attachment A). The Planning Commission and members of the public provided comment on the Draft EIR at a public study session on June 3, 2004; a summary of comments will be provided to the City Council on June 4. At the end of the Draft EIR circulation period on June 9th written comments received and written responses to these comments will be included with the Draft EIR document in the form of the Final EIR for the project. On July 8, 2004, the Planning Commission will hold a public hearing and make its recommendation to the City Council as to whether or not to certify the Final EIR. The City Council will hold public hearings and consider the Planning Commission recommendation on the Final EIR on July 13, 2004 and on July 27, 2004. On July 27th the City Council may certify the Final EIR if it determines that, after reviewing the document. the EIR was completed in compliance with CEQA and reflects the City Council's independent judgment and analysis. Draft EIR Summary: The Marinapark Resort and Community Plan Draft EIR identifies the range of potential environmental impacts that could result from construction and operation of the 110 - room Marinapark Resort. The range of impacts analyzed in the DEIR was based on an Initial Study (included in the DEIR) that concluded that no further analysis was needed for environmental issues related to agricultural resources, cultural resources, hazards and hazardous materials, mineral resources, population and housing, and recreation. The DEIR includes a description and analysis, by subject area (Land Use, Biological Resources, Air Quality, Traffic, etc.), of each impact determined to be potentially significant. Based on this analysis, a level of significance is assigned to each potential impact: "No Impact ": "Not Significant'' or "Significant." Mitigation measures are identified for "significant" impacts. A level of significance is again assigned to each potential impact according to the extent that proposed mitigation measures may reduce the severity of the impact. Alternatives to the project that may result in lesser impacts on the environment than the proposed project are also evaluated in the Draft EIR. As shown in the "Executive Summary" (Page 2 -1) of the DEIR, the analysis concludes that, with implementation of recommended mitigation measures, no significant impacts to the environment would result from construction and operation of the Marinapark Resort. Potential environmental effects of the proposed project which can be mitigated so that no significant impacts result are indicated below. Mitigated Impacts Impact Mitigation Measure Geology and Soils Liquefaction of soils during an Building design and construction earthquake incorporating structural components that resist soil collapse Hydrology and Water Quality Degradation of water quality 0 Overload storm drain system Preparation and implementation of a Stormwater Pollution Prevention Plan and Water Quality Management Plan incorporating best management practices Construction of on -site detention basins I Mitigated trnpacts Impact Mitigation Measure Biological Resources Cement walkway results in loss of Development of shorebird foraging habitat shoreline habitat for shorebirds replacement site Disruption of benthic. resources through loss of soft bottom habitat Long -term impacts to fish resources through loss of soft bottom foraging habitat Development of benthic habitat replacement site and revision of slip plans to include elevated walkway from beach to slips Development of benthic habitat replacement site Disruption of California least tern Preparation and implementation of a and California brown pelican Stormwater Pollution Prevention Plan foraging behavior through site incorporating best management practices grading and bay dredging and construction noise Periodic loss of eelgrass through maintenance dredging Loss of halibut nursery habitat Construction, vessel movement, and increased turbidity levels could affect Eelgrass Restoration Project Bulkhead and support pilings for boat slips will result in long -term loss of sand beach and soft bottom habitat Development of a plan for restoration of eelgrass habitat pursuant to Southern California Eelgrass Mitigation Policy. Development of a benthic habitat replacement site and preparation and implementation of a Stormwater Pollution Prevention Plan and Water Quality Management Plan incorporating best management practices Preparation and implementation of a Stormwater Pollution Prevention Plan and Water Quality Management Plan incorporating best management practices Development of benthic habitat replacement site and revision of slip plans to include elevated walkway from beach to slips and development of a benthic habitat and shorebird foraging habitat replacement site 9 �D Mitigated Impacts Impact Mitigation Measure Air Quality Dust resulting from construction Compliance with Air Quality Management activities District Rule 403 and adopt and implement a construction traffic management plan Exceed thresholds for Reactive Organic Gases through use of paint and other coatings in construction phase Use pre- coated materials. high pressure low - volume paint applicators with 50% efficiency, lower volatility paint The Executive Summary of the DEIR also includes environmental components that would not be adversely affected by project development and operation as shown below. Areas of No Impact/Less Than Significant Impact Land Use • Project development is consistent with General Plan Policies and the Harbor and Bay Element and the Newport Beach Municipal Code and with the Local Coastal Program Land Use Plan policies on public access, views, parking, dock facilities, public restrooms and historic resource inventory: project complies with Zoning Code for Community Plans; project is compatible with nearby land uses and maintains public beach access and replaces existing recreation facilities: structures nearest the Bay will be one -story and structures adjacent to 15'x' and 18`r Streets will be similar in scale to nearby buildings; Transportation: The project will generate a net increase of 520 average daily trips during the "shoulder" e.g, fall and spring season which, compared to existing traffic, does not represent a significant impact. The project would generate a net increase of 360 average daily trips during the summer season which, compared to existing traffic, does not represent a significant impact, Noise, The project is consistent with the City performance standards for locating land uses in noisy environments, restriction of construction hours would reduce adverse effect of equipment noise to less than significant level; noise modeling indicates no increase in traffic- related noise levels, y} Aesthetics: The architectural features of buildings included with the project are consistent in size and scale with existing development and existing views to the bay from public rights - of -way will be substantially maintained; Public Services and Utilities: Existing public facilities and resources for police and fire protection were deemed adequate to serve the project based on interviews with the respective department representatives; facilities and infrastructure for solid waste disposal, water service, wastewater service, natural gas, and electricity were all deemed adequate for the needs of the project based on information from the respective service providers. Alternatives to the Mannapark Resort project are analyzed in the DEIR and their potential impacts are compared with those of the proposed project. Any of the alternatives may be determined to be environmentally superior if, overall, the magnitude of impacts is less than that of the proposed project. Each alternative, however, must also be evaluated in light of the project objectives identified by the City of Newport Beach and set forth in the DEIR as follows: • Complement efforts to revitalize Balboa Village and enhance other commercial • areas on the Peninsula, • Redevelop the site with land uses that are consistent with, and permitted by, the legal restrictions on the use of tidelands; • Reduce the current and anticipated future deficit between t6ideland revenue and tideland expenditures; • Provide additional general fund revenue that will help the City maintain or enhance the high level of public safety and municipal services provided to Newport Beach residents; • Enhance public access and community faci8lities on the site without any expenditure of tax revenue and without any fiscal impact on the Girl Scouts and other users, • Ensure that site redevelopment does not generate noise, glare or traffic that could adversely impact the residents in the vicinity or the American Legion adjacent to the site; • Provide for additional marine - related facilities that can be used by coastal . visitors for sailing and boating. Alternatives analyzed in the DEIR, the magnitude of overall impact compared with the project, and the extent to which each meets project objectives identified above are as follow: "No Proiect/No Development Alternative" This alternative assumes that existing mobile homes and recreational facilities remain. No additional environmental impacts would result but this alternative would not meet project objectives for area revitalization, consistency with tidelands restrictions, reduction of tidelands deficit, generation of additional revenue, or provision of additional marine - related facilities. "Marinapark Marine Recreation Alternative" This alternative assumes removal of the mobile homes and development of new recreational facilities including 2 charter boat moorings, 20 boat slips, parkland, a Girl Scout/Community Center, tennis /basketball courts, and beach and boat slip parking area. This alternative would result in lesser impacts to geology and soils, aesthetics, and public services and utilities as compared with the proposed project. Impacts associated with land use and planning would be similar to those of the project. Impacts associated with hydrology and water quality, geological resources, transportation, air quality, and noise would be greater as compared with the proposed project. The Marine Recreation Alternative would meet project objectives related to area revitalization, consistency with tidelands restrictions, and provision of additional marine - related facilities. This alternative, however, may not reduce the tidelands revenue deficit and may not generate additional general fund revenue or enhance public access without an expenditure of tax revenue. "Reduced Intensity Alternative" This alternative assumes development of an 80 -room luxury resort hotel, a 4,500 square -foot restaurant, and 12 boat slips. This alternative would result in lesser impacts to geology and soils and to aesthetics as compared with the proposed project. Impacts associated with traffic, air quality, noise, and public services and utilities would be greater for this alternative than for the proposed project. Similar impacts would be incurred for hydrology and water quality, geological resources, and land use and planning. 0 Based on consideration of the relative impacts of each alternative compared with the proposed project, and on the extent to which each alternative and the proposed project satisfy the objectives set forth by the City of Newport Beach for redevelopment of the proposed project site, the proposed Marinapark Resort and Community Plan is deemed to be the Environmentally Superior Alternative consistent with guidelines set forth in CEQA. CONCLUSION: The Study Session will allow members of the City Council and the public to.better understand the proposed project and to evaluate conclusions about potential environmental impacts set forth in the Draft EIR for the Marinapark Resort and Community Plan. The Study Session will prepare the City Council for public hearings on the Final EIR on July 13, 2004 and July 27, 2004, and.for City Council determination after public hearing on July 27, 2004 whether or not to certify the Final EIR. If the City Council certifies the Final EIR on July 27`h, the City Council may at that time adopt a resolution calling for the proposed General Plan amendment for the Marinapark Resort and Community Plan to be placed before the Newport Beach electorate in November. Prepared by: Submitted by: ames W. Cam bell, t Senior Planner Attachments �fltZVA�- Sharon Z. WoVager Assistant City 0 11 1� • ATTACHMENT 2 DRAFT ENVIRONMENTAL IMPACT REPORT SCH #200311021 [Distributed separately due to bulk. Available for public review at the City's Planning Department] 0 i5 0 E ATTACHMEMT 3 RESPONSES TO COMMENTS SCH #200311021 [Distributed separately due to bulk. Available for public review at the City's Planning Department] 0 EIR -12 Supplemental City Council Staff Report for July 13, 2004 9 0 CITY OF NEWPORT BEACH SUPPLEMENTAL CITY COUNCIL STAFF REPORT Agenda Item No. 18 July 13, 2004 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Manager's Office Sharon Wood, Assistant City Manager 644 -3222, swood @city.newport- beach.ca.us SUBJECT: Marinapark Resort & Community Plan (PA 2003 -218) 1700 West Balboa Boulevard Final Environmental Impact Report Fiscal Impact Analysis APPLICANT: Marinapark LLC (Formerly Sutherland Talla Hospitality) RECOMMENDATIONS: 0 1. Review the Final Environmental Impact Report (EIR) and receive public comments during the public hearing; 2. Review and comment on the draft fiscal impact analysis; and 3. Continue the public hearing to July 27, 2004. Environmental Impact Report: The Planning Commission conducted a public hearing on the draft Final Environmental Impact Report (EIR) for this project on July 8, 2004. At the conclusion, the Commission adopted the attached Resolution, recommending that the City Council certify the EIR, with the Reduced Intensity alternative identified as the environmentally superior alternative. Commission Discussion: The Commission reviewed the statutory intent and purpose for preparing, circulating, and certifying an Environmental impact Report, and focused their discussion on several areas of impact analysis included in the DEIR and in comments received during the public circulation period. These areas were traffic, revised dock plan, hazardous Marinapark EIR and Fiscal Impact Analysis July 13, 2004 Page 2 materials, tidelands boundary, loss of recreation facilities, parking, alternatives to the project, land use compatibility, noise, and revisedladditional mitigation measures. City staff and consultants summarized the analysis and conclusions in the DEIR and responded to Commission questions as each was introduced. This report highlights issues where information was clarified or added, or changes to the EIR were recommended. Traffic Staff noted that the trip generation rate used to analyze the proposed hotel was not the rate found in the Institute of Traffic Engineers (ITE) Manual, but a rate that had been developed by Austin Foust Associates, the traffic consultant, in a study of resort hotels. This rate is higher than ITE's resort hotel rate for peak hours, and therefore results in a more conservative traffic analysis than would have been the case using the ITE rate. The DEIR should be amended to cite the correct source for the trip generation rate. The traffic consultant also noted that the traffic study assumed that only 24 mobile homes (those occupied by full -time residents) were occupied and generating traffic. The tables in the DEIR are correct; the text on page 5.5 -3 should be amended to delete the reference to a "fully occupied mobile home park" and explain the assumption regarding 24 occupied units. Alternatives Because the DEIR found the proposed project to have less environmental impact than any of the alternatives except no project, it concluded that the project is the environmentally superior alternative. The City Attorney advised the Commission that CEQA requires the lead agency to identify an environmentally superior alternative among the' alternatives to the project. Michael Houlihan of Michael Brandman Associates, who prepared the EIR, provided the Commission with a comparison of the Marine Recreation and Reduced Intensity alternatives. The DEIR shows that impacts from both alternatives would be less than significant, but the Reduced Intensity alternative would have less impact in the areas of traffic, air quality, noise, biological resources and water quality. Based on this analysis, he recommended that the Reduced Intensity alternative be identified as the environmentally superior one, and the Commission accepted the recommendation. Public Comments: Four pieces of written correspondence were received at or prior to the Planning Commission hearing, and they are attached to this report. Eight members of the public spoke at the hearing. In addition to commenting on the environmentally superior alternative and project impacts they would experience, public comments raised a few issues to which staff responded. Marinapark EIR and Fiscal Impact Analysis July 13, 2004 Page 3 Employees The DEIR states that the hotel will have 50 employees in total, but the project proponent has stated that there will be no more than 50 employees at any one time. In addition, existing luxury hotels in the region have a higher number of employees per guest room. Staff responded that hotel employees would work on varied schedules depending on work assignment (e.g., housekeeping vs. grounds maintenance), day of week, and whether there is a ballroom function. Therefore, there will not be shift changes involving all employees at the same time, which could have greater traffic and parking impacts. In addition, the small size of the proposed ballroom (3,600 square feet) was noted as a reason for a lower employee requirement than other hotels with larger conference and banquet facilities. Altematives The Commission was asked to consider the Marine Recreation alternative as the environmentally superior one. Speakers also suggested that another alternative should be analyzed in the EIR, one that would be consistent with the existing General Plan but would not retain the mobile home park. The City Attorney advised that the Marine Recreation alternative accomplishes that because it is consistent with the existing General Plan and includes removal of the mobile home park. Traffic A question was raised regarding the impact of car rental activities at the hotel, and the City Attorney noted that such activity is not part of the project description, and would not be permitted without additional review. Another question was whether the use of taxis by hotel guests would change traffic impacts, and staff noted that the traffic counts done to establish the trip generation rate included all vehicles arriving and leaving the hotel. Fiscal Impact Analysis: The City's agreement with Sutherland Talla Hospitality requires that a fiscal impact analysis be prepared before the City Council certifies the EIR. Staff retained Applied Development Economics (ADE), the firm that is doing the fiscal impact work for our General Plan update, and they have analyzed the proposed project using the fiscal impact model that was developed for the General Plan work. ADE's draft report is attached. It may be revised prior to the City Council hearing on July 27, based on comments from the Council and public at the meeting on July 13. To provide a complete understanding of impacts, the fiscal analysis includes revenue expected from rent on the property and costs to close the mobile home park. In the case of rental revenue, the analysis assumes the lease terms that have been developed Marinapark EIR and Fiscal Impact Analysis July 13, 2004 Page 4 by the Council committee on lease negotiations, which will be discussed by the full Council in closed session on July 13. That discussion could result in amended terms, which will require revisions to the fiscal impact analysis. For closure of the mobile home park, the analysis assumes the costs suggested by a draft of the relocation impact report, which will not be finalized prior to July 27. For other costs and revenues, the analysis uses projections in the market study prepared by PKF Consulting for the project proponent and reviewed for the City by Keyser Marston Associates. Finally, cost and revenue factors developed for the fiscal impact model and reviewed by the General Plan Advisory and Update Committees and the Economic Development Committee were used for items not specifically projected for this project. The fiscal impact analysis concludes that the current land uses generate positive net revenue of $696,000 per year, which is attributable primarily to lease revenue. The projected impact of the project is positive net revenue of $3,544,773 (in 2004 dollars) in year 4, when the project is stabilized. This positive impact is projected to increase for the five years after stabilization included in the analysis. For the project, rent would generate approximately half the net revenue, and transient occupancy tax would generate over $1,00,000. Submitted by: S aron Wood Assistant City Manager Attachments: 1. Planning Commission Resolution 2. Planning Commission Correspondence 3. Fiscal Impact Analysis ATTACHMENT i RESOLUTION NO. 1640 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF NEWPORT BEACH RECOMMENDING THAT THE CITY COUNCIL CERTIFY THE ENVIRONMENTAL IMPACT REPORT REGARDING THE MARINAPARK RESORT AND COMMUNITY PLAN ON THE NORTH SIDE OF BALBOA BOULEAVARD BETWEEN FIFTEENTH AND EIGHTEENTH STREETS (STATE CLEARINGHOUSE NO. 200311021). WHEREAS, Marinapark LLC (formerly Talla Sutherland Hospitality), 4500 Campus Drive, Suite 650, Newport Beach, California, has applied to the City of Newport Beach for approvals necessary to develop a 110 -room luxury resort hotel, related ancillary facilities and community facilities on an 8.1 acre site on the north side of Balboa Boulevard between 15'' and 18i' Streets; and WHEREAS, in accordance with CEQA requirements, a Notice of Preparation (NOP) of a Draft EIR was filed with the State Clearinghouse, which assigned State Clearinghouse Number 200311021: and WHEREAS, the NOP and an Initial Study were distributed to all responsible and trustee agencies and other interested parties for a 30 -day public review period commencing on November 4, 2003, and ending on December 3, 2003; and WHEREAS, in accordance with CEQA requirements, a Notice of Completion (NOC) of the Draft EIR was filed with the State Clearinghouse; and WHEREAS, the Draft EIR was distributed to agencies, interested organizations, and individuals by the City. The distribution list is available at the City of Newport Beach Planning Department; and WHEREAS, a 45 -day public review period for the Draft EIR was established pursuant to State law, which commenced on April 26, 2004 and ended on June 9, 2004; and WHEREAS, all comments received during the public review period for the Draft EIR were responded to in the Response to Comments document dated July 2004, distributed separately due to bulk and hereby designated by reference as Exhibit EIR -2 of this Resolution as if fully set forth herein. All comments and responses were considered by the Planning Commission during its review of the Environmental Impact Report; and 0 L_J • WHEREAS, on July 8, 2004, the Planning Commission held a public hearing at which time the Final Environmental Impact Report, comprised of the Draft Environmental Impact Report, a listing of persons and organizations that provided written comments on the Draft Environmental Impact Report during the pubhc circulation period, a compilation of those comments, and responses to those comments, was considered. Notice of time, place and purpose of the public hearing was duly given and testimony was presented to and considered by the Planning Commission at the hearings. WHEREAS, the Final Environmental Impact Report identifies potential significant impacts to the environment and certain mitigation measures designed to reduce or avoid these impacts. NOW, THEREFORE, BE IT RESOLVED that the Planning Commission of the City of Newport Beach does hereby find that Environmental Impact Report (State Clearinghouse Number 200311021) designated by reference as Exhibit EIR -I of this Resolution has been prepared in compliance with the California Environmental Quality Act (CEQA) and the CEQA Guidelines. In addition, the Planning Commission finds that the EIR adequately analyzes project - related impacts, • identifies feasible mitigation measures and discusses project alternatives, and that the Final EIR reflects the independent judgment of the Planning Commission. The Planning Commission hereby recommends that the City Council certify Environmental Impact Report identified by State Clearinghouse No. 20031 1021, with Section 7.4 of the Draft EIR amended to read as follows: "Based on the analysis in this EIR and on the requirements of Section 15126.6(e)(2) of the CEQA Guidelines, he reduced intensity alternative would be environmentally superior to the proposed project." ADOPTED this 8d day of July 2004, by the following vote, to wit: AYES: NOES: ABSENT BY: Larry Tucker, Chairman BY: Jeffrey Cole, Secretary 0 2 EXHIBIT EIR -1: ENVIRONMENTAL IMPACT REPORT [Distributed separately due to bulk. Available for public review at the City's Planning Department] 0 0 11 9 EXHIBIT EIR -2: RESPONSES TO COMMENTS ON DRAFT EIR [Distributed separately due to bulk. Available for public review at the City's Planning Department] E MRS. CAROL MARTIN 1824 West Ocean Front Newport Beach, California 92663 July 8, 2004 RECEIVED BY Plannin Commission PLANNING DEPARTMENT City of Newport Beach CITY OF NEWPORT BEACH 3300 Newport Blvd. Newport Beach, Ca JUL 0:8 2004 PM Re: Response to Marina Park DEIR 7 8119V1 0111 11211,213141516 Gentlemen: Thank you for the explanations of those issues I addressed regarding Marinapark's DEIR. I agree that the plan's change of dock design may mitigate some sealife issues. I disagree with these points: Traffic for Events The answer is inadequate. Whether or not events are the developer's intention, the facilities are clearly in the plan and therefore parking and traffic provisions for these ancillary uses need to be addressed. Metered Parking Lot These spaces are currently available 24 hours a day, 7 days a week Accessibility only during hours of operation of the Girl Scout House and the Community Center is a reduction of public parking, which is so valued in this location and protected by City policies. Sidewalk Width on Balboa Blvd. can be an environmental issue in addition to a site plan issue if consideration is given to the ambiance of the pedestrian's experience when sharing space with others and their pets. A 4-foot sidewalk adjacent to grass or sand is environmentally different from the same width sidewalk adjacent to oncoming traffic and a fence. In consideration of the frequency with which local residents utilize walking as a means of transit or recreation; this change in environment needs to be acknowledged and in addition the safety of children utilizing this route should be analyzed- 1 believe these issues require further analysis: Traffic Flow I repeat, "adequate provision should be shown for access routes that do not slow local traffic unassociated with the development". Pursuant to the information provided in the Response to the DEER, this is not addressed at the 17* Street left turn into the hotel entrance. In addition 10vph service vehicles entering the 15'b St service entrance through a limited access alley will significantly impact traffic flow at 15`s Street and Balboa Blvd. This has not been addressed adequately. Acoustics/Noise All responses fail to acknowledge the environmental impact of how noise travels across water echoing as it progresses and does not include mitigation measures to prevent intrusion on Lido Isle and the Lido Peninsula This project's architectural design has potential for creating periodic increase in ambient noise levels across the water above levels now existing. Prevention of the problem should be the goal rather than dependence on enforcement of the city code to remedi ate the intrusion after construction is completed- Dock Whereas I would agree that the change of.dock design should reduce disruption of sea life and improve water quality, the new plan for a 260 foot dock has not been analyzed in relation to environmental impact Tbese comments should be included. Thank you for your attention to these issues. Sincerely, Carol Martin fLJ 0 Cents( .?Yewport Beach July 7, 2004 Community ASSOClahon P.O. Box 884 • Newpon Beach, Cal ifemia 92661 Members of the Planning Commission City of Newport Beach 3300 Newport Boulevard Newport Beach, California 92659 PLANNING DEPART CITY OF NEWPORT EACH JUL 0.8 2004 PM AM 8191101111121112131415 6 Re: Draft EIR- Mannapark Resort and Community Plan- Responses to Comments Members of the Planning Commission: Directors of the Central Newport Beach Community Association (CNBCA) have reviewed the Response to Comments to referenced EIR and the staff report for referenced project for your meeting of July 8, 2004 and wish to offer the following comments: In order to recommend that the City Council certify the EIR, the Planning Commission must find that the EIR adequately analyzes project - related impacts, identifies feasible mitigation measures and discusses project alternatives. We feel that, in its current state, the EIR cannot meet the criteria for these findings and thus must be augmented and recirculated. Inadeeuacies Despite comments made by CNBCA and others to the NOP and the DEIR, Recreation continues to be deleted from analysis as being not significantly affected. The response (1­15) does not address the impact of the proposed change of zoning and use on the overall recreation policies of the City as embodied in the LCP and Recreation Element of the General Plan. In other responses conceming recreation, this site is equated with resident serving (Quimby type) recreation and ocean beach and completely fails to recognize the unique characteristics of the site as being on a bay beach. There is little such beach with its potential for still water activities (use by 0 0 Ll L_J small children, swimming, hand boat launching, boating lessons, etc.) available to the public. The public marine oriented recreation use of this site is wholly consistent with the Tidelands Trust, a factor dismissed by response H5. The effect of this project on recreation is a significant effect pursuant to CEQA and should be analyzed as such. Modifications to the dock design were made pursuant to responses received. The Marine Recreation Alternative design described in the EIR was not altered in the responses. Consequently this alternative continues to bear negative analysis from a dock design that is not feasible. This alternative should be redesigned into a project that is feasible. Response H39 regarding the Marine Recreation Altemative is not adequate to address concerns over the skewing of intensity that casts the hotel alternative in a favorable light. • Responses (including H21) use the deficiencies in coastal access under present conditions as a defense to continue to perpetuate deficiencies. Proposed access to the beach is through an imposing gate system at the entry to a luxury hotel — not inviting to the ordinary beach user. and the existing pathway to the beach adjacent to the American Legion will also be the service entry to the hotel, an unpleasant and potentially unsafe beach access. Currently there is little visual access to the bay through the site. This is used in the responses as an excuse to again provide very little visual access through hotel gates. Generous visual access should be included as a mitigation measure for the impact of the substantial bulk of proposed facilities. Visual access is a consideration of the Coastal Commission policies (reference Sea Scout Base). Responses to concerns regarding employees continue to refer to 50 hotel employees (H3 et. al.). At the City Council meeting of dune 8, 2004. in response to a question posed by Councilman Nichols, the project developer, Mr. Sutherland, stated that there will be an employee pool of approximately 150. people but it is anticipated that 50 maximum will be on- site at any given time. There must be an analysis of the impact of 150 employees not 50. In citing an unemployment rate of 4.1% in Orange County as a reason for the project not attracting non- residents to work at the hotel, the respondent fails to recognize that economists consider 4 1/6 as full employment thus rendering the answer inadequate. Response H7 addresses access from Fifteenth Street down the alley to the garage structure and service area. It states that the alley will be used only by the 50 employees and service vehicles therefore there•is no impact from using this access. If this is correct, despite there being 150 employees and 100 parking spaces, a mitigation measure should be imposed that access to the garage be controlled with only 50 vehicles allowed. • Revisions to Exhibit 4 -1, Response H14, are appreciated. The graphic depiots Fifteenth Street north of Balboa Boulevard and West Bay east of Eighteenth Street as metered parking lots. They are public streets with perpendicular parking and are not different in use from any of the other metered parking south of or along Balboa Boulevard. There is a public beach at the end of Fifteenth Street. There has been a very short period of time, which included a major holiday, to analyze the Response to Comments. An EIR is supposed to be an impartial information document for decision makers. The Responses to Comments are defensive, in some cases inadequate and provide advocacy for the hotel project rather than impartial analysis. Your Commission's consideration of CNBCA concerns regarding inadequate analysis of alternatives, submission of incorrect employee information and suggested mitigation measures would be appreciated. Again, our recommendation is that additional analysis and augmentation of the EIR be performed and that the EIR be recirculated. At a minimum, additional time should be given for public analysis of this complex project and its documentdtion by continuing this item_ Very truly yours, Louise Fundenberg, President Central Newport Beach Community Association 0 0 JAN D. VAtiDERSLOOT, NI.D. 2221 East 16'h Street Office Phone: ( 714) 848 -0770 Nealport Beach, CA 92663 Office Fax: (714) 848 -6643 Home Phone: (949) 548 -6326 Email: JonV3@aol.com November 25, 2003 James Campbell, Senior Planner City of Newport Beach p Planning Department 'p y 3300 Newport Blvd Newport Beach, CA 92658 -8915 Re: Notice of Preparation (NOP) and Initial Study (IS) of a Draft Environmental Impact Report Project Title: Regent Newport Beach Hotel Project Applicant: Sutherland Talla Hospitality Dear Mr. Campbell, Thank you for the opportunity to comment on the NOP for the Regent Newport Beach Hotel at the area commonly known as Marinapark. Please put me on the distribution list for any notices concerning this project. I just received notice of availability of this document on November 20, 2003, and received the Initial Study itself on November 23, 2003. Due to the citywide interest in this project and an upcoming citywide vote on the project, this Initial Study should have received wider distribution throughout the City. The Initial Study itself does not include a Distribution List, and I request that list be included in the DEIR. is I believe there was inadequate public notice of the NOP and IS. I believe the Draft EIR should contain more information than the Initial Study indicates will be included in the DEIR. Under Section 1.6, Cumulative Impacts, an analysis should be made of the cumulative impacts of hotels possibly ringing the bay, induced by the development of this project. Also, the Cumulative Impact of loss of REOS from the General Plan should be analyzed, as the St Mark Presbyterian Church project, with loss of 10.81 acres of REOS is being processed concurrently with this project, which will lose an additional 8.1 acres of REOS from the City's General Plan. Under Section 1.7, Alternatives to the Proposed Action, the alternative proposed by the PBR Commission a couple of years ago should be included in the DEIR and analyzed for feasibility and possible adoption by the decision makers. Also, an alternative of creating a passive park serving as a window to the bay along Balboa Blvd should be considered, with removal of the mobile homes, similar to the El Moro situation at Crystal Cove State Park. Under Section 1.8.1, Effects Not Found To Be Significant, the IS finds that impacts to recreation are less than significant or of no impact. However, the project changes the General Plan Land Use designation from Recreational and Environmental Open Space to a District Plary resulting in loss of 8.10 acres of REOS. This is a significant impact and should be considered as such, including the cumulative impacts of loss of REOS designations of other areas in the City, such as the St. Marks project. The St. Marks project is being processed concurrently with the Regent Newport Beach Hotel project, which will result in a loss of an additional 10.81 acres of REDS. The loss of 1 JAN D. N 4\DERSLOOT, M.D. 2221 East 16' Street Newport Beach, CA 92663 Home Phone: (949) 548-6326 Office Phone: (714) 848 -0770 Office Fax: (714) 848.6643 Email: JonV3Caaaol.com 8.10 acres of REOS from the Regent Hotel plus 10.81 acres of REOS lost with St. Marks is a cumulatively significant loss of 18.91 acres that should be analyzed and mitigated. Analysis should include traffic and other environmental impacts from both projects since REOS open space is being converted to more intensive uses. Mitigation sites for replacement open space should include land such as the Lower Castaways site. Other mitigation strategies such as retaining more open space in the project site that would retain the REOS designation should be considered, such as 50 %retained as open space. Such a strategy, including replacement open space at Castaways, should ensure that no net loss of REOS in the City occurs with either or both of these projects. Section 3, Discussion of Environmental Evaluation, Environmental Checklist Responses, 1. Aesthetics, Environmental Checklist Responses; a) scenic vista, b) scenic resources, c)existing visual character. The DEIR should include an analysis of the scenic vista and scenic resources if the current General Plan designation of REOS is ultimately fulfilled, that is, removal of the mobile homes and other view blocking structures. Under the existing REOS designation, there could be a wide -open vista of the bay for the public along Balboa Blvd, probably the last opportunity to reclaim and preserve a bay view for the public in perpetuity. The proposed project will forever take away this view, and that is a significant impact. The view corridor that is proposed for the project is pathetic compared to the potential views created by the current REOS designation. Thank you again for the opportunity to make comments and please put me on the distribution list for fiuther notices, including my email address of lonV3@aol.com. Sincerely, Jan D. .. u • I 0 0 SPON Comments —Marinapark EIR 1. The objectives are written so that only a hotel proposal will be selected as the Preferred Alternative. The objectives overemphasize the need for the site to generate revenue for the City, which is inappropriate for the future use of a park. Who ever heard of a city park is being required to generate revenue to offset citywide police services costs, or pay for the cost to comply with tideland environmental regulations? The objectives predetermine the conclusion that the park shall be converted to a hotel. This contradicts Government Code 21001 that requires government agencies to develop standards and procedures and to consider alternatives. Fiscal issues have taken precedence over action to protect, rehabilitate, and enhance the environment. An example that confirms the EIR is biased toward the hotel is demonstrated by the City's dismissal of its own Environmental Quality Advisory Committee's (EQAC) concern about the limited scope of the objectives. The EQAC writes: "The DEIR includes no detailed discussion of these and other objectives. However, it is unclear that such objectives are appropriate for the Project site and the current environmental analysis. The onlYProiect Alternative in the DEIR which meets these economic objectives is the Project. Given these economic objectives, the DEIR should include an economic analysis which shows how and why the Project meets these and other objectives, provides a detailed discussion of City revenues from the Project including lease payments, taxes and other sources of revenue, and other economic considerations appropriate" In response, the City writes. "The project luxury resort hotel concept for this site was first presented to the City in 2000 in response to a Request for Proposals sent by the City of Newport Beach to potential developers of the Marinapark site. Marinapark Resort (formerly regent Newport) was selected by the City Council from among the proposals submitted because the project offered potential benefits to the City that the others did not including generation of significant revenues to th—eCitv's General Fund. Accordingly, the potential benefits of the Marinapark Resort project that were the basis for its selection for the project site have merely been restated as the project objectives" (Response to Comments, Pages 36 and 37). Aside from the disturbing realization that the City is actively seeking proposals to develop public parks with commercial uses, the City has admitted that the selection of EIR alternatives has been manipulated so that only the hotel will meet the project objectives. The notion that parks need to generate significant revenue is counter to the purpose for • having a public park. Marinapark consists of only 8.1 acres. By contrast, there is a much larger amount of commercial land on the peninsula. If luxury hotels make economic . sense on Balboa Peninsula, a developer may purchase and rebuilt any of the many low cost hotels on the peninsula with no loss of parkland and similar economic benefits to the project. Parks should not be irrevocably developed with commercial interests in order to balance the City's apparent lack of fiscal solvency. The few open spaces in the City, and on Balboa Peninsula in particular, should be protected for our children and future generations. This is especially true as additional residential projects, such as the South Coast Shipyard, will increase demand for limited public recreational opportunities on the peninsula. 2. The impact analysis should assume the mobile homes are removed. The mobile homes are not consistent with the General Plan. And in accordance with the General Plan, the mobile homes will be removed. The City has put mobile home residents on notice that their leases will not be extended. Ultimately, the entire site will become public open space. By including the mobile homes in the baseline land use assumptions for Marinapark, the EIR assumes that the environmental impacts they create will remain forever. By retaining the mobile homes in the baseline, the hotel project appear better by comparison. For example, on Page 5.5 -2, the DEIR discusses traffic as follows: "Implementation of the proposed project will result in an increase in the number of trips in the project area above that contributed by existing uses. Since the project site currently has a mobile home park that generates traffic, the additional traffic generated by the proposed project will be the net increase of the difference between the number of project generated trips and the number of existing trips from the mobile home park residences." In summary, the City reduces the traffic impact for the hotel by the amount of traffic generated by the mobile home park. This means that the hotel proponent will not need to mitigate all the traffic generated by his project because he gets a credit for the mobile homes. The DEIR uses this same logic to other environmental impacts, such as: • Aesthetics. The mobile homes block views to the harbor. By comparison, the hotel is not better or worse. • Air Oualit . Any air pollution generated by vehicles originating from the mobile home park is credited against air emissions generated by hotel patrons. • Noise. Any noise generated by vehicles originating from the mobile home park is credited against noise generated by vehicles driven by hotel patrons. • Public Services and Utilities. Public services and utilities used by mobile home park residents are credited against public services and utilities used by the hotel. 11 Since the mobile homes' days are numbered, and they are not consistent with the General Plan, it doesn't make sense that the applicant gets to credit the environmental impact of the mobile homes against his proposal. The EIR should compare the environmental impacts of the project with the site absent the mobile homes. This will result in a fair choice between aquatic, beach, and community facilities versus an alternative not consistent with the General Plan that offers a hotel on most of the property with limited public facilities and coastal access. To see how this makes a significant difference, consider the aesthetic impact of the hotel once the mobile homes are removed from the site. If the public knew they had a choice between unobstructed harbor views or a hotel, they would choose the unobstructed views. The addition of the hotel would probably change the DEIR conclusion that there is no aesthetic impact, to a conclusion that the hotel causes a significant and unavoidable aesthetic impact. The fact that this choice is not given to readers of the DEIR contradicts Public Resources Code Section 21005 that requires disclosure of relevant facts. The same point can be made toward the DEIR approach toward other environmental impacts, such as traffic, air quality, noise, and public services and utilities. 3. The Permanent conversion of parkland to a commercial use should be cateeorized as a significant and unavoidable impact. The EIR has not adequately justified the need to replace parkland with a hotel. All land on Balboa Peninsula has been developed. If the City loses this land for a park, there is no replacement land on the peninsula. While it is true that the ocean side of the peninsula has many wide sandy beaches, this is not an overabundance of public open space on the harbor side. The ability to relax on a significant amount of open space to enjoy views of the harbor is a markedly different experience than using the beaches along the ocean- The harbor side park may be more interesting than the ocean, given the high degree of maritime activity that occurs at the harbor, from pleasure craft of all sizes and ages, to sea life, birds, and views of the islands and beyond. These will all be greatly restricted to a confined area if the hotel project were built. In fact, the tot lot and tennis courts face Balboa Boulevard, and have no relation to the harbor. An example of how the City has not expressed appropriate regard for the future recreational potential of the Marinapark is exemplified by the City's response to Carol Martin's comments regarding the loss of recreational opportunities. Ms. Martin writes: "Open Space The loss of 8.1 acres of Newport Beach's Open Space Element in a recreational area requires mitigation. How will the loss of the Las Arenas Park and beach be mitigated by equal open space elsewhere? This document fails to address this issue." The City responds as follows: "Neither Las Arenas Park nor the public beach will be lost due to the project. As noted on pages 1 -6 and 5.4 -12 of the DEIR, all park facilities other than 0 the basketball half -court will be replaced, and the beach will remain open and accessible to the public. The portion of the site on which the hotel is proposed is currently occupied by the mobile home park, and does not provide open space or recreational opportunities. The Recreation and Open Space Element calls for the retention of the existing park facilities and beach and notes that the site "...affords future opportunities for park, recreation, and aquatic facilities which are not yet fully planned." The element does not indicate specific facilities that should be provided on the site. The project includes an amendment to the Recreation and Open space element, which would remove the reference to future opportunities at the project site." (Response to Comments, page 143) To summarize the City's response to Ms. Martin's comment, the City has stated that it intends to trade approximately 6.0 acres of mobile homes for a 6.0 acre hotel by simply removing a General Plan policy to provide recreation and open space on the entire site. In effect, the City has made up its mind that public will never be permitted full recreational use of the park, and will not be compensated for the loss of 6.0 acres of open space. Once again, parks should not be irrevocably developed with commercial interests in order to balance the City's apparent lack of fiscal solvency. The DEIR does not give the public the opportunity to understand the tradeoffs presented by the project when it determines the permanent loss of approximately 6.0 acres of General Plan open space will be used for a hotel. 4. The "No Project' Alternative should be revised The "No Project" alternative incorrectly includes mobile homes as a long -term land use. Under the current General Plan policies, the mobile homes are a short-term use, inconsistent with the General Plan, and slated for removal once the current leases expire. On Page 7 -2 of the DIER, the "No Project" alternative is described as follows: "The No Project/No Development alternate assumes that no new land uses (including infrastructure improvements) would be added to the project site. The existing mobile homes and recreational facilities would remain. While no development would be permitted under this alternative, the underlying General Plan and zoning designations would be retained, thereby allowing development of the project site in the future." The "No Project" alternative incorrectly assumes that the mobile homes remain. If the City does not change the General Plan, the "No Project" alternative would represent an environmentally superior alternative by a greater margin than the DEIR indicates. Once again, the DEIR does not accurately represent the facts concerning the public's choices for the site, and in doing so, fails to comply with Public Resources Code Section 21005. 4.. Detailed DEER Comments SListed below are detailed comments regarding needed corrections to the DEIR. Proiect description 3.1. l There appears to bean error in the existing land use description. Clarify whether the reference should be to "residents" as written or actually to dwelling units. 3.1.2 The project description should include a table showing acreages and /or square feet of existing land use designations on the site as well as proposed land uses (General Plan, Zoning) and development square footages. Since the project includes a General Plan Amendment and Zone Change, this is needed to fulfill the intent of CEQA that the reader be able to understand the nature of the proposed project. Related Proiects 4.2 Table 4-1 should be revised to add the proposal to convert 500 Superior from R&D to office. Land Use 5.4.3 Paragraph 2 The public access points referenced should be identified on the site plan. Paragraph 5 The building setback for the beachside walkway is mentioned but there is no discussion of walls and fences that would separate the hotel from the walkway. In order to support the conclusion of no significant impact, there should be a Mitigation Measure requiring that any wall or fence be set back a minimum of 6 feet from the sidewalk, with landscaping installed between wall and walkway. Page 5.4-8 The Land Use Plans Policies and Regulations section needs to include a full description of the proposed GPA. Without this information the reader cannot understand or evaluate the project as required by CEQA, and the conclusion of no significant impact is unsupported. Furthermore, the analysis of Policy C consistency refers to the Traffic section of the EIR, which contains no mention of the employee and ballroom related trips. This section must describe what measures will be used to "minimize congestion" as required by Policy C. Page 5.4 -9 This section (as well as several subsequent sections) reference two public access points along Balboa Blvd flanking the hotel lobby building. The Site Plan in Exhibit 3 -3 shows two pairs of gates between Balboa Boulevard and the beach at the referenced location. Gates generally function in an urban landscape as a visual "keep out" message. In addition, these gates appear to be providing access to the hotel swimming pool. The EIR needs to discuss how the public access described will be reconciled with the needs for swimming pool safety code requirements. 0 Page 5.4 -11 It is not clear how a high level of City services would be ensured by a future negotiation on the part of the City as suggested in the analysis in the first paragraph. If the inclusion of timeshare units in the project may require a development agreement due to potential impact, such impact needs to be determined an analyzed in this EIR. This section inappropriately defers analysis to some later time and defers mitigation to some action on the part of the City Council. Therefore the conclusion of consistency with General Plan Policy G is inappropriate and inconsistent with CEQA. Page 5.4 -12 Discussion of consistency with Policy 5.1 (see comment regarding Pg 5.4 -9 above). Page 5.4 -13 A hotel is not a water dependent use. The analysis of the Harbor and Bay Element fails to note that the private hotel component of the project is inconsistent with policies BB 1. 1.2 and BB 1.2.4. It should also be noted that the public marine park Alternative would be consistent with these policies. Page 5.4 -20 This section states that the Municipal Code specifies that a dock may not extend beyond the U.S Pierhead line. How does the obtaining of a permit from another government agency make the project consistent with the Municipal Coe.? This needs to be clarified or the conclusion needs to be changed. Additionally, the discussion of the NCCP should cite the studies done to support the conclusion that no biotic resources occur on the site. 5.4.5 This section proposes no mitigation measures. As noted in the above comments, some mitigation measures may be necessary. Aesthetics Exhibit 5.8 -4 Photo 3 illustrates the importance of open design fencing in maintaining views. .A mitigation measure should be added to the EIR to require that all fencing and walls be comprised of open design (such as wrought ion) in order to preserve and enhance harbor and open space views consistent with the General Plan. Additionally, the spa building described as "two story" actually is shown in the photo as having a significant one story component adjacent to eh project entry. This helps maintain an open view corridor and should also be requires a mitigation measure. Exhibit 5.8 -5 Photo 4 shows a number of trees and shrubs on a berm between the tennis courts and Balboa Blvd. Is the setback sufficient to accommodate the plantings illustrated? How will light and ventilation be provided to the parking area underneath? The photo also shows a clear view of a boat on the bay. How will such a view be assured, since this point is shown on the site plan as parking structure egress? The mitigation measure referenced in the comment on Exhibit 5.84 above would preserve this view. Without such a measure, the illustration will be a pretty picture that is discarded when the "real" design is developed for the project. r 1 �_J Pg 5.8 -11 The lighting analysis should include the likelihood of architectural lighting, its potential impacts and any mitigation if necessary. Public Services and Utilities Tables 5.9 -2, 5.9 -4, 5.9 -6, 5.9 -8 and 5.9 -10 should be revised to include the cafe use and the new boat slips. Without a full tabulation of the project uses, the analysis is inadequate, and the conclusion is unsupported. Other CEOA Section 6.1 — Significant unavoidable adverse impacts Due to the inadequate analysis noted in the comments above, the conclusion that all impacts can be mitigated to a level of insignificance is premature. Section 6.3 Irreversible Commitment to Resources that would be involved in the proposed action if implemented This section acknowledges the more or less permanent presence of large structures on the site. However it fails to discuss the implications of public land being used for a private business serving only visitors able to pay a very high price. The removal of this public property from a truly open public commitment should be discussed and analyzed. Section 7.4 The conclusion makes no sense and needs to be corrected. IDRAFT FISCAL IMPACT ANALYSIS MARINAPARK RESORT July 8, 2004 Prepared for City of Newport Beach Prepared by Applied Development Economics 2029 University Avenue • Berkeley, California 94704 • (510) 548 -5912 1029j Street, Suite 310 • Sacramento, California 95814 • (916) 441 -0323 www.adeuea.com 0 s 0 0 i J CONTENTS Introduction............................................. ..............................1 Project Description ................................. ..............................2 Land Usc Overciew ................................. ..............................2 Phasing...................................................... ..............................3 Fiscal Impact Analysis ............................. ..............................5 LIST OF TABLES 1 Proposed Marinapark Resort and Community Facilities ......................... ..............................3 2 Projected Phasing For Marinapark Fractionals and Rental Occupancy Stabilization ..............................4 3 Impact of Existing Marina Park Land Uscs, 2004 ........6 4 Impact of Marinapark Hotel at Stabilization (2009), in 2004 Dollars ...................... ..............................8 5 Net Impact of Marina Park Hotel at Stabilization (2009), in 2004 Dollars ...................... ..............................9 6 Marinapark Fiscal Impact Projections, 2006- 2014..... 11 INTRODUCTION This memo presents our analysis of the fiscal impacts of the proposed Marinapark resort on the City of Newport Beach, in comparison with the impacts of the site's existing uses. This analysis estimates the annual operating costs and revenues for all ser -6ces provided to the existing uses and the proposed project through the Newport Beach General Fund, the Tidelands Fund, the Gas Tax Fund, and the Measure M Fund. Based on the assumptions and inputs outlined below, it projects the fiscal performance of the development from its initial year of operation through five years after rent stabilization, for a total of nine years. This projection reflects escalations in costs and revenues as the development ages, and is thus presented in future dollars. E s is 0 PROJECT DESCRIPTION LAND USE OVERVIEW The site of the proposed Marinapark Resort in Newport Beach is roughly bounded by Newport Bay and a public beach to the north, Veterans Memorial Park and the American Legion Building to the east, 18" Street to the west, and Balboa Blvd. to the south. Encompassing 8.1 acres, the site currently houses the 56 -space Marinapark Mobile Home Park, the Balboa Community Center, the Neva B. Thomas Girl Scout House, the Balboa Power Squadron (a boating dub), Las Arenas Park, four tennis courts, and a half basketball court. The mobile home court currently has 24 full -rime and 32 part-time residents. The primary component of the proposed project is a 110 - room luxury resort hotel. lip to 12 of the rooms may be sold as fractionals, while the remaining 98 rooms will be available for rent. The 19,830 - square foot hotel lobby will include a registration area, retail, a cafe, a restaurant, a bar, a ballroom, and supporting facilities. Other uses associated with the hotel include a business administration building (2,154 square feet) and a spa villa (6,191 square feet). The project also includes reconstruction of the Girl Scout House and tennis courts, a tot park, and a shared parking facility for the resort and community uses. A summary of the proposed uses is presented in Table 1. Source: ADE, based on information provided by bfichaet Bondman Associates PHASING This analysis estimates the fiscal impact of the Marinapark resort during each year of its development. Although it is expected that all of the project components will be in place when the hotel begins operations in 2007, it will take several years for rental rates to stabilize. According to PKF Consulting and Keyser Marston Associates, this should occur during the fourth year of hotel operations, in 2010. In addition, fractionals will be released over a period of three years, begituuing the year before development is complete (2006), and ending during the second year of operations (2008). A summary of expected fractional sales, occupancy 1• TABLE 1 Proposed Marinapark Resort and Community Facilities Land Use Rooms /Square Feet/ Spaces /Acres RESORT Luxury Resort Hotel 110 rooms/66,949 sf Hotel Lobby Building Lowry 3,000 sf Registration 4B3 sf Retail 600 sf Cafe 550 sf Restaurant 1,124 sf Bar 1,154 sf Ballroom 3,603 sf Supporting Facilities 8.316 sf Total 19,830 sf Business Administration Building 2,154 sf Spa Villa .6,191 Sf COMMUNITY Community Center /Girl Smut House 6,191 sf Tot Park 3,000 sf Public Tennis Courts 4 courts PARKING Structure 100 spaces Surface 100 spaces Handicap 9 Spa c Total Parking 209 spaces TOTAL ENCLOSED FLOOR AREA 101,315 sf PROJECT SITE AREA 8.10 Acres OVERALL FLOOR AREA RATIO 0.285 Source: ADE, based on information provided by bfichaet Bondman Associates PHASING This analysis estimates the fiscal impact of the Marinapark resort during each year of its development. Although it is expected that all of the project components will be in place when the hotel begins operations in 2007, it will take several years for rental rates to stabilize. According to PKF Consulting and Keyser Marston Associates, this should occur during the fourth year of hotel operations, in 2010. In addition, fractionals will be released over a period of three years, begituuing the year before development is complete (2006), and ending during the second year of operations (2008). A summary of expected fractional sales, occupancy 1• E 17J rates, and number of occupied rooms through stabilization is presented in Table 2. TABLE 2 Projected Phasing For Marinapark Fractionals and Rental Occupancy Stabilization Source: ADE, based on information provided by PKF Consulting and Keyser Marston Associates 0 A Year Project Component 2006/07 2007/08 2008/09 2009/10 2010/11 (Unit of Measure) (Construction) (Year 1) (Year 2) (Year 3) (Stabilization) Fractional Sales 10 48 38 - Rental Annual Rental Rooms Available (units) 35,770 35,770 35,770 35,770 Source: ADE, based on information provided by PKF Consulting and Keyser Marston Associates 0 A FISCAL IMPACT ANALYSIS 0 GENERAL FUND AND TIDELANDS FUND FISCAL IMPACT ANALYSIS This fiscal analysis addresses the revenues generated and costs incurred by the Marinapark resort development as they impact the City of Newport Beach General Fund and Tidelands Fund. The capital costs stemming from construction of public infrastructure and facilities related to the project would be fully funded by the project developer and are not detailed in this report. SUMMARY OF FISCAL IMPACTS Casing the Newport Beach fiscal impact model developed for the City's General Plan Update, ADF estimated the annual costs and revenues associated with both Marinapark's existing land uses and those associated with the proposed development. The results of these analyses are presented in Tables 3 and 4. Next, we considered the net impact of the hotel project at stabilization when compared to the existing uses (Table 5). Finally, we estimated the annual costs and revenues of the proposed project over time, from the first year of operations to five years after stabilization, for a total of nine years (fable 6). Existing Site Impacts The impact analysis of the site indicates that the current land uses generate positive net revenues of $696,000, with $718,000 in revenues against $21,000 in expenditures. This positive impact occurs despite the predominance of residential land uses (the mobile home park) because the City owns the site and collects land lease revenue from both the residents and the Balboa Power Squadron (Table 3). &I Ll 0 0 A TABLE 3 Impact Of Existing Marina Park Land Uses, 2004 Revenues Mobile Power Total Home Park _ Squadron GENERAL RJND $2,841 $0 Property Tax $570 $570 $0 $0 $0 .:P.UbI(rWOrkS - -_; 35,626.:';: 'S0 Transient occupancy Tax $0 $0 $0 .__. ....,_,...,..._._ ..,... ... :. ................... :Franchise Fees;.;:';;: 5581 .... '. $581...': ,$0 Business Licenses $277 $277 $0 $0 ... -; ie"21PPSO1eL'SS:.�_ _ Other Intergovernmental $432 $432 $0 ,,Charges forService,:'- '32,33- 7.;;.;F.S:,'i TIDELANDS FUND Fines, Penalties, and Forfeitures $862 $862 s0 cen3a:an'd.'1?einilt3 „: ";;,:_ i;Y703.. r:;:.,L.j1031 " =::; Oil and Gas Use of Property $1,458 $1,458 $0 -- .-:,... :.::::..:::.: ..:. ::Other. Revenue.: _:. ,._.- $0 GAS TAX Interest Income $1 $1 $0 SUBTOTAL GENERAL FUND $13,312 $13,312 $0 TIDELANDS FUND $523 $0 TOTAL EXPENDITURES Ucenses, Permits, and Fees $318 $318 $0 - is -eS :fo'i se ..... V. j9d:i ".:..;..._ k 3b Use of Money and Property $7u3,413 $701,479 $1,935 GA57q.X 3855 MEASURE M $3 $3 $0 SUBTOTAL OTHER FUNDS $704,599 $702,664 $1,935 TOTAL REVENUE $717,911 $715,976 51,935 Expenditures GENERAL FUND General Government $2,841 $2,841 $0 Sa Fire $0 $0 $0 .:P.UbI(rWOrkS - -_; 35,626.:';: $5,626 -50 Community Development $622 $622 $0 _ Cbinmunlq SerF[es ::.. $4 633. - j4j03 '; :'S9: CIP streets $146 $146 $0 ... -; ie"21PPSO1eL'SS:.�_ _ SUBTOTAL GENERAL FUND $20,894 $20,894 $0 TIDELANDS FUND Harbor Resources $0 s0 $0 Oil and Gas $0 $0 s0 CiP $230 $230 $0 GAS TAX $175 $175 $0 MEASURE M $118 $118 $0 SUBTOTAL OTHER FUNDS $523 $523 $0 TOTAL EXPENDITURES $21,417 _ $21,417 $0 NET (COSH /REVENUE $696,494 $694,559 $1,935 Source: ADE, City of Newport Reach Project Impact & Net Impact at Stabilization Analysis of the proposed project indicates that in the year that hotel rents stabilize pear 4), the Marinapark resort will generate positive net revenues of about $3.54 million (in 2004 dollars), with $3.57 million in revenue against $26,000 in expenditures. Large revenues arc generated due to both the prospective land lease terms and the transient occupancy tax generated by the project (fable 4). Subtracting the revenues generated by existing site uses from this amount results in a net revenue increase of $2.85 million for the Newport Beach budget, including the General Fund, Tidelands Fund, Gas Tax Fund and Measure M Fund (liable 5). M 0. L 9 0 I `♦• a` TABLE 4 Impact of Marinapark Hotel at Stabilization (2010), in 2004 Dollars Revenues Lodging _ . GENERAL FUND Property Tax 566,980 ...:.::. .:..: 5alesfax' ..... $2,533 Transient Occupancy Tax $997,697 sg. Fees �; ;;$1,177 Business Licenses $253 Motor. 061K-Lieu .... Other Intergovernmental $514 - �tbr9C5 fo5ernde ..._ $2,�82 Fines, Pena_ lties, and Forfeitures $1,027 _ _:� Licwsses.anG'permlts .- :5123 _ Use of Property $1 ?36 OttitrReVenUtz _.. . $1$2 Interestlncome $16,895 SUBTOTAL GENERAL FUND $1,091,899 TIDELANDS FUND Licenses, Permits, and Fees $379 Use of Money and Property $2,477,810 MEASURE M $860 SUBTOTAL OTHER FUNDS $2,479,059 TOTALREVENUE $3,570,958 Expenditures GENERAL FUND General Government $2,286 _ Police - ; $7-,772 Fire $4,947 _ ,public Works -- -- _ - $6,698. Community Development $740_ '_ Larpmunity:5emoes .. -.:. ;$01 CIP Streets $845 04her QPProjecis _ - , 59?d SUBTOTAL GENERAL FUND $24,239 TIDELANDS FUND Harbor Resources $0 Oil and Gas $0 CIP $254 GAS TAX 57,009 MEASURE M $684 SUBTOTAL OTHER FUNDS $1,947 TOTAL EXPENDITURES $26,185 NET $3,544,773 Source AUL, City of Ncwport Bcach, Keyser Marston Ammo tcs, PKP Consulting Nore: Public uses arc not listed becausc they do not generate any costs or revenues in this .uenario. TABLE 5 Net Impact of Marina Park Hotel at Stabilization (2010), in 2004 Dollars Revenues Existing Proposed S61 • Ponce Site _.,Project Net Impact,_ GENERAL FUND Use of Money and Property $703,413 $2,477,810 Property Tax $570 $66,980 $66,410 Sales T6: 55;589 $2,533:: ($3,055) Transient Occupancy Tax $0 $997,697 5997,697 Frandti : F . . - $581. $1;1 .:.: :-.$596: Business Licenses $277 (j21) MoUxVeltidetrleu $9, .7- -950) 4 Other Intergovernmental $432 $514 $82 gesfor Service. 37 $2,782. $4.45 Fines, Penalties, and Forfeitures $862 $1,027 $164 Licenses andvemis $fo. $123.z:: $20: Use of Property $1,458 $1,736 $278 $834 MEASURE M 7 $684 Interest Income $1 $16,895 $16,895 SUBTOTAL GENERAL FUND $13,312 51,091,899 S1.078,,86 TIDELANDS FUND NET(COST) /REVENUE $696,494 $3544,773 Licenses, Permits, and Fees $318 $379 S61 • Ponce 19, 1 Use of Money and Property $703,413 $2,477,810 $1,774,397 MEASURE M $3 $960 $857 SUBTOTAL OTHER FUNDS $704,599 $2,479,059 $1,774,461 TOTAL REVENUE $717,911 $3,570,958 $2,853,047 Expenditures GENERAL FUND Gerw*1 Government $2,941 $2-286 555) • Ponce $6;227 $7 J7 $5.45, Fire so $4,947 $4,947 Communrty Development $622 $740 $118 ($4,633) 01, streets $146 $845 $699 91:17lec P-Prolects z$ _$4.2 SUBTOTAL GENERAL FUND $20,894 $24,239 $3,345 TIDELANDS FUND Harbor Resources $0 $0 so Oil and Gas $o $0 $0 CIP $230 $254 524 GAS TAX 5175 $1,009 $834 MEASURE M $118 $684 5565 SUBTOTAL OTHER FUNDS --$523 $1,947 $1,423 TOTAL EXPENOrlURES $21,417 $26,185 54,768 NET(COST) /REVENUE $696,494 $3544,773 $2,848,279 Source: ADE, City of Newport Beach, Kerner Marston ANS(KiVCS, PKr Comulting A 9 40 0 Project Impact Over Time Based on our projections, the project will initially generate a negative fiscal impact for the City, but by the tune die project commences operations in 2007, the fiscal impact is a net positive. In year one of operations the proposed project will generate $2.16 million in net revenues, with $2.19 in revenue against $28,600 in expenses (in 2007 dollars). Net revenues are predicted to increase steadily through five years after. stabilization. At this point, the development is expected to generate $3.07 million (in 2014 dollars) in net revenues, with $3.1 million in revenues against $36,000 in expenses (fable 6). [This space intentionally left blank] 0 10 TABLE 6 Marinapark Fiscal Impact Projections, 2006-2014 TIDELANDS FUND Development Operations Revenues Year Year Year Year 2 Year 3 Oil and Gas (2005) (2006) (2007) (2008) (2009) GENERAL FUND so S278 $286 $294 Property Tax $71,080 572,501 $73,951 SaleS_Tda :. -.$50,454: 5770 $793 Transient Occupancy Tax $0 $878,7145 $997,269 $1,134,178 -FrarndLise ,Fees $0 $28,614 324 1,364 Business Licenses .. .. .. .. ....... 5277 $285 $293 :MotorV&dia-" lie'u'.. $65,000 $2,225,008 $4,511,299 ...$0 06r intergovernmental Associates, PKF Consulting $561 $518 $596 z -Wz .... .... $3,0.40 7. $3,131 .13, Fines, Penalties, and Forfeitures $1,122 $1,156 $1,190 LWIS% -112 Use of property, $1,897 $1,954 $2,012 Interest Income �18,462 $19,016 $19,586 SUBTOTAL GENERAL FUND $0 $0 $1,027,256 $1,154,356 $1,298,121 TIDELANDS FUND Licenses, Permits, and Fees $414 $426 $439 Use of Money and Property 1565,000 $580,000 $1,160,000 $1,160,000 $1,318,968 MEASURE M $939 $967 $997 SUBTOTAL OTHER FUNDS $565,000 $580,000 $1,161,365 S1,161,406 $1,320,316 TOTAL REVENUE $565,000 $580,000 $2,188,622 $2,315,763 $2,618,438 Expenditures GENERAL FUND General Government $2,498 $2,573 $2,650 W,492-- E6;7.4.7 j9,Q10 Fire $5,406 $5,568 $5,735 5 . 3 9 . ty Y-e�lc�- �'t Community $809 $8 33 $858 - .--i40 :. CIP Streets $923 $951 $979 SUBTOTAL GENERAL FUND $0 $0 $26,486 $27,281 $28,099 TIDELANDS FUND Harbor Resources $0 $0 $o Oil and Gas $0 $0 $0 CIP 51,080,000 so S278 $286 $294 GAS TAX $1,102 $1,136 $1,170 MEASURE M $747 5770 $793 SUBTOTAL OTHER FUNDS $1,080,000 $0 $2,127 $2,191 12,257 TOTAL EXPENDITURES 11,080,000 $0 $28,614 $29,472 $30,356 NET (COST) /REVENUE ($515,000) $580,000 $2,160,008 $2,286,291 $2,588,082 CUMULATIVE NET(COST)/REVENUE ($515,000) $65,000 $2,225,008 $4,511,299 $7,099,380 Source ADE, City of Newport Beach, KcysLz Marston Associates, PKF Consulting Il 0 Revenues Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Oil and Gas (2010) (2011) (20122 (2013) (2014) (2014) GENERAL FUND $303 $312 $322 $331 $341 $352 Property Tax $75,430 $76,939 $78,478 S80,047 $81,648 $83,281 Saes Taz;�;:, _._ $64,921'.:; $GG,B -9:. $68875. -;. =.; 0,941 : -' $73;0 -9.:' $7�,2G1 Transient Occupancy Tax $1,198,432 $1,234,833 $1.274,034 $1,310,435 $1,349,636 $1,391,638 ., .. $1405 '.,: $1,44- .:�. $1,491 ����� , $1,535: '' $1,581 ... . : "; �S1,G29 Business Licenses ., $302 _� $311 5321 $330 S340 $350 .. Motor Vehicle -in Geu. -. .. .. . ... _ .. :- .. _.,. . :30 Other Intergovernmental $613 $632 $651 $670 $690 $711 Charges.for,5ermce:::,;.:._ ;3421 $3,524.' ,..- _ `- _.:.:::.. $3,629' ,33,738,. _ .. .$3,830. Fines, Penalties, and Forfeitures $19226 $1,263 $19301 $19340 $19380 $19421 $151 - $155 :., :160 $1Gr.::: - :jt ?0- Use of Property $29073 529135 $2,199 $29265 $2,333 $29403 OtherRevenue :.`,: :. :.'. $218 : :_.. $224. ...': :$231- '.. ;238' $245 '. : -�.V53 interest income $209174 $209779 $219403 $229045 $22,706 $239387 SUBTOTAL GENERAL FUND 5193 689263 $194099005 $194529661 $194939636 $1,537,133 $19584,355 TIDELANDS FUND Licenses, Permits, and Fees $452 $466 $480 $494 $509 $_524 .. for Sernce _? - .' _ -- .. '. j�13 :. `;. $14 :.z. $14, :_ $14 _ $tp_... ::$15 Use of Money and Property ;19309581 $193499182 $1,391,166 $1,431,627 $194749498 $195199791 GAS TAR:' _. :.:: - ::..r;..'. - $0:; _: SO . , MEASURE M $19026 $19057 $19089 $19122 $19155 579190 SUBTOTAL OTHER FUNDS $193119072 $1 ,3509718 $1 ,392,749 $1,433,257 $19476,177 $195219521 . TOTALREVENUE S296799335 $2,7_5.9,723 52,8459410 $299_2_69894 $39013,710 $391059875 Expenditures GENERAL FUND General Government $2,730 $29812 $2,896 $29983 $3,073 $39165 PNice'. -'? .. d .. _ _.. 3928U .- ".$9558 .; ,- ;Y,BAS -,1. $10140'' $10,444,,:7 Fire $59908 $69085 $6,267 $69455 $69649 $69848 ,.19;272 Community Development $884 $910 $937 $966 $995 $19024 Community Sernees - � -;,,.- __ ti V.- $Q . :.:._ $0 . ` $0 _ i CIP Streets $19009 $19039 $19070 $19102 $19135 $19170 - - -:-; r ;1,135 ,31240 „': $1,27.1. ..$1 ,316 SUBTOTAL GENERAL FUND $28,942 $29,811 $30,705 $31,(92- $32,575 $339552 TIDELANDS FUND Harbor Resources $0 $0 $0 $0 $0 $0 Oil and Gas $0 $0 $0 $0 $0 $0 CIP $303 $312 $322 $331 $341 $352 GAS TAX $1,205 $1,241 $1,278 $1,316 $1 ,356 $1,397 MEASURE M $816 $841 3866 $892 $919 $946 SUBTOTAL OTHER FUNDS $2,324 $2,394 $2,466 $2,540 32,616 $2,695 TOTAL EXPENDITURES $31,267 $32,205 $33,171 $34,166 $35,191 $36,247 MET(COST)IREVENUE $2,648,069 $2,727,518 $2,812,239 $2,892,728 $2,978,519 $3,069,628 CUMULATIVE NET(COST)IREVENUE $9,747,449 $12,474,967 $15,287,206 $18,179,934 $21,158,453 $24,228,081 Source: ADL-, City of Newport Beach, Kevser Marston Associates, I'KP Consulting 12 0 FISCAL ANALYSIS METHODOLOGY The Newport Beach fiscal impact model, developed for the City's General Plan Update, was used as the framework for the analysis. Known characteristics about existing and proposed uses —such as building square £outages, assessments, population, and number of employees —were input into the model to generate costs and revenues. Wliere costs and revenue items specific to the project were known, they were substituted for the model - generated outputs. In the case of the proposed project, this procedure was followed for property tax, sales tax, transient occupancy tax (TOT), and use of property. The fast portion of the analysis looks at fiscal impacts of the existing site and proposed site at stabilization, and calculates the difference between the two. For a valid comparison, both of these impacts were calculated in 2004 dollars. The second portion of the analysis looks at the fiscal impacts of the proposed project over dune and, thus, must take inflation into account. To this end, we utilized the three percent inflation rate assumed by PKF Consulting in their calculations. This rate is consistent with Consumer Price Index trends over the past several years. REVENUES Property Tax Because of their public and nonprofit status, most of the existing uses on the Marinapark site are exempt from paying property taxes. However, personal property and improvements related to the mobile home park are taxable, as are boats. The stun of these assessments was multiplied by the County tax rate of one percent and then by 17 percent to obtain the Cite share of property tax. According to Keyser Marston's estimate, at stabilization the project will generate a property tax of $394,000 (in 2004 dollars), which is equal to one percent of the property's assessed value. ADE applied a rate of 17 percent to this value to determine die portion of the property tax allocated to the Newport Beach General Fund. For the fiscal impact projections, property taxes were inflated by two percent each year (with 2004 as the base year) in accordance with is )3 Ptopositionl3.1 Because we projected to only five years after stabilization, we assumed that the property would not be sold and reassessed during the period of our analysis. Sales and Use Tax The existing uses on the site generate no taxable sales onsite, but out analysis accounts for off -site purchases by the mobile home park residents. The sales tax estimate for the proposed project is based on the food and beverage revenue projection prepared by PKF, Inc. The figure is about 20 to 25 percent higher than average for existing hotels in Newport Beach, reflecting the upper end market segments the project is anticipated to serve? TOT Tax A TOT of ten percent is letied on guest room receipts in Newport Beach. This rate was applied to PKF's projected room rental revenue for each year of the proposed development. Use of Property A significant portion of the revenues generated bl- both the existing and proposed uses comes from use of property, or lease payments. In the case of the existing uses, mobile home park residents pay the City a total of roughly $700,000 per year in rent, while the Balboa Power Squadron pays an annual rent of $1,935. The proposed Ivlarinapark resort is expected to pay an annual base land lease of $550,000 per year during the construction phase and increasing to $1.1 million per year once the project begins operation. The base rent would be credited against additional "percentage rents" equal to 7 percent of room I Under the provisions of Proposition 13, property assessments may only be raised be a maximum of two percent each year until the property changes ownership (with a few exceptions). Once sold, the property is reassessed to market value and the two - percent increases begin again. Taxes are limited to one percent of assessed value, plus any additional taxes up to two percent passed by two- thirds of the voters. a CIC Research, Inc. Profele ofViitaer to., a Yy Beath 2001. p. 31. Based on surveys conducted by CIC Research, hotel /motel guests in Newport Beach generated about 5108.3 million in taxable sales in 2001_ For the projected stabilization year of 2010, this would equate to about $4', 8 per room, vs. the $590 per room projected by PKF, Inc. r 14 income, 3 -5 percent of food and beverage income, and 10 percent of other miscellaneous income. In addition, the developer would make option payments during the initial years following voter approval of the project and receipt of the required permits. Other Revenues The remaining revenue categories were calculated based on per- capita and per-employee factors as described above. EXPENDITURES As with the revenues, the General Fund expenditures in Tables 3 through 6 were estimated based on per - capita and per - employee cost factors that were developed for the Newport Beach General Plan Update. According to the Draft $IR prepared by Michael Brandman Associates, existing fire and police capacities will be sufficient to serve the needs of the proposed project. Consequently, the project is not expected to incur significant expenditures in these categories. The cost figures shown for these services reflect the average cost of additional calls for sen-ice anticipated for the project C 15 x-13 Oq �k-1$ CITY OF NEWPORT BEACH Office of the City Attorney TO: Mayor 8a Members of the City Council .r FROM: Robert Burnham RE: Marinapark Resort & Community Plan CEQA Standards for Adequacy & Recirculation DATE: July 13, 2004 This memo summarizes the provisions of CEQA and the CEQA Guidelines that are relevant to the standards for certification of an Environmental Impact Report (EIR) and the standards for recirculation of a Draft EIR after the public review process has commenced. According to CEQA and the CEQA Guidelines, the lead agency shall certify an EIR if it represents a good faith effort at full disclosure of the significant environmental effects of a project, identification of possible ways to minimize the significant effects and describe reasonable alternatives to the project. CEQA does not require the analysis in an EIR to be exhaustive. The absence of information - even relevant information - does not preclude certification unless the failure to include the information precludes informed decision making and informed public participation. The standards for the recirculation of a Draft EIR are similar. A Draft EIR must be recirculated when "significant new information" is added to the EIR after the document is available for public comment. According to the CEQA Guidelines: "New information added to an EIR is not "significant" unless the EIR is changed in a way that deprives the public of a meaningful opportunity to comment upon a substantial adverse environmental effect of the project or a feasible way to mitigate or avoid such an effect (including a feasible project alternative) that the project's proponents have declined to implement" CEQA Guid�#nes Section 15088.5(a)). Burnham L EIR -13 Transcript of City Council Public Hearing of July 13, 2004 0 0 E Intentionally Left Blank 1�1 City Council Meeting July 13, 2004 Verbatim Transcript Item No. 18 Marinapark Resort and Community Plan — Final Environmental Impact Report (PA 2003 -218); Fiscal Impact Analysis — 1700 West Balboa Boulevard. Mayor Ridgeway Is there a staff report? Assistant City Manager Wood Yes, there is, Mr. Mayor. Mayor Ridgeway I would remind both staff and the audience that this issue is really a certification of the EIR at this point in time. Is that correct? We're looking at public comments on the EIR. Assistant City Manager Wood That's right. And, in this case, the only action for the Council, and we've actually asked that you continue this to your next meeting on July 27th to take the action, would be to consider whether or not to certify the EIR as being in compliance with • CEQA and also to decide on placing the project on the ballot. City Attorney Burnham However, Mayor, I believe a draft fiscal impact report was distributed, so certainly testimony on that document would be appropriate as well. Council Member Heffernan Since we've got folks here obviously dealing with the vote issue, maybe Mr. Burnham, you can explain the relationship about what we're going to do tonight and in two weeks, versus the prior statement by this Council that this matter was going to the voters, and would go to them in November. And, why that would or would not occur based upon what needs to be done tonight and in two weeks. City Attorney Burnham Back in March of 2003, the Council unanimously approved an agreement with Sutherland Talla Hospitality. And, I guess in answer to Council Member Heffernan's question, the key provision of that agreement called for the City Council to place the Marinapark project general plan amendment on the ballot in November of 2004, if the City Council, prior to that action, certified an environmental impact report for the project. So, that is one of the reasons for the meeting tonight. Council Member Heffernan 1 0 . In simple terms, then, once this Council certifies that EIR - environmental impact report - then this matter does go on the ballot, subject to the residents vote in November. City Attorney Burnham Correct. Council Member Heffernan So, that's the only remaining discretionary act by this Council between it being on the ballot in November. City Attorney Burnham That's correct. Council Member Heffernan And, in addition, that certification is limited by the rules that apply to certification of environmental impact reports, in general, and CEQA, and a bunch of technical jargon. City Attorney Burnham That's correct. Council Member Heffernan In other words, we're not passing on the environmental impact report, we're certifying it. And, maybe an explanation of what that means would be helpful before we get into all the detail. City Attorney Burnham Alright, and I did prepare a brief memo for the Council and copies of the memo are on the table in the foyer. There really were two issues, or are two issues I guess, before the City Council as it relates to the EIR. The first is, should you certify the draft EIR with the additional documentation that is prepared after the draft until the final action of the Council. And, CEQA says that you should certify the EIR if it represents a good faith effort at full disclosure of the significant effects of the project, the potential ways to minimize the impacts of the project and discusses reasonable alternatives to the project. In that regard, the EIR doesn't have to be perfect, it doesn't even have to contain all of the relevant information. The real key is whether the EIR contains information adequate to inform the decision maker and to result in informed public participation. So, there is no perfect EIR, I can guarantee you. And, in terms of the other issue that has surfaced — whether the draft EIR should be recirculated — there's really a similar standard. And, in that regard, the draft EIR should be circulated only if significant new information is added to the EIR after the notice of completion was filed. And in that regard, I can • read to you what CEQA says is new information that's significant. And, I think this 2 may be helpful. It says, "new information added to an EIR is not significant unless the EIR is changed in a way that deprives the public of a meaningful opportunity to is comment upon a substantial adverse environmental effect of the project or a feasible way to mitigate or avoid such an effect, including a feasible project alternative that the project's proponents have declined to implement ". And, that's right out of the CEQA guidelines. So, it's not that there is some information added to the draft EIR because that typically happens; it's whether significant new information is added that really deprives the public of the opportunity to participate in an informed way. Council Member Heffernan Mr. Mayor, then my final question. Mr. Burnham, what is the significance of the July 27th date, visa vie the election in November. City Attorney Burnham According to the City Clerk, that would be the last regular Council meeting prior to the deadline for submitting a ballot measure and consolidating that ballot measure with the election in November. Council Member Heffernan Alright, in a nutshell, unless the City Council certifies the environmental impact report by July 27th, this Marinapark matter will not be on the ballot in November City Attorney Burnham The answer is yes, unless you were to schedule a special meeting subsequent to July 27th. Council Member Heffernan Great. Thanks. Council Member Bromberg Mr. Mayor, question for Mr. Burnham. Just following with Mr. Heffernan's line of questioning — then is it fair to presume that if this City Council on July 27th certifies the EIR or does not certify the EIR, whether we do or we do not, does not constitute an approval or disapproval of the project itself. We're ruling on the environmental document. City Attorney Burnham Exactly. The only statement that makes on the part of the Council is that the EIR prepared for the project is adequate under CEQA and the CEQA guidelines. Council Member Bromberg Thank you. 3 1 • Council Member Webb Mr. Heffernan was asking if — I thought I heard him ask — if the City would have any other approvals after the ballot measure. Let's say it passed, my concern is on site plan. When will the City actually approve the site plan for this project or be able to make adjustments in the site plan that has been submitted to us. City Attorney Burnham Well, you would be able to make adjustments - being the owner of the property — be able to make adjustments to the site plan probably at any point in time prior to the time that you sign the lease and then the lease may specify also that you have the right to make modifications to the site plan. You'd certainly have, I believe, the right to make modifications to the site plan at the next meeting. If you did make modifications that substantially changed the project, that would potentially be grounds for the need to recirculate the draft EIR. Assistant City Manager Wood I think in addition to that, just treating it as any other property. In addition to the general plan amendment that will be before the voters, there is a proposed planned community development plan for this property, which will have to have public hearings and recommendation from the Planning Commission. And, then public hearing and adoption as an ordinance by the City Council. And, I expect that that development plan will require either some kind of a site plan review or perhaps a use permit for the hotel to establish the operational conditions. So that again, would be an opportunity at the Planning Commission level and on appeal to the City Council to look at that. Council Member Webb I think that my concern is that in one of the comments that I made relative to the document and the answer back was that the environmental document did not approve a site plan, it only evaluated the site plan that was submitted. And, I just wanted to make sure it was clear that changes can be made in that site plan, assuming that the voters approve it — approve the general plan amendment. City Attorney Burnham Changes could be made, but they certainly couldn't be made in a way that would increase the entitlement or increase the intensity of the development. Council Member Webb The items that I'm concerned with wouldn't increase the intensity. Council Member Nichols I have a question. There is something in the Charter that says there would be a vote of the people before — that this land is to be used for recreational purposes. And, that's into perpetuity or something like that. Unless there is a majority vote H by the people. My question is, the vote on the ballot, would that serve for that purpose or how do you interpret that. Maybe you want to read that. City Attorney Burnham There are provisions in the Charter relative to this particular site, reserving to the people and the public the use of the strip of land not less that 85 feet in depth from the line of mean high tide. But, I believe, the provision that you were talking about would allow. And, I will have to look this up. But, I think the vote that you're contemplating in November would be adequate. But, I also think that if the property had been leased before that time, that you are authorized, as a City Council, to enter into a lease consistent with the provisions with our tidelands trust. But, I will check on that. Council Member Nichols Doesn't' that directly say where you were, that 85 feet from the mean high tide had to — was to be used for public and that whole property from 15th to 18th was to be used for recreation, unless there was a vote of the people. City Attorney Burnham Well, that's not how I read it Council Member Nichols. The Section is 1402 and it says, "the City Council shall have the authority to lease City -owned property, including tide and submerged lands so long as the lease is limited to the term permitted by State law ", which under our tidelands grant is 50 years. The Section goes on to say that, as I indicated earlier, there is reserved to the public a strip of land 85 feet upland of the line of mean high tide. And, as you know, the line of mean high tide has not been established for that particular parcel. Council Member Nichols But, you're saying that a lease that we're contemplating and so forth, would accomplish that I guess, right? That it would be public use or within the scope of that Charter without any vote of the people. City Attorney Burnham Yes. I don't think this Section requires a vote of the people, but I do believe, as you just indicated, the lease would have to be consistent with this provision of the City Charter. Mayor Ridgeway Any other questions? Seeing none, I will open this up to the public. Jim Hildreth Real quick. Why hasn't the median tide level been established is this area. Thank you. 0 E Mayor Ridgeway This is effectively public comments on the EIR document, and comments on the fiscal impact report. Mike Johnson Mike Johnson, Newport Beach. I have a couple questions. One, now I'm concerned with the American Legion property. We just heard that this includes property from — all of the property from 15th to 18th, which American Legion falls under. Last week, they passed out a site plan that included the American Legion property. And, this morning, Council Member Bromberg was quoted as saying that the American Legion property was going to be rebuilt. Now, there's some discrepancy here. Is the American Legion property sacrosanct or is it included in this property that is being discussed for another lease. Mayor Ridgeway Mike, are you in contact with your — I think it's your commodore or your commander? Mike Johnson I am, but just this morning, Council Member Bromberg was quoted in the Daily Pilot as saying that the American Legion was going to be rebuilt. Now, I don't know whether the Daily Pilot was wrong, Council Member Bromberg was misinformed — or, I'd just like a clarity on it. City Attorney Burnham Maybe I can help clarify that. The Council recently entered into a — I believe it was a 25 -year lease, or longer? Mayor Ridgeway 25, with a 25 year option. City Attorney Burnham 25, with a 25 -year option of the American Legion parcel, and the American Legion parcel is not part of the Marinapark Resort & Community Plan project, but Council Member Bromberg is also correct in that the lease between the City and Marinapark does contemplate a renovation of the American Legion facilities. Assistant City Manager Wood Mr. Mayor, I think some of the confusion arose because the public notice for the Planning Commission and the City Council public hearings had a map attached, and the American Legion and the property in question are all one assessor's parcel. Therefore, the computer automatically drew the line including both, but the project clearly does not include the American Legion. And, the EIR is clear on that. 3 City Attorney Burnham I guess I'm curious as to whether that answers Mr. Johnson's questions or not. Mike Johnson [did not speak at the microphone, but most of what he said was audible] Yes, it does to an extent but I think that up to now, the amount that was going to be offered to the American Legion for renovation was something like half a million dollars, and that does ................. Dolores Otting I'm going to do this anyway because I made all these copies and I...... — good evening, Honorable Mr. Mayor and Council Members, my name is Dolores Otting. I live in the City of Newport Beach. What I have here is the same thing that Dr. Nichols was just talking about, which was brought up by Sandy Gonis on the Notice of Preparation, and her first question was is the proposed project consistent with provisions of the City Charter regarding this site in particular, and City -owned land in general, or would a Charter amendment be required to implement the proposed project. So, again, as we just discussed, Section 1402 says that there shall be reserved forever to the people, the public use of strip of the bayfront - that Bob just read - above mean high tide, not less that 85 feet in depth in the City owned — and it's bounded by — and, it's this piece of property. So, my concern here is that this — I mean that this was not answered in the EIR. It was brought up in the notice of preparation but nothing that was brought up in the notice of preparation was brought up in this EIR. So, we got used to that when we looked at it in EQAC. This is the City Charter. Our forefathers had the foresight to realize that this could possibly happen one day and that Section 1402 in the beginning says, there was already the Marinapark — trailers on the property — so, I mean like releasing for that is okay according to — wouldn't invalidate it — according to those paragraphs above. Now, what you're doing here is you're giving this property to Sutherland Talla, or to whoever it is. I haven't caught up with the latest LLC name. And, you're giving it in perpetuity. This is a Charter amendment. This is our Constitution. So, I'm sure there's attorneys in the room right now on this issue, so that's why.I'm bringing this up, because you might need two votes. You might need a Charter amendment and you might need - like this general plan amendment. And, another thing I wanted to bring up is in all the years that I've been going to City meetings and County meetings and — I've never before experienced where there was a public hearing that was advertised. And, our City Clerk was kind enough to e -mail me what the advertisement was and it was just this document. Okay, just this one. And, yet, on Friday afternoon, we got added the Fiscal Impact Report which I thought we were going to get a staff report on and which I feel that our community deserves to have a staff report this evening on that subject. We didn't have a Study Session, it's not easy to understand, it doesn't make any sense, are there 98 timeshare rooms or are there 98 timeshare things being sold. So, there's a lot that's left open and I guess it would be nice to have two separate items because 7 they are two separate items. When you have a public hearing on a parcel of land, if two pieces are on the same street, you don't add them into one. So, I kind of feel that we didn't get the best that we should have gotten. And, this is an issue that has such visibility and I was always hoping that we would do things right. And, I know that we have a lot of outreach, we had a scoping committee — we had a scoping meeting and there was nothing from the scoping meeting that was put into this EIR. Okay. Your last meeting on May 25th was a Study Session for this item, but yet the minutes weren't going to be done according to page 162 of the notice to responses by Council Member Webb. He had to put in a separate response because his comments weren't going to be able to be done on time. Sorry that I'm boring you guys tonight. This is like really important. Thank you. City Attorney Burnham Mayor, a couple corrections to what Ms. Otting said. First of all, the City Council — and this is not the place or time to talk about the lease — but, the City Council has never said they're going give the property to Sutherland Talla. The term of any lease, assuming the Council approves one, would be limited to 50 years, not into perpetuity. And, as I indicated earlier, the lease must be consistent with provisions of the City Charter. And the lease will have that provision in it. And, I do believe that the Planning Commission adopted a resolution unanimously recommending certification of the EIR, recommending against recirculation of the draft EIR and I think it's fair to say that this environmental document has undergone probably closer scrutiny by the public and the Planning Commission and even EQAC than any other document I'm familiar with, so the scoping meeting in fact was reflected in terms of the content of the document. Council Member Heffernan Mr. Burnham, from what Ms. Otting gave us — the text of our Charter says notwithstanding anything else, the City has authority to lease City -owned property including tide and submerged lands so long as the lease, which means the lease term — the length of it - is limited to the term permitted by State law. And, as I understand what we've been — what is being proposed is a 50 -year lease. City Attorney Burnham State law actually allows you to lease of tidelands for up to 66 years, and some cases, 99 years. But, our tidelands grant contains a 50 -year limitation. Council Member Heffernan So as the legal officer of the City, is it your opinion that what is being proposed is in conformance with our City Charter. City Attorney Burnham The term can be up to 50 years, yes. And, that has been confirmed with State Lands Commission. E Council Member Rosansky 0 Just following that up, as far as the 85 feet that's supposed to be reserved for the public. Can we lease the land with the understanding that the land will be open to the public. City Attorney Burnham The Charter simply says the land shall be reserved forever to the people, the public use of the strip of bayfront land. So, as long as it's reserved for public use, I guess the answer is yes, but there could be no impediment to public use of that land Council Member Rosansky So, if the developer in developing their project keeps an 85 strip of land open to the public for public access, then you would say that that complies with this provision City Attorney Burnham Correct. Council Member Rosansky Thank you. Council Member Webb Mr. Mayor, I don't understand. Where is this 85 -foot strip of public land going to be. Can you build a hotel in the middle of the 85 -foot strip? City Attorney Burnham No. Council Member Webb. Okay. Where is the 85 -foot strip being provided for in this project. City Attorney Burnham Well, the 85 -foot strip is measured from a line that has not been established yet. And, unless that line is established at a point 85 feet bayward of the line of the development, then the project could not move forward. Or, at least, private improvements could not move forward. I think it's fair to say that we've assumed for the sake of discussion that the current line of development probably represents the upland limit of the 85 feet. Council Member Bromberg Mr. Mayor. Mr. Burnham, if the voters on November 2nd approve this project and if the EIR is certified, isn't it true that the developer will have to secure all permits and basically do everything that any other project would have to go through, and then some, and that's where this 85 -foot line would probably come in. 6 City Attorney Burnham Yes. And, the "then some" is probably a very accurate understatement of what has to occur. Assistant City Manager Wood I had been prepared to do a quick summary of the Fiscal Impact Analysis if the Council would like to hear that. Otherwise, I can just respond to questions. Mayor Ridgeway If it's brief, I would urge you to go ahead and do that. And, then will that be incorporated into our packet the next — on the 27th Assistant City Manager Wood A draft of the Fiscal Impact Analysis is in your packet for tonight. Mayor Ridgeway I meant your staff summary. Assistant City Manager Wood That is as well. This analysis is one of the things that's required by our agreement with Sutherland Talla. We retained the firm of Applied Development Economics to do the Fiscal Impact Analysis for us. This is the same firm that's doing the economic and the fiscal work for our general plan update, and they used the model that's been prepared for our general plan update analysis, which has had a lot of review by citizen committees. Some of the assumptions in the Fiscal Impact Analysis include the terms of the lease that the City Council is still reviewing in Closed Session. And, so that analysis will likely be revised before your meeting of the 27th. But, with the terms that have been discussed by the City Council committee so far, the summary of the impact is that the existing uses on the site generate a net positive revenue to the City of $696,000 and the project is projected to generate a net positive revenue of about $3.5 million. This would be in the stabilization year of operation, year 4, and that's in 2004 dollars. Mayor Ridgeway Thank you. We are still in a public hearing. Public comments are welcomed on item 18. Joe O'Hora Good evening, gentlemen. My name is Joe O'Hora. I've lived on the Balboa Peninsula for about 30 plus years. I have about 25 years of management and consulting experience in the hospitality industry. Also, in another life, I was president and CEO of the firm which owned the Newport Ensign newspaper and when it was in its prime. This was during the development wars of the 70's and I-K 80's and I have the scars to prove it. Let me go on record first as being absolutely appalled at what I view as the persistently unimaginative, lazy and shortsighted staff planning reflected in this proposal. You guys are considering the commercial development of the largest remaining undeveloped bayfront property left on the peninsula. Is that the best you can offer us. I guess that the Santayana was right when he said that those who cannot remember the past are condemned to repeat it. Secondly, the longevity of this proposal is truly amazing. I remember working on a City Council presentation almost three years ago on the same subject from the same developer, and wonder why it keeps turning up like a bad penny. Even more amazing is that lives despite the fact that it is seriously flawed from an economic standpoint. Albeit, only looking at the financial document that we received tonight. There's more to be done in this area. But, it's my judgment, as well as that of other industry people with whom I reviewed the project, that this concept is operational naive in the extreme. Among other things, it's not large enough to consistently produce an operating profit. We're in a tough, competitive, over saturated hospitality market. Marinapark isn't likely to ever show an operating profit. And, the more 5 -star it becomes, the greater the probability that it's never going to show black ink. The developer and his banker know this of course and his carrot isn't in operations, it's in timeshare sales. Potential one time sales revenue from only 12% of these units could exceed $20 million. Once the timeshare revenue potential is exhausted, the developer is gone. The City not only has to deal with a facility that's inherently not viable as a going concern. What do you do? Authorize expansion? Allow more, or even all, of the units to be timeshared? Downgrade service and support to reduce the costs? This hit and run pattern's a familiar one in the industry. The lure of additional tax revenue is a siren song to most municipal managers. So this story's been repeated many times over from Hawaii to Florida. There's a saying in the industry that everybody wants to go to heaven, but nobody wants to die. Your challenge and ours doesn't lie in wording this proposal to death one more time. Rather it's inheriting the vision and the foresight to put it aside once and for all. It's time for us to move on to encourage and guide the creative noncommercial development of this site in a manner that will truly benefit our community for decades to come. You'll find no shortage of community support and help in this matter if you take this approach. Thank you. Assistant City Manager Wood Mr. Mayor. It is true that this project has been before the City Council over the years, because we started — at least in my memory — we started the process of trying to decide what to do with the property when the mobile home park is closed, back in 1997. There was an economic study that was done for the City by Keyser- Marston Associates, and it showed that a hotel use would provide the greatest economic return to the City. The City Council then authorized staff to send a request for proposals to developers for a hotel project. That was not done as that point in time, because we had also requested the State Lands Commission to give us a decision on the tidelands boundary. And, that hadn't been forthcoming. And, then Mr. 11 Sutherland came forward to the City Council with his hotel proposal. I think that was early in 1999. The City Council was interested in the proposal but didn't want to just enter into an agreement with that developer without seeing what else was out there as a possibility. So, at that point, we did issue a request for proposals. That was in late 1999. We had eight responses to those proposals, which the City Council analyzed for a couple meetings. We retained another economic consultant to help us review those and finally Sutherland Talla Hospitality was selected and the agreement that the City Attorney has been referring to was entered into. Since then, Mr. Sutherland has been working on his plans for approximately a year, and then we have, for the past several months, been working on the environmental impact report. City Attorney Burnham Mayor, I believe the first exclusive negotiating agreement with Sutherland Talla was entered into in 2000 or 2001. And, the agreement in March was a refinement and a modification of that original agreement. So, it went through a lengthy process. The Council selected Sutherland Talla as the preferred project and it's been four years in the making. So, I think that may help provide some context to the comments of the last speaker. And, I think it's fair to say, during that time, there have been some alternative proposals, but there certainly hasn't been an outpouring of alternative plans to the one proposed by Sutherland Talla. Council Member Heffernan Mr. Mayor, to the last speaker's comments about the fiscal impact and the effect of timeshare sales. That is an issue that has not been resolved, because I think the City Council — and I'll speak for myself — are keenly aware of the aspect of timeshares being sold for a lot of money and that money being taken off the table early and then being left with an operating hotel and where that would leave the City, visa vie under a lease proposal. We are aware of that issue and the balances of where - who's getting the money, in essence - and that is still open. And, that is, quite frankly, an issue of the continued Closed Session item that we earlier talked about. Tom Billings Good evening, Mr. Mayor and Council Members. My name's Tom Billings with Protect Your Parks. Our organization is dedicated to preserving Newport's public parklands and open space. I have a list of ten items regarding the EIR that we would like to object to, that you all have received. But before I do that, I'd just want to respond to Sharon Wood's comments regarding the process that the City went through in selecting Mr. Sutherland, in spite of their own rationale for choosing Mr. Sutherland's project. I just want to reference that in 2002/2003, there was a Godby research poll, which the City hired, which revealed that - and this was taken for the • visioning festival, vision summiting that the City sponsored — 70% of residents and businesses in Newport Beach did not want a resort in two specific areas of the City 12 — did not want more hotels - and that's Newport Dunes and Marinapark. So, the public spoke and the public is speaking now. And, of course, it will be decided in November and we won't get all worked up right now about that, but just wanted to point that out — that research that was done. Quickly, I just want to refer to the memo that was sent. Number one — major issues that still need resolution — is that due to the confluence of this contract with the developer and the November election, we feel that the EIR was rushed and biased. And, we feel there needs more time to consider the objections that are going to be raised here — that has been raised. Number two, the timeshare hotel out of the EIR Planning Commission's recommendation was designated as the environmentally superior alternative, versus leaving the park as a park or an aquatic park — aquatic center. This is erroneous as the general plan calls for mobile homes to be removed and the land maintained as a park. That's right in our general plan. So, if it remains as a public park, with nothing more that an open field with turf, or an aquatic center — community center — developed in accordance with the PBR plan, this will create less noise, visual impacts and traffic than the proposed timeshare hotel. So, based on this, we feel the EIR needs to be relooked at. The proposed parking plan leaves the timeshare hotel seriously under parked. Either more parking is necessary to support what Mr. Sutherland's calling a 5 -star hotel or the hotel not receive that prestigious rating. You know like the gentleman previously — really aren't any 5- star hotels in Orange County. And, a survey of 4 -star hotels — and, I believe this is correct — requires an average of three employees per room. So using three employees per room, another 100 parking spaces would be required, assuming two employees per car. Again, the EIR states that employees will not work in shifts, then there will be no valid possibility they could be bussed to the hotel from a distant parking lot. So, we feel that that needs to be relooked at. The tidelands — number five issue has already been addressed, but one point I want to clarify is that there is no clear demarcation line to establish the tideland boundary. So, this boundary needs to be further defined and established for timeshares. I'm not sure how it works Mr. Burnham, but in terms - I understand that timeshares are not permitted within tidelands, is that correct? City Attorney Burnham Mayor, that's an issue that State Lands Commission has not determined yet. There is an opinion from the Attorney General that, I think, suggests that timeshares would be permitted depending upon the length of time, or duration of the particular share, but the State Lands Commission has not made a determination as to whether timeshares or fractional ownerships of four, five or six weeks would be consistent with the tidelands trust. Tom Billings So to go forward, I would think we'd need to clarify that? Mayor Ridgeway 13 E Mr. Billings, your time is close to being up. Tom Billings Okay. Thank you. Points seven, eight and nine are really mitigation points which we feel need further clarification. Point number six — I'll just quickly head on — the visual impacts cannot be ascertained unless views show all building elevations for the site. That we felt was inadequate. Thank you. Mayor Ridgeway Thank you. I think you did submit that letter. It's a part of our record. Assistant City Manager Wood Would you like us to respond to these as the speakers come forward or wait until the end. Mayor Ridgeway No, I think it's fine. Otherwise, it won't be very fresh in our mind. Assistant City Manager Wood Well, I feel like I've been working on this project, and particularly this EIR, for quite some time, so I guess I have a little difficulty saying it's been rushed. But, even if one looks at — since the draft EIR was released — that was back in April for a public review period of 45 days. We've received a large number of comments on the draft EIR, we've responded to all of them, this is the responses to comments document which is over 200 pages long. In the responses to comments, we added information, we clarified some information that had been in the draft EIR. We added and revised some mitigation measures to deal with some of the comments we received. There was public review of this draft EIR by our Environmental Quality Affairs Committee, there were study sessions at both the Planning Commission and the City Council, the Harbor Commission held a review, the Planning Commission had their public hearing last week and now we have two public hearings scheduled at the City Council. So, while we are mindful of the July 27th date as being the deadline for making the November ballot, I still think that we have given this a thorough environmental review. Mayor Ridgeway Thank you. Assistant City Manager Wood I had wanted to talk about the environmentally superior alternative question, because that's come up quite a few times and that was the one change that the Planning Commission did make in their resolution recommending certification of . the EIR. Because the draft environmental impact report found the project to have less environmental impact than any alternative, except the no project alternative, 14 the draft EIR found the project to be "the environmentally superior alternative ", which is a CEQA requirement. But, at the Planning Commission meeting, the City Attorney advised that CEQA requires that the environmentally superior alternative that's identified be the one that's superior among the alternatives. So, the project is not one you consider at that point. So, on that basis, and having some more analysis from the consultant who prepared the EIR, the Planning Commission found that the reduced intensity alternative — the smaller hotel — would be the environmentally superior one among the alternatives. But, making this finding to satisfy CEQA still didn't change the conclusion of the draft EIR that the project would have less environmental impact than any of the other alternatives, except for the one that involved no development. Council Member Webb Mr. Mayor. One question on that environmentally superior alternative. Wasn't there a significant amount of discussion amongst the Planning Commissioners related to whether or not the marine use was really the environmentally superior one — was that a 7 -0 vote or was there some discussion on that. Assistant City Manager Wood There was discussion on that and I believe they did a straw vote on that before they actually adopted the resolution, and I think the straw vote was 5 -2. And, the main issue with regard to the marine /recreation alternative is the parking lot and how you treat that as far as traffic generation. And, if you care for some detail on that, Joe Faust, who prepared the traffic study is here and could discuss that some more. I also wanted to respond to Mr. Billings' comment about the lack of elevations, because the draft EIR does have a number of view simulations which were done with existing photographs from several areas around the site, including a shot from across the bay. And, then using the plans and using a computer simulation to show exactly what the project would look like imposed on those photographs. And, those were shown as part of the PowerPoint presentation at the Planning Commission and City Council study sessions, and the Harbor Commission meeting. And, in addition, the elevations are available in the Planning Department. With regard to the mitigation measures and not having specific dates for when those things need to be done, the mitigation measures have mostly been written to say, prior to the issuance of a specific kind of permit that something needs to be done. And, that is the typical way to write mitigation measures, because that's the best way to have enforcement that the mitigation measure will be accomplished, saying that the City or some other agency will not issue the necessary permit to the applicant until that study has been or a certain design has been done or replacement habitat has been established. So, I think that was an adequate response. Mayor Ridgeway Thank you. 15 Council Member Nichols I have a question. The question that I would have is the design of the hotel fixed — in other words, are we really looking at a fixed hotel design that we're going to be voting on or are we simply voting on a general plan amendment that would change the zoning and allow a hotel up to a certain size on the property. Assistant City Manager Wood Well, if you're speaking of the City Council... Council Member Nichols I'm talking about the vote in November. Assistant City Manager Wood Okay, the people in November. That vote will be on an amendment to our general plan to both the land use element and the recreation/open space element — to change the land use designation from recreation to commercial and to remove the references to developing a future park on the marinapark site from the rec. and open space element. In addition to..... Council Member Nichols So, could you just say that last part of that — so, it would remove the — about the recreation and open space — in other words, that would be removed from there and it would now be zoned for hotels. Assistant City Manager Wood It wouldn't be zoned because this is just the general plan designation. General plan and zoning are two different things. So, the general plan gives a land use designation and an intensity of development that may be allowed on the site. Then, there is also zoning. In this case, it would be a planned community development plan that would have the detailed development regulations that you would usually find in the zoning ordinance — the height limits, the setbacks, the parking ratio, the landscaping standards - the review process, as I was mentioning earlier, which ties into your question about whether the site plan is set because as part of that development plan, there will be a requirement for further review by the Planning Commission of the more detailed designs for the project. But, as the City Attorney was saying earlier on this same subject, if there are changes to the site plan from what we see today as part of the EIR, they cannot be changes that make the project more intense unless additional environmental review is done and it's still needs to be consistent with whatever general plan amendment may be approved by the voters. Council Member Heffernan Mr. Mayor, this is a question for Mr. Burnham and has to do — and, is related to the fiscal impact issue that is still in process — and that has to do with the identity of RA who this potential tenant is. As I understand it, the LLC — the limited liability company that is the current party who is given the exclusive right to negotiate is not the party who is contemplated for — to be the tenant under any lease for the property. My question specifically is, does the City Council need to approve the transfer of those exclusive right to negotiate rights between that original LLC from four years ago to the current version, as part of the fiscal impact report, which is part of the EIR, which we are certifying or is that an entirely separate issue. City Attorney Burnham It's a separate issue, but I believe the City Council has to give its consent to an assignment of the rights from the original contracting party to the new LLC. Council Member Heffernan Well, maybe I'll be more precise — and, that is, does that consent need to be part of the City Council approvals on July 27th, so this matter would be a part of the ballot or can that be done later, after the vote in November. City Attorney Burnham It can be done later. It doesn't have to be done on the 27th for purposes of submitting the matter to the ballot — to the voters and putting it on the ballot. But, it's something that I suspect the City Council may want to do on the 27th. Council Member Heffernan 0 Is the fiscal impact report going to give an opinion as to the strength and viability of the tenant to conform with its tenants obligations under the lease. Assistant City Manager Wood No. All the fiscal impact analysis does is look at the revenues that the project will generate and the costs to provide City services to that project, and look at the balance between those two. Behind the fiscal impact analysis is the market study that was done for the project proponent by PKF Consulting and then that was reviewed for the City by Keyser- Marston Associates, who's assisting us with the lease negotiations. Council Member Heffernan Okay, if that all being said, so we're not going to give a Council position on that specific issue, if I'm a voter in November and I'm relying upon a fiscal impact report that says the City is going to — will receive X amount of revenue, but we have no identify of who the tenant is at that point, then what sort of reliability are those revenue estimates if we don't know the viability of the tenant to generate the timeshare and hotel operational revenue necessary to pay the payments to the City. In other words, there has to be some relationship between the fiscal impact numbers and the ability of a tenant to operate on this site to generate the revenue 17 necessary to pay the City the revenue that the City is saying in this fiscal impact report. I don't know how you can do one without the other. Mayor Ridgeway Mr. Burnham, I don't know if that begs for an answer from the City Attorney. I agree with Mr. Heffernan and I think that on the 27th, we need to have full information and disclosure, and part of the item for approval will be a consent to assignment. City Attorney Burnham And, I think part of the information presented to the City Council on the 271h will be the background information on the people to whom you might assign the rights that were initially given to Sutherland Talla and information that will or will not give you a comfort level that the people that are potentially going to construct and operate the facility will in fact do so in a manner that will make the fiscal impact report conclusions valid. You never know if a fiscal import report is going to bear out or not, but I think what Council Member Heffernan is saying is that he wants a level of comfort that at least the people that we're dealing with have every intention of meeting those objectives. Council Member Heffernan Well, I think from a fairness standpoint to the voters who will be trying to make a vote on this, they should have that type of information because — they are too interrelated. The revenue estimates and who is going to generate from operations on this site the amount of revenue - to be able to pay the City what the City is representing will be generated from the site have to be related, so I think as a practical matter, that potential tenant has to be identified and its background for a vote to make an informed decision on that strata of the overall land use decision being made as part of the ballot measure. Mayor Ridgeway I think we all agree, and intention has no bearing here, it's actually qualification and that's what we're talking about. Ma'am, go ahead. Dr. Patricia Frostholm I'm Dr. Patricia Frostholm and I live at 1805 West Bay Avenue, very near the issue property. I'd like to preface my remarks by saying, why are there are no women on the City Council. I would like to say, men and women of the City Council, because you have a different view. Women who bear children in pain know how intimately - know how precious these children are. And, we're dealing with a place called a "Mothers Beach ". A mother's beach, I watch every day when the vans come up and the children play on the beach. This is very important and I think it would be wrong to have a hotel with its concomitant traffic and liquor and use and police activity so near a mother's beach. It would be a great loss. My vision would be to E have a community center where parents could work — could leave their children. A place where kids could learn to sail, elder people could get flu shots, an arts center, an open view of the water, a sailing school, a small boat launching facility such as we have now. Perhaps, the Nautical Museum there. I also see no need for another hotel. We have the Balboa Bay hotel, and right in back of me, is Best Western. The police were called to Best Western four times in one evening a couple of weeks ago..... Mayor Ridgeway Ma'am, I really urge you to be relevant to the issue at hand., which is comments to the EIR. Dr. Patricia Frostholm I'm speaking to the issue of environmental — adverse environmental effects and I think that we should keep the public land public. Thank you. Mayor Ridgeway I would like to make one comment or correction. I think Mother's Beach is down at 10th Street, is it not? Where is it? [Responder did not speak at the microphone, very little was audible] No ..................it's been there since I lived a block away. Mayor Ridgeway Okay, I was under the impression it was at 10th. Okay, that's fine. Marie O'Hora Hi, my name is Marie O'Hora and I also live in Newport Beach, and I would like to tell you that the 10th Street beach is called Mother's Beach, but now we're calling it the Young Mother's Beach. I'd like to comment, first of all, about the traffic problem that was reported in the EIR. I do not feel that it's been dealt with completely. I know that over the 4th of July weekend, they put more strips over, so that they could tell what the traffic was on the peninsula. Unfortunately, I think that a lot of it was people going around in circles looking for parking spaces on the Balboa Peninsula. And, then I have one comment about a timeshare hotel. With an ever changing flow of transients located one -tenth of a mile from a grammar school and two churches, with extensive pre- and after- school program, is this a better choice than a park? How will a Girl Scout meeting facility located on the onsite of the hotel itself sound to parents of current and potential Girl Scouts. Thank you very much. Steven Sutherland Good evening, Mayor, members of the City Council, I'm Steven Sutherland, I'm the proponent for the project. As Sharon has mentioned, this has been an ongoing 19 project that has probably received more public scrutiny that any development project that's been in front of this Council. I can tell you that over the last number of years, I have worked very hard with the community, with both residents and other members that were affected by this project. And, the project has changed quite a bit because of that, but it's made it a better project because of that — both for the development and also for the community. I think that a number of the faces you see here this evening, you've seen before. The difference is that tonight they're here supporting the project going to a vote. I think that residents in this City, they know that this is an important piece of property and they certainly want to have the final say on it. It's a project that is helping Girl Scouts, it is helping veterans, according to the EIR. It's also improving water quality, it's a very low rise, low density project that we feel is going to be a very positive for the community in the future, for residents, for the American Legion, for the Girl Scouts, all included. Any questions that you have of me, I'm here to answer. Mayor Ridgeway Thank you. Just be back on the 271h Council Member Nichols I would like to ask one question. The question I had is do you feel that we have a representative fiscal study — are you, have you gone through it in any fashion? • You're the proponent of the study and one who's working with that property consistently, do you feel that this is a representative study and one that you as a partner, could live with. Steven Sutherland Yes, Councilman Nichols, we did the original fiscal analysis, or marketing analysis, for the project back in 2000, utilizing the services of PKF Consulting, who are recognized as the premiere hotel consulting firm in the country. Since that time, we've worked on numerous updates, including a major new fiscal analysis study that we've been working on with PKF still, for a number of months. That information has been submitted to the City, and the City has taken that information to their own consultants. And I don't know what their own consultants say really at this point, but from what I have seen, I feel that it is very representative, yes. Is that a long way of answering a short question? Council Member Nichols No, that's a very appropriate way of answering it, and I appreciate it. I think it was important that we either have some confidence in the fiscal study that has been presented to us as a Council and is shown - or the residents have some queasiness about it - and I think, you're standing behind that is helpful. Steven Sutherland It's been four years in the making. Thank you. 20 Council Member Heffernan Maybe we can cover an area that I raised with Mr. Burnham, and that is the current composition of the tenant, because I think it's a relevant topic, because I think between now and the 27th, we're going to have to deal with this fiscal impact report. And, the identity of the tenants is a related issue to the numbers that the City has come upon. Can you address the tenant issue. Mr. Sutherland Yes, we have basically, up until just recently, I've had two partners in Bayside Pacific LLC and we are now moving to just one partner. It will be myself and one other partner, who has been involved already, it's not a new partner, but I think all of that will be presented to the City Attorney's office, most likely, by the end of this week, if not sooner, but it's Tuesday — we will have a full disclosure, yes. Council Member Heffernan And, then specifically, as to capital capability to do this as far as experience in operating a facility similar to this. And, the ability, of course, to address the fiscal impact revenue items that are part of that.. Steven Sutherland That's correct. We have — I think — maybe I should stop while I'm asked to leave. We have been with Regent International Hotels for a number of years. We cannot • sign an operating agreement with them until we have an agreement from the City. But, we still are anticipating that it will be operated by Regent. Mayor Ridgeway Phil, I thought you were here on number 12. Philip Arst That's a long wait so I ...... I got antsy, you know. Mayor Ridgeway, members of the City Council, someone has commented on the fiscal impact report. My background is that I have a minor in economics, my MBA degree, and spent my career in consulting and doing some financial analysis in specialized fields in the high tech industry. I think the principle source of difficulty to start with is that, as you announced, the lease agreement will not be available. Well, the principle source of revenue shown for the hotel is apparently land use, which I believe is based on the lease agreement. So, one cannot draw any final conclusions from this current issue of the fiscal impact report. It's open, and I hope - will be closed, and will be given enough time to review the lease before the next Council meeting. Now, having — another is we had a gentleman, a professional in the hotel industry and stated that the hotel - the number of employees averaged three employees per room for four star hotels in Orange County. This hotel claims to be five star, they have one employee per room. They say, well, that's because we don't have a lot of dining rooms, we don't have a banquet hall and the like. Well, those are amenities that a 21 major hotel has and attracts five star paying customers. The numbers work out to approximately $450 per night per room, which is maintained at a 601A level, growing to 75, over the first four years. And, I find that just unbelievable. According to Mr. Sutherland's own testimony, he's only going to have 100 employees. This was some time back when we debated at a previous meeting. And, it just doesn't match.. It's not a five star hotel to draw that kind of room rent, or there need to be some major changes in the parking and the number of employees. Five star hotel customers demand very high level of personal services. You just can't provide it at that level. Mr. Sutherland has mentioned Regency, we don't know if Regency signed off on this. We certainly haven't any major hotel operator that said this — these economics will work. We had a gentleman here with many years experience in the industry and he said they wouldn't, and the numbers I've seen would support that. We have no information on the tidelands /uplands demarcation line, so we don't' know how many timeshares can be put into the property — timeshares, of course, reducing the amount of TOT tax available to the City. It's an open -ended proposition, the way it is. And, finally, the fiscal impact report compared the hotel to what's on the ground now — 58 mobile homes that are on a short -term lease, so paying a reduced lease ate. I remember those hearings here at the Council. And, the homeowners have said that with longer term leases, they would pay approximately $1.7 million a year. Given business cycles, given the fact that the five star hotel concept is very questionable, I think the City Council is much better served — instead of rolling the dice on an unknown proposition — the City Council is better served if they were to leave the mobile homes there to take guaranteed money that's steady every year, independent of business cycles. Now, the preferred alternative is a park, but the fiscal impact report compared to what's on the ground. Certainly, comparing to what's in the general plan, the hotel would produce a great deal more money, but what kind of value can you assign to serving the public — the public getting use of the beaches, the public having full use of that parcel as a park. There are concepts floating around to show it as an aquatic park. That's what we should be doing. So far, I see this fiscal impact report as being very questionable and I certainly don't recommend rolling the dice based on this conflicting information. Thank you. Mayor Ridgeway Thank you. I would just make one comment to Mr. Arst's letter and item six, and I've been working on this project for six years. I have never heard $1.7 million from the mobile home park. It was a little over a million and that was at — and everything disintegrated after that. Philip Arst I do remember the session and — I thought it was at and just I called them — and I just didn't invent the number. Mayor Ridgeway 22 Okay, well, that was not the number, and the record will support that. Philip Arst Well, then I think this fiscal impact report should get the correct number instead of taking just what's on the ground and saying well - short term lease, that's what it is. Mayor Ridgeway Thank you, Phil. Council Member Heffernan Sharon, have we gotten any — addressing that last point — have we ever gotten a proposal orally, in writing, from the existing tenants there, what they would do if the lease was recast — anything to address the fiscal impact numbers at all. Assistant City Manager Wood I'm not sure if there's ever been anything in writing. I know that they have made comments as to what they would be willing to increase their rent to at some study sessions or public meetings on the subject, some time ago, and we could look back at the record for that. Council Member Heffernan • But, quite frankly, they have not addressed this specific........... Mayor Ridgeway Actually, my memory serves me of the eight proposals - they also sent in a letter with the eight proposals that proposed that they raise their rent from the then existing $600,000 to about — it was a little over a million. They actually physically made a — they actually made a proposal — you're not showing a proposal? Assistant City Manager Wood Not in response to the RFP. I think it was during the discussions of those proposals that....... Mayor Ridgeway They did send in a letter, but basically, agreeing to raise their rent, but....... Council Member Nichols Did that proposal include the ability to sell the trailers to other people, as well. In other words, one of the things that greatly decreased this is the ability for them to sell, other than to the City. Mayor Ridgeway It was a proposal for a long term lease. 23 • Council Member Nichols Which would have the resale capability of their leasehold. Mayor Ridgeway Correct. City Manager Bludau Mr. Mayor, at one point, $7 million for approximately 60 mobile homes, that would be $28,000 a year that they would be paying the City for lease. About $1,200 a month. Council Member Heffernan Let me address the second question, that is as to a park use — and this may not be relevant and you can just say they've never addressed this - the Parks, Beaches & Recreation Commission — have they ever addressed a park site — that use as an alternative, as to development costs and proposed uses and issues like that. Or, was it off the table because we had an exclusive right to negotiate on this specific use. Assistant City Manager Wood The Parks, Beaches & Recreation Commission was one of the parties that • responded to the City's RFP, and they submitted a proposal for park use on the site. There was never any cost analysis or revenue analysis. Council Member Heffernan That was one of the options that was presented to the Council that was cast aside for — I don't mean cast aside — but, was....... Assistant City Manager Wood Not selected. Council Member Heffernan It was not selected. Thank you. Council Member Nichols This non - selection was based on the criteria though in the EIR, right? Assistant City Manager Wood No, this was in 2000, when....... Council Member Nichols Oh, this was prior to that. 0 Assistant City Manager Wood 24 That this is what led to the agreement with Sutherland Talla Hospitality. Council Member Heffernan Okay, because the EIR selection criteria essentially eliminates any recreational alternative. And, that we didn't feel was appropriate in the committee. Assistant City Manager Wood Just a couple other responses, I think we also have to keep in mind that with the mobile home park, even if the lease revenue were to go up, we wouldn't realize the transient occupancy tax from that, which is estimated at over $1 million. And, then Mr. Arst made a comment about — without knowing the tidelands boundary, we can't know how many timeshares there could be, and therefore, we wouldn't know the full impact on the TOT. Well, the fiscal impact analysis assumed that - the maximum of 12, which is what's cited in the EIR, would be the fractionals. And, so I think in that sense, it's a worst case analysis. Mayor Ridgeway And, I would remind Council when we made this decision some four years ago, we do have an objective — a Council objective — on this piece o� property for a reasonable financial return, which is inconsistent, by the way, with the underlining park proposal. Stewart Berkshire • My name is Stewart Berkshire and I live at Marinapark, I have a long history of experience with this - all these plans and projects, and so forth, and RFP's and this and that, that has gone on over here, the past several years. Of course, the request for proposals was answered by nine actually, proposals that came in, because there was two from one proponent. And, the contractor that you hired to judge whether these were in response - responsive to the RFP — listed several that were, including one that we had cooperated with, but not the one you chose. You went out and said, well, we need more information and nobody knew quite what you wanted to do. But, then the next April, why, Sharon got up and said, well, the only one that's responsive at all is Steve Sutherland's. And, therefore, the City Council decided that he would be the City's agent to determine what project would be built. Guess what. It's his project that he decided would be built. The rents that we're talking about — we have done our own studies and I'm sure you are aware of the fact that we have, and you have done the same thing — you've had the appraiser out and you've made your studies. You know exactly what the going rate for rentals for mobile home parks on the bay are. There being three in number already that we can compare with. The highest possible rate currently is about $3400 a month. This is the highest — this is not the average, by any means. But, it does represent much more than double what we are paying now. I mean, much more than double what we are paying now to the City because we are not given a lease that has — that allows a person to make any plans to live there for a while. So, the $1.7 million is a • 25 very good figure. I've worked out myself and I know it's okay. You ask, was there anything in writing with us. No, of course not. Normally, we're given a lease to sign and that's it, or else get out. We've done the homework and we know exactly what these figures are. So, I don't think that we need to quibble about it. And, to say that if you kick us out and put in a hotel in, well, glory!. You get the transient occupancy tax. Well, sure, you won't get our rent though. You'll get the transient occupancy tax — I don't think you're going to get any more — I don't think you're going to get as much from that tax as you get from us. So, as far as the fiscal impact is concerned, you don't really have a whole lot of choice. You'd have to take the figure, as any marketer would — is take the figure that he's promising you times the probability you're going to get it and determine what that number is. And, then take our figure and say that's times 100 %, because you haven't lost a dime yet on rent for 50 years, that I know about, from rents here. So, as far as the fiscal impact is concerned, I think there's no — there's not much choice in this thing. But, I think that your project is very iffy and I — whatever happens will be taken care of with the law, alright. But, I just think that the City is walking into something very naively and the whole process, which I won't go into now — I can start way back over this thing and say all these things that were done, like the Keyser- Marston report, and the farce that that thing was and you guys swallowed it. I can't believe it. But, anyway, that's — we won't go into that — but, I do think that you ought to consider the people's objections. And, Tod, you said yourself, if the people of this peninsula do not want this project, you'd never vote for it. You did say it. So, did Gary Adams. Assistant City Manager Wood Mr. Mayor, I don't recall that in entering into the agreement with Sutherland Talla Hospitality, the City Council made Mr. Sutherland your agent. I believe that he was selected as the developer to develop the project that he had presented to you, which at that time, was I think 146 rooms. It's still substantially the same, although a smaller resort proposal. Madelene Arakelian Madelene Arakelian, resident on the peninsula. Since we're addressing the EIR and I was at the Planning Commission meeting, I think in the EIR, the traffic issue is inadequate beyond belief. And, it being that that's the most superior project for the land is also inadequate. I'm not a traffic engineer, but driving from the Coast Highway to the house at the end of the peninsula, takes 35 minutes even during the winter. Now, I don't know what kind of a survey they did, I listened to them, it made no sense to me whatsoever. Traffic is terrible on the peninsula and I think that needs to be looked at before you okay the EIR. And, the superiority of that stake as open land. Thank you. 0 Dr. Jan Vandersloot 26 Good evening, Mr. Mayor, City Council Members, my name is Jan Vandersloot. I live up in Newport Heights. I would like to also advocate for inclusion of a total open space alternative for this property that would be consistent with the underlying designation of recreation and environmental open space. And, I'd like to ask that you couch this in terms of what this means to the future people of Newport Beach, our children, our grandchildren. I've asked that the people from Newport Coast come down to take a look at this property. I asked the people of Corona del Mar to come down and take a look at this property. And, the people from Newport Heights come down and take a look at this property. Because this property is the best kept secret in Newport Beach. It's actually a beautiful spot. The beach is quiet, it's serene, it's practically empty, people don't know about it, they can't see it from Balboa Boulevard. And, if I think they see this property, they will find no way that they will allow this property to be sold to a private developer. I'd like to ask why this City thinks we have to sell our heritage to a developer. And, if you look at the budget of Newport Beach, it's something like $170 million for about 75,000 people. And, if you look at the budget of Costa Mesa of about $110 million for 85,000 people, Costa Mesa is spending 40% less budget for more people. So, why do we, in Newport Beach, need to sell off our precious assets for some transient occupancy tax, or in the future, if all this turns into a timeshare hotel. Why do we need to do that. I submit that we don't need to do that and one way that we can inform the people of Newport Beach about the value of this property is to develop an alternative in the EIR that is totally open space. This would be as Bob Burnham says, a plan to plan type alternative. And, I think that this to be complete, the EIR should include this alternative and we should also invite the people to come down and take a look at what they will be losing if this hotel is built. I'd like to ask people that they envision this place as being an open window to the bay that where I, as a Newport Heights resident, can come down, rather than driving around and around looking for a parking space, I have a place to park at this site. I think that the people of Newport Beach will be best served if we keep this recreation and environmental open space. And, I think that we really need to evaluate the alternatives before we go ahead and approve the EIR. Thank you very much. Mayor Ridgeway Okay. Anybody else like to be heard on this item? Seeing no one, I will close the public hearing. I believe we need a motion to continue this item. Council Member Bromberg Mayor, I'll move that we — what I believe we're supposed to do it per the agenda — is I'll move that we continue the public hearing to July 27, 2004. Council Member Rosansky Second. Mayor Ridgeway 27 0 Any discussion? Okay, call for the vote. City Clerk Harkless Motion carries. 0 0 Wi EIR -14 City Council Staff Report for July 27, 2004 0 • APPLIED DEVEI.OPME NT ECONOMICS MEMORANDUM TO: Sharon Wood From: Doug Svensson Copy: Date: July 27, 2004 Re: Revised Table for Marina Park Fiscal Analysis As requested, we have redone Table 6 in our report on the fiscal impacts of the Marina Park project. The new table leaves all the numbers in constant 2004 dollars, rather than showing the figures in current dollars that change with inflation. The result of this change is that the figures are lower, since 2004 dollars have more buying power than do future dollars. The annual net revenue from the project in Year 2015 would be $2,111,287 in 2004 dollars compared to $3,928,294 in 2015 dollars. Similarly, the cumulative net revenue in the revised table is $4,405,223 lower than the figures shown in the report ($18,483,531 compared to $22,888,754). Once the project has stabilized in year 2010, nearly all the figures in the table remain constant in 2004 dollar terms. The property tax is the one exception because the Proposition 13 limitation on annual property assessment increases causes the property tax to degrade in constant dollar terms. Thus, the property tax in the revised tables is shown to decline slightly each year. 2029 University Avenue • Berkeley, CA 94704 • Tel 510.548.5912 • Fax 510.548.6123 E -mail ade @adeusa.com TABLE 6 Marina Park Fiscal Impact Projections, 2006 -2014, in 2004 Dollars 0 11 Development Operations Revenues Year 1 Year 2 Year 1 Year 2 Year 3 (2005) (2006) (2007) (2008) (2009) GENERAL FUND Property Tax $('5'ois $64;11( $63,;01 Sales Tax $46,173 - $50,465 $52,940 Transient Occupancy Tar $ -23 -'S8 $'91,9 18 $t- '8.0112 Franchise Fees 51,177 $1,177 $1,17.7 Business Licenses $253 $.'.:i3 $253 Motor Vehick in -Lieu $0 $0 $0 Other Intergovernmental $:ll.t $514 $514 Charges for.Service. .. . $2,782 ; . $2,782 x:$2,782. Fines, Penalties, and Forfeitures $1,112' $1,1)2" $1,02' Ucerlses and l5emvts 7., $123' ' • $123 . •$123 Use of Property $1,736 $1,-36 $1,%36 Other Revenue .$182 .$182., ' $182 Interest Income $15.3_- $15.3_- $15_.2 SUBTOTAL GENERAL FUND $0 $0 $858,100 $932,950 $1,017,853 TIDELANDS FUND Licenses, Permits, and Fees $379 $379 $379 Use of Money and ProptTty- $Sill11(111 $iS111HH1 $1.016,656 $9 - i76 $I t16H 65H GAS TAX $0 $U . $0 MEASURE M $8('11 $')1n) $920 SUBTOTAL OTHER FUNDS $550,000 $550,000 $1,007,905 $978,626 $1,069,968 TOTAL REVENUE $550,000 $550,000 $1,866,005 $1,911,575 $2,087,821 Expenditures GENERAL FUND Genc4al Government $2,286 $2'-)86 $2,286 Police $7,712 $7,772 $7,772 fire S,t,9.t- $1 �1° $4.9-1- Public Works .$6,098 $6,698. $6,698 Community Development $740 $ -40 $ -40 Community S&Vices - ' $0 $0,i::. CIP streets $845 $845 $8.15 Outer CIP Pm)ects $950 $950 . , $950, SUBTOTAL GENERAL FUND $1) $0 $24,239 $24,231) $24,239 TIDELANDS FUND Harbor Resources $0 $0 $0 Oil and Gas $0 $0 $0 CIP $1,080,000 $0 $254 $254 $254 GAS TAX $1,009 $1,009 $1,009 MEASURE M $684 $684 $684 SUBTOTAL OTHER FUNDS $1,080,000 $0 $1,947 $1,947 $1,947 TOTAL EXPENDITURES $1,080,000 $0 $26,185 $26,185 $26,185 NET ($530,000) $550,000 $1,839,819 $1,885,390 $2,061,636 CUMULATIVE NET ($530,000) $20,000 $1,859,819 $3,745,209 $5,806,845 Source: AIDE, City of Newport Beach, Keyser Marston Associates, PKF Consulting *Revenues from Use of Monev and Property may change based on credits given to the developer for option payments. 0 11 Revenues Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Cliarges for Servioe; (2010) (2011) (2012) (2013) (2014) (2015) GENERAL FUND $LUVO, ?S3 $1,096, -53 $l,1)v6,-53 $1096, 753 Property Tax $6.3,1 -2 $(•'.vi5 $61 ?51 $61,3n1) $(,0,754 $60,164 Sales Tax $54,330 $54-3-10 $54,370. . $54,370 $5437ifi`; $54;370 Traadent Occupancy Tax $901..32 $9u1, -32 $901, 732 $701. -;.'. $901,732 $901:(32 TOTAL REVENUE $2,140,480 $2,139,867 .... "43,177 $1,177. Business Licenses $: ,3 $253 $2533 153 $215.3 25 MotorVetude =m- $0 - ".:•3 $O ;.50 . $0. $0. 'so Other Intergovernmental $314 $;14 $511 $514 VAI $514 CI a45.for Service $2,78' $2,382 $2,782: $2,782 . $2,782, $2,782 Fines, Penalties, and Forfeitures $1712 $1!32- $1 �2- $1,02' $) n?- $1 �T lkensesand Permits .$123 $123 - g1?3 . $123 ' $123': $123 Use of Property $1.'36 $1,-36 $1,.-36 $1.7136 $],-36 $1;'36 Other. Revenue... $182. $182 $182 $182.... $182 - $182 Interest Income $15,.,27 $15,32- $15,32- $15,3_1- $15,32:' $15,3.. - ' SUBTOTAL GENERAL FUND $1,042,394 $1,041,-81 $1,041,1 74 $1,040,57-2 $1,039,9:'6 $1,039,38; TIDELANDS FUND Licenses, Permits, and Fees $3:9 $377 $-,79 $379 $3-9 $379 Cliarges for Servioe; $11 $11 .. $11 $11 "• $11. $11 Use of Money and Property- $LUVO, ?S3 $1,096, -53 $l,1)v6,-53 $1096, 753 GAS TAX $0 $0 j0 ... $.0 $0. $4,947 MEASURE M $943 $9.0 $943 $943 $943 $943 SUBTOTAL OTHER FUNDS $1,098,086 $1,098,086 $1,098,086 $1,098,086 $1,098,086 $1,098,086 TOTAL REVENUE $2,140,480 $2,139,867 $2,139,259 $2,138,658 $2,138,062 $2,137,473 Expenditures GENERAL FUND General Government $2,386 $2,286 $2,286 $2,286 $2,286 $2,286 Police .. 57,772 47,772:.:%, , Fire $4,947 $4,947 $4,947 $4,947 $4'147 $4,947 .Pudic Works °;• •`- ..,:46,698, ,. - ?4669$ ,. f6698,..i_::'- 46'7,9 ` 46,6)6.: S6,69$ Community Development $740 $-40 $741) $740 $740 $ -40 :Cammunity5ervrces: :. $0 ..;SO'$0 $0,f0 , ._..$0 CIP Streets $8.15 $8.15 a $845 $8.15 $84; $845 OfheTCIP:Projecfs: i. $950 $950 b950... $9.50 _ $950 •. ' _ .. 4950. SUBTOTAL GENERAL FUND $24._139 $24,239 $24,239 $21,239 $24,139 $24,239 TIDELANDS FUND Harbor Resources $0 $0 $0 $0 $0 $0 Oil and Gas $0 $0 $0 $0 $0 $0 CIP $254 $254 $254 $254 $254 $254 GAS TAX $1,009 $1,009 $1,009 $1,009 $1,009 $1,009 MEASURE M $684 $684 $684 $684 $684 $684 SUBTOTAL OTHER FUNDS $1,947 $1,947 $1.947 $1,947 $1,947 $1,947 TOTAL EXPENDITURES $26,185 $26,185 $26,185 $26,185 $26,185 $26,185 NET(COST) /REVENUE $2,114,295 $2,113,681 $2,113,074 $2,112,472 $2,111,877 $2,111,287 CUMULATIVE NET $7,921,139 $10,034,821 $12,147,895 $14,260,367 $16,372,244 $18,483,531 Source: AIDE., City of Newport Beach, Keyser Marston Associates, PKF Consulting 'Revenues from Use of Money and Property may change based on credits given to the developer for option payments. L 12 1 26 04 11:13a Brewer (9491 640_ -_4673 P.1 "RECEIVQ AFTER AG NO PRiNITEV' 10 Marilyn C. Of elder 1603 Aran t31' Orive NewPOrL Beach, California July 26, 2002 Tod Ridgeway, Mayor City Council members City of Newport Beach Newport Beach, California Re; Marinapark Resort and Community Plan Dear Mayor Ridgeway and Council Members; As a twenty year resident of Newport Beach, I feel compelled to express my support for tale Marinapark resort and Community Plan. Certainly, Newport Bay is the crown jewel of this city and deserves protection and enhancement. For far too long the peninsula has remained blighted and has not benefited from renovation. This project will serve as the badly needed catalyst and foundation for the revitalization and renewal of the BalBoa Peninsula. Your own planning commission has unanimously ruled that the environmental impact report on this project is sufficient, Arguments against this development are specious. For some years this property has been a privately held trailer park. It has never been a public park for general public use. There are many advantages to the peninsula in approving this project: additional parking, public access, renovation of the Girl Scout House and the American Legion Yacht Club. The City of Newport Beach will be well served by your "aye" vote. Many thanks for your consideration u1 this important matter. Best regardc,A Marilyn C. Brewer SCAR - %A TAK;F� (Homeowner Association 23 July 2004 Mayor and Members of the Newport City Council City of Newport Beach 3300 Newport Blvd. Newport Beach, CA 92663 Proposal for Marinapark Dear Mayor Ridgeway and Members of the City Council: i2Z,t 3b. `N During the City Council Meeting of 13 July 2004, the question came up about the financial qualifications of the entity currently proposing to build a hotel/timeshare at Marinapark. In view of the apparent disarray of that entity, it seems that an alternate proposal may be considered by the Council. Accordingly, the Homeowners of Marinapark herewith propose an alternate plan for the future utilization of this property. The City could easily renew leases for the Mobilehome Park for an extended period which would 1. assure a very respectable return to the City, 2, reduce if not eliminate the present furor over the development of this area 3, obviate any requirement for a revision to the General Plan, 4, require no qualification of any proponent other than currently performed for a lease transfer, 5, eliminate Staff efforts to research, analyze and make proposals to the Council, and 6, require no expense to the City to relocate current owners. To start with the return to the City, the most recent appraisal was the April 4, 2002 study by William R. Hansen, MAI, commissioned by the City. His "Comparison of Rental Value Conclusions" shows: Front View 2 "a Tier 3`a Tier 20 Year New Lease $2,650 $1,650 $1,550 He states that amounts are to include an annual CPI adjustment. We may assume that the CPI adjustments between April 2002 and whatever date marks the start of a new lease here amounts to 10 %, and then the above figures become $2,915 $1,815 $1,705 Number of Units 25 22 11 Monthly rents $72,875 $39,930 $18,755 (Homeowner Association Adding these comes to total monthly rent revenue of $131,560, and annually of $1,578,720. This figure is 100% guaranteed both at the outset and with increases in the foreseeable future. These increases would include the annual CPI adjustment and a periodic review. In this way, the City would be assured of the maximum increases that "fair market value" implies. The Tidelands issue would become a non - issue. We have previously made a case before the State Lands Commission to the effect that the Court Cases of the late twenties which declared the adjacent lands to be upland also decided the status of this parcel. This was accompanied by a title policy in favor of the City which guaranteed that this parcel is indeed upland. In any case, the State has mobile home parks on Trust Property elsewhere in the State, deeming that "mobile" means that it is not a permanent residential use of the property. In addition, the beginning paragraphs of the Mobilehome Residency Law specifically cite the desirability of mobilehome parks in the State's housing mix. Most citizens who are now most active in their opposition to the hotel have no such feelings about the presence of the Mobilehome Park. Continuing access to the existing tennis courts, and basketball court, and not disturbing the area of the Girl Scout House would be a comfort to many. Indeed, some of the letters to the Pilot are from those who do not live here, but have visited here to see what it looks like. They have been most complimentary about the beauty of the public beach and are alarmed that this access and unspoiled beauty may be ruined by such a major commercial development as the hotel. Our observation is that the park would improve rather dramatically, and at no cost to the City, if owners had a lease long enough to at least amortize the cost of updates and improvements. In addition, the freedom to bring new homes on board would beautify the area even more, but, again, people need assurance of the permanency of residency. Altogether, a decision to renew the parcel as Marinapark Mobilehome Park will solve many of the problems now facing the citizens of Newport Beach and the City Government. Neither is the economic return to the City to be trivialized. It will be roughly twice the revenue per acre returned by the Balboa Bay Club, even when it is prospering, and three times the return per acre of Beacon Bay residences. These benefits to the City and to the political climate deserve your most careful consideration. Sincerely, Marinapark Homeowners Board of Directors Bob Seymour, President 1 7 7 0 W E S T B A L B O A BLVD. N E W P O R T BEACH, CA 9 2 6 6 3 Central Newport 'Beach iQ Community Association P.O. Box 884 + Newport Beach, Califern;a 92661 July 26, 2004 Members of the City Council City of Newport Beach 3300 Newport Boulevard Newport Beach, California 92663 Re: Agenda Item 16, July 27, 2004 — Marinapark Dear Members of the Council: The Central Newport Beach Community Association ( CNBCA), in response to City staff recommendations, urges the City Council to: NOT adopt Resolution (Exhibit A) certifying the final Environmental Impact Report for the Marinapark Resort and Community Pian. 2. NOT adopt Resolution (Exhibit C) placing amendments to the General Plan on the November 2004 ballot. If this Resolution is adopted, alternate language is recommended below. If the CNBCA recommendations are adopted, any election will be deferred until the next general election following November 2004. 4. If the project is to be pursued, direct staff to have corrections and reanalysis performed on the PKF and ADE financial studies. 5. Revise recommendations of the Negotiating Committee as described below. 6. Terminate the agreement with Sutherland Talla Hospitality (STH) based on default of Section X (E) of the Amended Agreement between STH and the City. The breach occurs in Section X (B). In no case should the City consent to assignment of the rights of STH under this agreement. Discussion of above recommendations: The EIR is not yet in a form to be certified. The issue raised by CNBCA regarding the dismissal of including Recreation as incurring a significant impact was not addressed in the responses to comments. Recreation should have been addressed as such in the EIR. The response made to the CNBCA letter to the Planning Commission regarding misrepresentation of the number of employees was not addressed in the Supplemental Letter from Michael Brandman Associates included in the current staff report. Other responses to CNBCA comments were incorrect such as stating that visual coastal access is not an issue of the Coastal Commission when, in fact, the Coastal Act expressly includes it; the Coastal Commission has imposed changes to other coastal projects in order to accommodate visual access. Indeed, the document was prepared for a possibly non - existent project applicant, Marinapark LLC (see attached Exhibit A). 2. If the Council does choose to place the General Plan Amendments on the November ballot the following wording (with changes noted) should be adopted: Shall the Newport Beach General Plan designations for Marinapark, approximately 8 acres of City -owned baysidefront property on Balboa Peninsula between the American Legion and 18`h Street, be amended from Recreation and Environmental Open Space to Recreational and Marine Commercial to permit a resort with a maximum of 110 guest units and 96,000 square feet including a restaurant a cafe a ballroom a bar and a spa on approximately 5 acres and a Community Center and replacement of existing public recreation facilities on 3 acres? 3. The Amended Agreement between the City and STH provides for the General Plan Amendments to go to a vote at a general election. This does not require a vote in November 2004. This project is very complex, involving many documents and has too many questions open to be rushed to immediate election. Even though the STH representative iterates how long the project has been underway, the financial documents just became available and the nature of the true project applicant is unknown (see 6 below). The staff report notes that the Fiscal Impact Analysis submitted on July 8, 2004 was incorrect in its income projections but a revised version has not been obtainable via internet. 4. Neither the PKF nor the Applied Development Economics (ADE) studies addresses any revenue to the City from the potential sale of fractional ownerships. The City should receive revenue from the sales in that a good portion of the sale value is in the lease. The ADE study projects increasing revenue from property tax. The tax is a possessory interest tax that decreases each year due to the diminishing value of the leasehold interest. The unfortunate comparison made by ADE between the hotel projections and current mobile home revenues demonstrates this principle. The tax revenue shown from the mobile home park is due to its having only one year leases which are of comparatively low value. The 2 ADE study has a CIP expense to the City of $1,080,000 in Year 1. This line item is unexplained. If it is for relocation of the mobile home park tenants, the amount is inadequate. Neither the PKF nor the ADE studies addresses the mobile home park relocation or demolition expenses. Rent for the tidelands must be addressed separately from other economic benefits to the City. Fair market value rent must be received for the tidelands and cannot be traded for revenues such as TOT to the General Fund. Additionally, any reference to "balancing the tidelands fund" should be omitted. The obligation to the tidelands fund is that any tidelands revenue must be spent in the tidelands. There is no legal obligation to balance the fund and non - tidelands revenues can be spent within the tidelands. 5. The Fiscal Impact Analysis requires correction. General Recommendation 1 regarding negotiations, should the Council choose to pursue them, should be to obtain fair market value for each and every item being negotiated. Anything less will be a gift of public funds. Recommendation 2 should include State Law. Recommendation 3 should define default including default of terms of the lease and default of financial obligations that could result in an unknown entity taking control of the property possibly mismanaging and /or degrading the quality of the improvements. Recommendation 4 should require the lessee to have the financial ability to construct and operate the hotel as well as funding the public benefits without substantially leveraging the project. If there are operating or construction contracts, the lessee should have demonstrated experience in managing such contracts,The principals of the lessee should also have reputations as upstanding citizens of good moral character as well as having reputations for responsible and community sensitive development. 6. The Amended Agreement between STH and the City contains as default clause in Section X (E). We believe that Section X (B) of the agreement has been breached. Although that section addresses Assignment, it states that "STH acknowledges that the City Council is relying on the personal knowledge, skill, ability and integrity of STH and its principals... A) The EIR states that the applicant is Marinapark LLC. This would be an assignment, however there is no Marinapark LLC in the State of California (Exhibit A). B) STH proposes to assign its interest to Bayside Pacific LLC. There is such an entity with D. Michael Talla as the agent for service of process but, as of July 13, 2004, there are no names or addresses of officers or address of principal office on files with the State (Exhibit B). 3 C) There are no City of Newport Beach business licenses for Marinapark LLC, Bayside Pacific LLC, Sutherland Talla Hospitality. The business license for Stephen Sutherland was closed in 2002 at the same address that is being used for Bayside Pacific (Exhibit C). D) In a July 16, 2004 statement in the Daily Pilot, Stephen Sutherland stated that he had found a business in which Mr. Talla had invested that he was not comfortable with and that Mr. Talla had withdrawn from the project. Newspaper articles, readily available on the internet, including one dated June 19, 2003, discussed Mr. Talla's problems with his operations of strip clubs in Las Vegas (Exhibit D). Mr. Sutherland further stated that he is going to develop the project with Bayside Pacific LLC, a company of which Mr. Talla is the only acknowledged member (Exhibit B). Based on the above, the Council should find that STH is in default of its agreement. In no case should the principals of STH be rewarded by being able to assign, i.e. sell, their interest in the Amended Agreement to persons previously unknown and uninvolved with the City. The City relied on Mr. Talla's experience in operating sports clubs, especially for the spa operation. It has relied on Mr. Sutherland's expertise that he now characterizes on his website as "designer" of resorts not "developer." Neither has performed in a manner that should be expected of a lessee of prime public property that is of statewide importance. If the Council still wishes to pursue development of a hotel, despite the plea of local citizens to retain the site for public marine recreation purposes as had been planned for many years, the Council should terminate the Amended Agreement with STH and issue an RFP that will result in responses from experienced hotel developers. Thank you for the opportunity for input to this project. We sincerely appreciate the ability, most of the time, to access documents on the City's website. Because this is a volunteer effort to respond, more time to analyze complex documents would have been helpful. Very �truly �yours, .� Louise Fundenberg, President !I ilifornia Secretary of State - California Business Search - Limited Partnership / Limited Liability Co EXHIBIT p C01 liilfi0.1411�1a �lustuless Portal . f! o JS �' rIXND]': S. iY[t1 d317Sd " ,( 1 Business Search ' _ __ _ j w LP /LLC The information displayed here is current as of "Jul 16, 2004" and is updated weekly. It is not a complete or certified record of the Limited Partnership or Limited Liability Company. _.... ...._.._.. ... ... _.._ _.__.____.... -- -. If you are unable to locate a record, you may submit a request to this office for a more extensive search. Fees and instructions for requesting the search or for the certification of Limited Partnership or Limited Liability Company records are included on the LPILLC Records Order Form. No results matched the search term : "Marinapark LLC" Need help with your search? lob California Secretary of State. Privacy Statement. A tn:// kenler. ss.ca.sov /comdata/ShowLi)llcList 7/25/2004 EXHIBIT B _. 10. RETURN TO: F NAME Kandis L. Partington FIRM Resch Polster Alpert & Berger, LLP ADDRESS 10390 Santa Monica Boulevard, Suite 400 CITYISTATE Los Angeles, California ZIP CODE 90025 0? "` �'�0�31 4100x9 , ..............r State of California File # g: Kevin Shelley Secretary of State C.<IiOPP! FILDP In the office of the ecretery of State LIMITED LIABILITY COMPANY of the State of California ARTICLES OF ORGANIZATION NOV 0 7 2003 RET OF STATE A $70.00 filing fee must accompany this form. KEVIN SHELtLEY IMPORTANT- Read instructions before completing this form. This Space For Filing Use Only 1. NAME OF THE LIMITED LIABILITY COMPANY (END THE NAME WITH THE WORDS LIMITED LIABILITY COMPANY; "LTD. LIABILITY CO., "OR THE ABBREVIATIONS LLC" OR L.L.C.' Bayside Pacific, LLC 2. THE PURPOSE OF THE LIMITED LIABILITY COMPANY IS TO ENGAGE IN ANY LAWFUL ACT OR ACTIVITY FOR WHICH A LIMITED LIABILITY COMPANY MAY BE ORGANIZED UNDER THE BEVERLY- KILLEA LIMITED LIABILITY COMPANY ACT. 3. CHECK THE APPROPRIATE PROVISION BELOW AND NAME THE AGENT FOR SERVICE OF PROCESS. ✓ AN INDIVIDUAL RESIDING IN CALIFORNIA. PROCEED TO ITEM 4. 1 = A CORPORATION WHICH HAS FILED A CERTIFICATE PURSUANT TO SECTION 1505. PROCEED TO ITEM 5. AGENTS NAME: D. Michael Talla 4. ADDRESS OF THE AGENT FOR SERVICE OF PROCESS IN CALIFORNIA, IF AN INDIVIDUAL: ADDRESS 11100 Santa Monica Boulevard Suite 300 CITY Los Angeles STATE CA ZIPCOOE 90025 5. THE LIMITED LIABILITY COMPANY WILL BE MANAGED BY: (CHECK ONE) nom— ONE MANAGER MORE THAN ONE MANAGER r--j ALL LIMITED LIABILITY COMPANY MEMBER(S) 6. OTHER MATTERS TO BE INCLUDED IN THIS CERTIFICATE MAYBE SET FORTH ON SEPARATE ATTACHED PAGES AND ARE MADE A INCLUDE THE LATEST DATE ON WHICH THE LIMITED LIABILITY COMPANY IS TO PART OF THIS CERTIFICATE. OTHER MATTERS MAY DISSOLVE. 7. NUMBER OF PAGES ATTACHED, IF ANY: 8. TYPE OF BUSINESS OF THE LIMITED LIABILITY COMPANY. (FOR INFORMATIONAL PURPOSES ONLY) real estate development 9. IT IS HEREBY DECLARED THAT I AM THE PERSON WHO EXECUTED THIS INSTRUMENT, WHICH EXECUTION IS MY ACT AND DEED. ,/������ r, ✓1 ��„����A� J November 5, 2003 SIGNATURE OF ORGANIZER DATE Kandis L. Partington TYPE aR PRINT NAME OF ORGANIZER 10. RETURN TO: F NAME Kandis L. Partington FIRM Resch Polster Alpert & Berger, LLP ADDRESS 10390 Santa Monica Boulevard, Suite 400 CITYISTATE Los Angeles, California ZIP CODE 90025 �l •i SECRETARY OF STATE KEVIN SHELLEY STATE OF CALIFORNIA July 13, 2004 This is in reply to your inquiry of June 14, 2004 The records of this office indicate that BAYSIDE PACIFIC, LLC ❑ Is not of record in this office as either .a Domestic or Foreign ❑ Is in good legal standing ❑ A statement as to the names and addresses of the agent, officers and directors and the addresses of the principal office are on file in this office. A copy of the filed statement may be obtained for a fee of $1.00 for the first page, and $0.50 for each additional page. If you would like the statement certified, there is an additional $5.00 fee. ® No statement as to the names and addresses of officers or addresses of the principal office has been filed in this office. ❑ A statement of information is not required to be filed by the entity indicated above. Only Limited Liability Companies and Corporations are required to file them. ❑ Agent for service of process: ❑ No agent for service of process has been designated. ❑ Was suspended by order of the Franchise Tax Board on For non - compliance with statutory requirements. ❑ Was suspended by the Secretary of State on for failure to file a statement of officers. ❑ Was dissolved on ❑ Its term of existence expired on ❑ Was merged into: ❑ Surrendered its right to transact intrastate business in California on ❑ Forfeited its right to transact business in California on for non - compliance with statutory requirements. ❑ Copies of bylaws and names of shareholders or owners are not made of records with the Secretary of State. ❑ Information regarding related businesses of individual corporate entities is not made of record with the Secretary of State. INFORMATION RETRIEVAUCERTIFICATION UNIT STATC1.101 (03104) CERTMCATION AND RECORDS r5CO lI7N S � Kl:ll', jRl l i L • SACR:�WlL rO, (A 95314 • Ev) ROK 94426c • sv:R. \. EJCN"ft!, cA 9424#z6: • 916 65� 5448 • x \\'\\'si.i.:A.r t q' PROGRA615 dKCHi'.'fS, dU51N LSS I'Ri K;KAA!5, EJI(:IlptiS, ;Ni PKdi ATION "fF'.CHN0[CK;Y. C.AGFORMA 4fATF HNT(AS SIGtif U.tL 31: \ >:\C,1 \tLYf tiPKC IGf.l, kV'P : \T H(la[, IA` \IPtiI'If. PARTDiLKi Kf.0 1iTRY: \UISi K` Pl'Y,11C, MIL 1711':11 KCPC )R }I EXHIBIT C Newport Beach Business License Directory Help: Pasting results into Excel Bus.# Compan y Owner Ownershi p Type Address City /State /Zip Phone Start Date Expiratio n Date Status STEPHE STEPHE N R. N R. NEWPOR SUTHER SUTHER 4500 T BEACH BT98042 LAND LAND CORPOR CAMPUS CA 92660- 949 -757- DR #650 072 CO. CO ATION 0000 11662 05/12/99 04/30/02 Closed Ls Vegas SUN: Topless club investor welcomes licensing investigation .� 11111W merican 1 a& t■ o P■■ y AOmnrpwCaw PesY Tie 0111111111111111 Sf0R11FS: tM1IMM Printable text version I Mail. this to a fiend 7t>1w June 19, 2003 Topless club investor welcomes licensing investigation By Jeff Gorman <german@lasvegassu n.com> LAS VEGAS SUN A major partner in the newly opened Sapphire topless club said Wednesday that he welcomes a licensing investigation into the backgrounds of a half -dozen previously undisclosed investors in the Las Vegas business. The investors were disclosed last month under pressure from longtime topless nightclub operator Pete Eludes, whose company, SHAC Eliades, owns the other 50 percent of Sapphire, which opened last December. The Talla and Eliades companies operate Sapphire under a company called SHAC LLC. Eliades and Talla, who runs several athletic clubs throughout the country, have become embroiled in a battle for control of the 71,000- square -foot Sapphire, which is billed as the world's largest strip club. Talla filed suit in District Court late last week against Eliades and SHAC Eliades, alleging Eliades was interfering with his business interests at Sapphire and Olympic Garden, another topless club jointly wtstsssts stssstss� SCORE f A ROOM If H IN VEGAS P JJJlJJJJ Sttttttt tp:l lwww. lasvegassun. com/ sunbin /storieslconsumer /2003fjunI l 9/515239252.htng Page I of 3 EXHIBIT D 7/25/2004 'They'll come forward and they'll be licensed," said icon, D. Michael Talla, a Los Angeles businessman and Showbt. weeklY real estate developer. "They're totally suitable." ee Vpee weekly Like Veres Life Talla, whose company, SHAC MT, owns a 50 NoW Resorts percent interest in the Sapphire club, was reacting to word that Clark County business license investigators plan to conduct background checks into the six silent partners brought in by Talla. The investors were disclosed last month under pressure from longtime topless nightclub operator Pete Eludes, whose company, SHAC Eliades, owns the other 50 percent of Sapphire, which opened last December. The Talla and Eliades companies operate Sapphire under a company called SHAC LLC. Eliades and Talla, who runs several athletic clubs throughout the country, have become embroiled in a battle for control of the 71,000- square -foot Sapphire, which is billed as the world's largest strip club. Talla filed suit in District Court late last week against Eliades and SHAC Eliades, alleging Eliades was interfering with his business interests at Sapphire and Olympic Garden, another topless club jointly wtstsssts stssstss� SCORE f A ROOM If H IN VEGAS P JJJlJJJJ Sttttttt tp:l lwww. lasvegassun. com/ sunbin /storieslconsumer /2003fjunI l 9/515239252.htng Page I of 3 EXHIBIT D 7/25/2004 is Vegas SUN: Topless club investor welcomes licensing investigation owned by Talla and Eliades. Talla asked District Judge Jennifer Togliatti to modify his agreements with Eliades to give him sole possession of Sapphire and leave Olympic Garden to Eliades. Eliades and his Las Vegas lawyer, Mark Tratos, denied Talla's allegations Wednesday, and they accused Talla of deliberately withholding the names of the six hidden partners from Eliades and licensing authorities. Eliades and Tratos plan to file a countersuit against Talla in the coming days. Talla called their accusations "absurd" and "ridiculous" and said he was confident he would prevail in court. "At the end of the day the judge will decide what's fair," he said. "I've made full disclosure. Some of those partners were admitted after we got the licenses." But Eliades countered: "He never would have disclosed these names if I hadn't brought it to his attention. My attorney reported it to authorities." Talla acknowledged Wednesday that three of the just - disclosed partners are attorneys in the Los Angeles law firm that helped him put together the $25 million deal with Eliades to purchase the old Sporting House Athletic Club, 3025 S. Industrial Road, and convert it to the Sapphire club. The attorneys, Lee Poster, Peter Alpert and Sheldon Berger, are members of Resch Polster Alpert & Berger, a firm that specializes in real estate and corporate law. The firm's senior partner, Ronald Resch, said in a telephone interview from Los Angeles that none of the three lawyers were involved in the Sapphire negotiations and they have no conflict of interest. He described their investments as "relatively minor." In a May 14 letter to the county's Department of Business Licenses, Talla said the three lawyers became nonvoting partners on Dec. 15, two days after Sapphire opened its doors. They formed a company called Badda Bing Partners, each investing $47,619 in Sapphire, he said. Page 2 of 3 tp : / /www.lasvegassun.com/sunbin/ stories / consumer /2003/jun/19/515239252.htm1 7/25/2004 is Vegas SUN: Topless club investor welcomes licensing investigation Talla told the Las Vegas Sun Wednesday that the attorneys also each invested the same amount in the Olympic Garden. He said another company he runs, OG -LA, co -owns the Olympic Garden with Eliades. "Badda Bing's overall interest in Sapphire is .5 percent," Talla explained in his letter to the county. Talla would not give the Sun details about the other three investors, Robert Shipp of Los Angeles, John Moller of Malibu and George Vasilakos of Las Vegas. But Talla told the county their interests in Sapphire totaled about 10.6 percent. Talla listed himself as having a 20.6 percent interest in Sapphire and two previously disclosed partners, Rex A. Licklider and SHAC Feinstein, as having a combined investment of 18.3 percent. On Wednesday, Ardel Jorgenson, the county's business license director, said investigators planned to take an "in- depth" look into the claims of hidden ownership in Talla's share of Sapphire. She would not say whether sanctions would be sought against Talla for not disclosing the additional partners earlier. Jim DiFiore, manager of the city's Business Services Division, said his agency hasn't decided whether the new disclosures have a bearing on the license of the Olympic Garden, which is in the city. Printable text version I Mail this to a friend Las. Vegas. SUN . main page Problems or questions Read ou A y on privacy and cookies. Advertise on Vegas.com. All contents ® 1996 - 2004 Las Vegas Sun, Inc. Nevada's Largest Website Page 3 of' tp : / /www.fasvegassun.com/sunbin/ stories / consumer /2003/J*un/19/515239252.htm1 7/25/2004 Members of the Newport Beach City Council Re: Marinapark Dear Councilmember: Generally, the "Highest and Best Use" of land, is that use which will generate the maximum net profit -- in dollars. But that rule is applied to private property, whether commercial, industrial, or residential. It should not be applied to publicly -owned property, especially when that property has been zoned Open Space, Parkland, or Recreational, and especially when those are the historically- intended and historically - promised uses. The seven members of the City Council do not wholly own Marinapark - only seven /seventy five thousandths of it. We the people - the other seventy four thousand nine hundred and ninety three - own the overwhelming majority. This private development process should never have been allowed to begin, without a vote of all the owners, not just seven people. Let the Bay Club be a shameful example of betraying the fiduciary trust the people placed in a previous council. Don't make the same mistake again. Cut off this misadvent e this very evening! j�J�` Footno�_It is agreed that cities today are hardpressed to find the funds to operate. But this is not the way. What's next: selling off our city streets as private toll roads? Gordon and Mimi Glass (Residents since 1955) 2024 Avenida Chico, Newport Beach 92660 949 - 644 -1954 fax 1584 July 27, 2004 cc: Daily Pilot Orange County Register Los Angeles Times g 0 N ti n %0 6 A 07/27;2004 12:52 FAX 7605101565 LAW OFF EVERETT OELANO LAW OFFICES OF EVERETT L. DELANO III 220 W. Grand Avenue Escondido, California 92025 (760) 510 -1562 (760) 510 -1565 (fax) July 27, 2004 VIA FACSIMILE d U.S. MAIL Sharon Wood Assistant City Manager City of Newport Beach 3300 Newport Blvd. Newport Beach, CA 92659 Re: Marinanark Resort and Community Plan Dear Ms. Wood: 0002/006 '04 JUL 27 Pit :58 This letter is submitted on behalf of Protect Our Parks in connection with the proposed Marinapark Resort and Community Plan ( "Project "). Please ensure that copies of this letter are provided to all City Council members prior to their consideration of the Project at tonight's City Council meeting. The Project will involve the construction of 96,000 square feet of hotel facilities (including 110 guest units), a boat dock, and other facilities on public property. The impacts of such substantial development are inadequately explored in the Project's Environmental Impact Report ( "EIR "), in violation of State law. Accordingly, the City should reject the Project and the EIR. INTRODUCTION The California Environmental Quality Act ( "CEQA "), Pub. Res. Code §§ 21000 — 21177, must be interpreted "so as to afford the fullest possible protection to the environment within the reasonable scope of the statutory language." Friends of Mammoth v. Board of Supervisors (1972) 8 Cal, App. 3d 247, 259. If an EIR fails to provide agency decision - makers and the public with all relevant information regarding a project that is necessary for informed decision- making and informed public participation, the EIR is legally deficient and the agency's decision must be set aside. Kings County Farm Bureau v. City of Hanford (1990) 221 Cal.App.3d 692, 712. An EIR is "aptly described as the `heart of CEQA "'; its purpose is to inform the public and its responsible officials of the environmental consequences before they are made. Laurel Heights Improvement Assoc. v. University of California (1988) 47 Cal-3d 376, 392. INADEQUATE PROJECT DESCRIPTION /PROJECT SEGMENTATION The description of the Project is misleading and confusing. County oflnyo v. City of Los Angeles (1977) 71 Cal.App.3d 185, 198. Page 3 -9 of the EIR provides a list of 17 07/27!2004 12:52 FAX 7605101565 LAW OFF EVERETT DELANO ZOOO /006 Comments re Marinapark Resort July 27, 2004 Page 2of5 "discretionary approvals by the City," but the EIR does not explain how these will occur. There is no discussion of the public vote on the Project. Nor has the City subsequently provided substantial additional information; in fact. while the staff report for tonight's City Council hearing discusses a public vote on the proposed General Plan Amendment, there is no mention of the 16 other discretionary approvals or how or when they might occur. For example, the EIR and the staff report contain no discussion of a proposed Planned Community Development Plan, Parcel Map or Final Precise Plan. Furthermore, the proposed General Plan Amendment discusses the Project as including "110 guest units and 96,000 square feet [of commercial use] on approximately 5 acres and a Community Center and public recreation facilities on 3 acres." Yet the EIR never discussed the Project as including these two separate elements, and there is no discussion in the EIR about the different uses for these two areas. CEQA requires consideration of "[a]ll phases of project planning, implementation, and operation." CEQA Guidelines § 15063(a)(1). It defines aproject to be "the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment." CEQA Guidelines § 15378(8) (emphasis added). Analysis under CEQA must embrace future development that foreseeably will occur if the City approves the project. City of Antioch v. City Council (1986) 187 Cal.App.3d 1325. 1333 — 36. Among other things, the EIR fails to acknowledge the relationship of the discontinuation of the existing mobile home park use to the Project. The General Plan acknowledges that the City could decide to extend the use of the Site as a mobile home park, yet the EIR does not acknowledge that changing the use from a mobile home park is part of the Project. The impacts associated with closing the mobile home park are likely to be significant in virtually every environmental area, including land use (see e.g., Newport Beach Municipal Code § 20.51), traffic, air and water quality, noise, public utilities and services, and aesthetics. Indeed, requiring the existing residents to find alternative housing is likely to lead to growth inducing impacts, among other things. Furthermore, the City is required to prepare and circulate a Tenant Impact Report prior to park closure, Government Code § 64863.7, yet the EIR fails to discuss the impacts associated with such closure. The Tenant Impact Report requirements are applicable even "when the closure. cessation, or change of use is the result of a decision by a local governmental entity .... not to renew a conditional use permit or zoning variance ... or as a result of any other zoning or planning decision, action, or inaction." Govemment Code § 64863.7(i). IMPROPER BASELINE ENVIRONMENT CEQA requires analysis against what is happening on the ground at the time the Project is approved. Environmental Planning andlnformation Council v. County of El Dorado (1982) 131 Cal.App.3d 350, 357 — 58. Separately, CEQA requires: "The EIR 07/271/2004 12:52 FA.X 7605101565 LAW OFF E'VERETT DELANO Z 004/006 Comments re Marinaparlc Resort July 27, 2004 Page 3 of 5 shall discuss any inconsistencies between the proposed project and applicable general plans..." CEQA Guidelines § 15125(d). Accordingly, the EIR must analyze the Project's likely environmental impacts both in relation to the existing "plan" and "ground" conditions. The EIR fails to perform either analysis adequately. For example, the EIR presumes that the existing mobile home park on the Site is not consistent with the General Plan. EIR at 5.4 -4. However, the General Plan specifically provides: "The existing mobile home park will be allowed to continue until the end of the existing lease. At that time the City will make the decision as to whether the lease should be further extended, or the property converted to public use." Id. In other words, the General Plan does not indicate that the existing use must be changed — rather, it acknowledges that the City "will make the decision" at the appropriate point in time. The EIR discusses land use impacts associated with the Project as if the existing use must be changed; yet, that is not the case. Similarly, in discussing traffic impacts, the EIR assumes that the mobile home park use will not continue and subtracts a supposed number of vehicle trips associated with that use from the projected number of vehicle trips associated with the Project. EIR at 5.5 -2. This is inconsistent with either the "plan" or "ground" version of the baseline conditions. As stated, the General Plan clearly indicates that the City may either decide to extend the mobile home lease or convert the property to "public use." "Public use" could involve a use with less vehicle trips than either the proposed project or the mobile home park. Additionally, the EIR's "subtraction" of mobile home park vehicle trips from Project vehicle trips rests upon the faulty assumption that mobile home park residents will not use area roadways once they move to a new location. In fact, while the Project is very likely to add trips to area roadways (as a result of additional visitors coming to the area), residents of the mobile home park are likely to attempt to find alternative housing as close to their existing residence as possible. The EIR does not address these impacts. Other areas where the EIR fails to address the baseline environment (both as "plan" and "ground ") include air quality, noise, aesthetics, public services and utilities, and cumulative impacts. INADEQUATE DISCUSSION OF PROJECT IMPACTS The EIR wrongly assumes that it can ignore the Project's noise impacts because the existing noise conditions already exceed applicable standards. EIR at 5.7.1 1. In Los Angeles Unified School Dist. v. City of Los Angeles (1997) 58 Cal.App.4th 1019, 1024, the court rejected an EIR's conclusion of insignificant traffic noise impacts where the project would increase noise by a minimal amount. The court reasoned, "the relevant issue to be addressed in the EIR ... is not the relative amount of traffic noise resulting from the Plan when compared to existing traffic noise, but whether any additional amount 07/127/2004 12:52 FAX 7605101565 LAW OFF E'VERETT DELANO 1� 005/006 Comments re Marinapark Resort July 27, 2004 Page 4 of 5 of traffic noise should be considered in light of the serious nature of the traffic noise problem already existing." Id. at 1025. See also Berkeley Keep Jets Over the Bay Comm. v. Board of Port Commissioners (2001) 91 Cal.App.4`h 1344, 1381. Additionally, the EIR does not discuss the Project's inconsistency with the General Plan's clear statement that the Site either should be used as a mobile home park or be "converted to public use." The FIR's general discussion asserting that some aspects of the Project provide for public recreation does not address the General Plan's clear intention that the entire Site be put to public use. Furthermore, in a June 14, 2004 letter, the State Lands Commission objected that the EIR was inadequate both for its failure to address the "resolution of the boundary and the title status [of the Site] as well as land use restrictions involving filled and unfilled tide and submerged lands subject to the public trust doctrine." In fact, the EIR does not discuss or demonstrate that the Project's hotel use is consistent with the public trust obligations associated with State tidelands. Marks v. Whitney (1971) 6 Cal.3d 251, 258 n.5. Additionally, the EIR does not discuss the Project's consistency or inconsistency with City Charter Section 1402. INADEQUATE ALTERNATIVES ANALYSTS CEQA requires that an EIR "produce information sufficient to permit a reasonable choice of alternatives so far as environmental aspects are concemed." San Bernardino Valley Audubon Society v. County of San Bernardino (1984) 155 Cal.App.3d 738, 750 — 51. "(T]he discussion of alternatives shall focus on alternatives to the project or its location which are capable of avoiding or substantially lessening any significant effects of the project, even if these alternatives would impede to some degree the attainment of the project objectives, or would be more costly." CEQA Guidelines § 15126.6(6). "Without meaningful analysis of alternatives in the EIR, neither the courts nor the public can fulfill their proper roles in the CEQA process," Laurel Meights Improvement Assoc. v. University of California (1988) 47 Cal.3d 376, 404, Here, the Project and its objectives are defined too narrowly, thereby resulting in a nairowing of the consideration of alternatives to the Project. Rural Landowners Assoc. v. City Council (1983) 143 Cal.App.3d 1013, 1024 ( "Responsibility for a project cannot be avoided merely by limiting the title or description of the project "). The EIR failed to consider a reasonable range of alternatives that would be more protective of the environment, including alternatives that are consistent with the City's General Plan and municipal code. A plan that allowed public use of the entire Site should have been considered. As the State Lands Commission pointed oui, these lands are to be held in the public trust, and the EIR should have reflected that consideration in its analysis. 07;27;2004 12:52 FAX 7605101565 LAW OFF EVERETT DELANO Z006/006 Comments re Marinapark Resort July 27, 2004 Page 5 of 5 Additionally. CEQA requires that the "no project" alternative "discuss the existing conditions ..., as well as what would be reasonably expected to occur if the project were not approved, based on current plans and consistent with available infrastructure and community services." CEQA Guidelines § 15126.6(e)(2). The EIR does not consider a "no project" alternative consistent with the public use of the Site. THE NEED TO RECIRCULATE THE EIR Recirculation of an EIR is required whenever the lead agency adds significant new information. Pub. Res. Code § 21092.1; Laurel Heights Improvement Assoc. v University of California (1993) 6 Ca1.4`h 1112, 1130. In this instance, the EIR is sufficiently lacking that the only way to fix these issues is to revise it and recirculate an adequate report. W0708018% "0 For the foregoing reasons, Protect Our Parks requests that the City reject the Project and the EIR. If you have a question or would like to discuss this matter, please contact me. Thank you for your consideration of these comments. Sincerely, Everett DeLano, Esq. Brown, Leilani From: Oborny, Shirley Sent: Tuesday, July 27, 2004 11:06 AM To: City Clerk Subject: Marinapark opinion for City Council Darlene Colesworthy, resident of Lido Isle, called to say she's opposed to the hotel. It's not the best use for the public; therefore, she doesn't want the hotel. Shirley Oborny City Manager's Office City of Newport Beach 3300 Newport Blvd. Newport Beach, CA 92663 949 - 644 -3002 949 - 644 -3008 (fax) JUL -28 -50 11 :47AM FROM - NEWPORT CHAMBER OF COMMERCE 949- 729 -4417 T -791 P.02/03 00-4, NEWPORT BEACH CHAMBER OF COMMERCE RESOLUTION OF THE BOARD OF DIRECTO S OF THE NEWPORT BEACH CHAMBER OF COMMERCE It4 SUPPORT OF THE MARINAPARK RESORT AND COM34UNITY PLAN WHEREAS, Marinapark LLC wishes to develop a 110 room luxk resort, related ancillary facilities and community facilities on an 8.1 acre site on alboa Blvd. Between 15'" and 18'" Streets in Newport Beach; and WHEREAS, this project represents a more than $50 million investment in the Newport Beach Community resulting in increased jobs and revenue for the City; and WHEREAS, the project would offer residents and visitors greatej access to the harbor through extensively landscaped grounds and walkways; and F -911 WHEREAS, in accordance with CEQA requirements an Environ nental Impact Report was drafted and circulated for public comment; and 9 WHEREAS, all comments received during the public review per od for the Draft Ell: were responded to; and IV N WHEREAS, The Draft EIR indicates the project will generate ad itional average da""n trips which when compared to existing traffic does not represent a significant impactZtld b WHEREAS, the City of Newport Beach Economic Development Committee prepared a detailed Fiscal Impact Analysis which indicated a net revenue inci ease of $2.85 million annually for the Newport Beach Budget over the existing use; and WHEREAS, a special Government Affairs Committee of the N Jport Beach Chamber of Commerce heard detailed presentations on the Marinapark Res tt and Community Plan; and WHEREAS, the Newport Beach Chamber of Commerce Board o�Directors heard the report presented by the Government Affairs recommending certifi ation of the Draft EIR for the Marinapark Resort and Community Plan; and JUL -28 -30 11:48AM FROM - NEWPORT CHAMBER OF COMMERCE 949- 729 -4417 WHEREAS, the Newport Beach Planning Commission unan,, the Newport Beach City Council certify the Draft FIR; NOW, THEREFORE BE IT RESOLVED that the Newport Commerce Board of Directors recommends that the Newport I the Draft EIR for the Marinapark Resort and Community Plan. ADOPTED, sighed and approved this 20' day of July 2004 at a Board of Directors of the Newport Beach Chamber of Commerce Richard R. Luehrs, President Kirk T -791 P.03/03 F -911 recommended that t Chamber of City Council certify meeting of Vice Chairman P•2 Laura Bekeart Dietz 3535 E. Coast Hwy., #180 Corona del Mar, CA 92625 (949) 721 -8035 TO: Newport Beach City Council From: Laura Dietz Date: July 27, 2004 Subject: Marinapark DEIR Approval Gentlemen: V ,AA. 27 P 1 :41 In my opinion, those members of this community who have publicly declared that there need to be additional analyses of this project are not motivated by the facts but rather by their motivations to stop this project from being approved. For example, the SPON critique references that there are "few open spaces in the City". The fact is that 36% of the City is 'open space ". In addition, SPON makes the claim that the DEIR `does not accurately represent the facts concerning the public's choices for the site." I attended the Council meeting when projects were presented to the City Council. The only project that met the basic requirements required by the City was this particular project; the other "public choices" failed. And while some will argue that doing nothing, and maintaining the mobile home park, would be environmentally superior to the proposed project, the job, to which six of you were elected and one appointed, is to consider the fiscal impacts, and the totality of the project within the community. While I respect the concerns of the few opponents of the project, the reality is that this project will give a significant "shot in the arm" to the Peninsula, increasing homeowners proclivity for property improvements and raising property values near the proposed hotel. In addition, the American Legion will be benefiting, the Girl Scouts will be benefiting, and ultimately, the City as a whole will benefit from projected tax revenues. p.3 The benefits, in my humble opinion, are of such significance in the totality that I strongly recommend approval of the DEIR. Speaking for myself only, not as a 7 year member of the Environmental Quality Affairs Citizens Advisory Group, this project, unli e the Dunes Hotel Project which I personally found too large for the site, merits your support. I appreciate your attention. Laura B. Dietz 2 °i July 2004 To: Mayor Ridgeway and Councilmembers From : Dolores Otting Amended Agreement - Pages 5 & 6 of the Amended Agreement J Fiscal Impact Analysis- STH shall, at its sole cost and expense, prepare a "Market Analysis" that shows projected occupancy & daily rates for hotel rooms, as well as projected revenue from the restaurant and other accessory uses that are part of the project. The market ..................(Fiscal Impact analysis). The Market Analysis and Fiscal Impact Analysis shall be prepared, and available for public review, at least ten (1 D) days prior to the Public Hearing at which the City Council is scheduled to consider certifying the EIR That did not happen. The July 8t' Fiscal Impact analysis was not out 10 days before the CC Meeting of July I Ith, and the Fiscal Impact analysis of July 211 was not out 10 days prior to the CC meeting of July 27h. What does this mean to Us, ...... _. _.? ??? Also, the Amended agreement deleted 1J from the Original Agreement which reads- J. Voter Approval pursuant to provisions of the Newport Beach City Charter. Could this have been a reference to the Charter saying that that anything that is to be built has to be 85 feet above the mean high tide ? ? ?? Thank you for your time & your consideration of the above information. Respectfully, Dolores Otting �►: \ / :ti7�IA Rtwin F.O. BOX 15406 SACRAMENTO, CA 95851 A RE: SUTHERLAND TALLA HOSPITALITY LLP JURISDICTION: Secretary of State State of California /'M AgEA�IBER l AW ads aesearcn a ER We have caused a search to be made of the public records of the above jurisdiction for: Filings under the Uniform Commercial Code C ), Notices of Bulk: Transfer C ), Tax Liens C ), Judgments C ), Lis Pendens C ), Other CX) against the above named subject. As of the close of business on the date(s) indicated, we find no effective filings, recordings or requested matters of record, save and except the following: *LLP Document Retrieval The Secretary of State reported no record of the above named entity. Therefore, no copies were provided. 32372 DOLORES OTTING ATTN-. DOLORES OTTING 17 HILLSBOROUGH NEWPORT BEACH CA 926x.0- (-)0(.)i f REPORT NUMBER: REPORT DATE: REFERENCE: PROCESS LEVEL: INDEX DATE: il � /I)pO 114381 839 7/23/04 OS34= 7/19/t.r4 Ve guarantee our information to be as accurate as reasonable care can make it. However, the ultimate responsibility for maintaining files rests with the tiling Officer and Ne will accept no liab liry beinnd the exercise of reasonable care IF AMMI-WA«NIN F.O. BOX 1540 SACRAMENTO, CA 95551 l RE: MARINA PARK LLP j 1. t- ClO�c. � JURISDICTION: Secretary of State State of California J ' VJL' n, OMRB«f �xa«h ��« We have caused a search to be made of the public records of the above jurisdiction for: Filings under the Uniform Commercial Code C ) Notices of BUlk: Transfer C ), Tax Liens C ), JUdgments C ), Lis Pendens C ), Other CX) against the above named subject. As of the close of business on the dates) indicated, we find no effective filings, recordings or requested matters of record, save and except the following: *LLF' Document Retrieval The Secretary of State reported no record for the entity named above. Therefore, no copies were provided. '2372 DOLORES OTTING ATTN: DOLORES OTTING 17 HILLSBOROUGH NEWPORT BEACH CA 926BO -CptC; REPORT NUMBER: REPORT DATE: REFERENCE: PROCESS LEVEL: INDEX DATE: OS /OCip 114.322 S'; 7i23/C>4 (-)57-45 7/.19/04 -2 guarantee our information to be as accurate as reasonable care ran make rt. However, the ultimate responsibility for main aimng files rests with the filing officer and we will accept so liabilic; ceyond the =. iircua of reasonable care / 2 / # / k§ \ u)nn22 q k(/ G > - ST �- - 7o,22 / C# m a CO) g C ■ KKK q ■0 «27 'm;q ,z im -� r 2� ■ . k § mi 2 j 9 < k ]f! q2 `SA - « nk k IE } �§ 2 02 �¢ M . §0 }n Ei I \� 0 -- � } ) % f• 7 �\ u bi }� \ ICD a2� '10 ; ] U) CD OL mm 99$§ immm \�8- i CD \0 CD 0 /qCD \ \% \ \ \% OL 0 m® k ¥%3 - 8»� CL g c 7 m$$ �00 e =_ CL Eo\ BCD FD --h] \2 _ ,n � / =/ _0 Mm- /R] ]a -0 - $OL CE kD k\ 0\ 0 C� \§ k C- CD ƒG / \9 E/ ] O� rCD /\ $ � .� � ( § � 2 _ MAL � _ ) � r � / \ 3 / Z � \ %r q n G 2 -o -■ / C# m a CO) g C ■ KKK q ■0 «27 'm;q ,z im -� r 2� ■ . k § mi 2 j 9 < k 0 0 q2 « nk k IE o22 2 02 �¢ M . §0 }n Ei I \� 0 -- � } ) % f• 7 �\ u bi }� \ ICD a2� '10 ; ] U) CD OL mm 99$§ immm \�8- i CD \0 CD 0 /qCD \ \% \ \ \% OL 0 m® k ¥%3 - 8»� CL g c 7 m$$ �00 e =_ CL Eo\ BCD FD --h] \2 _ ,n � / =/ _0 Mm- /R] ]a -0 - $OL CE kD k\ 0\ 0 C� \§ k C- CD ƒG / \9 E/ ] O� rCD /\ $ � .� � ( § � 2 _ MAL � _ ) � r � / \ 3 W, n 0 rt u r� 0 0 w II3 0 v nj n ((D rt N �G O rt 63 M u o N N J N N N °o O N OODD OD o° o OODD OD rn o OD C) O 0) OD O W O OD W W 0) N CT O O O O O O O O O O O O O N O O O O O O _ OD _ co co N W OD C) A 0) O fD fD fD CD CD fD 1z 3 i y;0 h ;D D'< <i� r:D jT r iD jD :D ntn O':3 �t;D T'O a � �D C;C,D i-u jr Di—jD ;0 < r �zmTZ� � m r'� DjT G); -,D;tn zmjr-:Onz o _ m;� mI I� -i:z� ITV;mz 0RAI �i -;r -imD zi r 10 G) D ;r DI 90 ,3 r m vm;- '� D D r D 0� m.v �� Z m D L� :� ;n �v -+ i i-D-i = z Ivmi �_ y D < 01 > i D� :.� Dy M W� m� D 0 v� 0M m mn �Z DZ Oy my m zD Z ;070 ;a m z -� o N y q J N N O P M O N §JGJ/(1CIIG t1QH'ad. P.O. BOX 15406 SACRAMENTO, CA 95851 RE: SAYSIDE PACIFIC, LLC JURISDICTION: Secretary of State, Sacramento, California We have caused a search to be made of the public records of the above jurisdiction for requested CORPORATE DOCUMENTS regarding the above referenced entity. As of the close of business we find the exact name of the corporation to be: SAME AS ABOVE ARTICLES OF ORGANIZATION: filed 11/7/03, assigned no. 200331410069 SEE ATTACHED COPY. 32372 (lp) DOLORES OTTING ATTN: DOLORES OTTING 17 HILLSBOROUGH NEWPORT BEACH CA 92660 -0000 REPORT NUMBER: 102275 889 REPORT DATE: 7/23/04 REFERENCE: PROCESS LEVEL: 05342 5 Ve guarantee our information to be as accurate as reasonable care can make it. Howevra. the elhmate responsiodiN tar maintaining files rests MAIM Wing our and ne M aaapr n".VON "oe me mcm at reasonable care. APPROVED BY SECRETARY OF STATE e" State of California File# m V V a 0 1 -3; V v v 6' Kevin Shelley C1l If011M \� Secretary of State LIMITED LIABILITY COMPANY In theoffic oI SEratDa�(stata of the state ofCa%fornia ARTICLES OF ORGANIZATION NOOV 0 7 2003 A $70.00 filing fee must accompany this form. &�81546TAVOF KEVIN SH STATE IMPORTANT — Read instructions before completing this form. This Space For Filing Use Only 1. NAME OF THE LIMITED LIABILITY COMPANY (END THE NAME WITH THE WORDS "LIMITED LIABILITY COMPANY," "LTD. LIABILITY CO.,-OR THE ABBREVIATIONS'U -C" OR "L.L.C.") Bayside Pacific, LLC 2. THE PURPOSE OF THE LIMITED LIABILITY COMPANY IS TO ENGAGE IN ANY LAWFUL ACT OR ACTIVITY FOR WHICH A LIMITED LIABILITY COMPANY MAY BE ORGANIZED UNDER THE BEVERLY- KILLEA LIMITED LIABILITY COMPANY ACT. 3. CHECK THE APPROPRIATE PROVISION BELOW AND NAME THE AGENT FOR SERVICE OF PROCESS. EEI AN INDIVIDUAL RESIDING IN CALIFORNIA. PROCEED TO ITEM 4. Q A CORPORATION WHICH HAS FILED A CERTIFICATE PURSUANT TO SECTION 1505 PROCEED TO ITEM 5. AGENTS NAME: D. Michael Talla 4. ADDRESS OF THE AGENT FOR SERVICE OF PROCESS IN CALIFORNIA, IF AN INDIVIDUAL: ADDRESS 11100 Santa Monica Boulevard Suite 300 CITY LOS Angeles STATE CA ZIP CODE 90025 5. THE LIMITED LIABILITY COMPANY WILL BE MANAGED BY: (CHECK ONE) ONE MANAGER MORE THAN ONE MANAGER 0 ALL LIMITED LIABILITY COMPANY MEMBER(S) S. OTHER MATTERS TO BE INCLUDED IN THIS CERTIFICATE MAY BE SET FORTH ON SEPARATE ATTACHED PAGES AND ARE MADE A PART OF THIS CERTIFICATE. OTHER MATTERS MAY INCLUDE THE LATEST DATE ON WHICH THE LIMITED LIABILITY COMPANY IS TO DISSOLVE. 7. NUMBER OF PAGES ATTACHED, IF ANY: 8. TYPE OF BUSINESS OF THE LIMITED LIABILITY COMPANY. (FOR INFORMATIONAL PURPOSES ONLY) real estate development 9. WHO EXECUTED THIS INSTRUMENT, WHICH EXECUTION IS MY ACT AND DEED. IT IS HEREBY DECLARED THAT I AM TH��E //PERSON ��ii�G�l� CX�77/2� November 5, 2003 SIGNATURE OF ORGANIZER DATE Kandis L. Partington TYPE OR PRINT NAME OF ORGANIZER 10. RETURN TO: r 1 \ NAME Kandis L. Partington FIRM Resch Polster Alpert & Berger, LLP -� � ADDRESS 10390 Santa Monica Boulevard, Suite 400 CITYISTATE Los Angeles, California ZIP CODE 90025 L � RFGRTATF FnPU I I CI ,.-" n 11n 1 — e,.. .... APPROVED BY SECRETARY OF STATE vuO rvbu "vi I. A vFI�00 �LUU uL♦ �owL vv �LwuL�o LL,.LLJU.r, LLL V rOUrMUW VU La8l L UL J Return to the referring page. Las Ye �as SUN June 19, 2003 Topless club investor welcomes licensing investigation By Jeff German <german ajasye assun.com...> LAS VEGAS SUN A major partner in the newly opened Sapphire topless club said Wednesday that he welcomes a licensing investigation into the backgrounds of a half - dozen previously undisclosed investors in the Las Vegas business. "They'll come forward and they'll be licensed," said D. Michael Talla, a Los Angeles businessman and real estate developer. "They're totally suitable." Talla, whose company, SHAC MT, owns a 50 percent interest in the Sapphire club, was reacting to word that Clark County business license investigators plan to conduct background checks into the six silent partners brought in by Talla. The investors were disclosed last month under pressure from longtime topless nightclub operator Pete Eliades, whose company, SHAC Eliades, owns the other 50 percent of Sapphire, which opened last December. The Talla and Eliades companies operate Sapphire under a company called SHAC LLC. ty� Eliades and Talla, who runs several athletic clubs throughout the country, have become embroiled in a battle for control of the 71,000 - square -foot Sapphire, which is billed as the world's largest strip club. Talla filed suit in District Court late last week against Eliades and SHAC Eliades, alleging Eliades was interfering with his business interests at Sapphire and Olympic Garden, another topless club jointly owned by Talla and Eliades. http:// www. lasvegassun .com/sunbin/stori es /text/2003[j un/19/515239252.htm1 07/25/2004 Talla asked District Judge Jennifer Togliatti to modify his agreements with Eliades to give him sole possession of Sapphire and leave Olympic Garden to Eliades. Eliades and his Las Vegas lawyer, Mark Tratos, denied Talla's allegations Wednesday, and they accused Talla of deliberately withholding the names of the six hidden partners from Eliades and licensing authorities. Eliades and Tratos plan to file a countersuit against Talla in the coming days. Talla called their accusations "absurd" and "ridiculous" and said he was confident he would prevail in court. "At the end of the day the judge will decide what's fair," he said. "I've made full disclosure. Some of those partners were admitted after we got the licenses." But Eliades countered: "He never would have disclosed these names if I hadn't brought it to his attention. My attorney reported it to authorities." Talla acknowledged Wednesday that three of the just - disclosed partners are attorneys in the Los Angeles law firm that helped him put together the $25 million deal with Eliades to purchase the old Sporting House Athletic Club, 3025 S. Industrial Road, and convert it to the Sapphire club. ,yp The attorneys, Lee Poster, Peter Alpert and Sheldon Berger, are members of Resch Polster Alpert & Berger, a firm that specializes in real estate and corporate law. The firm's senior partner, Ronald Resch, said in a telephone interview from Los Angeles that none of the three lawyers were involved in the Sapphire negotiations and they have no conflict of interest. He described their investments as "relatively minor." In a May 14 letter to the county's Department of Business Licenses, Talla said the three lawyers became nonvoting partners on Dec. 15, two days after Sapphire opened its doors. They formed a company called Badda Bing Partners, each investing $47,619 in Sapphire, he said. Talla told the Las Vegas Sun Wednesday that the attorneys also each invested the same amount in the Olympic Garden. He said another company he runs, http://www.lasvegassun.com/sunbin/storie:s/text/2003fjun/ 1 9/5 15 239252.htm1 07/25/2004 S OG -LA, co -owns the Olympic Garden with Eliades. "Badda Bing's overall interest in Sapphire is .5 percent," Talla explained in his letter to the county. Talla would not give the Sun details about the other three investors, Robert Shipp of Los Angeles, John Moller of Malibu and George Vasilakos of Las Vegas. But Talla told the county their interests in Sapphire totaled about 10.6 percent. Talla listed himself as having a 20.6 percent interest in Sapphire and two previously disclosed partners, Rex A. Licklider and SHAC Feinstein, as having a combined investment of 18.3 percent. On Wednesday, Ardel Jorgenson, the county's business license director, said investigators planned to take an "in- depth" look into the claims of hidden ownership in Talla's share of Sapphire. She would not say whether sanctions would be sought against Talla for not disclosing the additional partners earlier. Jim DiFiore, manager of the city's Business Services Division, said his agency hasn't decided whether the new disclosures have a bearing on the license of the Olympic Garden, which is in the city. Return to the referring page. Las Vegas-SUN main page Questions or problems? Click here. All contents copyright 2003 and 2004 Las Vegas SUN, Inc. http: / /www.lasvegassun.com/sunbin/ stories /texV2003/jun/19/515239252.html 07/25/2004 cr f!!. \ \ E ■ | \i) {§ �T 8 2 } =n# w = E_� IE{!E $ } \ \/ \)72 3 \ 3 } _ \\ a§ . a - ;[ �'/A -- - M L - �]wm( 0 m �a0 =r 0 \� �to ��\ /})\ {_ m�j } /}(a =r § \ /222 ] n ®Gg }� \7/ G�S� �< a - =) ®E3 0 3 /0 /\ {}/ {- (§ // `m a }ƒ \ee m_ \ I_W 2[a }!o: n0 =r MCL ),) §2 /}2 E[ 7f }gem 7/E E - \ _ X772 ± - \%( 00 . a& \� _ J} / \// /\ a 7 }n; /\ to _0 M0 =r m 2 © - , § / - CL ;� « Ln \ \ \ \ \ / § § \ / / ƒ \ w Zr w I I(v \ \ \§ 3 7=7 (PD7 0) (D (D \\0 - - 0) CT o to 77 77 0 -- 1-0 77 0. c (D =r to (D (D U EP =1 =r CL (D 0 r CL a f- D = E X 0 D (D 7-7 (D 3 N =r \ \\ (D (D C 0 =r (D 3 0 =r =r C- 0 3 = 0 3 77 0 C: to (D =r 03 m 0 (D 3 0 / CD ZZ (D (D (D �D (D 0) 9'D 3 C'L � W Z 0) V� E2` � -< r) (D I =r CL c 0 CY (D c (D / to =r \ CL 0) a) 77 (D CL 03 77 to (D 77 3 7=7 (PD7 0) (D (D \\0 - - 0) CT o to 77 77 0 -- 1-0 77 0. c (D =r to (D (D U EP =1 =r CL (D 0 r CL a f- D = E X 0 D (D 7-7 (D 3 N =r \ \\ (D (D C 0 =r (D 3 0 =r =r C- 0 3 = 0 3 77 0 C: to (D =r 03 m 0 (D 3 0 / CD ZZ Dean Heller Nevada Secretary of State Corporate Information -I- . ... http: / /sos.state. nv.us /cotp_nme. asp 07/18/2004 r` Fame: SHAC MT, LLC Type: Limited Liability Comp:a:ny]ILLCI2222-2001 File Number: State: NEVADA Incorporated On: November 09, 2001 Status: Current list of officers on file Corp Type: Limited Liability Company [Resident Agent• ' NATIONAL REGISTERED AGENTS INC OF ( Address: I 1000 E WILLIAM ST STE 204 CARSON CITY 089701 - Manager or Member: PETER FEINSTEIN Address: 112857 PARADISE RD #1806 MANAGER LAS VEGAS 0 89109 - Manager or Member: D MICHAEL TALLA Address: I 11100 SANTA MONICA BLVD STE 300 MEMBER LOS ANGELES CA 90025 - Manager or Member: F REX LICKLIKER Address: III 1100 SANTA MONICA BLVD STE 300 MEMBER http: / /sos.state. nv.us /cotp_nme. asp 07/18/2004 r` hR a .6, ♦ vi c Dean Heller Adphk Nevada Secretary of State Corporate Information http : / /sos.state.nv.us/corp_nme.asp 07/27/2004 Name: SHAC, LLCII Type: Limited Liability Company File Number: LLC 11697-20 State: NEVADA 10ctober29,2001 Incorporated On: [Status: Current list of officers on file Corp Type: Limited Liability Company Resident Agent: NATIONAL REGISTERED AGENTS INC OF (Accepted) Address: I 1000 E WILLIAM ST STE 204 CARSON CITY 0 89701 - Manager or Member: SHAG MT, LLC * �b� 'v tL�/ f Address: 11100 SANTA MONICA BLVD #300 MANAGER LOS ANGELES CA 90025 - Manager or Member: SHAC ELIADES, LLC Address: 111531 LAS VEGAS BLVD S MANAGER LAS VEGAS 0 89104 - Manager or Member: Address: http : / /sos.state.nv.us/corp_nme.asp 07/27/2004 ��1G \IG�i�Cl�i■ (��"'�ea� P.O. BOX 15406 SACRAMENTO, CA 95851 RE: WOODRIDGE CAPITAL, LLC JURISDICTION: Secretary of State, Sacramento, California We have caused a search to be made of the public records of the above jurisdiction for requested CORPORATE DOCUMENTS regarding the above referenced entity. As of the close of business we find the exact name of the corporation to be: SAME AS ABOVE ARTICLES OF ORGANISATION: filed 6 /4/96, assigned no. 101996156U1S STATEMENT OF INFORMATION RENEWAL: filed 6/29/9 8 (NOTE: This is the most recent "complete" statement on file. SEE ATTACHED COPIES =2372 (2p) DOLORES OTTING ATTN: DOLORES OTTING 17 HILLSBOROUGH NEWPORT BEACH CA 92660 -Oo00 REPORT NUMBER: 102276 35°9 REPORT DATE: 7/2"/04 REFERENCE: PROCESS LEVEL: 05342 II guarantee our information to be as accurate n reasonable care can make it. However the ultimate responslb0 ty for mamtmmnq files rests Ash the filing Chile, and wa Al accent no iabdity beyond the 2,,, , et :e,sonable care State of California • 'Rill Innno Secretary of State LIMITED LIABILITY COMPANY LLC -1 c•` "'��� ARTICLES OF ORGANIZATION . IMPORTANT- Read the instructions before completing the form. This document is presented for filing pursuant to Section 17050 of the California Corporations Code. 1. Limited liabFj company name: OW*1 .. t.te >•�..:rt '�Y. Mopw44n ace r.n..•u.C.tiYI'w1'[:4r-�n leiMa.i�deZY•�t•ra� WOODRIDGE CAPITAL, LLC 2- Latest date (mouth/day/year) on which the limited liability company is to dissolve: June 4, 2031 3. The purpose of the limited liability company is to engage in any lawful act or activity for which a limited liability company may be organized under the Beverly- Killea Limited Liability Company Act t 4. Enter the name of initial agent for service of process and check the appropriate provision below: Jack Tomlinson which is [ xl an individual residing in Califomia- proceed to Item 5. [ J a corporation which has filed a certificate pursuant to Secticr 1505 of the California Corporations Code. -Skip Item 5 and proceed to Item 6. _ 1 i S. If the initial agent for service of process is an ind;vidual individual enter a business or residential strtt! address in California: j Street address: (lna Rnch Qr ... t a..;.e zon tirr. San Francisco State: CALIFORNIA Zip Code: 94104 6. The limited liability company will be managed by: (check one) 7. [ x ) ore manager [ I more that one ma Lager [ J limited liability comoanv members If othr. matters are to be included in the A-- titles of Organization attach one or more separam pages. N.wrber of pages atached, if any: 0 S. It is hereby declared that I am the person who executed this instrument, which execution is my as and deed. I X ml MA" Swerintre ofOrganizer Jack Tomlinson I ype or print name of organizer Date: June 4 u.e, rZ�r V. M .19 96 A......,a�sa..r.rf. 1M 101996156018 FILED: REGISTRN /ARTICLES OF ORG. AT SACRAMENTO, CA ON JUN.04,1996 SECRETARY OF STATE OF. CALIFORNIA c4tate of Cattfornia 6 `'` ecretarp of 4btate e LIMITED LIABILITY COMPANY — STATEMENT OF INFORMATION RENEWAL A $10.00 FILING FEE MUST ACCOMPANY THIS FORM. bI iAsofNI�C %!� 9 IMPORTANT— Read Instructions On Back Before Completing This Form. Of the $tete0 &I mlMo 1. LIMITED LIABILITY COMPANY NAME JUN 2 9 1998 WOODRIDGE CAPITAL, LLC ONE BUSH ST., STE. 380 v�R.�• SAN FRANCISCO CA 94104 BILL JONES, Secretary of State 2. SECRETARY OF STATE FILE NUMBER THIS SPACE FOR FILI14° ... yILT 3. JURISDICTION OF FORMATION ,, ^ 101996156018 C',YLr^\I'" IF THERE HAS BEEN NO CHANGE IN THE INFORMATION CONTAINED IN LAST STATEMENT OF INI-ORMATION El ON FILE WITH THE CALIFORNIA SECRETARY OF STATE, CHECK BOX AND PROCEED TO ITEM 12 4. 5TREET ADDRESS OF PRINCIPAL EXECUTIVE OFFICE CITY AND STATE ZI CODE 0 W,ISIA a IayD LDS���I�s c� q(,oa�I W1151���� Ql�d• la-yD Los f}ti e(es CA gl[�1K LIST THE NAME AND COMPLETE ADDRESS OF ANY MANAGER OR MANAGERS, AND CHIEF EXECUTIVE OFFICER, IF ANY, OR IT NONE HAVE BEEN APPOINTED OR ELECTED. PROVIDE THE NAME AND ADDRESS OF EACH MEMBER. (CHECK THE APPROPRIATE DESIGNATION). ATTACH ADDITIONAL PAGES IF NECESSARY. 6. NAME M;�Aaef G. Rosen fe t4� ... ADDRESS 10 14 D W; I S I ;P41. 13 10 CITY Los / tie (Cs 7. NAME ADDRESS CITY 8. NAMETHEAGENTFOR In STATE OF PROCESS AND CHECK THE APPROPRIATE AN INDIVIDUAL RESIDING IN CALIFORNIA. PROCEED TO ITEM 9. [ I A CORPORATION WHICH HAS FILED A CERTIFICATE PURSUANT TO SECTION 9. STRE ADDRESS OF THE AGENT FOR SERVICE OF PROCESS IN CALIFORNIA. (ML(D W: s v.;te glad tj`fn los 10. DESCRIBE TYPE OF BUSINESS OF THE LIMITED LIABILITY COMPANY, L)e s f- (-,L — 11. NUMBERO�AGESPTT HEp�IFA _ L Sf. T CPEORPRINTN (B Rosee �e(�t Ttc ✓(1 Aare TYPE OR PRINT NAME AND TITLE OF PERSON 51 NING ----" `• 06/04/1998 IPCODE 90 0 �.�i IP CODE I BELOW: PROCEED TO ITEM 10. CITY �r ANAGER [ I CHIEF EXECI, I IVE OFFICER TI MANAGER [ I CHIEF EXECOI IVE OFFICER WHICH IS ;",CODE Tb l L/ , oATTto I>.v(4P — ' To: Bob Burnham, City of Newport Beach Subject Qualifications and Financial Review for Michael Rosenfeld Nicholas Colonna, Partner Ali July 23, 2004 Page 2 Pacific Coast Capitai Partners, LLC -`�t 0A . L1,& - S u V-xS D . Pacific Coast Capital Partters is a debt and equity fund with over $1 billion in investments in California and the Western States. 'Woodridge `is Fisted in Pacific Coast's promotional material as a client. Our interview with Mr. Coionna confirmed this relationship. They have co- invested in fire major real estate transactions with Woodridge, and were highly complimentary concerning the firm's reputation, integrity, and performance in these projects_ The projects include an $88 million komy residential project in Hawall where Mr_ Rosenfeld has rued successfully through a very difficult entitlement process. Mr. Colonna considers Woodridge a valuable client and looks for additional invest opportunifes with the firm. Reagan Vidal, SVP Guaranty Federal Sank Mr. Vidal represented Societe Generate, a French bank that provided Woodridge $20 million in construction financing for a condominium Project on Wilshire Boulevard in Los Angeles during the mid -19Ws. The loan was handled as agreed upon between the Bank and Woodridge. despite a downturn in the condominium market. The Bank and all equity sources were repaid, and the project completed_ Since that time, Mr. Rosenfeld has continued to successfully complete projects using institubonai equity sources and non - recourse debt. Mr. Vidal has no current business with Woodridge as Guaranty Federal only makes recourse loans. Mr. Vidal spoke highly of Mr. Rosenfeld's reputation and development expertise, including his ability to navigate difficult entitlement processes, citing a hand development transaction in Thousand Oaks as an example Mr_ Vidal highly recommends Woodridge and Mr. Rosenfeld without hesitation. is Y11i✓ 1 IZ-07,1;- CO/ VL -ATE �S A' I, LC.01\,l.2-SV� L,0 7 Harvey Brookstein, Principal r REV, LLC. (Certified Public Accountants) Y1 v S LL C. L4 l_l— G Ltierj- vJ Sec- � i Mr_ Brookstein has known Mr. Rosenfeld for over 20 years and is his personal and business accountant. In addition, Mr. Brookstein has been an investor in a number of the Woodridge projects. The investments have been highly successful. In these investment projects, Mr. Rosenfeld has taken the primary role as the development manager responsible for entitlements, development and financing. Other Investors have included Pacific Capital and Cargill, a highly selective equity source_ Mr. Rosenfeld has also acted as an entitlement consultant to other real estate development fines. Mr. Brookstein higPl)f recommends Mr. Rosenfeld. This completes our review to date. We anticipate additional interviews on Monday and will report on the results as soon as possible -re-le- R)wk- hPcS R 4 U -Q @, /4-1s4 A k - 4'tur7sn0030Ym1r6Gt JfRYry:E 70010 rvkwa CcQ YHYRK_I CEkgm 18{01 d6OU State of Delaware 'File Ot iciat rtiebsite for the rin:t state V:sd the Governor ; General Assembly I Courts I Oth ?i +cted :`ifidais 1 Federal, State & L State Directory j Help I Search Delaware 3? Citizen Services I Business Services \ Deparhnent of State: Division of Corporations HOME About Agency Secretary's Letter Newsroom Frequent Questions Related Links Contact Us Office Location SERVICES Pay Taxes File UCC's Delaware Laws Online Name Reservation General information Status INFORMATION HOME About Agency Secretary's Leiter Newsroom Frequent Questions Related Links Contact Us Office Location SERVICES Pay Taxes File UCC's Delaware Laws Online Name Reservation General Information Status INFORMATION �ec�er�r„eer�, Newsroom Frequent Questions Related Links Contact Us Office Location SERVICES Pay Taxes File UCC's Delaware Laws Online Name Reservation General Information Status INFORMATION Corporate Forms Newsroom Frequent Questions Related Links Contact Us Office Location SERVICES Pay Taxes File UCC's Delaware Laws Online Name Reservation General Information Status INFORMATION Corporate Forms Coroorate Fees Fre uentIv Asked Questions Name Available The name'PACIFIC COAST CAPITAL PARTNERS LLP' is available. The cost for this reservation is $ 75.00. Do you want to reserve this name? Freguently_Asked Questions Name Available The name'PACIFIC COAST CAPITAL PARTNERS L.L.P.' is available. The cost for this reservation is $ 75.00. Do you want to reserve this name? Name Available The name'PACIFIC COAST CAPITAL PARTNERS LIMITED PARTNERSHIP' is available. The cost for this reservation is $ 75.00. Do you want to reserve this name? Name Available The name'PACIFIC COAST CAPITAL PARTNERS LLC' is available. The cost for this reservation is $ 75.00. Do you want to reserve this name? Yes I No, Perform New search �a State of Delaware The Official o4ebsite for the first State ., Visit the Governor General Assrrhly j Courts j Otiie; r. �r�iad Officials j Federai. State 3 L ..__....---_. ..Y ._..... - - ---- - - - - -- -- ------- --- --. _—`- "- -- - ............ ..._.._..._.--- __.`- -___. .. State Director ; Help Search Delaware F a Citizen Services I Business Services I \ Department of State: Division of Corporations HOME About Agency Secretary's Letter Newsroom Frequent Questions Related Links Contact Us Office Location SERVICES Pay Taxes File UCC's Delaware Laws Online Name Reservation General Information Status INFORMATION Corporate Forms Corporate Fees UCC Forms and Fees Taxes Expedited Services Registered Agents Get Corporate Status Submitting a Request Frequently Asked Questions Name Available The name 'PACIFIC COAST CAPITAL PARTNERS CORPORATION' is available. The cost for this reservation is $ 10.00. Do you want to reserve this name? site map I abaft this site I contact us I translate ; delaware gov https : / /sos -res. state.de.us /tin/controller 07/27/2004 U� - - - -- --- - - ---� --- -- ...�..a..a aaa ».. »oau...ao ....u, ..0 -...0 aaa wu. / iduu tuu ... 1 amr 1 Ul 1 id Business Search ` LP /LLC - AAGHNES i MUSEU4 Kii Lrntt<d@arhwsb(a0Lmftd Liattiliyfumpmws s..i_ The infotmatton displayed here is current as of "Jul 23, 2004" and is updated weekly. It is not a complete or certified record of the Limited Partnership or Limited Liability Company. �2, L , ' L I�� LP /LLC RBZ REAL ESTATES SERVICES, LTD., A CALIFORNIA LIMITED PARTNERSHIP Number: Date Filed: Status: 200000800060 1!3!2000 active Jurisdiction: Principal Address 11755 WILSHIRE BLVD., STE 900 LOS ANGELES, CA 90025 Agent for Service of Process RICHARD S. HERSCHENFELD 11755 WILSHIRE BLVD., STE 900 LOS ANGELES, CA 90025 New Search • Fees and instructions for requesting certiflcation of limited partnership and /or limited liability company records are included on the Lp LLC Records Order Form. • Blank fields indicate the information is not contained In the computer file. • If the agent for service of process is a corporation, the address of the agent must be requested in writing. Fees and instructions for requesting this information are included on the Corporate Records Order Form. Copyright rF)2001 . California Secretary of State. Privacy Statement. J http: // kepler. ss. ca. gov/ corpdata/ ShowLplIcAlIList ?QueryLplIcNumber--200000800060 07/27/2004 -) ,~~~~~,^^~^°^' `'~^^^""^^^°'~"°^^,"".~°^`"^ ­`^^^^."'.""^,^~^'/�.^^^^'�u ... ^"r�/`u/ � � The information displayed here is current asof "Jul 23,lOO4" and is updated weekly. ltis not a complete o,cert|fied record of the Limited Partnership o, Limited Liability Company, F- LP/LLC jR13Z AGENCY, LLC, THE LNumber: ]FDate Filed: 227910124 1912812000 1.1urisdiction: CALIFORNIA I Principal Address 111755 WILSHIRE BLVD., SUITE 900 ILOS ANGELES, CA 90025 1 Agent for Service of Process 111755 WILSHIRE BLVD., SUITE 900 ILOS ANGELES, CA 90025 � New Search • Fees and instructions for requesting certification oflimited partnership and/or limited liability company records are included on the ILPAL���������ridler ]Form. • Blank fields indicate the information is not contained |n the computer file. •If the agent for service of process isa corporation, the address of the agent must be requested in writing. Fees and instructions for requesting this information are included on the Corporate ]0eicords Order Earm. Copyright ��,2001 caffomiaseoetarY of State. Privacy Statement. http://kepler.ss.ca.gov/corpdatalShowLplIcAlIList?QueiyLplIcNumber--200027910124 07/27/2004 6usiness Search ` LP /LLC �c�l�lf�Yl�ll1� �`U�S�1�11f =SS �C+1�7 "�c1� ARCHNES & VAEUM f 77 P" The information displayed here is current as of "Jul 23, 2004" and is updated weekly. It is not a complete or certified record of the Limited Partnership or Limited Liability Company. LP /LLC RBZ INVESTMENT, LLC Number: Date Filed: Statue: 200001010101 11/3/2000 active Jurisdiction: CALIFORNIA Principal Address 11755 WILSHIRE BLVD., 10TH LOS ANGELES, CA 90025 Agent for Service of Process CHARLES ROSENBLATT 11755 WILSHIRE BLVD., STE 900 LOS ANGELES, CA 90025 New Search. • Fees and instructions for requesting certification of limited partnership and /or limited liability company records are included on the LPLLLC_Records Order Form. • Blank fields indicate the information is not contained in the computer file. • If the agent for service of process is a corporation, the address of the agent must be requested in writing. Fees and instructions for requesting this information are included on the Corporate Records Order Form. A Copyright ��:2001 California Secretary of State. Privacy Statement. http: //kepler.ss. ca. gov/ corpdata/ ShowLplIcA11List ?QueryLplIcNumber--200001010101 07/27/2004 6 Business Search Ih LP /LLC C �� biif c�rnti�� � u�s1iln+� s� Pc�r Otraill ARCH"JER I LI SEUk lmited E'ar6ershExaLim�led'uaMli:y {bmpanies . I The information displayed here Is current as of "Jul 23, 2004" and is updated weekly. It is not a complete or certified record of the Limited Partnership or Limited Liability Company. LP /LLC RBZ BUSINESS MANAGEMENT, LLC Number: Nate Filed: Status: 200330710103 0/31 /2003 active Jurisdiction: CALIFORNIA Principal Address 11755 WILSHIRE BLVD SUITE 900 LOS ANGELES, CA 90025 Agent for Service of Process MARK BAUMOHL 11755 WILSHIRE BLVD SUITE 900 LOS ANGELES, CA 90025 NEW" MI New Search • Fees and instructions for requesting certification of limited partnership and /or limited liability company records are included on the LP /LL LCecords..Qrder Form. • Blank fields indicate the information is not contained in the computer file. • If the agent for service of process is a corporation, the address of the agent must be requested In writing. Fees and instructions for requesting this information are included on the Corporate Records Order Form. Copyright ;20C? Californla Secretary of State. Privacy Statement. http: //kepler. ss .ca.gov /corpdata/ShowLplIcAlILi st?QueryLplIcNumber--200330710103 07/27/2004 Z. s N W O N 7 N V V V1 T Ri _a c O U ti F" G p � � W K G U AM u' 4% U N J Y \ f0 0 O d v CL E O 10 O c Mh ti T Y N Ol 3 v IG C CL a E c O 0U R T O C) (1 J ry � E N � � O a C L �v V c y a . v y L � E v T J CL � o c o E � v o a c_ w v � w V >, t a i I3� C �✓ a Z T C C CL E O T Lo 10 a m v v O O r N r 0 J J 7 . T ,^ V/ W /` VO p d Z N IL rh V V Q °—' 0) a o LU J n W °' WE 6 ul J J (D Q U) c a i \ Q R N W N W U W� G. O U.) Q O. M N N z N �I EL Y. VI v Z o N J 6' r Q w C W Q m L G Q W Q � H d U V U) CO O p Z m Im Z J Z O U o o C 0 Z a Z � U � MG) E 0o lauj U15 M((C�B Z W >, t a i I3� C �✓ a Z T C C CL E O T Lo 10 a m v v O O r N r 0 T p d A LL 7 A F WE 6 ul A c a i C Q N f IG N! m, _' m VI Y. VI J i 6 J U U VI J' J 6' r >, t a i I3� C �✓ a Z T C C CL E O T Lo 10 a m v v O O r N r 0 Marine Recreation. Craig Morissette. Mr. Mayor and council members, good evening. My name is Craig Morissette, I am a constituent, and for the past 14 years i have owned a home in the 1800 block of West Balboa Blvd., one block up the penninsula from the proposed time -share hotel project. I'd like to speak to you on how the Draft EIR analyzes the impact of the proposed project on existing Marine Recreation uses at the site. I can actually sum it up in one word: NOTHING. The document writes -off any analysis of the impact from the beginning by saying, and 1 quote "The environmental issues that are determined not to be significantly affected by the proposed project, and therefore, do not require further analysis in this EIR ... are as follows: ... Recreation." The document says little about the current use of the unique Marinapark beach. It does say it as "a public sand beach ", but never describes in detail what impact placing 300 feet of dock on the beach and nearly a quarter of an acre of dock into the channel will have. I have been walking that beach for 14 years and I am here to tell you that the beach is used by kids and adults in their small sailboats, inflatables, kayaks, canoes or on their sailboards, as well as swimmers, and usually a flock or two of pelicans and sea gulls. On the Monday before your last council meeting I was walking along the beach and shot these pictures with my cell phone camera. Page 1 Morissette Comments 7/27/04 Art U. Point I here !,A]-r,- ;s0 S. ifdli Boa+V a• ,J a, ansa,__r n �r� ram :S:.�. Basin �R8< i ° Beata )r In The Ad- acran! :Salihoo Basin (I� onda-y yr+ July) k On that Monday afternoon, not a busy weekend, I counted 59 small sailboats (sabots, lidos, etc) and 11 small motor boats (inflatables, sciffs, etc.), that's 70 boats on the beach or directly off the beach at the same point in time. I didn't count larger vessels passing through the small sailing basin. I didn't count Parks Department boats stored on the beach for sailing classes. How can an Environmental Impact Report that doesn't acknowledge, much less analyze the impact of 300 feet of dock precisely where these kids have their boats beached serve the public interest! Had the Draft EIR taken a harder look at the Marine Recreation Impact, it would have found the following: Page 2 Morissette Comments 7/27/04 Marinapark is the only large bayside beach which hasn't been consumed by roped -off areas for swimming or beach moorings. I~lar t apark Is The i ! _+ %H Udlm -Val F LtdYYGr'idRy Large Beach Without Swim Ropes Jr Beach Moorings r Bay Island has a narrow channel and low bridge. Penninsula Point is roped off, usually filled to the gils with swimmers, and overwhelmed with main channel traffic and currents. 10th Street could accommodate 20 -30 small boats, but not Fn or 70 at the same time. Besides, it is completely roped -off for swimming and flanked by beach moorings. Even if it weren't, there are no launching facilities, parking or restrooms. Page 3 Morissette Comments 7/27/04 Marinapark is the only beach that can accommodate large numbers of small boaters at the same time. Draft rxisting Marine Irt - eu'ne� -ctr - `- - i� ,' usM as sailing basin �� ,' 6y gnall boats 6 windsurfers. l-. � : _ Calm water, less large boat traMc, - _ 6 a sand bexh makes It a popular ' _ area for learnin Lesz popular r area of channel because it is narrow due to docks and has _ little sand to beach • Sailing Basin During the summer, 1 /3rd of the Marinapark beach is roped -off for swimming. This area is in green. And yet, the proposed project wants to take another 20 -30% of the remaining beach and part of the sailing basin (in blue) in trade for FOUR public slips -- without mentioning or analyzing the impact! That certainly can't be in the best interest of the community! Now, I surfaced this issue in a letter to the City in early June. The responses I received were disappointing. First, the existence of a sailing basin was DENIED, then later acknowledged with the caveate that it was NOT part of the project. Page 4 Morissette Comments 7/27/04 The response I received was, and I quote "The City's Harbor Resources Division is unaware of a "sailing basin" in this part of Newport Bay. The channel in front of the project site is consistent in size from one end to the other, and there is NO evidence of a basin." The respondent went on to say "the sailing basin is in Newport Bay and is not part of the project, and will not be changed." I just showed you pictures of typical use both on the beach and off - shore, as well as an aerial view from the EIR that shows a wider effective channel without beach docks. I don't know what kind of game is going on in my backyard, but I don't appreciate it! And yet, the EIR is bold enough to say: "... the proposed project will replace all of the recreational facilities except the basketball half- court" and later concludes "Therefore, no significant recreation impacts will occur from project development." HOW DO WE KNOW, THE IMPACTS WERE NEVER ANALYZED. You have heard from people for and against many alternatives, but what ever your favorite, the impact on existing Marine Recreation cannot be ignored. Especially in the largest small -boat harbor in the country. How can you in good conscience approve a document that doesn't reflect the truth about how the site is currently used, and what impact changing its use will have on your community. How could you approve such a document that will form the foundation of a request you intend to take to the voters in Newport Beach. Page 5 Morissette Comments 7/27/04 Send the Draft back to the planning commission and ask them FIX IT, and not side -step important issues like the impact on Marine Recreation. Thank you for your time. Page 6 Morissette Comments 7/27/04 `i �� �, IT I I a, F+7106. ! kc,M, hit � L.7r A717? It ; I Ft� Ak, 1111111 L.7r A717? It ; I Ft� I" I Ali 'nil II oil I ft h --7