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HomeMy WebLinkAbout20 - Newport Aquatic Center (NAC)aCITY COUNCIL AGENDA ITEM 20 TO: MAYOR AND CITY COUNCILMEMBERS FROM: Kevin J. Murphy, City Manager DATE: August 10, 1998 RE: NEWPORT AQUATIC CENTER (NAC) On July 13th the City Council considered the attached request by the Newport Aquatic Center for a fee waiver. The original request and the staff report from the June 22nd meeting are attached for information. This item was continued for thirty days to meet with homeowners regarding their concerns related to the impacts associated with the NAC. On July 29, 1998 a meeting took place between City representatives (Mayor Edwards, Councilmember Noyes, the City Manager, Senior Recreation Manager and Recreation Manager), representatives of Dover Shores (Ed Benson, Burt Ohlig, Larry Root, and Anders Folkedal), and the Newport Aquatic Center (Billy Whitford, David Grant, Skip McKibben and John Van Cleave). Ed Benson, representing Dover Shores, distributed the attached memo on the issues of concern to neighbors. There was consensus that progress had been made on issues identified on the attachment as #1 and #3. These issues ( #1 and #3) are related to traffic and parking during the periodic special event and a good contact point for regular and after -hours events for homeowners to reach NAC staff. Issue #2 involves early morning (6:00 — 7:30 a.m.) noise concerns, which appear to primarily involve non - NAC participants. NAC representatives and City staff pledged continued efforts to try and work on early morning noise concerns. Another issue which arose during the discussion of the parties was whether the City could take further steps to restrict after -hour access to the leased premises controlled by the NAC, as well as the North Star Beach area. The City's Municipal Code currently contains in Section 11.08.030 (attached) a prohibition to nighttime use of any public bay, beach or ocean beach between 10:00 p.m. and 6:00 a.m. The access to the NAC and North Star Beach is off a common driveway, which is gated and signed to reflect the restrictions on hours. The City staff will work with NAC to assure gate closure and request additional periodic police patrol to enforce the beach closure. Receive the updated staff report on discussions with the NAC and -Dover Shores representatives; reconsider the request of the NAC for a waiver of their building permit fees, building excise tax, and if appropriate direct staff to request an appeal of the NAC for their Fair Share Fee requirement in accordance with the Newport Beach Municipal Code. DOVER SHORES COMMUNITY RELATIONSHIP WITH THE AQUATIC CENTER IN VW OF THE AQUATIC CENTERS LOCATION IN RELATION TO OUR COMMUNITY" OF THE 63 CONDITIONS THAT WERE MADE OF TIM CITY'S APPROVAL OF THE AQUATIC CENTER DEVELOPMENT" THERE ARE 3 THAT ARE OF MAJOR CONCERNS AND IMPORTANCE TO THE DOVER SHORES COMMUNITY. L. TRAFFIC CONGESTION AND CONTROL WITHIN OUR COMMUNITY AS A RESULT OF THE AQUATIC CENTERS OPERATIONSm ESPECIALLY DURING THE VAJOR SVENNI'S CONDUCTED BY THE CENTER. 29 EARLY MORNING NOISE CONTROL AND ELIMINATION DURING PART OF NORMAL SLEEPING HOURS 6,00 TO 7130 A. M. IN ADJACENT COMMUNITY AREA WBILE ROWING PREPARATION. AND ROWING OCCURS. 3, CONTACT POINT ( NAME AND PHONE NO. ) TO REPORT IMMEDIATELY ANY UNUSHAL''.. OR OUT OF ORDER ACTIVITIES. WE FEEL ADHERING TO THESE REQUESTS WHICH ARE PART OF THE ORIGINAL CONDITIONS OF DEVELOPMENT ARE NOT OVERLY DEMANDING•CONSIDERING THE FACT THAT OUR COMMUNITY WAS HERE NDNG BEFORE THE AQUATIC CENTER WAS DEVELOPED. DOVER SHORES COMMUNITY ASSOCIATION NEWPORT BEACH, CALIF. 92660 ATTENTION... CITY OF NEWPORT BEACH DOVER SHORES COMMUNITY ASSOCIATION E. P. BENSONt PRESIDENT f�PP5 �ovle-� XXVIN MURPHY, CITY MANAGER NEWPORT BEACH, CALIFORNIA 11.04.020 F. Play basketball on any outdoor public basket- ball court within three hundred (300) feet of any residentially zoned parcel, between sunset or seven p.m., whichever is later, and eight am.; G. Use of rollerblades, rollerskates or skate- boards on any public tennis court (Ord. 96 -34 § 1, 1996: Ord. 96 -14 § 1, 1996: Ord. 95-44 § 1, 1995: Ord. 92-41 § 2, 1992: Ord. 1510 § 1, 1973: Ord. 967 (part), 1961: 1949 Code § 4204.2) 11.04.030 Use of Parks at Night. Parks shall be closed between the hours of eleven p.m. and six am. of the following day. No person shall remain in any park during the prohibited hours. Parks may remain open at the discretion of the Community Services Director. (Ord. 93 -26 § 3 (part), 1993: Ord. 92 -53 § 1, 1992) (No -pen Beach rr-K 350 Chapter 11.08 CONDUCT ON BEACHES AND PIERS• Sections: 11.08.020 Use of Concealing Umbrellas Prohibited. 11.08.030 Use of Beaches at Night. 11.08.040 Sleeping in Vehicles or on Beaches and Piers. 11.08.050 Disposal of Noncombustible Refuse. 11.08.055 Dangerous Articles lass Containers on Beach. 11.08.070 Removal of Beach Sand. • Removal of infuse reVimd — See Seaion 6.04.180. 11.08.020 Use of Concealing Umbrellas Prohibited. No person shall erect umbrellas upon that part of the beach or shore of the Pacific Ocean within the City which lies southerly of the southerly line of Ocean Avenue and Ocean Front or public streets of the City, if the same shall have side wall attached thereto; and shall at all times while the same are erected, be fully exposed from all sides to the public view. (1949 Code § 4200a) 11.08.030 Use of Beaches at Night. A. Prohibited Hours. Except as provided in subsection (B), no person shall be allowed or per- mitted on any public bay, beach nor any ocean front beach between the hours of ten p.m. and six am. of the following day; B. Temporary Modification The City Manager may, when necessary to protect the safety of persons or property, temporarily modify the beach and pier closure hours established in this Code. In no event shall the modification of hours continue for a period of more than two weeks. The modification shall not be effective until notice of the new hour, and the effective dazes if filed with the City Clerk. (Ord. 93 -28 § 1 (pan), 1993: Ord. 93 -6 § 1, 1993: Ord. CITY COUNCIL AGENDA ITEM 9 TO: MAYOR AND CITY COUNCILMEMBERS FROM: Kevin J. Murphy, City Manager (�� DATE: July 13, 1998 I RE: REQUEST FOR FEE WAIVERS FOR NEWPORT AQUATIC CENTER (NAC) BUILDING ADDITION In early June my office received correspondence (attached) from David Grant, President of the Newport Aquatic Center, requesting that the City waive all fees associated with the construction of an addition to their facility alongside the Upper Bay in Dover Shores. You'll note in the request there is a representation that the City waived all building permit fees when the facility was originally constructed and they are requesting the same sort of accommodation at this time. On July 2nd a follow -up request was received from Jonathan Van Cleave, again on behalf of the NAC. This correspondence provided additional background on the nature and reasoning for the request and is also attached. Upon receipt of the initial request, I requested Community Services and Building staff members to determine if there were any records indicating the basis upon which the City waived the fees or if the City Council had approved such a waiver. No such records could be found and a review of the NAC files in the City Clerk's Office reveal no such fee waiver approval by the City Council and no reference to a fee waiver in any of the current agreements between the City and the NAC. The only reference to the building permit fee waiver is found on the permit itself with a statement that... "All fees waived by the City Council" (see attached). Based on a discussion with the City Attorney, he recalls the waiver based on the City's co- application with the NAC for permits through the various resource agencies, including the Coastal Commission. Records in the City's files confirm that the City was a co- applicant with NAC at the Coastal Commission. A copy of our current lease addendum and lease is also attached for reference. Upon receipt of the July 2nd Van Cleave letter, staff was able to locate a Study Session report from January 26, 1987 (attached) indicating that unless the City Council objected, staff would waive Building Permit and Fair Share fees. It appears that there was no City Council objection. In this instance, the fees which would normally be charged for the construction of their addition include City Building Code plan check, inspection and clean -up deposit fees ($6,986.51), Fair Share Traffic Fees ($35,601.00), Building Excise Tax fees ($2,096.22), and Orange County Sanitation District fees ($4,711.50). In order for the NAC to continue to move forward on their construction project, all City Building permit fees were paid last week, prior to formal review of the City Council. The Newport Beach Municipal Code makes no provision for the waiver of Building permit fees for non- profits, or other joint or co- sponsored projects of the City. The plan check and building permit fees are collected to offset the costs of plan review and inspection services provided by City or contract employees. Fair Share Fees are covered in Municipal Code Section 15.38.085 and there are provisions for fee adjustments, waivers and exemptions in the Municipal Code. The only category of exemption is for affordable housing projects. Exemptions generally apply where there is no net new square footage or where the only change is from one land use category to another where the traffic generation rates are identical. A fee adjustment procedure is established in the Municipal Code, and it appears that the NAC may qualify upon application and processing through the Public Works Department and the approval of my office. Based on the cap of the total number of users of the site in the use permit, it is not likely that additional trips will be generated from the additional square footage. Upon City Council concurrence, we will ask that the NAC file an application for adjustment to the Fair Share Fees. SUMMARY AND CONCLUSION The NAC is a worthy and important member of the community and has provided a key access point to the Upper Bay for world and national class athletes, high school athletes, amateur, and members of the community. The City's Community Services Department uses the NAC as a resource to provide kayaking classes on a fee - for -class basis and has done so since its construction. In the past, the City waived the Building Permit fees for this organization and may wish to do so again for their expansion program. The Municipal Code provides no means for the City staff to approve such a waiver and such action must be approved and authorized by the City Council. Fair Share Fees may be handled administratively in accordance with provisions of the Municipal Code. Sanitation District Fees are outside the ability of the City to waive. RECOMMENDATION The City Council approve the request of the NAC for waiver of their building permit fees, building excise tax, and direct staff to request an appeal of the NAC for their Fair Share Fee requirement in accordance with the Newport Beach Municipal Code. I June 2, 1998 newport aquatic center Mr. Kevin Murphy City Manager City of Newport Beach 3300 Newport Blvd. Newport Beach, CA 92659 -1768 Re: Newport Aquatic Center final build -out. Dear Mr. Murphy: I am writing to you as the spokesperson for the Newport Aquatic Center (NAC), a non - profit, youth oriented, public facility that has existed in the upper bay for over a decade. Because this is a public facility, utilized primarily by the citizens of Newport Beach and because it has heavy usage by the City of Newport Beach Recreation Department, for which no fee is charged to the city, we need some assistance from you. When the Center was developed it was built entirely by local private donations, and the city waived the CIP Building Permit fees. The NAC has been so enormously successful that we have raised the funds to complete the build -out that was approved 10 years ago. As you no doubt will understand, raising over $400,000 to complete the project was no easy task. We have done that, but every dollar is targeted for the building based upon our discussions with the city staff, and the fact that building fees were waived for the initial phase. We very much need the fees to be waived. We are a non - profit entity serving the community. In fact, the city was a co- applicant for the building approvals obtained from the 18 various regulatory groups. Additionally, the county and school district had previously agreed to waive any applicable fees. As I will be out of town for a couple of weeks, I have requested that Mr. Bruce Ibbetson, an Olympian, a founder of the center and currently on the Board of Directors discuss this issue further with you. He will contact you this week or early next week, though please don't hesitate to call him at (949) 442 -8044. I appreciate your consideration on behalf of the Newport Aq,!atic Center. Yours Very T David A. Grant President, NAC President Emeritus Orange Coast College One Whitediffs Drive Newport Beach, CA 92660 714/646 -7725 LAW OFFICES OF JONATHAN E. VAN CLEAVE TELEPHONE SUITE 240 FAX 17141 660 -9090 S CORPORATE PARK (7141 976 -1614 IRVINE. CALIFORNIA 92606 July 2, 1998 Mr. Kevin Murphy City Manager City of Newport Beach 3300 Newport Blvd. Newport Beach, Ca. 92663 RE: Newport Aquatic Center Dear Mr. Murphy: The Board of Directors of the way of board members Chip McKibben Director Bill Whitford, have req documents and information relating development fees for the current NAC. Newport Aquatic Center (NAC), by and Bruce Ibbetson, and the NAC uested that I provide you with to the proposed city permit and construction activities at the By way of introduction, I was fortunate to have been selected to serve as General Counsel, Secretary and Treasurer for the NAC at it's inception and served in those capacities from the incorporation in 1981 until July, 1987. During that time, I was responsible for, among other things, assisting in the preparation and execution of numerous documents pertaining to: 1) the Joint Powers Agreement as between the City and the County regarding the use of North Star Beach; and, 2) the Ground Lease between the City and the NAC. I was also involved in the preparation of information presented from time to time to the Newport Beach City Council regarding construction plans. Enclosed for your use are copies the following documents which I believe will be sufficient to document the fact that the City Council took sufficient action, actually non - action, in early 1987 which waived the fees associated with the construction of the NAC project improvements, not only as to phase I construction which took place in late 1987, but as to the entire project, the balance of which is being completed now: The Grant Deed from the County of Orange to the City of Newport Beach, dated March 10, 1978, as to a one -half interest in North Star Beach. Mr. Kevin Murphy City Manager City of Newport Beach July 2, 1998 page 2 2. A Memorandum from the City Attorney, Bob Burnham, to the City Council, dated January 20, 1987, regarding, among other related items, the construction of the NAC and fees associated therewith. 3. The Joint Powers Agreement between the City of Newport Beach and the County of Orange, dated March 24, 1987 wherein the County granted to the City the authority over the use and administration of North Star Beach. 4. The Ground Lease between the City of Newport Beach and the NAC dated March 24, 1987. The Grant Deed from the County to the City documents that North Star Beach is owned jointly by the City and the County and thus the NAC has no ownership interest in the real property on which the NAC facility is built. The Joint Powers Agreement documents that the County agreed to transfer to the City the power to lease or otherwise arrange for the use of North Star Beach, thus making the City the sole entity possessing the ability to enter into a lease with the NAC for such use as is identified in the Ground Lease. Recital E on page one of the Joint Powers Agreement contains the "mission statement" of the City, County and the NAC and reads: "E. The construction of an Aquatic Center on North Star. Beach would constitute a significant benefit to both CITY and COUNTY in that the facility would be available for use by members of the general public to serve the needs of the large number of persons who own human - powered watercraft and provide additional facilities to serve the general public for activities such as public fishing access." Paragraph 9 on page 4 of the Joint Powers Agreement states that: " 9. All land and improvements shall remain the joint property of CITY and COUNTY, and shall be maintained and operated for public park and recreation purposes consistent with the terms of the grant Mr. Kevin Murphy City Manager City of Newport Beach July 2, 1998 Page 3 deed by which County conveyed a one -half interest In the property to CITY." These paragraphs make it clear that the County of Orange, the City of Newport Beach, and the NAC are in "partnership" with one another for the mutual benefit of the citizens of the City and the County regarding the NAC facility. Moreover, it is also clear that the City and the County not only own the Property at North Star Beach, but also the improvements ( ie; the driveway, the parking lot, the buildings and the fixtures inside the buildings). Accordingly, if the City were to levy development fees or taxes on the improvements, it would amount to a levy on itself, resulting in, among other things, a reduction in the funds available to construct and operate the facilities which the City and the County own. This reasoning , discussed and considered by the City Council in January, 1987, is the main reason that all such fees were waived by the City Council for the entire project, regardless of when the actual construction took place. The Memorandum from Bob Burnham in January, 1987 discusses some of the background of the NAC project. It also specifically raises, and discusses, the issue of a waiver of the normal developer fees based in part on the above logic. The Waiver of Fees section, found on page 4, section 3, reads as follows: 3. WAIVER OF FEES: Aquatic Center representatives have asked for a waiver of fees typically charged to developers. The project is operated by a non - profit corporation and is not subject to property development tax. There is no specific provision for waiver of fair share or plan check fees, but a waiver could be justified on the grounds that the City property is involved. If the Council does not direct Staff to collect fees for this project, plans will be processed with fees waived." I recall that no such fees were requested by the City, or paid for by the NAC, at the time that the first phase of the project was constructed in 1987. I also recall specifically that the understanding was that the waive}' of fees, by way of the non - action by the Council in 1987, applied to the "Project ", not just to one or more of the construction phases. It was well known that the project would be constructed in at least 3 phases, over time, when the NAC had been successful in it's fund raising. Accordingly, the City has good grounds to decline to charge the NAC fees related to the construction of the current phase of construction because the City Council has already determined not to charge such fees for the Mr. Kevin Murphy City Manager City of Newport Beach July 2, 1998 page 4 NAC "Project ", which includes the current construction. The NAC has been, and will continue to be, a very popular and valuable asset to the County, the City and to all those who have had the pleasure of using the NAC. The current construction will complete the master plan approved by the City in 1987, and launch a new era for the NAC in that it's full potential will now be realized. I trust that the City will review this matter in light of the information contained in this letter, and affirm it's 1987 decision regarding the waiver of the project fees in question. Thank you for the time and effort you have expended in exploring these issues. JEVC /jvc cc: Chip McKibben Bruce Ibbetson Bill Whitford S, Cleave `ui!di g gDici°wimeni - _1 u Fr•o,le - ORr AVCHITECT /� \\ TELL 't ZONING /A/ �C(_7y Y {i FnIR GF lNGR. /l: •IL �� /J �% / - NO _)�/ c /��' APPROV. (' ✓'� SHANE S t,-. ir • /�(JA�� "'t. zIP CITH II ADD EF R API:. LEE! ^L15,• �AMGFJAiURF, ( I LICENSED CONTRACTORS DECLARATION i<I SED •NC C R PROVSONS OF CHAPTER G 1 OF AEON 3 OF BUSNESL AN TH)vrA!10 EQFETr .0 'IV LICENSE • it. FULL FORCE AND EFFECT. �.ncF. C•)S_ LIC..v0 _ DATE N CW'NCR BUILDER DECLARATON THA Au. Cv En PT FROM THE CONr PACrOR'S LICENSE' -AV.' I.N TI<E .:SJ1: FEC 703 6 PROFESSIONS CODE.A v OR T04CONSTRNCT.w PRp VE. DEMOISw OR - !<N. 1ITNU Of IF[STi ro ITS ISSUANCE ALSOER iRCS THE APn.CAnT P vVcI C O FILL 4' s a'J STATEHENT THAT HE IS LICENSED FUPCIANT TO C ?FO' S C UC CO.TRSCTDF S ' E C (CHAPTER IF Go Nn C.C, AS p OI OFDIVISION 3 OFT E &DT PROFE55 J a5 CODE OR -FROM 2 FOR : D CFEIIRTIOI:. ANY IN OF ES TTION RTV31.A POR A ME R +U A CCV1L PEI1f ITY OFV'+C .CRESTI,A` r"rE HUNDRED DOLLARS ESODFl R OF T.TE FFDPEFT +.OR N. P_OrECS.TWTH WAGES A THEIR SOLE U I'D p E WC IRK F STRUCTURE IS NOT NT,NDE O ( F (E. 6 ESS AND PROFESSONS CODE: C J C DOE p F TU AN OWNER OF PROFCRTV WMO S. LL.. IF M U.ES FED -NC O DIES SLCI wOPU H ELF OR THROVU•< . PLOVECS <' DVIOED THAT V SLON I..FROVENENTS A NOT INTENDED OR F`-CPFO FJ9 SAIE. 11 I:OICEVER. THE SU:LCINC OF IMPROVEMENT 15 SOLD WITHIN C FEAR < E.O THE OWNER PU VE TIE BURDEN OF PROVNG F'T C ] D BUILD OR IMPROVE FOR VI,ri OF SALE .1 TIE I O C CP p SOICERTY A V O RACT NO W Try LICENSED TIE PROJECT TO«. BGAF PIVS — P O ,,, 5 O E CONTRACTORS DOES NOT TO A E O O ER O VU OS OR IMPROVES THEREON AND L NO CONTRACTS FIT .T( PROJECTS COITRAGTC'PIS LICENSED PURSUANT TO THE Ri LC SE IAn L .+ EXCnPT UN ER SEC &&A C. ICA THIS REASON, FIRE II,�J" EXCISE 'S PP.PROY L Y ^._ y GR w DING 1 NO U PPROV L NO $ _; C.. PLaN YI I OiHEF Dv AP III T TC ISSL }i .i: _.. J_ ------ ..� WORKERS COMPENSATION DEC: -A RATION HEREd \' IFF.F.14 HAT I 4A0,M A C.FR'HICATE O :. SF:.E -IN SERE CIA r.Ri IC O VO.T R 'Lry O : <.•:r l-. �/ POLICY O %�Meer/IS ��lFj CERTIFIED E DATE APITJ. ANT �C. CERT!FL.AT E OF EYE N PI 'I ttqq. ,fLJ.J FPS COMPENSATI ON INS f1G C THIS SECTICT I4EED NOT BE CCVFLllIG E 1- V I,p CNV 1 0 C'F SRT TI FY T THE P-R . -CF ISSUED 1 O T ALL NOT E LO\' PL R. . S L... . SJDIE<T TO TuE v.ORXE RS' CCIMPENS.TIDN AAV.a OF —.1-1 I AFTER R 1 Nprl<L B C E It P. INC T - LABOR BECOME MUST O TO Fill ERW C.."111-HO ^..� .BOB BE CODE .MEDFSTFORTNWI:RICV09oEV W'FI. S'ICt F... SC SJ09Fin 3'PECni:T 1 _ .LL BE DEEMED EJORED. L CONSTRUCTION LENCINC I CG u `REDY AFFIRM THERE O A D, P_D ORMAN_E OFT •L WORD 0:.5 R CF T ! T IT ADLI ...... LENDER'S NAME .._ _... .. _.- ..,.._._. LENDER'S ADDED 5% __ ...._. CERTIFY 1H QRR E ^FL1.:A TIJ<: ALP - nC :.E_ RDNANCES THAT COPRS!A PEE TO BULL COONT: OPT NAImES AND ,v -E LAY, . H D E. rlE.E. RPPEA ENTa� FIT E= YOF ADO /E NENi pNCO l'(JPERTV •c4 nS .0 NJH uR<'u ECS' I. OINK FEeS r PIG Fee $ - -- �' Permit FD, Final Va $ AOj P'C Fee S _ oW NFp (:SG $ J Toial F..e• / WORK MUST BE STARTED WITHIN L PERIOD OF 180 DAYS FROM THE DATE OF VALIDATION OR THIS PEE FAIT BECOMES NI L:EL 9N0 ;VOID PLAN CHECK VALIDATION cK. N.D. CASH - PERMIT' VALIDATION c. r:. M.. cA.;N s newp®rt aquatic center May 20, 1998 Planning Department City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92659 RE: Newport Aquatic Center Boat House Expansion Use Permit No. 3104 Gentlemen, The Newport Aquatic Center agrees to comply with the conditions of approval of Use Permit No. 3104 dated September 6, 1984. The conditions of approval, items 1 through 63, are recognized, including condition number 20, limiting hours of operation, and condition number 61, limiting daily trips. Sincer ly, i David Grant Presid nt (inn Rn,,I, (A Q9rrr1 11 71 d /rd(�_777F THE CITY OF NEWPORT BEACH AND NEWPORT AQUATIC CENTER, INC. ADDENDUM TO GROUND LEASE WHEREAS, on March 24, 1987 a Ground Lease was entered into by and between the CITY OF NEWPORT BEACH, ( "Lessor") and NEWPORT AQUATIC CENTER, INC., a non profit public benefit corporation, ( "Lessee ") for a term of twenty -five (25) years; and WHEREAS, Lessor and Lessee desire to extend the original Ground Lease, and WHEREAS, Lessor and Lessee agree that all other terms and conditions are to remain unchanged: IT IS HEREBY agreed by and between the City of Newport Beach, Lessor, and Newport Aquatic Center, Inc., a non profit public benefit corporation, Lessee, that the term of the Ground Lease shall be twenty -five (25) years from the first day of the first full calendar month after each of the following conditions have been satisfied: A. The Lease has been executed by Lessor and Lessee; B. Lessee has submitted construction drawings for the construction of the remainder of the floor area permitted by Use Permit number 3104 and Coastal Development Permit 5 -84 -786; C. Lessee has applied for a building permit for the construction of the remaining floor area permitted by Use Permit number 3104 and Coastal Development Permit 5 -84 -786; D. Lessee has complied with all conditions to the approval of Use Permit number 3104 and Coastal Development Permit number 5 -84 -786, including, but not limited to, permits from other public agencies, and the soils hydrology and related studies; E. Lessee has submitted an agreement, signed by a general contractor licensed as such by the State of California, committing the contractor to complete the remaining floor area of the project; F. Lessor has received a bond guaranteeing performance of the contract required by the provisions of subparagraph E. The bond shall guarantee performance of the contract in a timely and workmanlike manner in the event contractor fails or refuses to perform in accordance with the contract; G. Lessee must satisfy each of the conditions precedent to the commencement of the term of the lease within twelve (12) months of the date of the execution of this Addendum. IN WITNESS WHEREOF, the Parties hereto have executed this Addendum to the Ground Lease. Dated: 24 Of 011 Dated: APPROVED AS TO FORM: By: _ �b 0 Daniel K. Ohl, Deputy City Attorney for the City of Newport Beach AT- 0 LESSEE: NEWPORT AQUATIC CENTER, INC. By: a >� LESSOR: CITY OF NEWPORT BEACH By:A Debay, � d 9ayorforthe City of Newport Beach LaVonne Harkless, City Clerk for the City of Newport Beach F;1 caPdebbietag taquaticlnac25yr.doc 09 -15-97 Council Meeting: 04 -28 -97 Agenda No. CITY OF NEWPORT BEACH OFFICE OF THE CITY ATTORNEY April 24, 1997 TO: Mayor and Members of the City Council FROM: Daniel K. Ohl - Deputy City Attorney RE: Newport Aquatic Center Addendum to Ground Lease Extension Supplemental Report By way of background, the City of Newport Beach, in conjunction with Newport Aquatic Center, applied for and received a permit from the California Coastal Commission for the development of North Star Beach in the Dover Shores residential area. The permit allowed for construction of a 18,228 square foot aquatic training and recreational facility which occupies approximately one -fourth of the 12 acre beach. A deed restriction limits development to this degree and thus the property does not produce income. The facility is situated such that the portion of the beach left undeveloped is adjacent to the public road. The center is quasi - public in nature in that the primary users are various boat clubs, youth day camps, sports camps, civic organizations and elite athletes through memberships. The Coastal Commission Permit notes that recreational boating use of coastal waters shall be encouraged. The boat launching facilities, public restrooms and public parking must be made available to the general public during the hours of operation of the facility. In connection with the California Coastal Commission Permit, the City has issued a Conditional Use Permit with 63 conditions in conjunction with a 25 -year Ground Lease executed in March of 1987. The Lease is attached as an exhibit. The City added the various conditions largely as a result of the concerns expressed by the Dover Shores Residential Community since the only overland access to the facility is through their community. The most notable condition includes a reservation of 20% of the maximal allowable daily use of 250 persons for general public walk -in use of the boat launching facility. The center is to provide a minimum of 63 parking spaces, and allow limited outdoor boat storage to seasonal storage of outrigger canoes. Further, the center is required to have a weekly clean -up program on the site. The hours of operation are limited to 6:00 a.m. to 10:00 p.m. daily, with no outdoor programs offered after 7:00 p.m. Only advanced training activities are permitted between 6:00 and 7:00 a.m. The Conditional Use Permit restrictions were also embodied into a facility management plan approved by the City Council on January 25, 1988. The document reflects the Conditional Use Permit restrictions, Coastal Commission requirements, and input of both the Aquatic Center Board and Dover Shores Community Association. Since the center officially opened in January of 1988, it has become a beacon for water enthusiasts. Several world class athletes routinely train there, a large number of recreational activities and programs are offered to the public, and consistent with its charge from the California Coastal Commission, increase use of coastal waters has not only been encouraged, but achieved. Current management at the Aquatic Center has done an excellent job of communicating with local homeowners concerning activities at the center and have been able to iron out any issues which have arisen. The proposed and previously approved build out, which is mainly to increase storage, will cause the plans and specifications to be re- examined by the Building Department to make sure all applicable issues are addressed. The maximum daily use restrictions will not change, while parking will be increased. The Harbors, Beaches, and Parks Committee considered and approved the addendum to the Ground Lease at its meeting of April 24, 1997. Recommendation: It is recommended that the addendum to the Ground Lease, granting the requested extension, be approved. DANIEL K. OHL Deputy City Attorney DKO:kh F: 1catldebbielccmemolnac- perm.doc THE CITY OF NEWPORT BEACH AND NEWPORT AQUATIC CENTER, INC. GROUND LEAS2 THIS GROUND LEASE, entered into this a day of C � 198 , by and between THE CITY OF NEWPORT BEACH, ( "Lessor" and NEWPORT AQUATIC CENTER, INC., a Non - profit Public Benefit Corporation, organized and existing under and by virtue of the laws of the State of California. (referred to as "Lessee ") is made with reference to the following facts, the materiality and existence of which is stipulated and agreed by the parties: A. Lessor is the owner, subject to a public trust, of approximately 12 acres of tidelands located in the City of Newport Beach and commonly known as N_.th Star Beach. B. In November, 1982, the qualified electors of the City of Newport Beach approved a Measure which granted the City Council the authority to lease property on North Star Beach for the construction of facilities to promote sports involving human - powered watercraft. C. The property which is the subject of this lease has been identified as that portion of North Star Beach best suited for the construction of facilities to promote sports involving human- powered watercraft. D. On September 6,' 1984, the Planning Commission of the City of Newport Beach approved Lessee's application for a use permit (No. 3104, attached 'as ExhLuit "C ") authorizing the construction of an 18,228 square foot structure that would provide facilities for human- powered watercraft, and their owners, including boat storage, and multi - purpose area and meeting room, a weight training room, small offices for the conduct and operation of facility, Docker rooms, and such other facilities as may be incidental to sports involving human- powered watercraft. In addition, permittee proposed to construct a bulkhead along a portion of the beach frontage, build low lying docks to serve only human- powered craft, landscape the property, and provide appropriate public parking, restroom facilities, and access to the beach. E. On February 14, 19859 the California Coastal Commission approved Lessee's application for a Coastal Development Permit authorizing the construction of the Aquatic -1- lift Center. (See Coastal Development Permit No. 5 -84 -786- Exhibit "D. ") F. The property is subject to restrictions, including, but not limited to, limitations specified in Chapter 415, Statutes of 1975 the Grant Deed from the County of Orange to the City of Newport Beach and (conveying an undivided one -half interest in the property) and the limitations commonly imposed on public tidelands. Lessor has determined that the proposed Aquatic Center, and the uses to which it will be put, are consistent with the limitations and restrictions imposed on the property; G. The residents of Newport Beach and the County of Orange will derive substantial benefit from the construction of the Aquatic Center in that: 1. Newport Harbor has ideal water c::.ditions for the'training and development of world -class rowers, canoers, and kayakers, but no facility currently exists to accommodate these athletes and there is currently no organized public program for these specific water sports outside collegiate programs. 2. Construction of the Aquatic Center will provide a facility for world -class athletes, as well as encourage and provide for public participation in human- powered aquatic sports at all levels of ability; 3. A portion of the Aquatic Center will be available for use by members of the general public on a daily basis and also will be available for use by the City of Newport Beach. H. The County of Orange, pursuant to a joint powers agreement, has given the City of Newport Beach the power to execute this lease on its behalf. NOW, THEREFORE, the parties hereto agree as follows: 1. LEASED PREMISES Lessor hereby leases to Lessee, subject to the terms of this Agreement, the 3.9 +/- acre parcel legally described on Zxhibit "A," and depicted on the -zp attached as Exhibit "B" (the "property "). -2- 2. TERM The term of this Lease shall be twenty -five (25) years, unless sooner terminated as provided herein. The term of the lease shall commence on the first day of the first full calendar month after each of the following conditions has been satisfied: A. The Lease has been executed by Lessor and Lessee; B. Lessee. has applied for a building permit for the construction of at least 35% of the floor area permitted by Use Permit No. 3104 and for construction of any and all improvements or facilities relating to the construction of phase I (as defined in Paragraph S.A. and required as conditions to Use Permit No. 3104 and conditions 2 -6 of Coastal Development Permit 5 -84 -786; C. Lessee has complied with all conditions to the approval of Use Permit No. 3104 and Coastal Development Permit No. 5 -84 -786, including, but not limited to, permits from other public agencies, and the soils, hydrology and related studies; D. Lessee has submitted an Agreement, signed by a general contractor licensed as such by the State of California, committing the contractor to complete at least Phase I of the project on or before March 1, 1988. E. Lessor ha's received a bond guaranteeing performance of the contract required by the provisions of subparagraph D. The bond guaranteeing performance of the contract in a timely and workmanlike manner in the event contractor fails or refuses to perform in accordance with the contract. Lessee must satisfy each of the conditions precedent to the commencement of the term of the lease within twelve months of the date of execution. 3. USE RESTRICTIONS /CONDITIONS This Lease is subject to all of the conditions, covenants, restri.,�ions and limi.ations of the following: A. City of Newport Beach Use Permit No. 3104; -3- n W B. Coastal Commission Development Permit No. 5- 84 -786; C. The Grant Deed from the County of Orange conveying to the City of Newport Beach an undivided one -half interest in the property and recorded March 13, 1978 in Book 12594, Page 990, Official Records of the County of Orange. D.- The provisions of any and all Statutes of the California Legislature granting any portion of the property to the City of Newport Beach or County of Orange. E. The Joint Powers Agreement between the City of Newport Beach and County of Orange (attached as Exhibit "E. ") F. Lessee shall permit, and provide for, public access for activities permitted under the Tideland Grants, including fishing, to the extent those activities do not interfere with the activities and programs conducted by Lessee. 4. CONSIDERATION The consideration for this Agreement shall be the construction of an aquatic center by Lessee, at no cost to Lessor, the continued maintenance and operation of this facility for the term of the Lease at no cost to Lessor, the commitment of Lessee to utilize the facility as an aquatic center for the advancement of marine - oriented athletic and recreational programs and activities, and the right of Lessor to utilize the facility. 5. CONSTRUCTION BY LESSEE A. Project: Lessee shall have the right, at Lessee's sole cost and expense, to construct a facility consisting of no more than 18,228 square feet, inclusive of boat storage areas, weight training rooms, men's and women's locker rooms, multi - purpose assembly room, facility and public restrooms, and other uses, all as shown on the plans and specifications submitted by Lessee to the City of Newport Beach and California Coastal Commission in conjunction with the approval of Use Permit No. 3104 and Coastal Development Permit No. 5 -84 -786. Lessee shall construct, at Lessee's sole cost and expense, at least 83 parking spaces, an access road, and other improvements as are shown on the plans for Phase I attached to this lease as Exhibit "F." Lessee may also construct, at Lessee's sole cost and expense, a staging area, dock and bulkhead, to the extent permitted by Use Permit No. -4- 31049 subject to whatever restrictions may be imposed by any agency having jurisdiction over such construction. B. Phasing /Phase I: The project may be constructed in no more than three phases. Phase I shall consist of 8,107 square feet of building area, 64 parking spaces, staging area, ramp, dock and accesss road all as described in, shown on, the plans and specifications attached as Exhibit "F." Construction of subsequent phases shall not commence until Lessor has, with respect to each phase, complied with the provisions of subparagraphs 2.C. through 2.E. C. Construction Schedule: Construction of phase I shall commence within ninety (90) days from the effective date of the lease and shall be diligently pursued to completion in accordance with the schedule submitted by lessee or lessee's contractor, and approved by the Building Director of the City of Newport Beach. The time for completion of any phase of construction may be extended in the event of strikes, acts of God, or other events beyond the control of lessee, but shall not be extended due to financial problems. Failure to timely conmence construction, or failure to diligently pursue completion of any phase shall be considered a material breach. D. Permits and Approvals: Lessee shall be required to obtain, prior to commencing any phase of Zons!truction, all permits, licenses or approvals that may be required in connection with that particular phase, including, but not limited to, approvals and Permits from the following agencies: (1) The City of Newport Beach; (2) The County of Orange; (3) The California Department of Fish do Game; (4) '!'he California Coastal Commission; (5) The California Regional Water Quality Control Boards; -5- _I (6) The Army Corps of Engineers; (7) The United States Department of Fish do Wildlife; (8) The United States Bureau of Sports Fisheries. E. Completion Bond /Letter of Credit: In the event the contract performance bond provided pursuant to the provisions of paragraph 2.E. of this lease becomes invalid, or unenforceable, for any reason, Lessee shall provide Lessor with a substitute letter of credit or completion bond within five (5) days from the date on which Lessee becomes aware of the invalidity or unenforceability or the bond or letter of credit or, .written notice from Lessor, whichever first occurs. Any substitute bond or letter of credit must comply with. the standards specified in paragraph 2.E. of this lease. F. Prior Written Approval: No structure or improvement of any kind shall be erected or maintained on the property unless and until plans, specifications, and proposed location of the structure or improvement have been approved, in writing, by Lessor. G. Notice of Non - Responsibility: Lessor shall have the right, at any time, to post and maintain on the premises, ar-' record, as required by law, any notice or notices of non - responsibility provided for the Mechanics' Lien laws of the State of California. H. Licensed Contractors: All work required in the construction of any phase of the Aquatic Center, including site preparation, work, landscaping, utility installation and similar work shall be performed only by competent contractors duly licensed as such under the laws of the State of California and pursuant to written contract between the contractor and Lessee. Unless otherwise specified by the Buildino Director and Public Works Director of the City of Newport Beach, each contract with a general contractor shall provide that the final payment under the contract shall be in an amount equalling at least 10% of the full -6- a : amount payable and shall not be paid to contractor until the following, whichever last occurs: (1) The expiration of 35 days from the notice of recording by Lessee of a notice of completion of the building, with Lessee agreeing to record the notice promptly within the time specified by law; or (2) The settlement and discharge of all liens of record claimed by persons who supplied other labor or materials for the construction of the project. 6. CONSTRUCTION /ALTERATION BY LESSEE (1) Lessor's Consent: No structures, improvements, or facilities other than as provide' in phase I, shall be constructed or altered by Lessee without the prior written consent of the Building Director of the City of Newport Beach. Any conditions relating to the manner, method, design and construction of the structures, improvements or facilities imposed by Lessor shall be considered conditions of this Agreement as though originally stated herein. In the event that any construction or alteration of facilities, structures or improvements requires any discretionary approval of any Board or Commission of the City of Newport Beach, any conditions Imposed by such Board or Commission relating to the manner, method, design and construction of the structures, improvements or facilities shall also be conditions of this Lease. (2) Strict Compliance: All improvements constructed by Lessee on the property shall be constructed`in strict compliance with the plans and specifications approved by the Building Director of the City of Newport Beach. (3) Mechanics Liens or Stop Notices: -7- Lessee shall, at all times, indemnify and hold Lessor harmless from any and all claims for labor or materials in connection with the construction, repair, alteration, or installation of the structures, improvements, equipment or facilities on the property, and from the c - -ts of defending against such claims, including reasonable attorney's fees. In the event any lien or stop notice is imposed or recorded on the property as a result of the construction, repair, -7- I i alteration of the facility, installation of any equipment, Lessee shall, within thirty (30) days from the filing of the lien or stop notice: i. Record a valid release of lien or stop notice; ii. Deposit sufficient cash with Lessor to cover the amount of the claim or lien or stop notice in question and authorize payment to the extent of said deposit to any person or entity that obtains any judgme.nt with respect to said claim or lien or stop notice; or iii. Procure and record a Bond in accordance with the provisions of Section 3143 CCP, which frees the property from the claim of lien or stop notice and from any action brought f,) foreclose the lien or stop notice. Lessee's failure to comply with the provisions of this paragraph, shall be considered to be a material breach, and this Lease shall be subject to immediate termination, pursuant to the provisions of Section 23 of this Lease. OWNERSHIP OF IMPROVEMENTS: All buildings, improvements and facilities, exclu- sive of trade fixtures, constructed or placed on the property by Lessee must, upon completion of construction or installation, be free and clear of all liens, claims or liability for labor or material, and shall become property of Lessor and the County of Orange at the expiration of this Lease, or earlier termination thereof. Lessor retains the right to require Lessee, at Lessee's cost, to remove all improvements, placed on the property by Lessee, at the expiration or termination of this Lease subject to the provisions of paragraph 13 of this Lease. 8. UTII:ITIES Lessee shall be responsible for and pay, prior to the delinquency date, all charges for utilities supplied to the property and structures or improvements thereon. 9. MAINTENANCE OBLIGATIONS OF LESSEE Lessee agrees to maintain the -8- property and all improvements constructed thereon in good order and repair, and to keep said premises in a neat, clean, orderly, safe, and sanitary condition. This includes, but is not limited to, the prevention of accumulation of any refuse or waste materials which might constitute a fire hazard or a public or private nuisance. Failure of Lessee to p:operly maintain and repair the property and improvements shall constitute a material breach of the terms of this Lease. 10. DAMAGE TO OR DESTRUCTION OF IMPROVEMENTS In the event of damage to or destruction' of Lessee's buildings, facilities, or improvements located on the property or in the event buildings, facilities, or improvements located on the property are declared unsafe or unfit for use or occupancy by a public entity with the authority to make and enforce such declaration, Lessee shall, within 120 days, commence and deligently pursue "- completion the repair, replacement, or reconstruction of the structure or improvements necessary to per- mit full use and occupancy of the property for the purposes required by this Lease. Repair, replacement, or reconstruction of improvements within the property shall be accomplished in a manner and according to plans approved by Lessor. 11. INSURANCE Lessee shall maintain insurance, acceptable to Lessor, in full force and effect throughout the term of this Lease. The policy or policies of insurance maintained by Lessee shall provide the following limits and coverages: A. Liability Insurance: Coverage 1,::.3,000 Bodily injury - property damage combined single limit, which insurance shall be in force on the first day of the term of this Lease. B. Fire do Extended Coverage: Not less than 90% of the cost of replacement of all Insurable improvements within the property. Water damage and debris cleanup 'provisions shall be included. C. Insurance shall be in force the first day of the term of this Lease. D. Each insurance policy required by thi: Lease shall contain the following three clauses: 1. "This insurance shall not be cancelled, -9- i limited in scope of coverage or nonrenewed until after 30 days' written notice has been given to the City Manager of the City of Newport Beach, c/o City Attorney's Office, 3300 Newport Blvd., Newport Beach, California 92663" 2. "It is agreed that any insurance maintained by the County of Orange or the City of Newport Beach will apply in excess of, and not contribute with, insurance provided by this policy." 3. "The County of Orange and the City of Newport Beach are added as additional insureds with respect to all operations or activities of the named insured at or from the property," provided, however; this' language shall not be required as _a part of a -- insurance policy carried by a contractor for fire and extended coverage during construction of any phase. E. Lessor shall retain the right, at any time, to review the coverage, form, and amount of the insurance required hereby. If, in the opinion of Lessor, the insurance provisions in this Lease do not provide reasonably adequate protection for Lessor, based upon loss experience and /or the kind and extent of the risks which then exist, Lessor may require Lessee to obtain additional insurance in such amount as necessary. F. Lessor shall notify Lessee, in writing, of changes in the insurance requirements, and if Lessee does not deposit copies of acceptable insurer.::, policies with Lessor, incorporating such changes within thirty days of receipt of such notice, Lessee shall be in default. G. Any and all fire, extended coverage or other insurance proceeds that become payable at any time during the term of this lease because of damage to, or destruction of, any building or improvement on the property, shall be paid to Lessee and applied by Lessee towards cost of repairing and restoring the damage or destroyed buildings or improvements as provided in paragraph 10 of this lease. H. The procuring of -uch required policy or policies of insurance shall not be construed to limit Lessee's liability hereunder nor to fulfill the indemnification provisions and requirements of this Lease. -10- r r'n kc 12. ASSIGNING. SUBLETTING AND ENCUMBERING PROHIBITED Lessee shall not mortgage, pledge, hypothecate, encumber, transfer, sublease or assign its interest in this lease, the property, or. any structure located on the property. The reasons for the prohibitions specified in this paragraph include, but are not necessarily limited to, the following: A. The property consists of tidelands subject to a public trust for specified purposes, and may not be transferred or conveyed by LESSOR. The assignment or transfer of the Aquatic Center's interest in this lease could violate the restriction or transfer. B. Lessor's power to enter into this Lease has been granted by vote of the people and the Joint Powers Agreement, (attached as Exhibit-"E"), and Lessor's power to lease the property is limited to non- profit corporations involved in promoting sports involving human - powered watercraft. Any assignment of the Lease or encumbrance of the property could be inconsistent with the authority conveyed by the electorate; C. Lessor, given the purposes for which Lessee was formed, and limitations on its power as specified in its articles of incorporation, has greater assurance that Lessee will comply with the terms and conditions of this Lease and related approvals, than any other entity or organization. 13. EMINENT DOMAIN In the event the whole or part of the property or improvements is condemned by,a public entity in the lawful exer- cise of the power of eminent domain, this Lease shall cease.as to the part condemned upon the date possession of that part is taken by the public entity. If only a part is condemned and the taking of that part does not substantially impair the capacity of the remainder to be used for the purposes required in this Lease, Lessee shall continue to be bound by the terms, covenants and conditions of this Lease. If only a part is condemned and the taking of that part substantially impairs the capacity of the remainder to be used for the purposes required in this Lease, Lessee shall have the election of: -11- (1) Terminating this Lease and being absolved of obligations hereunder which have not accrued at the date possession is taken by the public entity; or (2) Conti.nuing to occupy the remainder of the property and remaining bounds by the terms, covenants and conditions of this Lease. Lessee shall give notice in writing of his election hereunder, within 30 days of the date possession of the part is taken by the public entity. Lessor shall be entitled to receive and shall receive all compensation for the condemnation of all or any por- tion of the property by exercise of eminent domain. Lessee shall be entitled to receive and shall receive all compensation fvr. the condemnation of all or any portion of the improvements constructed by Lessee on the leased premises by the exercise of eminent domain. 14. FACILITY MANAGEMENT PLAN The purpose of Lessor for entering into this Lease is to promote the development of sports involving human- powered watercraft, as well as facilities, programs and services related thereto, all to satisfy the needs of the general public. In furtherance of that purpose and to ensure that the operation of the facility is in accordance with the intent of the Lessor, Lessee shall submit a Facility Management Plan (FMP) to the Director of Parks, Beaches do Recreation for the City of Newport Beach for approval. The ;facilities shall be operated and administered in accordance with the approved FMP. The FMP shall, at a minimum, include the following: A. The programs, services and activities to be offered to members of the general public by the facility; B. to which any dues C. D. able for use by ,programs, togethe be available; _The nature of any membership program pursuant or fees are charged by Lessee; The hours of operation of the facility; The portions of the facility that are avail - Lessor for the conduct of public recreation r with the days and times that such space will -12- n 1 E. Such other provisions as the Parks, Beaches do Recreation Director considers necessary to ensure that the facility is operated and maintained in accordance with the purpose of this Agreement. F. The right of City to modify the FMP in the event of operation of the Aquatic Center is inconsistent with this lease, Use Permit No. 3104, Coastal Development Permit No. 5 -84 -786 and other applicable law, rule or regulation. Lessee shall sumbit the proposed FMP to Lessor within 120 days after the effective date of this lease. Lessee is prohibited from using, or permitting others to use, the facility in any manner which is not authorized by, or inconsistent with, the approved FMP. The failure of Lessee to comply with the provisions of this paragraph after written notice by Lessor shall be considered a material breach of this lease. 15. UNLAWFUL USE: Lessee agrees that no improvement shall be erected, constructed or operated on the property, nor any business conducted on the property in violation of the terms of this Lease, or of any regulation, order, law, statute, bylaw, charter provision or ordinance of any Governmental agency having jurisdiction. Lessee shall not construct, maintain, or allow any sign upon the property, or improvements thereon, except as approved by Lessor, and further, such sign must be in compliance with the provisions of Chapter 20.02 of the Newport Beach Municipal Code. Lessee shall not discriminate against any person or class of persons by reason of sex, color, race, creed, national origin or age. Lessee shall make all of its services, programs ana facilities available to the public on fair and reasonable terms. 16. INDE&TIFICATION Lessee hereby hereby waives and claims and recourse against Lessor, including the right of contribution, for any loss or damage of or to persons or property in any way related to this agreement and Lessee's activities hereunder, except claims or liability arising from concurrent, active, or sole negligence of Lessor, or its officers, agents, employees or representatives. Neither party shall request a iury apportionment. Lessee agrees to indemnify and hold harmless and -13- defend Lessor, its officers, agents, employees and representatives, from and against any and all claims, demands, losses, damages, costs, legal and investigation expenses, or liability of any kind or nature which Lessor or its officers, agents and employees may sustain or incur or which may be imposed upon them or any of them for injury to or death of persons, or damage to property as a result of, arising out of, or in any manner related to this Lease, or with the occupancy and use of the property or improvements thereon by Lessee, or any of Lessee's activities at or from the property, or its officers, agents, employees, subtenants, licensees, patrons or visitors, except liability arising out of the concurrent, active, or sole negligence or wilful misconduct of Lessor or its officers, agents, or employees. 17. TAXES AND ASSESSMENTS This Lease may create a possessory interest which is subject to the paymrait of taxes levied on such interest. It is understood and agreed that all taxes and assessments, includ- ing but not limited to said possessory interest tax, which become due and payable upon the property or improvements thereon or upon fixtures, equipment or other property installed or constructed thereon shall be the full responsibility of Lessee, and Lessee shall cause said taxes and assessments to be paid promptly. 18. INSPECTION Lessor or its authorized representative shall have the right at all reasonable times to inspect the property to determine if Lessee is in compliance withthe terms and conditions of this Lease and Use Permit No. 3104. 19. SUCCESSORS -IN- INTEREST Unless otherwise provided in this Lease, the terms, covenants and conditions contained herein shall apply to and bind the heirs, successors, executors, administrators and assigns of all the parties hereto, 'all of whom shall be jointly and severally liable hereunder. 20. CIRCUMSTANCES WHICH EXCUSE PERFORMANCE If either party hereto shall be delayed or prevented from the performance of any act required hereunder by reason of acts of God, restrictive Governmental laws or regula- tions, or other cause without fault and beyond the control of the party obligated (financial inability excepted), performance of -14- c. such act shall be excused for the period of the delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay. 21. PARTIAL INVALIDITY If any term, covenant, condition or provision of this Lease is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions hereof shall remain in full force and effect and shall, in no way, be affected, impaired or invalidated thereby. 22. WAIVER OF RIGHTS The failure of Lessee or Lessor to insist upon strict performance of any of the terms, covenants or conditions of this Lease shall not be deemed a waiver of any right or remedy that Lessee or Lessee may have, and shall not be deemed a waiver of the eight to require strict performance of all of tue terms, covenants and conditions of the Lease thereafter, nor a waiver of any remedy for the subsequent breach or default of any term, covenant or condition of the Lease. 23. DEFAULT IN TERMS OF LEASE BY LESSEE Should Lessee default in the performance of any material covenant., condition or agreement contained in this Lease, and such default is not corrected within a reasonable time (as determined by Lessor) after Lessee receives written Notice of Default from Lessor, Lessor may: (A) Terminate this Lease. All rights of Lessee and those who claim under Lessee, stemming from this Lease shall end at the time of such termination; or (B) At Lessor's sole option, cure any such default by performance of any act, reasonably necessary to cure such default. 24. COSTS OF •SUSTAINING AN ACTION FOR BREACH OR DEFAULT In the event either Lessor or Lessee conmences legal action against the other, claiming a breach or default of this Lease, the prevailing party in such litigation shall be entitlea to recover from the other costs of sustaining such 'action, including reasonable attorney's fees as may be determined by the Court. -Is- 25. RESERVATIONS TO LESSOR The property is accepted as is and where at by Lessee, subject to any and all existing easements and encumbrances. Lessor reserves the right to install, lay, con- struct, maintain, repair and operate such sanitary sewers, drains, storm water sewers, pipelines, manholes and connections; water, oil and gas pipelines; telephone and telegraph power lines and the appliances and appurtenances necessary or convenient in connection therewith in, over, upon, through, across and along the property or any part thereof, and to enter the property for any and all such purposes. Lessor also reserves the right to grant franchises, easements, rights -of -way and per- mits in, over, upon, through, across and along any and all por- tions of the property. No right reserved by Lessor in this clause shall be so exercised as to interfere unreasonably with Lessee's operations hereunder or to impair the security of any secured creditor of ..cssee. 26. gUITCLAIM OF LESSEE'S INTEREST UPON TERMINATION Upon termination of this Lease, including but not limited to, termination because of default by Lessee, Lessee shall execute, acknowledge and deliver to Lessor, within 30 days after receipt of written demand therefor, a good and sufficient Deed, whereby all right, title and interest of Lessor in the property is quitclaimed to Lessor. Should Lessee fail or refuse to deliver the required Deed to Lessor, Lessor may prepare and record a Notice, reciting the failure of Lessee to execute, acknowledge and deliver such Deed and said Notice shall be conclusive evidence of the termination of this Lease and of all right of Lessee or those claiming under Lessee in and to the property. 27. LESSOR'S RIGHT TO REENTER Lessee agrees to yield and peaceably deliver possession of the property to Lessor on the date of termination of this Lease,.wha_tsoever the reason for such termination. Upon giving written notice of termination to Lessee, Lessor shall have the right to reenter and take posses- sion of the property on the date such termination becomes effec- tive without further notice of any kind and without institution of sumnary or regular legal proceedings. Termination of the :Lease and reentry of the property by Lessor shall, in no way, alter or diminish any obligation of Lessee under the Lease terms, and shall not constitute an acceptance or surrender. -16- 28. NOTICES All notices required by this lease shall be deemed to have been given when deposited in the United States mail, first class,_postage prepaid, and addressed as follows: LESSOR City Manager City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92663 LESSEE Newport Beach Aquatic Center 200 Newport Center Drive Suite 301 Newport Beach, CA 92660 s IN WITNESS WHEREOF, the parties hereto have executed this Ground Lease, the day and year first above written. F 0 LESSEE NEWPORT AQUATIC CENTER, INC. LESSO AT /TEST L '1 1- Wanda Raggio / City Clerk -17- Study Session Agenda Item No. 6 1c9c7t VNIS M OFFICE OF THE CITY ATTORNEY January 20, 1987 TO: Honorable Mayor and Members of the City Council FROM: Robert H. Burnham, City Attorney RE: Aquatic Center Background: In November, 1982, the voters approved a Measure authorizing the City Council to lease a portion of North Star Beach to permit construction of a facility for human - powered watercraft and related activities (Aquatic Center). On January 10, 1985 the City Council approved a use permit authorizing the construction of the Aquatic Center, but limiting its size to 18,000 + /- square feet and imposing other conditions to protect nearby residents from undue noise and traffic. Subsequent to Council approval, the City and Aquatic Center, as co- applicants, sought Coastal Commission approval of the project. The Commission approved the project, but imposed a number of conditions, including one which required implementation of a beach improvement plan. The co- applicants were given the choice of converting the dredge spoil to a sandy beach or constructing a public fishing dock, cleaning facilities, picnic tables and shaded viewing areas. Construction of the improvements is required to commence four years after the Aquatic Center begins operation and must be complete within five years. The Aquatic Center has experienced some difficulty in raising the money necessary to complete construction of 40% of the project. They are proposing construction of the facility in three phases, the first to consist of approximately 8,000 square feet, including a multi - purpose room and boat bays. The Coastal Permit expires in approximately 30 days, and the Aquatic Center Honorable Mayor and Members of the City Council Page 2 January 20, 1987 intends to submit a proposed lease of the project site to the Council for its approval on February 9th. However, there are certain issues that we believe should be presented to, and discussed with, the City Council prior to its approval of the lease and prior to transmittal of a commitment to comply with conditions imposed by the Coastal Commission. These issues and staff's recommendations are as follows: 1. COASTAL COMMISSION REQUIREMENT The Coastal Commission approval of the project is subject to submittal, by the City and Aquatic Center, of a written agreement corcmitt1ng to the implementation of a beach improvement program. As* indicated above, this means either the conversion of dredge spoil to sandy beach or the construction of certain improvements. This condition is the result of language in the LCP to the effect that it is "desirable that the site (North Star Beach) be improved to provide a higher quality beach."* Residents in the area have generally been supportive of the Aquatic Center after imposition of conditions restricting its size and usage. The beach will never be able to compete with ocean and bay beaches, but the requirement to improve the beach, which is linked to the Aquatic Center, could mean a few more people will come to the site. Moreover, some Dover Shores residents believe the beach improvement plan to be inconsistent with provisions of the Recreation and Open Space Element which call for no development of the beach other than the Aquatic Center. Finally, the Aquatic Center will, in all probability, be operating with a tight budget and may not have the funds to make the improvements when required to do so. Subject to Council approval, it is proposed that the Mayor and Chairman of the Aquatic Center Board of Directors send the letter attached to this Memo as Exhibit "A" as compliance with the Coastal Commission condition. This letter is an effort to reserve the right of the City to request deletion of this condition if future events, such as an amendment to the LCP or ' Coastal staff advised the Commission the City.had 1p ans to make North Star a high- quality beach. 'Honorable Mayor and Members of the City Council Page S January 20, 1987 increased tidal flows resulting from the Upper Bay sedimentation removal plan, make it infeasible to comply with the conditions. 2. TERMS OF LEASE /POTENTIAL PROBLEMS IN FUNDING CONSTRUCTION AND OPERATION: This office has prepared a proposed Lease to be submitted to the City Council for approval on February 9, 1987. (See Exhibit "B. ") The Lease attempts to address a number of problems, including the following: A. Lack of Funding Prior to Construction: The lease is structured so that it will not become effective until the Aquatic Center provides proof of the financial ability to proceed with construction of at least Phase I of the project. Currently the requirement is a letter of credit issued by an institution approved by the Finance Director in a sum equal to 110% of estimated cost of construction. To avoid any City involvement in the construction process, this provision probably should be revised to insure the letter of credit obligates the financial institution to complete construction within a given time. However, this type of letter of credit or completion bond may be difficult to obtain and the Council may have to accept lesser assurance or reject the project; B. Prompt Completion of Phase I: It is virtually impossible to obtain and /or enforce absolute commitments to complete construction of a building. The terms of the lease require the Aquatic Center to complete construction of all phases of the facility within the time frames specified in the contractor's bid. Failure to do so constitutes a material breach which would entitle the City declare a default and terminate the lease. However, termination of the lease simply puts the City back in control of the site and does not resolve problems associated with a half -built structure; C. Operating Revenues: The Aquatic Center proponents believe there is sufficient demand in the harbor to generate revenues adequate to pay the bills when the facility is in operation. However, this Honorable Mayor and Members of the City Council Page 4 January 20, 1987 opinion is based upon experience of Aquatic Center board members familiar with the rowing activities in the Lower Bay and not on a feasibility study prepared by professionals. There is the possibility that demand for rowing facilities and boat storage has been overestimated and, in such event, the City may eventually be required to terminate the lease and take over the facility. Ron Whitley, P,B&R Director, believes the City can operate the facility at no cost assuming some flexibility in the type of recreational programs offered. 3. WAIVER OF FEES: Aquatic Center representatives have asked for a waiver of fees typically charged to developers. The project is operated by a non - profit corporation and is not subject to property development tax. There is no specific provision for waiver of fair share or plan check fees, but a waiver could be justified on the grounds that the City property is involved. If the Council does not direct Staff to collect fees for this project, plans will be processed with fees waived. 4. CITY /COUNTY JOINT POWERS AGREEMENT: The County of Orange and City of Newport Beach each own an undivided one -half interest in North Star Beach. In the past, the County has expressed an interest in allowing the City to take the lead role in pressing the project. The County transmitted a preliminary draft of a Joint Powers Agreement (JPA) granting the City this responsibility. However, in my opinion, the proposed JPA imposed too much responsibility on the City. For example, the City was required to assume full responsibility for completion or operation of the facility in the event problems occurred during construction or operation. The City was also required to hold the County harmless from and against any loss or liability in carrying out the terms of the JPA. This office has made revisions to the preliminary draft of the JPA and a copy is attached to this Memo as Exhibit "C." If the Council has no objection, the revised draft will be forwarded to appropriate County personnel for their review and comment. Robert H. Burnham City Attorney RHB /jc Attachments .�1