HomeMy WebLinkAbout14 - Lease Discussions - Lido Isle Street End Parks, Beaches and MarinaO��EWPO e Newport Beach City Council
AGENDA ITEM 14
°9 oR, October 26, 1998 Council Meeting
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TO: MAYOR AND CITY COUNCIL
FROM: DENNIS DANNER, ACTING CITY MANAGER
BY: DAVE KIFF, ASSISTANT TO THE CITY MANAGER
SUBJECT: LEASE DISCUSSIONS -- LIDO ISLE STREET END PARKS, BEACHES
AND MARINA
ISSUE:
A request for direction from the City Council regarding a request from the
Lido Isle Community Association (LICA) to extend or renew the lease of street
end parks, beaches, and marina.
BACKGROUND AND DISCUSSION:
As a part of its income property inventory, the City holds title to the street end parks,
beaches, and marina of Lido Isle (see Attachment A for a map of the parcels and
Attachment B for a chronology of City actions relating to the lease). These parcels,
which total 219,004 square feet, include:
• Walkways (23,062 square feet)
• Passive Landscaped "Street End" Parks (37,344 square feet)
• Beach Areas and Waterways (113,738 square feet)
• Marina Areas (12,673 square feet)
• Dry Boat Storage Areas (32,142 square feet)
In April 1975, the City leased these properties to the Lido Isle Community
Association (LICA) for $3,700 per year (with an inflation adjustment). The lease
payment is now $7,880 per year. The 1975 Lease expires on April 14, 2000. For
planning purposes (especially relating to the capital expenses that LICA expects to incur
to upgrade the marina), LICA wants to negotiate a new lease prior to the termination of
the current lease.
The City Council's Policy F -7 (Income Properties) directs the City to "continually
evaluate the potential of all City -owned property to produce revenue. This may
include leasing unused land, renting vacant space, establishing concessions in
recreation areas or other similar techniques." The Policy further directs the City that
'.whenever possible the City shall conduct an open bid or proposal process to insure
the highest financial return..." in order to help "...determine the highest and best use
of the property."
In late 1997, the City contracted with Mr. William Hansen of Fuller and Hansen to
conduct an appraisal of the value of the Lido Isle street end parks, beaches, and marina.
Hansen submitted the completed appraisal in March 1998. In his appraisal, Hansen
assigned a yearly rental value of $54,300.
Newport Beach City Council
Agenda Item _
Paae 2
Given the difference between what LICA pays today to lease the parcels ($7,880 per
year) and the proposed lease value assigned by Mr. Hansen ($54,300 per year), City
staff and two members of the City Council (Mayor pro Tern O'Neil and Council Member
Hedges) have met with LICA representatives to attempt to resolve various issues.
Several aspects of the new lease will require both continued discussion with LICA and
additional direction by the City Council.
RECOMMENDED ACTION:
Offer direction to City Staff on the following issues:
(1) What members of the City Council and Staff should continue to meet with LICA
representatives on the proposed lease; and
(2) What the appropriate mechanism (bi- monthly report, memorandum, other) should
be to report back to the City Council on Lease discussion points such as term,
rental value, public access to beaches and waterways, and tidelands issues.
ATTACHMENTS:
Attachment A — Map of Leased Parcels
Attachment B — Chronology of Lido Isle Lease Activities
Agenda Item _
Page 3
Attachment A
Map of Leased Parcels
PARCEL E �i —�,,•
I
IO
LOTJ
LOT I (1 - 6) 8 PARCEL B
' \ LOT H
P F' \
P'
LOT B r° P LOT G
LOT C 8 PARCEL C �\ _ LOT F
LOT D —.� . , \ ` LOT E
C.Pa
0. D�
Agenda Item _
Page 4
Attachment B
Chronology of Lido Isle Lease Actions
October 1897
Portion of Lido Isle (swamplands) conveyed by State of California to James McFadden.
July 1919
State grants City of Newport Beach "all of the right, title, and interest" of the Stale to
tidelands and submerged lands within the 1919 boundaries of the City. Includes most
of Newport Harbor. Referred to as the "Tidelands Trust"
1923
W.K. Parkinson acquires Lido Isle, begins filling island with attempt to create residential
and commercial development
1927
Parkinson sells to William Crittenden. Crittenden and John Elsbach prepare plans for
island that would pattern development after Venice, Italy. As a part of sale, Title
Insurance and Trust Company holds legal title to Lido Isle.
July 29, 1927
State adds tide and submerged lands within Newport Harbor to the Tidelands Trust.
May 25, 1928
Superior Court sets "line of ordinary high tide" as decree line around Lido. Properties
bayward of decree line are City's tidelands and landward of the decree line are owned
by Title Insurance and Trust.
August 1928
City Council discusses subdivision map for Lido Isle. On August 23, 1928, Newport
News reports that the City Council "insists that at least six street ends be dedicated to
the public' and that "the public should not be denied the beaches, which, they say, are
being all too rapidly absorbed by private interests"
September 7, 1928
City Council approves subdivision map. Map includes "lots at the end of each street"
deeded to City. "In return for deeded property, the City agrees to lease the Isle to the
developers (Crittenden and Elsbach) over a period of 50 years at a rental of $1002 per
year." (Newport News, September 13, 1928). Map includes 16 lettered lots (A through
P), most with a 4' easement for City utilities and storm drains.
September 14, 1928
City and Title Insurance finalize Agreement to grant and convey lots A through P to
City. In same agreement, City agrees to tease lots back to LICA for 25 years with an
option to extend for an additional 25 years.
December 10, 1928
Declaration of Protective Restrictions recorded with County. Declaration provides that
"no structures shall be erected (on the lettered lots) ... except bandstands, comfort
stations, recreational structures or other structures for the use, welfare, and benefit of
the community and the public, and on all such lots ... having Bay frontage the structure
must be so erected and maintained that free access to the waters of the Bay and the
Beach shall at all times be available to the residents of the community or the public."
March 4, 1929
City and LICA enter into 16 leases for lettered lots A through P. Rent for Lot A
(clubhouse area) was $200.00 per year. Others set at $1 per year per lot.
June 10, 1929
LICA quitclaims various 10' wide corridors through each lettered lot and along US
Bulkhead line (along Lido's North side) to City "for the purpose of constructing public
improvements under 1911 Street Improvement Act. 10' strip not coterminous with 4'
easements.
August 14, 1929
Tide and submerged lands in Pacific Ocean added to Tidelands Trust.
July 1930 • May 1931
Correspondence between City, Title Insurance, and Orange Title over deeds to lettered
lots. On May 25, 1931, City accepts lettered lot deed a second time.
June 5, 1933
City Council adopts resolution finding that LICA "has wholly failed to pay any of the
rents (associated with the Lease)" and that LICA "has offered to release to the City all
of (LICA's) right, title and interest in" the lease property to terminate the lease.
October 29, 1934
City accepts title to "parcels" A, E, and F on north side of Lido in connection with harbor
improvement project.
Agenda Item _
Pa_4e 5
November – December 1938 LICA writes to City, requests new lease. City and LICA enter into lease on December
5, 1938. Lease splits lots into five lettered 'parcels." Parcel A is 10' bayward of US
Bulkhead line, Parcel B is uplands to Parcel A (a 50' wide strip running along north side
of Lido), Parcel C is tidelands between lots B and D along south side of Lido, Parcel D
is uplands of Parcel C, Parcel E is strip of land adjacent to Peninsula on east side of
Lido Bridge.
Lease declares that "industrial uses" not appropriate for parcels. Parcels must be kept
for "park, recreational, residential, and educational purposes." Lease also notes that
City Council finds that "the uplands ... cannot be used without the tidelands (and vice -
versa) ... and that the leasing of the whole of said lands — is necessary for the proper
development and use of said lands, water frontage, and tidelands..."
Term of lease is 25 years with a rental rate of $750 per year.
Lease also declares that LICA may "at all times have the right to quietly and peaceably
hold, possess, use, occupy, and enjoy said leased land and premises."
April 1, 1940
City Council "closes and abandons" certain 10' wide strips of land through lettered lots
A -J (see earlier action, June 10, 1929 regarding these strips).
May 31, 1951
LICA asks City to cancel 1938 lease and to enter into another lease for 25 -year term.
June 11, 1951
City and LICA enter into new lease with same lands and term as 1938 Lease with
expiration date of June 10, 1976.
March 22, 1954
City and LICA agree to delete Parcel E (land not on Lido Isle) from 1951 Lease. Same
action adds property south and adjacent to Lido Isle Bridge (now the site of the
marina).
March 23, 1959
City and LICA amend 1951 Lease to allow LICA to build and maintain a marina.
March 19, 1973
LICA requests that City renew 1951 lease for additional 25 years. Memorandum
proposes that rent be set at $3,566.18 per year adjusted every five years by a factor
relating to the assessed value of all Lido Isle property.
July 3, 1974
Mr. Robert Krueger of Nossaman, Waters, Scott, Krueger, and Riordan writes letter to
City Attomey Dennis O'Neil noting that (among other things): (1) the City can enter into
a renewal consistent with Tidelands Trust; (2) lease must provide for reasonable
access routes for public; (3) lease should reflect current fair rental value without
deduction for LICA's maintenance expenses; and (4) the California Coastal Zone
Conservation Act may apply and the California Environmental Quality Act does apply
to the lease.
February 4, 1998
City staff first meets with LICA representative John Polovina regarding new lease.
March 18, 1998
William Hansen transmits copies of appraisal to City.
April 15, 1998
LICA president J. Jeffrey Pence writes to City, notes LICA's "strong opposition" to
methodology used by Hansen to value lease.