HomeMy WebLinkAboutAtt C - Water Front PropertyAttachment C
CITY OF NEWPORT BEACH
CHARTER UPDATE COMMISSION STAFF REPORT
Agenda Item No. 3
February 16, 2010
TO: HONORABLE MEMBERS OF THE CHARTER UPDATE COMMISSION
FROM: Harbor Resources Office
Chris Miller, Harbor Resources Manager
949-644-3043, cmiller@newportbeachca.gov
SUBJECT:, CHARTER SECTION 1402 - Sale of Waterfront Property
RECOMMENDATION:
Recommend to the City Council to amend Charter Section 1402 to allow for the sale or
conveyance of waterfront property upon affirmative vote of the electorate (Alternative 1).
DISCUSSION:
Attached is a "white paper" with relevant background information and suggested
alternatives for the Commission to consider.
Submitted by��l 6?kly
Chris Miller
Harbor Resources Manager
Attachments: Section 1402 White Paper
Charter Section 1402
Map of City Owned Property
Beacon Bay Bill/State Tidelands Grant (pp.1-2)
Council Guidelines Section F-7/Income Property
The Sale of Waterfront Property
Charter Section 1402
Statement of the Issue:
Currently, Charter Section 1402 prohibits the sale or conveyance of any waterfront property with limited
exceptions. However, over the years, Section 1402 has been amended six times in order to allow for the
sale of waterfront property at various locations throughout the harbor.
Should the City modify Charter Section 1402 to provide for the sale or conveyance of waterfront
property?
Relevant Background:
Section 1402 was adopted with the original Charter effective January 7, 1955. Since then, Section 1402
has been amended six times to allow for the sale of specifically identified parcels:
• The first (1402.a) and second (1402.b) amendments were added effective January 25, 1961
• The third (1402.c) amendment was added effective May 4, 1964
• The fourth (1402.d) amendment was added effective April 28, 1966
• The fifth (1402.e) was added January 12, 1967
• The sixth (1402.f) and final amendment was effective November 3, 1992
Each amendment required an affirmative vote of the electorate to modify the Charter and add the
exception. In principle, Charter amendments should be reserved for consideration of significant changes
to public policy or City governance. The number of exceptions made to Section 1402 since 1961 indicate
that there can be a compelling public reason to sell waterfront property, and brings into question
whether the Charter provision is overly restrictive.
Historical City records do not reveal any relevant information or discussions on these amendments
except that 1402 (f) states that the proceeds from the sale of the property be placed in a special fund to
be used solely for the completion of the new central library. In addition, after reviewing past parcel
maps, we can see that most of the City parcels previously sold were extremely small or unusually
shaped, providing little public value. In these cases, the property was usually sold to the adjacent
property owner as a matter of convenience or lot -line practicality.
Waterfront properties currently owned by the City are identified on the attached map. Excluded from
this map are the dozens of public street ends and oceanfront beaches which would never be sold. The
areas shaded in red represent the City's waterfront property, including some smaller beaches, that could
potentially be considered for sale. The areas shaded in green are also City property but currently have
long term leases (income property) associated with them (Beacon Bay, Balboa Bay Club, American
Charter Section 1402
Page 2
Legion, Basin Marine and North Star Beach which is jointly owned by the City/County). Some of these
areas may not be sold per the provisions of the Tideland Trust (Beacon Bay Bill). Council Policy F-7
addresses the management of income properties including those that are tidelands, filled tidelands or
waterfront by stating that "...the City is the steward of a public trust and state law requires the City to
maximize returns..." Therefore, the City must view this income property as a potential revenue
generator and a means to benefit the community.
In a review of six California Chartered cities holding waterfront property, all had charter provisions
allowing for the sale of waterfront property (Alameda, Huntington Beach, Long Beach, San Diego, Santa
Barbara and Ventura).
Alternatives:
Alternative 1: Amend Charter Section 1402 to allow for the sale or conveyance of waterfront property
upon an affirmative vote of the electorate.
This alternative would simplify the process by allowing the electorate to continue to vote on the sale of
waterfront property by the City, but without requiring a Charter amendment to do so.. The electorate
would retain the right to determine whether waterfront property should be conveyed by the City.
Alternative 2: Do not amend Charter Section 1402. Continue the current practice of not allowing City
owned waterfront property to be sold or conveyed except to the State or County for use as a public
beach or park.
This alternative would continue the practice of making exceptions to Charter Section 1402 each time
waterfront or beach front property is sold. The advantage is that this would require no change to the
current Charter section. The disadvantage is that Charter amendments in principle should be reserved
for significant questions related to public policy or governance, not the transfer of property for
compelling public reasons.
Charter Section 1402
Section 1402. Water -front Property.
The City Council shall not sell or convey any water -front or beach property, excepting to the
State or to the County for use as a public beach or park.
Notwithstanding any other provision of this Charter, 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.
Nothing in this Section shall invalidate any lease of such property in existence at the time of
the effective date of the Charter nor the future leasing or re-leasing of any such property under
lease at the effective date of this Charter.
There shall be reserved forever to the people the public use of a strip of bay front land above
mean high tide not less than eighty-five feet in depth of the city -owned water front property
bounded on the west by the southeasterly line of Nineteenth Street and bounded on the east by
a line parallel thereto lying 349.90 feet northwesterly of the northwesterly line of Fifteenth Street,
said frontage to be bay front frontage. (As amended effective January 11, 1957, and November
3, 1992)
Section 1402(a). Exception to Section 1402.
Notwithstanding the provisions of Section 1402, the City Council may sell and convey that
parcel of City -owned property fronting on the Rivo Alto Canal described as Lot 4, Block 434,
Canal Section, Newport Beach, as per map recorded in Book 4, Page 98, Miscellaneous Maps,
Records of Orange County, California. (Added by amendment effective January 25, 1961)
Section 1402(b). Exception to Section 1402.
Notwithstanding the provisions of Section 1402, the City Council may sell and convey that
parcel of City -owned property fronting on Newport Bay described as follows:
All of Lot 1, Block 223, as shown upon a map of Section "A," Newport Beach, recorded
in Book 4, Page 21, of Miscellaneous Maps, Records of Orange County, California, and
all that portion of Block 222 of said Section "A" described as follows: Beginning at the
most northerly corner of said Block 222; running thence south 46° 50' 30" East along the
Northeasterly line of said Block 222 to the most northerly corner of Lot 1, Tract 814, as
shown upon a map recorded in Book 24, page 36, Records of said County; running
thence southwesterly along the Northwesterly line of said Lot 1, Tract 814, to a point in
the Southwesterly line of said Block 222; thence Northwesterly along the Southwesterly
line of said Block 222 to the most Westerly corner of said Block 222; thence
Northeasterly along the Northwesterly line of said Block 222 to the point of beginning.
(Added by amendment effective January 25, 1961)
Section 1402(c). Exceptions to Section 1402.
Notwithstanding the provisions of Section 1402, the City Council may sell and convey that
parcel of City -owned real property described as follows, to -wit:
Lot 6, Block 218, as shown upon a map of Section "B," Newport Beach, recorded in
Miscellaneous Maps, Book 4, page 27, Records of Orange County, California, together
with a portion of Lot 4, Section 33, Township 6 South, Range 10 West, S.B.B. & M.,
bounded on the south by the northerly line of said Lot 6, on the north of the easterly
extension of the northerly prolongation of the easterly line of said Lot 6, and on the west
by the easterly lines of Lots 3 and 4 of said Block 218.
(Added by amendment effective May 4, 1964)
Section 1402(d). Exception to Section 1402.
Notwithstanding the provisions of Section 1402, the City Council may sell and convey that
parcel of City -owned real property described as follows, to wit:
That portion of Section Thirty-five (35) in Township Six (6) South, Range Ten (10) West,
San Bernardino Base & Meridian together with that portion of Fractional Section Two (2),
in Township Seven (7) South, Range Ten (10) West, San Bernardino Base & Meridian
shown as Parcel "A" on the map recorded in Book 80, Page 48 of Record of Surveys in
the office of the County Recorder of Orange County, California, and described as
follows:
Beginning at the most westerly corner of Lot 8, Block 22, Eastside Addition to Balboa
Tract as shown on the map recorded in Book 4, Page 20 of Miscellaneous Maps in the
office of the County Recorder of said County; thence S 70° 10' 00" E. 3.78 feet to the
True Point of Beginning; thence continuing S 70° 10' 10" E. 26.22 feet; thence N 19° 50'
00" E 9.46 feet; thence West 27.87 feet to the True Point of Beginning.
(Added by amendment effective April 28, 1966)
Section 1402(e). Exception to Section 1402.
Notwithstanding the provisions of Section 1402, the City Council may sell and convey that
parcel of City -owned property fronting on Newport Bay described as follows:
That portion of Lot 2 in Section 33, Township 6 South, Range 10 West, of the San
Bernardino meridian, in the City of Newport Beach, County of Orange, State of
California, according to the official plat of said land filed in the District Land Office,
August 4, 1890, lying northeasterly of the northeasterly line of Blocks 222 and 223 in
Section A, Newport Beach, as per map recorded in Book 4, page 21 of Miscellaneous
Maps, in the office of the County Recorder of said County and between the northeasterly
prolongations of the northwesterly line of Lot 1 in Block 223 of said Tract and of the
northwesterly line of Lot 1 of Tract No. 814, as per map recorded in Book 24, pages 35
and 36, of said Miscellaneous Maps.
(Added by amendment effective January 12, 1967)
Section 1402(f). Exception to Section 1402.
Notwithstanding the provisions of Section 1402, the City Council may sell and convey that
parcel of City owned property fronting on the Rivo Alto with the legal description as follows:
Lot 6, Block 242, Canal Section Tract filed in Book 4, Page 98 of Miscellaneous Maps in
the Office of the Recorder of Orange County, California.
The proceeds of the sale of this property shall be deposited in a special fund to be used
solely for the completion of the new central library.
(Added by amendment effective November 3, 1992)
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Beacon Bay Bill
Page I of 2
Chapter 74 (Statutes of 1978)
An act relating to tide and submerged lands in the City of Newport Beach, and in this
connection repealing Chapter 494 of the Statutes of 1919, Chapter 70 of the Statutes of
1927, Chapter 142 of the Statutes of 1929, Chapter 574 of the Statutes of 1929, Chapter
813 of the Statutes of 1929, and Chapter 200 of the Statutes of 1931, and declaring the
urgency thereof, to take effect immediately.
The PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
Section 1. There is hereby granted to the City of Newport Beach and its successors all
of the right, title, and interest of the State of California held by the state by virtue of its
sovereignty in and to all that portion of the tidelands and submerged lands, whether filled
or unfilled, bordering upon and under the Pacific Ocean or Newport Bay in the County of
Orange, which were within the corporate limits of the City of Newport Beach, a municipal
corporation, on July 25, 1919; the same to be forever held by the city and its successors
in trust for the uses and purposes and upon the following express conditions:
(a) The lands shall be used by the city and its successors for purposes in which there
is a general statewide interest, as follows:
(1) For the establishment, improvement, and conduct of a public harbor; and for the
construction, maintenance, and operation thereon of wharves, docks, piers, slips, quays,
ways, and streets, and other utilities, structures, and appliances necessary or convenient
for the promotion or accommodation of commerce and navigation.
(2) For the establishment, improvement, and conduct of public bathing beaches, public
marinas, public aquatic playgrounds, and similar recreational facilities open to the
general public; and for the construction, reconstruction, repair, maintenance, and
operation of all works, buildings, facilities, utilities, structures, and appliances incidental,
necessary, or convenient for the promotion and accommodation of any such uses.
(3) For the preservation, maintenance, and enhancement of the lands in their natural
state and the reestablishment of the natural state of the lands so that they may serve as
ecological units for scientific study, as open space, and as environments which provide
food and habitat for birds and marine life, and which favorably affect the scenery and
climate of the area.
(b) Except as otherwise provided in this section, the city or its successors shall not, at
any time, grant, convey, give, or alienate the lands, or any part thereof, to any individual,
firm, public or private entity, or corporation for any purposes whatever; except that the
city or its successors may grant franchises thereon for a period not exceeding 50 years
for wharves and other public uses and purposes and may lease the lands, or any part
thereof, for terms not exceeding 50 years for purposes consistent with the trust upon
which the lands are held by the state and with the uses specified in this section.
(c) The lands shall be improved without expense to the state; provided, however, that
nothing contained in this act shall preclude expenditures for the development of the
lands for the purposes authorized by this act, by the state, or any board, agency, or
commission thereof, or expenditures by the city of any funds received for such purpose
from the state or any board, agency, or commission thereof.
Beacon Bay Bill
Page 2 of 2
(d) In the management, conduct, operation, and control of the lands or any
improvements, betterments, or structures thereon, the city or its successors shall make
no discrimination in rates, tolls, or charges for any use or service in connection
therewith.
(e) The state shall have the right to use without charge any transportation, landing, or
storage improvements, betterments, or structures constructed upon the lands for any
vessel or other watercraft or railroad owned or operated by the state.
(f) There is hereby reserved to the people of the state the right to fish in the waters on
the lands with the right of convenient access to the waters over the lands for such
purpose, which rights shall be subject, however, to such rules and regulations as are
necessary for the accomplishment of the purposes specified in subdivision (a).
(g) Notwithstanding any provision of this section to the contrary, the city may lease the
lots located within Parcels A, B, and C described in Section 6 of this act for the purposes
set forth in this act and for terms not to exceed 50 years. The consideration to be
received by the city for such leases shall be the fair market rental value of such lots as
finished subdivided lots with streets constructed and all utilities installed. The form of
such leases and the range of consideration to be received by the city shall be approved
by the State Lands Commission prior to the issuance of any such lease. All money
received by the city from existing and future leases of those lots shall be deposited in the
city tideland trust funds as provided in Section 2.
(h) With the approval of the State Lands Commission, the city may transfer portions of
the lands granted by this act, or held pursuant to this act, to the state acting by and
through the State Lands Commission, for lease to the Department of Fish and Game for
an ecological reserve or wildlife refuge, or both, and other compatible uses to be
undertaken by the department; provided, however, that, if at any time the Department of
Fish and Game no longer uses those portions of the lands so transferred by the city to
the state for those purposes, the lands so transferred shall revert to the city to be held
pursuant to the provisions of this act. Upon approving such a transfer from the city to
the state, the State Lands Commission shall lease the lands so transferred to the
Department of Fish and Game. The public benefits shall be the sole consideration to be
received by the State Lands Commission from the Department of Fish and Game for that
lease. Any and all income received by the Department of Fish and Game from the lands
so leased shall be used only in connection with the department's improvement and
administration of the leased lands.
(i) The city shall establish a separate tidelands trust fund or funds in such a manner as
may be approved by the State Lands Commission, and the city shall deposit in the fund
or funds all money received directly from, or indirectly attributable to, the granted
tidelands in the city.
F-7
INCOME PROPERTY
The City owns and manages an extensive and valuable assortment of property
including streets, parks, beaches, public buildings and service facilities. The City also
owns and operates a yacht basin, a mobile home park, a luxury residential development
and various other income properties. Most of the income property is tidelands, filled
tidelands or waterfront. Unencumbered fee value of income property is estimated at
upwards of one hundred million dollars, and income typically contributes ten percent
of all City revenues.
As owner of property, the City is the steward of a public trust, and state law requires
the City to maximize its returns or be subject to a charge of making a gift of public
funds. Nevertheless, the City Council recognizes the importance of this property not
only as a revenue generator, but also as a means to provide otherwise unfeasible uses
and facilities to benefit the community.
In managing its property, the City will continually evaluate the potential of all City
owned property to produce revenue. This may include leasing unused land, renting
vacant space, and establishing concessions in recreation areas or other similar
techniques. The City Council will evaluate the appropriateness of establishing new
income properties using sound business principals and after receiving input from
neighbors and users.
The policy of the City Council is that income property be managed in accordance with
the following:
A. Whenever a lease, management contract, concession, sale or similar action
regarding income property is considered by the City, an analysis shall be
conducted to determine the maximum or open market value of the property.
This analysis shall be conducted using appraisals or other techniques to
determine the highest and best use of the property and the highest value of the
property.
B. All negotiations regarding the lease, management contract, concession, sale or
similar action regarding income property shall include review of an appraisal or
analysis of the use being considered for the property conducted by a reputable
and independent professional appraiser, real estate consultant or business
consultant.
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F-7
C. The City shall seek, whenever practical and financially advantageous, to operate
or manage all property and facilities directly with City staff or contractors.
D. In all negotiations regarding the lease, management contract, concession, sale or
similar action regarding a non-residential income property, the City shall seek
revenue equivalent to the open market value of the highest and best use; and,
whenever possible the City shall conduct an open bid or proposal process to
insure the highest financial return.
E. Whenever less than the open market or appraised value is received or when an
open bid process is not conducted, the City shall make specific findings setting
forth the reasons thereof.
Such findings may include but need not be limited to the following:
1. The City is prevented by tideland grants, Coastal Commission guidelines
or other restrictions from selling the property or converting it to another
use.
2. Redevelopment of the property would require excessive time, resources
and costs which would outweigh other financial benefits.
3. Converting the property to another use or changing the manager,
concessionaire or lessee of the property would result in excessive vacancy,
relocation or severance costs, which would outweigh other financial
benefits.
4. Converting residential property to another use or opening residential
leases to competitive bid would create recompensable liabilities and other
inequities for long-term residents.
5. The property provides an essential or unique service to the community
that might not otherwise be provided were full market value of the
property be required.
6. The property serves to promote other goals of the City such as affordable
housing, preservation of open space or marine related services.
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F-7
F. Generally, lengths of leases, management contracts, concessions or similar
agreements will be limited to the minimum necessary to meet market standards
and will contain appropriate reappraisal and inflation protection provisions.
Also, all agreements shall contain provisions to assure complete audits
periodically through their terms.
G. All negotiations regarding the lease, management contract, concession, sale or
similar action regarding income property shall be conducted by the City
Manager or his designee under the direction of any appropriate City committees
prior to consideration by the City Council.
H. To provide an accurate accounting of actual net revenues generated by the City's
income property, all costs and charges directly attributable to the management of
a specific income property shall be debited against the gross revenues collected
on that property in the fiscal year the costs are incurred. Costs and charges
include property repairs and maintenance, property appraisals, and consultant
fees, as authorized by the City Council, City Manager or by this Income Property
Policy.
I. The City Manager is authorized to sign an amendment to the lease, management
contract, concession or similar agreement in order to correct any errors or
discrepancies in the agreement, or to clarify provisions in the agreement. The
City Manager is also authorized to sign an amendment if circumstances arise that
were not reasonably foreseeable by the parties, which need to be addressed in an
amendment. Notwithstanding the foregoing, the City Council shall authorize
any amendment which increases or decreases the annual revenues in the
agreement by $10,000 or more.
Adopted - July 27,1992
Amended - January 24,1994
Amended - February 27, 1995
Amended - February 24,1997
Amended - May 26,1998
Amended - August 11, 2009
Formerly F-24
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