HomeMy WebLinkAbout2018-9 - Adjusting the Rent Charged for Commercial Fuel Docks Located Upon TidelandsRESOLUTION NO. 2018-9
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
NEWPORT BEACH, CALIFORNIA, ADJUSTING THE RENT
CHARGED FOR COMMERCIAL FUEL DOCKS LOCATED
UPON TIDELANDS
WHEREAS, pursuant to the 1978 Beacon Bay Bill, as amended, ("Beacon Bay
Bill") the City of Newport Beach ("City") acts on behalf of the State of California as the
trustee of tidelands located within the City's limits, including Newport Harbor
("Tidelands");
WHEREAS, Section 1(b) of the Beacon Bay Bill authorizes the City to allow third -
parties to use the Tidelands for commercial purposes for a term not to exceed fifty (50)
years;
WHEREAS, the City allows commercial Tidelands uses to operate upon the
Tidelands under either a permit or a lease;
WHEREAS, the Beacon Bay Bill, California Constitution Article 16, Section 6,
Newport Beach Municipal Code ("NBMC") Section 17.60.060(D), NBMC Section
17.60.020(E), and City Council Policy F -7(D) require that the rent received by the City
from third parties using the Tidelands be based in part upon an appraisal, and reflective
of the fair market value related to such uses;
WHEREAS, NBMC Section 17.60.060(D) vests the City Council with the exclusive
discretion to determine fair market value rent based in part upon the findings of a City -
selected appraiser;
WHEREAS, State law and City Council Policy F -7(E) requires that, whenever less
than the fair market value is received for use of the Tidelands, the City make specific
findings setting forth the reasons thereof including, but not limited to, findings that the
uses serve to promote the goals of the City or that the uses provide an essential or unique
service to the community that might not otherwise be provided were full market value
required;
WHEREAS, on November 13, 2012, the City Council adopted Resolution
No. 2012-98 setting fair market value rent for commercial uses located upon Tidelands;
WHEREAS, on November 26, 2013, the City Council adopted Resolution
No. 2013-88, which, among other things, amended Resolution No. 2012-98 to reclassify
certain homeowners' associations slips from commercial to residential;
WHEREAS, on July 25, 2017, the City Council adopted Resolution No. 2017-49,
which adjusted the fair market value rent charged for various commercial uses of
Tidelands;
WHEREAS, the City Council excluded commercial fuel docks from Resolution
No. 2017-49, and directed staff to further study this rental category;
WHEREAS, following the adoption of Resolution No. 2017-49, City staff reached
out to the commercial fuel docks owners in Newport Harbor,
Resolution No. 2018-9
Page 2 of 6
WHEREAS, at the City's request, George Hamilton Jones, Inc. conducted an
appraisal to determine fair market value rent for commercial fuel docks and, thereafter,
prepared an appraisal report dated October 30, 2017 ("Appraisal Report"); and
WHEREAS, the City Council reviewed the Appraisal Report and it is part of the
record in this matter.
NOW, THEREFORE, the City Council of the City of Newport Beach resolves as
follows:
Section 1: The City Council hereby sets rent, rental phase-in, and associated
adjustments for commercial fuel docks Tidelands users as provided in the attached
Commercial Tidelands Rent Calculations For Commercial Fuel Docks Located Upon
Tidelands, which is incorporated herein by reference. This finding is made by the City
Council in its exclusive discretion but is based on the information contained in the
Appraisal Report and on the other documents and testimony contained in the record for
this matter.
Section 2: The City Council does hereby repeal any portion of a resolution that
conflicts with the rental amounts, rental calculation methods, associated rental
adjustments, and rental phase-in provided in the attached Commercial Tidelands Rent
Calculations For Commercial Fuel Docks Located Upon Tidelands.
Section 3: The City Council sets the rental rates, phase-in, and adjustments
contained in the attached Commercial Tidelands Rent Calculations For Commercial Fuel
Docks Located Upon Tidelands at less than fair market value. Pursuant to City Council
Policy F -7(E)(6), the City Council finds charging less than fair market value rent for these
specific uses promotes the goals of the City to further marine -related services and
activities. More specifically, the City Council finds charging less than fair market value
rent for fuel docks promotes public recreation facilities and marine services to the general
public, furthers the policies and objectives of the Beacon Bay Bill, and allows for
continued operation and improved accessibility to the public. Thus, the charging of less
than fair market value rent for this use of the Tidelands is a matter of state-wide concern
that benefits the citizens of the State of California.
Section 4: The Recitals provided above are true and correct and incorporated
into the operative part of this resolution.
Section 5: Except as expressly modified by this resolution, all provisions, terms,
and covenants set forth in other Tidelands resolutions shall be unchanged and shall
remain in full force and effect.
Section 6: The City Council finds the setting of rent for commercial fuel docks is
not subject to the California Environmental Quality Act ("CEQA") pursuant to Sections
15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect
physical change in the environment) and 15060(c)(3) (the activity is not a project as
defined in Section 15378) of the CEQA Guidelines, California Code of Regulations,
Title 14, Chapter 3, because it has no potential for resulting in physical change to the
environment, directly or indirectly. Alternatively, the City Council finds the setting of rent
for commercial fuel docks is entitled to a Class 1 Categorical Exemption pursuant to
CEQA Regulation Section 15301 because the rent contemplates the continued use of
existing facilities, with no expansion of the proposed use. Further, the City Council finds
the setting of rent for commercial fuel docks is entitled to a Statutory Exemption pursuant
to CEQA Regulation Section 15273(a)(1) because the rent established by the City
Council will be used to meet operating expenses within the Tidelands.
Resolution No. 2018-9
Page 3 of 6
Section 7: If any section, subsection, sentence, clause or phrase of this
resolution is, for any reason, held to be invalid or unconstitutional, such decision shall not
affect the validity or constitutionality of the remaining portions of this resolution. The City
Council hereby declares that it would have passed this resolution, and each section,
subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or
more sections, subsections, sentences, clauses or phrases be declared invalid or
unconstitutional.
Section 8: This resolution shall take effect immediately upon its adoption by the
City Council, and the City Clerk shall certify the vote adopting the resolution.
ADOPTED this 13th day of February, 2018.
ATTEST:
Leilani I. Brown
City Clerk
APPROVED AS TO FORM:
CITY AT Y'S OFFICE
r
Aaron C. Harp
City Attorney
R TA
Marshall "Duffy"'Duffield
Mayor
Attachment: Commercial Tidelands Rent Calculations For Commercial Fuel Docks
Located Upon Tidelands
Resolution No. 2018-9
Page 4 of 6
Commercial Tidelands Rent Calculations
For Commercial Fuel Docks Located Upon Tidelands
Beginning on the date a lease or permit is first effective (i.e., the date a lease is executed
by all parties or a permit is issued by the City), a Commercial Fuel Dock shall pay to the
City, on a monthly basis, Rent (as defined below).
Rent.
The "Rental Rate" for each category of commercial Tidelands use is as follows:
Commercial Use Category
Rent Per Square Foot
Fuel Docks
August
- Tenant to select one of three rent
2018
calculation methodologies'.
Fuel Docks
1 Base rent
$0.76
(2) Greater of base rent or percentage
rent. Percentage rent calculated at
$0.01 per gallon per year, but not to
$0.38
exceed $0.76' per square foot per
year as adjusted by CPI
(3) Percentage rent only, calculated at
$0.01 per gallon per year, but not to
exceed $0.76' per square foot per
N/A
year as adjusted by CPI
For a term year beginning March 1, 2018, and thereafter, monthly Rent shall equal the
then applicable Rental Rate, rounded to the nearest cent, times the Premises square
footage as set forth in this resolution (i.e., if the Rental Rate is $0.76 and the Premises is
10,000 square feet the annual Rent is $7,600).
To the extent a Premise contains two (2) or more commercial Tidelands uses, the Rent
shall be apportioned according to the use and the Premises occupied by the use (i.e., if
half (1/2) of a Premises is operated as a Fuel Dock and the other half (1/2) as a Small
Commercial Marina the half (1/2) of the Premises used as a Fuel Dock shall pay the
applicable Fuel Dock rent and the half (1/2) operated as a Small Commercial Marina shall
pay the applicable Small Commercial Marina rent).
2. Rental Phase -In Period.
Rent will be set in accordance with a two (2) period phase-in procedure with the first
phase-in billed in February 2018, for Rent due on March 1, 2018. The second phase-in
billed in July 2018, for Rent due on August 1, 2018. Rent shall be fully phased -in
beginning on August 1, 2018. An example of the two (2) period phase in procedure is
provided below:
Commercial Use Category
Ramp -Ur) Period
March
August
2018
2018
Fuel Docks
$ 0.49
$ 0.76
- Base rent option only
' A fuel operator paying percentage rent shall at the City's request provide Books and Records to
the City to assist in calculating rent due.
Resolution No. 2018-9
Page 5 of 6
3. Rent Adjustments.
A. Annual Rent Adjustment.
Beginning on March 1, 2019, Rent may be adjusted on the first day of March each
permit/lease year to reflect an increase in the cost of living, as indicated by the Consumer
Price Index described below. Rent may be adjusted if the Consumer Price Index for the
Los Angeles — Orange County - Riverside Area, All Urban Consumers, All Items ("Index"),
as published by the United States Department of Labor, Bureau of Labor Statistics
("Bureau"), increases over the Base Period Index. The initial "Base Period Index" shall
be the Index for the calendar month which is four (4) months prior to the month of the
permit/lease effective date, thus November. The initial Base Period Index shall be
compared with the Index for the same calendar month for each subsequent Lease Year
("Comparison Index"). The Comparison Index used for a given year's adjustment
calculation will become the Base Period Index for purposes of the next annual Rent
adjustment calculation. If the Comparison Index is higher than the Base Period Index,
then Rent for the next Lease Year shall be increased by the amount of such percentage
change. Should the Bureau discontinue the publication of the above Index, or publish
same less frequently, or alter same in some other manner, then the parties shall adopt a
substitute Index or substitute procedure which reasonably reflects and monitors
consumer prices.
B. Market Adjustment of Rent and Other Fees and Charges.
At the Market Adjustment Date, the Rental Rate may be adjusted, in the City's sole and
absolute discretion, to reflect the then -current fair market value, as such value shall be
determined by an appraisal to be conducted in accordance with the provisions of this
section. If applicable, the Rental Rate determined by the appraisals shall commence on
March 1 of the year following the appraisals (i.e., the Rental Rate determined by the
appraisals following March 1, 2026 shall be effective March 1, 2027). If applicable, the
City shall retain one (1) independent MAI appraiser to conduct a harbor -wide appraisal of
commercial uses. All MAI appraisers selected pursuant to this subsection shall have at
least ten (10) years' experience appraising Tidelands in the Southern California area.
4. Definitions.
Unless otherwise provided, the terms provided in the NBMC shall apply to this resolution.
The singular of any term also includes the plural.
A. Base Rent and Rent, unless otherwise provided, means the annual rent charged
on a square footage basis for the use of the Premises.
B. Books and Records means full, complete, accurate and proper books, records and
accounts of all business, use or occupation, or any combination thereof,
transacted, arranged or performed, in whole or in part, on, from or for any fuel sold
from the Premises, whether by the lessee, permittee or by a sublessee, licensee,
concessionaire or other party.
C. City means the City of Newport Beach.
D. Fuel Dock or Commercial Fuel Dock means a facility that provides fuel (e.g.,
gasoline, diesel, oil, etc.) to vessels.
E. Market Adjustment Date means March 1, 2026 and every tenth (10th) anniversary
year thereafter.
Resolution No. 2018-9
Page 6 of 6
F. Percentage Rent means rent which is determined each calendar year and shall be
calculated by multiplying the rental rate, as indicated in the tables above, by the
total sales made in, upon, or from the Premises and/or otherwise attributable to
the Premises for the calendar year. For each calendar year that Percentage Rent
exceeds Base Rent, the Tidelands user shall pay to City the Percentage Rent less
the Base Rent paid to the City for that calendar year.
G. Premises means those Tidelands which are subject to the applicable permit/lease
and are more particularly described and depicted in the applicable permit/lease,
excluding any Private Waterways and improvements.
H. Private Waterways means privately owned submerged lands.
Small Commercial Marina(s) means a "marina" as defined in NBMC Section
17.01.030(J)(3) or any successor statute, which occupies less than thirteen
thousand square feet (13,000 sf) of Tidelands and Private Waterways.
J. Tidelands means certain tidelands and submerged land (whether filled or unfilled),
located in the City of Newport Beach, County of Orange, State of California granted
to the City of Newport Beach, as trustee, by the State of California, pursuant to the
Tidelands Grant.
K. Tidelands Grant means uncodified legislation related to the State of California's
grant of certain rights in the Tidelands to the City of Newport Beach, including,
without limitation, the Beacon Bay Bill (Chapter 74 of the Statutes of 1978, as
amended [citations omitted]).
STATE OF CALIFORNIA }
COUNTY OF ORANGE } ss.
CITY OF NEWPORT BEACH }
I, Leilani I. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the
whole number of members of the City Council is seven; the foregoing resolution, being Resolution
No. 2018-9 was duly introduced before and adopted by the City Council of said City at a regular meeting of
said Council held on the 131h day of February, 2018; and the same was so passed and adopted by the
following vote, to wit:
AYES: Council Member Jeff Herdman, Council Member Kevin Muldoon, Council Member Diane
Dixon, Council Member Scott Peotter, Council Member Brad Avery, Mayor Pro Tem Will
O'Neill, Mayor Duffy Duffield
NAYS: None
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of
said City this 14th day of February, 2018.
Leilam I. Brown
City Clerk
Newport Beach, California
STATE OF CALIFORNIA }
COUNTY OF ORANGE } ss.
CITY OF NEWPORT BEACH }
I, Leilani I. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the
whole number of members of the City Council is seven; the foregoing resolution, being Resolution
No. 2018-9 was duly introduced before and adopted by the City Council of said City at a regular meeting of
said Council held on the 13th day of February, 2018; and the same was so passed and adopted by the
following vote, to wit:
AYES: Council Member Jeff Herdman, Council Member Kevin Muldoon, Council Member
Diane Dixon, Council Member Scott Peotter, Council Member Brad Avery, Mayor Pro
Tem Will O'Neill
NAYS: None
RECUSED: Mayor Duffy Duffield
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of
said City this 141h day of February, 2018.
664r a C
Leilani I. Brown
City Clerk
Newport Beach, California