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HomeMy WebLinkAboutC-3850(A) - PSA for Update of Summary Appraisal of the Commercial Tidelands of Newport HarborPROFESSIONAL SERVICES AGREEMENT WITH NETZER AND ASSOCIATES FOR UPDATE OF SUMMARY APPRAISAL OF THE COMMERCIAL TIDELANDS OF NEWPORT HARBOR THIS AGREEMENT FOR PROFESSIONAL SERVICES ( "Agreement') is made and entered into as of this %day of May, 2012 by and between the CITY OF v NEWPORT BEACH, a California Municipal Corporation ( "City "), and JAMES BRADLEY NETZER, MAI, a sole proprietor doing business as ( "DBA ") NETZER AND ASSOCIATES ( "Consultant'), whose address is 170 East Seventeenth Street, Suite 206 Costa Mesa, CA 92627 and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City desires to engage Consultant to update the summary appraisal prepared by Consultant of the tidelands of Newport Harbor within the City of Newport Beach, dated October 9, 2006 ( "Project'). C. Consultant possesses the skill, experience, ability, background, certification and knowledge to provide the services described in this Agreement. D. The principal member of Consultant for purposes of Project shall be James Bradley Netzer, MAI. E. City has solicited and received a proposal from Consultant, has reviewed the previous experience and evaluated the expertise of Consultant, and desires to retain Consultant to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM The term of this Agreement shall commence on the above written date, and shall terminate on September 30, 2013 unless terminated earlier as set forth herein. 2. SERVICES TO BE PERFORMED City and Consultant acknowledge that the above Recitals are true and correct and are hereby incorporated by reference. Consultant shall diligently perform all the services described in the Scope of Services and Billing Rates attached hereto as Exhibit A and incorporated herein by reference ( "Work" or "Services "). The City may elect to delete certain tasks of the Scope of Services at its sole discretion. 3. TIME OF PERFORMANCE 3.1 Time is of the essence in the performance of Services under this Agreement and Consultant shall perform the Services in accordance with the schedule included in Exhibit A. The failure by Consultant to strictly adhere to the schedule may result in termination of this Agreement by City. 3.1.1 Notwithstanding the foregoing, Consultant shall not be responsible for delays due to causes beyond Consultant's reasonable control. However, in the case of any such delay in the Services to be provided for the Project, each party hereby agrees to provide notice to the other party so that all delays can be addressed. 3.2 Consultant shall submit all requests for extensions of time for performance in writing to the Project Administrator (as defined in Section 6 below) not later than ten (10) calendar days after the start of the condition that purportedly causes a delay. The Project Administrator shall review all such requests and may grant reasonable time extensions for unforeseeable delays that are beyond Consultant's control. 3.3 For all time periods not specifically set forth herein, Consultant shall respond in the most expedient and appropriate manner under the circumstances, by either telephone, fax, hand - delivery or mail. 4. COMPENSATION TO CONSULTANT 4.1 City shall pay Consultant for the Services on a time and expense not -to- exceed basis in accordance with the provisions of this Section and the Schedule of Billing Rates included within Exhibit A. Consultant's compensation for all Work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed Fifteen Thousand Dollars and no /100 ($15,000.00) without prior written authorization from City. No billing rate changes shall be made during the term of this Agreement without the prior written approval of City. 4.2 Consultant shall submit monthly invoices to City describing the Work performed the preceding month. Consultant's bills shall include the name of the person who performed the Work, a brief description of the Services performed and /or the specific task in the Scope of Services to which it relates, the date the Services were performed, the number of hours spent on all Work billed on an hourly basis, and a description of any reimbursable expenditures. City shall pay Consultant no later than thirty (30) days after approval of the monthly invoice by City staff. 4.3 City shall reimburse Consultant only for those costs or expenses specifically approved in this Agreement, or specifically approved in writing in advance by City. Unless otherwise approved, such costs shall be limited and include nothing more than the following costs incurred by Consultant: 4.3.1 The actual costs of subconsultants for performance of any of the Services that Consultant agrees to render pursuant to this Agreement, which have been approved in advance by City and awarded in accordance with this Agreement. 4.3.2 Approved reproduction charges. Netzer and Associates Page 2 4.3.3 Actual costs and /or other costs and /or payments specifically authorized in advance in writing and incurred by Consultant in the performance of this Agreement. 4.4 Consultant shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any Work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit B. 5. PROJECT MANAGER 5.1 Consultant shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Consultant has designated James Bradley Netzer, MAI to be its Project Manager. Consultant shall not remove or reassign the Project Manager or any personnel listed in Exhibit A or assign any new or replacement personnel to the Project without the prior written consent of City. City's approval shall not be unreasonably withheld with respect to the removal or assignment of non -key personnel. 5.2 Consultant, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of Services upon written request of City. Consultant warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 6. ADMINISTRATION This Agreement will be administered by the City Manager's Department. Rob Houston, the Assistant to the City Manager, shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or his /her authorized representative shall represent City in all matters pertaining to the Services to be rendered pursuant to this Agreement. 7. CITY'S RESPONSIBILITIES 7.1 In order to assist Consultant in the execution of its responsibilities under this Agreement, City agrees to, where applicable: 7.1.1 Provide access to, and upon request of Consultant, one copy of all existing relevant information on file at City. City will provide all such materials in a timely manner so as not to cause delays in Consultant's Work schedule. 8. STANDARD OF CARE 8.1 All of the Services shall be performed by Consultant or under Consultant's supervision. Consultant represents that it possesses the professional and technical personnel required to perform the Services required by this Agreement, and that it will Netzer and Associates Page 3 perform all Services in a manner commensurate with community professional standards. All Services shall be performed by qualified and experienced personnel who are not employed by City, nor have any contractual relationship with City. By delivery of completed Work, Consultant certifies that the Work conforms to the requirements of this Agreement and all applicable federal, state and local laws and the professional standard of care. 8.2 Consultant represents and warrants to City that it has, shall obtain, and shall keep in full force in effect during the term hereof, at its sole cost and expense, all licenses, permits, qualifications, insurance and approvals of whatsoever nature that is legally required of Consultant to practice its profession. Consultant shall maintain a City of Newport Beach business license during the term of this Agreement. 8.3 Consultant shall not be responsible for delay, nor shall Consultant be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of City to furnish timely information or to approve or disapprove Consultant's Work promptly, or delay or faulty performance by City, contractors, or governmental agencies. 9. HOLD HARMLESS 9.1 To the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers, and employees (collectively, the "Indemnified Parties ") from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims "), which may arise from or in any manner relate (directly or indirectly) to any breach of the terms and conditions of this Agreement, any Work performed or Services provided under this Agreement including, without limitation, defects in workmanship or materials or Consultant's presence or activities conducted on the Project (including the negligent and /or willful acts, errors and /or omissions of Consultant, its principals, officers, agents, employees, vendors, suppliers, subconsultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them). 9.2 Notwithstanding the foregoing, nothing herein shall be construed to require Consultant to indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Consultant. Netzer and Associates Page 4 10. INDEPENDENT CONTRACTOR It is understood that City retains Consultant on an independent contractor basis and Consultant is not an agent or employee of City. The manner and means of conducting the Work are under the control of Consultant, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. Nothing in this Agreement shall be deemed to constitute approval for Consultant or any of Consultant's employees or agents, to be the agents or employees of City. Consultant shall have the responsibility for and control over the means of performing the Work, provided that Consultant is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Consultant as to the details of the performance or to exercise a measure of control over Consultant shall mean only that Consultant shall follow the desires of City with respect to the results of the Services. 11. COOPERATION Consultant agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the Work to be performed. City agrees to cooperate with the Consultant on the Project. 12. CITY POLICY Consultant shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 13. PROGRESS Consultant is responsible for keeping the Project Administrator and /or his /her duly authorized designee informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. 14. INSURANCE 14.1 Without limiting Consultant's indemnification of City, and prior to commencement of Work, Consultant shall obtain, provide and maintain at its own expense during the term of this Agreement, policies of insurance of the type and amounts described below and in a form satisfactory to City. 14.2 Proof of Insurance. Consultant shall provide certificates of insurance to City as evidence of the insurance coverage required herein, along with a waiver of subrogation endorsement for workers' compensation. Insurance certificates and endorsement must be approved by City's Risk Manager prior to commencement of performance. Current certification of insurance shall be kept on file with City at all times during the term of this Agreement. City reserves the right to require complete, certified copies of all required insurance policies, at any time. 14.2.1 Consultant shall procure and maintain for the duration of the Agreement insurance against claims for injuries to persons or damages to property, which may arise from or in connection with the performance of the Work hereunder by Consultant, his agents, representatives, employees or subcontractors. The cost of such insurance shall be included in Consultant's bid. 14.3 Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, with an assigned policyholders' Rating of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. 14.4 Coverage Requirements. 14.4.1 Workers' Compensation Coverage. Consultant shall maintain Workers' Compensation Insurance (Statutory Limits) and Employer's Liability Insurance (with limits of at least one million dollars ($1,000,000)) for Consultant's employees in accordance with the laws of the State of California, Section 3700 of the Labor Code In addition, Consultant shall require each subconsultant to similarly maintain Workers' Compensation Insurance and Employer's Liability Insurance in accordance with the laws of the State of California, Section 3700 for all of the subcontractor's employees. 14.4.1.1 Any notice of cancellation or non - renewal of all Workers' Compensation policies must be received by City at least thirty (30) calendar days (ten (10) calendar days written notice of non - payment of premium) prior to such change. 14.4.1.2 Consultant shall submit to City, along with the certificate of insurance, a Waiver of Subrogation endorsement in favor of City, its officers, agents, employees and volunteers. 14.5 General Liability Coverage. Consultant shall maintain commercial general liability insurance in an amount not less than one million dollars ($1,000,000) per occurrence for bodily injury, personal injury, and property damage, including without limitation, blanket contractual liability. 14.6 Automobile Liability Coverage. Consultant shall maintain automobile insurance covering bodily injury and property damage for all activities of the Consultant arising out of or in connection with Work to be performed under this Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than one million dollars ($1,000,000) combined single limit for each accident. 14.7 Professional Liability (Errors & Omissions) Coverage. Consultant shall maintain professional liability insurance that covers the Services to be performed in connection with this Agreement, in the minimum amount of one million dollars ($1,000,000) limit per claim and in the aggregate. 14.8 Other Insurance Provisions or Requirements. Netzer and Associates Page 6 14.8.1 The policies are to contain, or be endorsed to contain, the following provisions 14.8.1.1 Waiver of Subrogation. All insurance coverage maintained or procured pursuant to this agreement shall be endorsed to waive subrogation against City, its elected or appointed officers, agents, officials, employees and volunteers or shall specifically allow Consultant or others providing insurance evidence in compliance with these requirements to waive their right of recovery prior to a loss. Consultant hereby waives its own right of recovery against City, and shall require similar written express waivers and insurance clauses from each of its subcontractors. 14.8.1.2 Enforcement of Agreement Provisions. Consultant acknowledges and agrees that any actual or alleged failure on the part of the City to inform Consultant of non - compliance with any requirement imposes no additional obligations on the City nor does it waive any rights hereunder. 14.8.1.3 Requirements not Limiting. Requirements of specific coverage features or limits contained in this Section are not intended as a limitation on coverage, limits or other requirements, or a waiver of any coverage normally provided by any insurance. Specific reference to a given coverage feature is for purposes of clarification only as it pertains to a given issue and is not intended by any party or insured to be all inclusive, or to the exclusion of other coverage, or a waiver of any type. 14.8.1.4 Notice of Cancellation. Consultant agrees to oblige its insurance agent or broker and insurers to provide to City with thirty (30) days notice of cancellation (except for nonpayment for which ten (10) days notice is required) or nonrenewal of coverage for each required coverage. 14.9 Timely Notice of Claims. Consultant shall give City prompt and timely notice of claims made or suits instituted that arise out of or result from Consultant's performance under this Agreement. 14.10 Additional Insurance. Consultant shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the Work. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the Services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Consultant, or of the interest of any general partner or joint venturer or syndicate member or cotenant if Consultant is a partnership or joint - venture or syndicate or cotenancy, which shall result in changing the control of Consultant. Control means fifty percent (50 %) or more of the voting power, or twenty - five percent (25 %) or more of the assets of the corporation, partnership or joint- venture. Netzer and Associates Page 7 16. SUBCONTRACTING The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Consultant. Assignments of any or all rights, duties or obligations of the Consultant under this Agreement will be permitted only with the express written consent of City. Consultant shall not subcontract any portion of the Work to be performed under this Agreement without the prior written authorization of City. 17. OWNERSHIP OF DOCUMENTS 17.1 Each and every report, draft, map, record, plan, document and other writing produced (hereinafter "Documents "), prepared or caused to be prepared by Consultant, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Consultant or any other party. Consultant shall, at Consultant's expense, provide such Documents to City upon prior written request. 17.2 Documents, including drawings and specifications, prepared by Consultant pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Consultant will be at City's sole risk and without liability to Consultant. Further, any and all liability arising out of changes made to Consultant's deliverables under this Agreement by City or persons other than Consultant is waived against Consultant and City assumes full responsibility for such changes unless City has given Consultant prior notice and has received from Consultant written consent for such changes. 18. CONFIDENTIALITY All Documents, including drafts, preliminary drawings or plans, notes and communications that result from the Services in this Agreement, shall be kept confidential unless City authorizes in writing the release of information. 19. INTELLECTUAL PROPERTY INDEMNITY The Consultant shall defend and indemnify City, its agents, officers, representatives and employees against any and all liability, including costs, for infringement of any United States' letters patent, trademark, or copyright infringement, including costs, contained in Consultant's drawings and specifications provided under this Agreement. 20. RECORDS Consultant shall keep records and invoices in connection with the Work to be performed under this Agreement. Consultant shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any Services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Consultant shall allow inspection of all Work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. 21. WITHHOLDINGS City may withhold payment to Consultant of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Consultant shall not discontinue Work as a result of such withholding. Consultant shall have an immediate right to appeal to the City Manager or his /her designee with respect to such disputed sums. Consultant shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. 22. ERRORS AND OMISSIONS In the event of errors or omissions that are due to the negligence or professional inexperience of Consultant which result in expense to City greater than what would have resulted if there were not errors or omissions in the Work accomplished by Consultant, the additional design, construction and /or restoration expense shall be borne by Consultant. Nothing in this paragraph is intended to limit City's rights under the law or any other sections of this Agreement. 23. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS City reserves the right to employ other Consultants in connection with the Project. 24. CONFLICTS OF INTEREST 24.1 The Consultant or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act "), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the Work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. 24.2 If subject to the Act, Consultant shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Consultant shall indemnify and hold harmless City for any and all claims for damages resulting from Consultant's violation of this Section. Netzer and Associates Page 9 25. NOTICES 25.1 All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first -class mail, addressed as hereinafter provided. All notices, demands, requests or approvals from Consultant to City shall be addressed to City at: Attn: Rob Houston Assistant to the City Manager City of Newport Beach 3300 Newport Boulevard PO Box 1768 Newport Beach, CA 92658 Phone: 949 - 644 -3001 Fax: 949 - 644 -3020 25.2 All notices, demands, requests or approvals from City to Consultant shall be addressed to Consultant at: Attn: James Bradley Netzer, MAI Netzer and Associates 170 E. Seventeenth Street, Suite 206 Costa Mesa, CA 92627 Phone: 949 -631 -6799 26. CLAIMS The Consultant and the City expressly agree that in addition to any claims filing requirements set forth in the Agreement, the Consultant shall be required to file any claim the Consultant may have against the City in strict conformance with the Tort Claims Act (Government Code sections 900 et seq.). 27. TERMINATION 27.1 In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non - defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. 27.2 Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving seven Netzer and Associates Page 10 (7) calendar days prior written notice to Consultant. In the event of termination under this Section, City shall pay Consultant for Services satisfactorily performed and costs incurred up to the effective date of termination for which Consultant has not been previously paid. On the effective date of termination, Consultant shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 28. STANDARD PROVISIONS 28.1 Compliance with all Laws. Consultant shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all Work prepared by Consultant shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 28.2 Waiver. A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 28.3 Integrated Contract. This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 28.4 Conflicts or Inconsistencies. In the event there are any conflicts or inconsistencies between this Agreement and the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govern. 28.5 Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 28.6 Amendments. This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney. 28.7 Severability. If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 28.8 Controlling Law And Venue. The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. Netzer and Associates Page 11 28.9 Equal Opportunity Employment. Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. 28.10 No Attorney's Fees. In the event of any dispute or legal action arising under this Agreement, the prevailing party shall not be entitled to attorney's fees. 28.11 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. [SIGNATURES NEXT PAGE] Netzer and Associates Page 12 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the dates written below. APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE Date: 57—( 2 —1 r -- By: A '--� �~ Aaron C. Harp 1 City Attorney ATTEST: Date: MAW - By: Leilani I. Brown City Clerk Lqi r pow% CITY OF NEWPORT BEACH, A California municipal corporation Date: S i -, - 3vz> i -L., By: G -- David Ktff-J 13 City Manager CONSULTANT: James Bradley Netzer, MAI, a sole proprietor DBA Netzer and Associates Date: 1Z5 1 Zc.?`< , By: Jar Prii [END OF SIGNATURES] Attachments: ibit A — Scope of Services and Billing Rates Netzer and Associates Page 13 CONTRACT FOR SERVICES SCOPE OF WORK This contract represents the agreement between Netzer & Associates, hereinafter referred to as THE APPRAISER, and the City of Newport Beach, c/o Rob Houston, hereinafter referred to as THE EMPLOYER. 1. THE APPRAISER agrees to provide: an UPDATE of the SUMMARY APPRAISAL, of the COMMERCIAL TIDELANDS, NEWPORT HARBOR, NEWPORT BEACH, CALIFORNIA, File No. 26 -019, Dated October 9, 2006. The update will include the following Sections: Section A, Commercial Entities @ Fixed Locations (including Gas Docks); o Section D, Commercial Piers that include; • Commercial Marinas - larger # of slips, and generally with upland support facilities (restrooms, storage, parking); • Commercial Marinas — smaller # of slips, generally not necessarily with upland support; Shipyards; • Dock slips held by yacht clubs, HOAs and Non - Profits, and • Slips associated with short-term stays /tie ups at upland properties (guest docks, slips reserved for restaurant customer use). 9 Section E, Residential Docks. The APPRAISER is directed to provide valuations that include a FMV based on square feet of tidelands under lease as well as FMV based on a percentage of gross from (generally) slip rental revenue. In addition THE APPRAISER will ensure that the appraisal will also include THE APPRAISER's consideration /study of the following: Separation between uplands and tidelands ownership. Generally, the City's leased properties represent water areas only; generally, land -side access to these leased properties must be provided through adjacent or nearby privately - owned uplands. Because the City's leased properties represent water areas only, most marina support uses must be conducted on adjacent privately -owned uplands. These support uses include, but are not limited to; • Parking; • Restrooms; • Utility connections; • Storage, service, maintenance; and marina management. Rates charged in Newport Harbor for existing leases — whether where uplands and tidelands are held by the same property owner or separated. Netzer and Associates Page 14 • The effect, if any, on FMV of a lessee's obligation to dredge beneath leased docks, maintain sea walls, etc. • The effect, if any, on FMV of a property being closer to or farther from the Harbor Entrance (ocean jetties). • The effect, if any, on FMV for tidelands leased when there is a "gap" of privately - held water (assume useable for docks, support structures, other) between privately -held uplands and public tidelands? • Is it typical or atypical that FMV or the resulting rental rate be adjusted downward when the lessee is responsible for an historic structure (ex. The Balboa Pavilion)? • Is it typical or atypical that FMV or the resulting rental rate be adjusted downward when the lessee is a not - for - profit entity (ex. ExploreOcean)? The APPRAISER will be required to meet with members of the Harbor Fee Work Group once (their schedule permitting) early in the process. The APPRAISER will be required to meet with stakeholders up to two times, also early in the process. The Stakeholder meetings will be organized and facilitated by THE EMPLOYER. The report will conform with and be subject to the requirements of the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. Attached to this contract is a copy of my standard "Appraisal Certification" and "Assumptions and Limiting Conditions" which will apply to the analysis. 2. THE APPRAISER understands that the appraisal is being requested by THE EMPLOYER in connection with the following non - litigated matter: Internal Purposes. THE APPRAISER agrees to deliver three copies of the report as required for the above referenced matter. Additional copies can be provided at an additional cost of $75.00 per copy. 1 The fee for the assignment will be billed on an hourly basis at an hourly rate of $200.00 for James Netzer's time, and $75.00 for associate's time. The total fee is not expected to exceed $7,500.00. The fee reflects the estimated time that will be required to complete the appraisal and is in no way connected with any predetermined conclusions. 4. THE EMPLOYER agrees to pay THE APPRAISER the full appraisal fee, upon delivery of three copies of the appraisal report. 5. In addition to the "appraisal fee" as quoted in Paragraph #3, additional billing will be charged at the rate of $200.00 per hour, portal to portal, for additional client meetings or conferences or those meetings or conferences with the client's attorney or other agent. Netzer and Associates Page 15 6. In the event THE APPRAISER is subpoenaed or otherwise required to give testimony or to attend any public or private hearing as a result of the having prepared this report, or attend any conferences pertaining thereto, THE EMPLOYER agrees to pay THE APPRAISER $300.00 per hour, portal to portal, for attendance or testimony required. 7. In the event that THE EMPLOYER desires to cancel this contract, written notice thereof shall be delivered to THE APPRAISER, and it is agreed that THE APPRAISER shall receive compensation from THE EMPLOYER for all services rendered at the appropriate hourly rate for time actually spent prior to receipt of written notice to stop work, plus all costs advanced in connection with said work prior to receipt of such written notice. Any unused portion of the advance payment shall be refunded to THE EMPLOYER. Accepted by APPRAISAL CERTIFICATION To the best of my knowledge and belief, I certify that: The statements of fact contained in this report are true and correct The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased professional analyses, opinions and conclusions. I have no present or prospective interest in the property that is the subject of this report, and have no personal interest or bias with respect to the parties involved. I have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three - year period immediately preceding acceptance of this assignment. I have no bias with respect to the property that is the subject of this report or to the parties involved in the assignment. My engagement in this assignment was not contingent upon developing or reporting predetermined results. My compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice. Netzer and Associates Page 16 The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. I have made a personal inspection of the property that is the subject of this report. No one provided significant professional assistance to the person signing this report. In accordance with the USPAP Competency Provision, I certify that I have the knowledge and experience to complete this assignment and have appraised this property type before. Disclosure of the contents of this appraisal review is governed by the Bylaws and Regulations of the Appraisal Institute. In furtherance of the aims of the Institute to develop higher standards of professional performance by its Members, the appraiser may be required to submit authorized committees of said Institute copies of this report and any subsequent changes or modifications thereof. The Appraisal Institute conducts a voluntary program of continuing education for its designated members. MAI's who meet the minimum standards of this program are awarded periodic educational certification. As of the date of this report, James B. Netzer has completed the requirements under the continuing education program of the Appraisal Institute. ASSUMPTIONS AND LIMITING CONDITIONS The analyses and opinions in this report are subject to the following assumptions and limiting conditions: General No investigation of title to the property has been made, and the premises are assumed to be free and clear of all encumbrances, leases, use restrictions, easements, cases or actions pending, except as specifically discussed in this report. Title is assumed to be good and marketable, and that the property is under responsible ownership, competent management and available for its highest and best use. No survey, legal, or engineering analysis of this property has been made by the appraiser. I assume no responsibility for any condition not readily observable from the customary inspection of the premises, and that there are no hidden or unapparent conditions of the property, subsoil or structures that render it more of less valuable, except as noted herein. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocation for land and buildings must not be used in conjunction with any other appraisal and are invalid if so used. Netzer and Associates Page 17 The maps, plats, photographs, and exhibits. included herein are for illustration only, as an aid in visualizing matters discussed within the appraisal. They should not be considered as surveys nor relied upon for any other purpose, nor should they be removed from, reproduced, or used apart from this report. I assume no responsibility for economic or physical factors which may affect the opinions herein stated which may occur at some date after the date of value. I reserve the right to make such adjustments to the analysis, opinions and conclusions set forth in this report as may be required by consideration of additional data or more reliable data that may become available. Information contained in this appraisal has been gathered from sources which are believed to be reliable, and where feasible, has been verified. No responsibility is assumed for the accuracy of information supplied by others. No opinion is expressed as to the value of sub - surface oil, gas, or mineral rights, or whether he property is subject to surface entry for the exploration or removal of such materials except as expressly stated. The property is appraised assuming to be in full compliance with all applicable federal, state, and local environmental regulations and laws, unless otherwise stated. The property is appraised assuming that all applicable zoning and use regulations and restrictions have been complied with, unless otherwise stated. The Americans with Disabilities Act ( "ADA ") became effective January 26, 1992. The appraiser has not made a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since the appraiser has no direct evidence relating to this issue, possible noncompliance with the requirements of the ADA in estimating the value of the property has not been considered. Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the property, was not observed by the appraiser. The appraiser has no knowledge of the existence of such materials on the property. The appraiser, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no material on or in the property that would cause a loss in value. No responsibility is assumed for any such condition, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired. If the client is aware or becomes aware of any conditions, the appraiser should be consulted immediately to assess the impact, if any, upon the market value. The property is appraised assuming that all required licenses, certificates of occupancy, consents, or other legislative administrative authority from any local, state, or national Netzer and Associates Page 18 government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based, unless otherwise stated. The appraiser reserves the right to make such adjustments to the valuation herein reported, as may be required by consideration of additional data or more reliable data that may become available. That no opinion is intended to be expressed for matters which require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate appraisers. I shall not be required, by reason of this appraisal, to give testimony or to be in attendance in court or any governmental or other hearing with reference to the property without prior arrangements having first been made with me relative to such additional employment. Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser. I do not authorize out of context quoting, nor partial reprinting of the report. In the event the report is placed in the hands of a third party, it is requested that such party be made cognizant of any and all limiting conditions resulting in the basis of my employment and the discussions thereto, as well as those set forth herein. The submission of this report constitutes the completion of the service authorized. It is submitted upon the condition that the client will provide the appraiser customary compensation relative to any subsequent required deposition, conferences, additional preparation or testimony. The appraiser respectfully requests that neither all nor part of the contents of this report shall be disseminated to the public through advertisement, public relations, news, sales, or other media, without written consent and approval of the author, particularly the valuation conclusions, the identity of the appraiser, or any reference to the Appraisal Institute or the MAI designation. In the event the appraiser is subpoenaed for a deposition, judicial or administrative proceeding, and is ordered to produce his appraisal report and file, the appraiser will immediately notify the employer. It is the responsibility of the employer to obtain a protective order. Any dispute of claim made with respect to this report shall be submitted to and resolved in accordance with the rules of the American Arbitration Association for arbitration, and the decision of the Association shall be binding. All appraisal services, pursuant to this report, shall be deemed to be contracted for and rendered in Orange County, California, and any arbitration or judicial proceedings shall take place in Orange County, California. The signatory of this appraisal report is a member of the Appraisal Institute. The Bylaws and Regulations of the Institute require each member to control the use and Netzer and Associates Page 19 distribution of each appraisal report signed by such member. Therefore, except as hereinafter provided, the party for whom this appraisal report was prepared may not distribute copies of this appraisal report, in its entirety, without the written consent of the signatory of this report. The report and parts thereof and any additional material submitted, may not be used in any prospectus or printed material used in conjunction with the sale of securities or participation interests in any Public Offering as defined under US Security laws. Further, neither all nor any part of this appraisal report shall be disseminated to the general public by the use of advertising media, public relations media, news media, sales media, or other media for public communication without the prior written consent of the signatory of this appraisal report. Netzer and Associates Page 20 APPRAISAL REPORT COMMERCIAL TIDELANDS NEWPORT HARBOR NEWPORT BEACH, CALIFORNIA DATE OF VALUE SEPTEMBER 30, 2006 PREPARED FOR MS. EVELYN TSENG REVENUE DIVISION CITY OF NEWPORT BEACH 3300 NEWPORT BOULEVARD NEWPORT BEACH, CALIFORNIA 92663 PREPARED BY NETZER R ASSOCIATES 234 E. SEVENTEENTH STREET. SUITE 209 COSTA MESA, CALIFORNIA 92627 FILE NO. 26 -019 NTTZER & ASSOCIATES Real Estate ADDTa1531 & Consultine October 9, 2006 File No. 26 -019 Ms. Evelyn Tseng Revenue Division City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92663 Re: Appraisal Services Commercial Tidelands — Newport Harbor Newport Beach, California Dear Ms. Tseng: In accordance with your request and authorization, I have undertaken the investigations and analyses necessary to estimate the market value, Pee supple interest, in the above referenced real property, which is the subject of this report. James B. Netzer conducted inspections of the subject properties in August and September 2006. Based upon the work undertaken and my experience as a real estate analyst and appraiser, I have formed the opinion, as of the 30th day of September 2006, subject to the Assumptions and Limiting Conditions contained in this report, that the subject has the following market values: SECTION A Current Fair Market Rent for the .Fuel Docks is 5.0- Percent of Gross Sales. SECTION B Current Fair Market Rent for the Balboa Island Ferry is 6.0- percent of gross sales. Current Fair Market Rent for the Newport Bait Barge is 4.5- percent of gross sales. 234 E. Seventeenth Street, Suite 209 e Costa Mesa, CA 92627 ♦ Phone (949) 574 -0261 ♦ FAx (949) 574 -0271 Evelyn Tseng October 9, 2006 Page 2 SECTION C The slips at the Balboa Yacht Basin have the following fair market rent: Slip Length Lineal Feet Total Slips Monthly Rent /LF Under 30' 2 $20.00 30' — 34' 43 $21.00 35' — 39' 71 $23.00 40' — 44' 32 $25.00 45' — 49' 3 $28.00 50' & Over 10 $30.00 Side Ties 10 $20.00 TOTAL 171. The apartment units at the Balboa Yacht Basin have the following market rent. Unit Type Size (Sq.Ft.) Market Rent 2 -Bed, One -Bath 1,100 $2200 2 -Bed, One -Bath 1,300 $2,500 The storage garages at the Balboa Yacht Basin have the following market rent. Size S .Ft. Total Units Market Rent Total Monthly Rent 200 29 $350 $10,150 160 2 $320 $640 SECTION D The tidelands in Newport Harbor that are not leased in conjunction with the adjoining upland parcel have a current market rent of 22.0- percent of the gross income. The tidelands in Newport Harbor that are leased in conjunction with the adjoining upland parcel have a current market rent of 27.0- percent of the gross income. Evelyn Tseng October 9, 2006 Page 3 SECTION E Fair market rent for a residential pier used for " commmercial" purposes is 20- percent of the gross rental income. Fair market rent for a residential pier for non- commercial use is $18.00 per lineal foot per year. SECTION F Fair market rent for the 29 °i Street Dock is $20.00 per lineal foot per month, or a total monthly rent of $1,140.00. SECTION G Fair market "transfer value" of the off -shore moorings is $1,000 per lineal foot. Fair market "transfer value" of the on -shore moorings is $475 per lineal 'foot. Monthly fair market rent for the on -shore and off -shore moorings is $7.25 per lineal foot. SECTION H Annual fair market rent for the oceanfront encroachments is $45.00 per square foot of land SECTION I The land under the Dory Fishermen's Fleet has a market value of $150 per square foot. This letter of transmittal must remain attached to the limited summary appraisal report, which contains 117 pages plus related e-J bits, in order for the value opinions set forth to be considered valid. 1 invite your attention to the following summary narrative report which has been prepared in accordance with the Code of Professional Ethics of the Appraisal Institute and is in compliance with the USPAP standards, and sets forth the data and analysis which my opinions are, in part, predicated. Thank you for the opportunity of serving you in this matter. submitted, . MAI wiser No. AGO03143 TABLE OF CONTENTS CERTIFICATION .............................................. ............................... 1 INTRODUCTION .............................................. ............................... 4 SECTION A - COMMERCIAL ENTITIES @ FIXED LOCATIONS .................... 18 SECTION B - COMMERCIAL OPERATIONS .......... ............................... 28 SECTION C - BALBOA YACHT BASIN ................. ............................... 39 SECTION D - COMMERCIAL PIERS ..................... ............................... 71 SECTION E - RESIDENTIAL DOCKS ..................... ............................... 81 SECTION F - CITY OWNED DOCKS .................... ............................... 85 SECTION G - ON -SHORE & OFF -SHORE MOORINGS ............................. 92 SECTION H - OCEANFRONT ENCROACHMENTS ... ............................... 102 SECTION I -DORY FLEET ................................ ............................... 108 VALUAT ION.................................................. ............................... 112 ADDENDA..................................................... ............................... 114 ry Newport Harbor Tidelands Newport Beach, California October 9, 2006 NEWER & ASSOCIATES CERTIFICATION To the best of my knowledge and belief, I certify that: The statements of fact contained in this report are true and correct. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased professional analyses, opinions and conclusions. I have no present or prospective interest in the property that is the subject of this report, and have no personal interest or bias with respect to the parties involved. I have no bias with respect to the property that is the subject of this report or to the parties involved in the assignment. My engagement in this assignment was not contingent upon developing or reporting predetermined results. My compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. I have made a personal inspection of the property that is the subject of this report. In accordance with the USPAP Competency Provision, I certify that I have the knowledge and experience to complete this assignment and have appraised this property type before. Disclosure of the contents of this appraisal review is governed by the Bylaws and Regulations of the Appraisal Institute. In furtherance of the aims of the Institute to develop higher standards of professional performance by its Members, the appraiser may be required to submit authorized committees of said Institute copies of this report and any subsequent changes or modifications thereof. The Appraisal Institute conducts a voluntary program of continuing education for its designated members. MAI's who meet the minimum standards of this program are awarded periodic educational certification. As of the date of this report, James B. Netzer has completed the requirements under the continuing education program of the Appraisal Institute. Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES I have personally conducted an inspection of the real property identified in hxhibit A to the Contract For Services, which is the subject of this report. Based upon my investigation and analysis, I have formed the opinion that the subject properties have the following values as of September 30, 2006: SECTION A Current Fair Market Rent for the Fuel Docks is 5.0- Percent of Gross Sales. SECTION B Current Fair Market Rent for the Balboa Island Ferry is 6.0- percent of gross sales. Current Fair Market Rent for the Newport Bait Barge is 4.5- percent of gross sales. SECTION C The slips at the Balboa Yacht Basin have the following fair market rent: Slip Length Lineal Feet Total Slips Monthly Rent /LF Under 30' 2 $20.00 30' — 34' 43 $21.00 35'— 39' 71 $23.00 40' — 44' 32 $25.00 45' — 49' 3 $28.00 50' & Over 10 $30.00 Side Ties 10 $20.00 TOTAL 171 The apartment units at the Balboa Yacht Basin have the following market rent. Unit Type Size (Sq.F(.) Market Rent 2 -Bed, One -Bath 1,100 $2,200 2 -Bed, One -Bath 1,300 $2,500 The storage garages at the Balboa Yacht Basin have the following market rent. Size (S .Ft. ) Total Units Market Rent Total Monthly Rent 200 29 $350 $10.150 160 2 $320 $640 2 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES INTRODUCTION Purpose of Report The purpose of this report is to set forth the data, analyses, and conclusions relative to my opinion of the fair market rent for the various uses of the submerged tidelands located in Newport Harbor, in the City of Newport Beach California. As set forth in Exhibit "A" ol'the Professional Services Agreement between Netzer & Associates and the City of Newport Beach, market rent conclusions for the following tideland uses are presented: A. Commercial entities operating at fixed locations on tideland properties, i.e. gas dock operations, bait and tackle stores; B. Commercial operations emanating from tideland properties, i.e. the Balboa Island Ferry, Newport Bait Barge; C. Balboa Yacht Basin, which contains approximately: 1. 200 boat slips, 2. 3 apartments, and 3. 31 garages; Note: Balboa Yacht Basin is subject to the terms of Council Policy F -7. D. Commercial piers within the City of Newport Beach; E. Two categories of residential piers within the City of Newport Beach, including: 1. Those which have been leased by the residential property owners to third -party boat owners on a monthly or quarterly basis; 2. Those which are used solely for personal.. non - commercial use; F. The licensing of City -owned docks, i.e. the 29Th Street dock; G. On -shore and off-shore moorings within the City of Newport Beach; H. Oceanfront encroachments: and 1. The Dory Fisherman Fleet Zone. For the purpose of describing the properties and the presentation of market data and market rent conclusions the above property uses will be discussed separately in the report and will be segregated by section based on the above outline. Function of Report The function of this report is to estimate the fair market rent of the above uses for the City's internal purposes and possible revisions to the City's Harbor Permit Policy. For reference, the 0 Newport Harbor Tidelands Ncwnort Beach, California October 9, 2006 NETZER & ASSOCIATES City's Harbor Permit Policy is included in the report Addenda. The appraisal is completed in compliance with the City's Harbor Permit. The appraisal is made at the request of Evelyn Tseng, Income Contract Admutistrator with the City of Newport Beach — Revenue Division, who is the intended user of this report. Date of Value The date of value presented in this report is September 30, 2006. Given the number of properties involved in this report the inspections of the properties were completed during the months of August and September 2006. Scope of Investigation This report conveys the results of my investigations and analyses concerning the subject property. The report includes a summary of the information utilized and the methodology used in determining an estimate of value. The appraisal process is a systematic analysis wherein data utilized in estimating the value of the subject property is acquired, classified, analyzed and presented. The first step of the appraisal process involves defining the appraisal problem. The step includes the identification of the real estate, an explanation of limiting conditions, stating the effective date of the value estimate, identification of the property rights being appraised and determining the type of value being sought. The next step is to gather information on the subject property such as vesting of ownership, property history and tax assessment information. The third step is the collection of regional, city and neighborhood data that influences the value of the subject property through economic forces. Relevant factors affecting the value of the subject property such as zoning, site and improvement data are considered to determine the highest and Best Use of the subject property. The valuation methodology process then discusses the meaningful applications and limitations of the three approaches to value which are the Cost, Sales Comparison, and Income Capitalization Approaches. The comparable market data is analyzed for comparison to the subject property as determined by a degree of similarities. The final step in the appraisal process is the reconciliation of the data gathered to determine the final value estimate. All sections of the appraisal report are structured to show the reasoning and justification utilized in the estimate of highest and best use and conclusion of value. The "Addenda" section of the report contains various information supportive of the appraisal. Interests Appraised The interests appraised include the Pee Simple Estate, the Leased fee Estate and the Leasehold Estate under the assumption that the subject properties will eventually be leased on a long term basis. 5 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES The term the "Fee Simple Estate " /" is defined as follows: Absolute ownership unencumbered by any other interest or estate; subject only to the limitations of eminent domain, escheat, police power, and taxation. The term the "Leased Fee Estate"/2 is defined as follows: An ownership interest held by a landlord with the rights of use and occupancy conveyed by lease to others. The rights of the Lessor (the leased fee owner) and the leased fee are specified by contract terms contained within the lease. The term the "Leasehold Estate " /3 is defined as follows: The interest held by the lessee (the tenonl or renter) through a lease conveying the rights of use and occupancy for a stated term under certain conditions. Market Value Defined The terns "market value " /4, as used in this report, is defined as follows: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: I. Buyer and seller are typically motivated; 2. Both parties are well- informed or well advised, and acting in what they consider their own best interests; 3. A reasonable time is allowed for exposure on the open market; 4. Payment is made in cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by any one associated with the sale. Market Rent Defined The terms "market rent' /', as used in this report, is defined as follows: Appraisal Institute, The Dictionary of Real Estate Appraisal, Third Edition, (Chicago, 1993), p. 140. Z Appraisal Institute, The Dictionary of Real Estate Appraisal, Third Edition, (Chicago, 1993), p. 204. 3 Appraisal Institute, The Dictionary of Real Estate Appraisal, Third Edition, (Chicago, 1993), p. 221. 4 Uniform Standards of professional Appraisal Practice s Uniform Standards of Professional Appraisal Practice 6 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES The rental income that a property would niost probably command in the open market,' indicated by the current rents paid and asked for comparable space cis of the date of the appraisal. Bulkhead Line Defined The term "Bulkhead Line " /6, as established, shall define the limit of solid filling or solid structures along the bayfront. Pierhead Line Defined The terms " Pierhead Line" /7, as established, typically shall define the limit for pier and float -type structures. Project Line Defined The terms "Project Line " /R, shall define the channel lines of the improvements and by the Federal Government in 1935 -36. Probability of Change The opinion of value is based upon my knowledge of conditions as of the date of this report. Constantly changing economic, social, political and physical conditions have varying effects upon real property values. Even after the passage of a relatively short period of time, property values may change substantially and require a review based on differing market conditions. Legal Descriptions I have not been provided with the legal description of each individual property; however, this does not impact the analysis or conclusions presented. Owner of Record and Property History It is assumes that title to all of the properties being appraised is vested in the City of Newport Beach. Unless specifically addressed in this report, none of the properties have transferred or encumbered with long term leases in the recent past. Assumptions and Limiting Conditions The analyses and opinions in this report are subject to the following assumptions and limiting conditions: G City of Newport Beach, Harbor Permit Policy 7 City of Newport Beach, Harbor Permit. Policy a City of Newport Beach, Harbor Permit Policy 7 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NEWER & ASSOCIATES General No investigation of title to the property has been made, and the premises are assumed to be free and clear of all encumbrances, leases, use restrictions, easements, cases or actions pending, except as specifically discussed in this report. Title is assumed to be good and marketable, and that the property is under responsible ownership, competent management and available for its highest and best use. No survey, legal, or engineering analysis of this property has been made by the appraiser. I assume no responsibility for any condition not readily observable from the customary inspection of the premises, and that there are no hidden or rmapparent conditions of the property, subsoils or structures that render it more of less valuable, except as noted herein. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocation for land and buildings must not be used in conjunction with any other appraisal and are invalid ifso used. The maps, plats, photographs, and exhibits included herein are for illustration only, as an aid in visualizing matters discussed within the appraisal. They should not be considered as surveys nor relied upon for any other purpose, nor should they be removed from, reproduced, or used apart from this report. I assume no responsibility for economic or physical factors, which may affect the opinions herein, stated which might occur at some date after die date of value. I reserve the right to make such adjustments to the analysis, opinions and conclusions set forth in this report as may be required by consideration of additional data or more reliable data that may become available. information contained in this appraisal has been gathered from sources, which are believed to be reliable, and where feasible, has been verified. No responsibility is assumed for the accuracy of information supplied by others. No opinion is expressed as to the value of sub - surface oil, gas, or mineral rights, or whether the property is subject to surface entry for the exploration or removal of such materials except as expressly stated. The property is appraised assuming to be in full compliance with all applicable federal, state, and local environmental regulations mid laws, unless otherwise stated. The property is appraised assuming that all applicable zoning and use regulations and restrictions have been complied with, unless otherwise stated. The property is appraised assuming that all required licenses, certificates of occupancy, consents, or other legislative administrative authority from any local, state, or national govenmient or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based, unless otherwise stated. The Americans with Disabilities Act ( "ADA ") became effective January 26, 1992. The appraiser has not made a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a 8 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since the appraiser has no direct evidence relating to this issue, possible noncompliance with the requirements of the ADA in estimating the value of the property has not been considered. Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the property, was not observed by the appraiser. The appraiser has no knowledge of the existence of such materials on the property. The appraiser, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde foan insulation, or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no material on or in the property that would cause a loss in value. No responsibility is assumed for any such condition, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired. If the client is aware or becomes aware of any conditions, the appraiser should be consulted immediately to assess the impact, if ally, upon the market value. The appraiser reserves the right to make such adjustments to the valuation herein reported, as may be required by consideration of additional data or more reliable data that may become available. No opinion is intended to be expressed, or implied, for matters, which require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate appraisers. I shall not be required, by reason of this appraisal, to give testimony or to be in attendance in court or any goverrunental or other hearing with reference to the property without prior arrangements having first been made with me relative to such additional employment. Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser. I do not authorize out of context quoting, or partial reprinting of the report. In the event the report is placed in the hands of a third party, it is requested that such party be made cognizant of any and all limiting conditions resulting in the basis of my employment and the discussions thereto, as well as those set forth herein. The submission of this report constitutes the completion of the service authorized. It is submitted upon the condition that the client will provide the appraiser customary compensation L relative to any subsequent required deposition, conferences, additional preparation or testimony. The appraiser respectfully requests that neither all nor part of the contents of this report shall be disseminated to the public through advertisement, public relations, news, sales, or other media, without written consent and approval of the author, particularly the valuation conclusions, the identity of the appraiser, or any reference to the Appraisal Institute or the MAI designation. In the event the appraiser is subpoenaed for a deposition, judicial or administrative proceeding, and is ordered to produce his appraisal report and file, the appraiser will immediately notify the employer. It shall be the responsibility of the employer to obtain a protective order I Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES The liability of Netzer & Associates and the appraiser responsible for this report is limited to the client only and to the fee actually received by the appraiser. Further, there is no accountability, obligation or liability to any third party. If this report is placed in the hands of anyone other than the client, the client shall make such party aware of all limiting conditions and assumptions of the assignment and related discussions. The appraiser is in no way responsible for ally costs incurred to discover or correct any deficiencies of any type present to the property -- physical, financial, and /or legal. It is agreed that the appraiser is not a necessary party in any inquiry or judicial proceedings. If called upon to testify in any litigation or other proceeding arising out the duties in this matter, and is compelled to incur court costs, attorney's fees or other out -of- pocket expenses in connection with court proceedings, such costs or expenses, together with the appraisers' usual hourly per diem applicable for study, preparation, testimony or travel will be paid by the party (or parties) who acts to bring any suit requiring ajudicial proceeding. Any dispute or claim made with respect to this report shall be submitted to and resolved in accordance with the rules of the American Arbitration Association for arbitration, and the decision of the Association shall be binding. All appraisal services, pursuant to this report, shall be deemed to be contracted for and rendered in Orange County, California, and any arbitration or judicial . proceedings shall take place in Orange County, California. The signatory of this appraisal report is a member of the Appraisal Institute. The Bylaws and Regulations of the Institute require each member to control the use and distribution of each appraisal report signed by such member. Therefore, except as hereinafter provided, the party for whom this appraisal report was prepared may not distribute copies of this appraisal report, in its entirety, without the written consent of the signatory of this report. The report and parts thereof and any additional material submitted, may not be used in any prospectus or printed material used in conjunction with the sale of securities or participation interests in any Public Offering as defined under US Security laws. Further, neither all nor any part of this appraisal report shall be disseminated to the general public by the use of advertising media, public relations media, news media, sales media, or other media for public communication without the prior written consent of the signatory of this appraisal report. AREA DESCRIPTION Newport Harbor is the focal point of the incorporated city of Newport Beach, which is located in coastal Orange County approximately 10 miles southwest of the Santa Ana Civic Center. The coastal city was incorporated on September 1, 1906. The State Department of Finance reports all estimated population of 70,032 persons, as of the 2000 Census. According to the City Chamber of Commerce, the influx of the tourist population during the summer months increases the population to over 100,000 persons. Newport Beach is located 85 miles north of San Diego, 14 miles south of Long Beach and 50 miles from downtown Los Angeles. The City's elevation ranges from sea level to 691 feet. With the annexation of Newport Coast, the City is comprised of approximately 25 square miles of land area, approximately 25.5 square miles bay, harbor and ocean waters for a total area of 10 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES approximately 50.5 square miles. The city has 6.1 miles of ocean frontage and 25.4 miles of harbor frontage. Newport Harbor is one of the largest pleasure craft harbors on the West Coast and is home to approximately 9,900 boats, 1,230 piers, 2,330 commercial slips and side ties and 1,235 moorings. In addition to the City's miles of beaches and pleasure craft harbor, the City is home to several public and private golf courses, Newport Center and its Fashion Island regional mall, the Balboa Peninsula, Balboa Island, Corona del Mar, and the Upper Newport Bay. Newport Center, developed by the county's largest landowner, The Irvine Company, is a master planned, mixed - use development, and includes offices, lodging and meeting facilities, and the Fashion Island regional mall. Newport Center is perceived as a premier business address in Southern California and the Class -A office buildings command some of the highest rents in the county. Fashion Island, an open -air regional mall containing approximately 1,200,000 rentable square feet, is home to many local, regional, national and international retailers, restaurants, and movie theaters. It caters to the business community, the local population, and attracts a large tourist market. Coupled with its mild climate, these community amenities will continue to draw the transient population from around the region and the nation, and the city should continue to be a destination resort into the foreseeable future. Newport Harbor is formed by the Balboa Peninsula on south and the mainland on the north and extends inland to Jamboree Road and the north end of the Upper Newport Bay (Back Bay). The primary focus of this assignment is the Lower Newport Bay, which is generally defined as the water area south of the Coast Highway Bridge near the intersection of Coast Highway and Dover Drive. Traditionally, most of the boating activity within the harbor is concentrated in the Lower Bay as most of the Back Bay is an ecological preserve with limited boating facilities (Newport Dunes, Newport Aquatic Center, U.C.I. Rowing base, Bayside Village and Dover Shores). The Balboa Peninsula consists of all the contiguous land east of 45 °i Street extending to Peninsula Point and the jetty at the mouth of Newport Harbor. The south side of the Peninsula consists of sandy beaches on the Pacific Ocean while the north side of the Peninsula forms the southern perimeter of Newport Harbor. Access to the Peninsula is via Newport Boulevard, Superior Avenue /Balboa Boulevard, or the famous ferry that runs between Balboa Island and the Balboa Peninsula. Newport Boulevard merges with Balboa Boulevard at 2151 Street near McFadden Square and the Newport Pier and Balboa Boulevard continues eastward to the end of the Peninsula and eventually turns into Chamhel Road. Access the inland side of the Harbor is via Coast Highway, Bayside Drive and Harbor Island Drive. Additional access is afforded to the residents of the eight islands that ring w uam a.rao. ueowrtaart uxe Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES the harbor, which include Newport Island, Lido Isle, Linda Isle, Harbor Island, Bay Island (the only island with no vehicular traffic), Balboa Island, Little Balboa Island and Collins Isle. Primary landmarks and attractions include the Newport and Balboa Piers, the Balboa Fun Zone (being converted to the Newport Harbor Nautical Museum), the Balboa Pavilion and the Wedge, a well -known body surfing beach at the tip of the Peninsula. The commercial activities are concentrated along the Mariner's Mile section of Coast Highway, in Lido Village along the Rhine Chatmel, and the neighborhood surrounding the Balboa Island Ferry and Fun Zone. The balance of the upland and tidelands include residential properties, marinas, private docks and beaches. The Location Map on the facing page shows the subject location relative to the surrounding community and transportation network. I -UGHEST AND BEST USE "Highest and Best Use" is an appraisal concept which is defined in The Dictionary of Real Estate Appraisal, Third Edition, as follows: The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria that must be met are legal permissibility, physical possibility, financial feasibility, and maximum profi.tability. Inherent in this definition are several conditions, which must be satisfied by the existing or proposed use in order to develop the maximum value. The use must be physically possible for the site. Soil condition, topography, sire and shape must be compatible with the proposed use. The use must be legally permissible in that it must conform to current or projected zoning. Similarly, the use must not be precluded by deed restrictions or other encumbrances, which may limit potential uses. Also, the use must be economically feasible. The market should indicate sufficient economic demand so as to support a proposed use of the site. Among the various uses that meet the above criteria, the use which creates the greatest rate of return and maximum productivity is considered to be the highest and best use of the site. Highest, and Best Use Criteria - As I£ Vacant/As- Improved A complete Highest and Best Use study of each of the uses of the tidelands and associated uplands parcels is beyond the scope of this assignment; therefore, it is assumed that the Highest and Best Use of the tidelands properties "as if vacant" and "as improved" are the current uses. 12 Newport Harbor Tidelands Newport Reach, California October 9, 2006 NETZER & ASSOCIATES APPRAISAL PROCEDURES The appraisal of real property generally involves one, two or three of the conventional approaches to value, and is based upon consideration of market- derived data, the experience of the appraiser, and opinions of other informed market participants. Valuation Approaches Three basic approaches to value are available to the appraiser: the Cost Approach, the Income Approach, and the Direct, or Sales Comparison Approach. Cost Approach This approach entails the preparation of a replacement or reproduction cost estimate of the subject property improvements new (maintaining comparable quality and utility) and then deducting for losses in value sustained through age, wear and tear, functionally obsolescent features, and economic factors affecting the property. The land value is then added to the depreciated cost along with an allowance for entrepreneurial profit to arrive at a value estimate. Income Approach This approach is based upon the theory that the value of property tends to be set by the net income that is to be realized by the owner. It is, in effect, the capitalization of expected future income into a present worth estimate. This approach requires an estimate of potential gross income, an analysis of all expense items, the selection of a capitalization rate, and finally, the processing of the net income stream into a value estimate. Sales Comparison Approach This approach is based upon the principle that the value of a property tends to be set by the price at which comparable properties have recently been sold or for which they were acquired. This approach requires a detailed comparison of sales of comparable properties with the subject property. Approaches Used in the Valuation of the Subiect The Sales Comparison Approach is a process of comparing prices paid for similar properties, prices asked by owners, and offers made by prospective purchasers. The approach presents good evidence of value because it represents the actions of buyers and sellers, or in the case of leased properties Lessee's and Lessor's. The Sales Comparison Approach is based on the principle of substitution, which implies "the value of a property tends to be set by the price that would be paid to acquire a substitute property of similar utility and desirability within a reasonable amount of time. "/9 Given the preceding discussion, and the interactions of market participants, the Sales Appraisal Institute, The Appraisal of Real Estate, Eleventh Edition, (Chicago, 196), p.398. l� Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Comparison Approach is the most relevant approach in estimating Pair Market Rent and is the only approach used in the analysis. RECENT CITY OF NEWPORT BEACH LEASE AGREEMENTS Within the recent past, the City of Newport Beach has entered into at least two agreements for Tideland properties in Newport Harbor. In December 2002 they entered into a Lease with the American Legion for the property at 15`x' Street and West Bay Avenue and in 2000 the Balboa Bay Club exercised its option for the redevelopment of their property at 1221 W. Coast Highway. "File basic terms of the leases are summarized in the following table: LEASE SUMMARY —CITY OF NEWPORT BEACH DATA NO. LEASE LEASE BASE PERCENTAGE RENT LOCATION DATE TERM RENT ADJUSTMENT (% of Gross Revenue I/ American Legion 12/2002 25 yrs. $96,000 Every 5 years Hall Rental: 20% 215 E. 15 "' Street Greater of 10% Marina: 40% Newport Beach or 75% of CPI Storage: 50% Parkin g Lot 100% 2/ Balboa Bay Club 10 /2000 50 yrs. $1,125,000 After 97 "' Month Dues: 6.0% 1221 W. Coast Highway Every 5 years Apartment 165% Newport Beach based on 75% of Marina: 31% previous 5 years Storage: 20% average rent Charter Commission: 20% Charter: 6% Room: 5% Beverage: 5% Food: 3% Retail: 5% Miscellaneous: 10% Both of these lease agreements are for properties in Newport Harbor and both Lessee's had prior operations at the respective locations. They both control both the upland and tidelands parcels and are included as background information and for comparison to other properties located in Newport Harbor that have similar use components. The American Legion had been occupying their property at the corner of Bay Avenue and 15i1' Street since 1975 and they constructed a legion hall, marina, parking area, dry boat storage facilities and lockers. The membership is restricted to those who have served in any branch of the United States armed forces. The Lease has a 25 year term with an option to extend the lease for an additional 25 year term. The Base Rent is $8,000 per month, or $96,000 per annum. Tt was reported that they paid $23,632.59 in percentage rent in 2005. 14 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES The Bay Club lease reflects the exercise of an Option Agreement that was originally negotiated in .tune 1996 that had a five year term and one extension and they paid non - refundable option money (approx. $355,000) during the option period. The operator of the Balboa Bay chose to exercise their option in October 2000. As part of the lease, the Bay Club was required to make a substantial investment in upgrading /replacing their existing improvements and had three years from the commencement date to complete the improvements. The base rent paid by the Bay Club is $1,125,000 per year plus any amount that the percentage rent exceeds the base rent. The percentages are set forth in the previous table. The base rent was reduced by approximately one - half during the first 30- months of the lease to permit the construction /renovation of the improvements. The base rent is adjusted in the 97 °i month and then every 61" month thereafter, to 75% of the average annual rent for the previous five year period. There is a "Fair Market Rent" adjustment at the commencement of the 26th year based on a :formula set forth in the lease. The lease does include a legal description of both the upland and tideland parcels; however, there are no area calculations. JURISDICTIONAL LEASING POLICIES During the course of completing this assignment interviews were conducted with representative of most of the jurisdictions that administer /lease tidelands along coastal Southern California. The representatives were interviewed with regard to the general leasing practices along the coastal strip and the following discussion is a summary of some of the interviews conducted. County of Orange At Dana Point Harbor, which is under thejurisdiction of Orange County, two marinas — the East Basin Marina and the Dana West Marina, had been leased on a "typical" percentage rent based on the various permitted uses. In 2001 the County changed its policy regarding the "lease" of marina properties. In 2001 the County and the operator of the East Basin Marina (1,500 slips w/ eight service buildings) entered into a management agreement to operate the East Basin Martina at the expiration of the 30 -year lease. Under the management agreement the County retains the operational expertise and historical knowledge of the original lessee (as the property manager) and the revenue to the County is significantly higher than the amounts received from percentage rents under the original lease. The lease for the Dana West Marina expired in October 2005. The original leases commenced in 1975 and the Marina is comprised of approximately 990 slips, six service buildings to provide boats facilities (showers, restroom, laundry facilities, etc...) on the lower floor with the upper 15 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES floors leased to various marine related business activities including a yacht club, boat broker, marine insurance and the operators administrative offices. The County entered into a similar five -year management agreement with the former Lessee and they have increased the County revenue significantly and retained ownership of all the improvements including personal property (docks, etc...). Under the Management Agreement the County pays the manager five- percent (5.0%) of the gross receipts collected on behalf of the County from slip reins, building tenants and other business activities at the marina. The manager contracts with the vendors and pays all operating expenses on behalf of the county (subject to county approved budgets and reimbursement by the County) and is responsible for the proper handling and reporting of all financial information. The County retains ownership of all the improvements. There is a third area within the harbor (Dana Wharf Sportfishing) that is leased to the operator of the Marina in a more traditional Lessor /Lessee basis under a 10 year ground lease with a 10 year option. This lease was entered into in 2002 and includes an annual `Base" rent and percentage rent based on the gross receipts of the Lessee. They also pay 1.0- percent of their gross receipts for Common Area Maintenance. There are different percentages established for each of the permitted uses and the Base rent is adjusted every five years based on the greater of the CPI or 75% of the Lessee's average rent for the prior three years. Based on the interviews completed during the course of completing this assigriment, Dana Point Harbor is the first, and only, jurisdiction to enter into property management agreements for the operation of their tidelands. Unified Port of San Diego The Unified Port of San Diego has jurisdiction over the tidelands in most of San Diego Harbor. In the recent past they have negotiated a lease and an option to lease agreement for the development of two separate marinas along with the associated support facilities. The leases are based on fixed minimum rent that is adjusted periodically based on the changes in the Consumer Price Index (CPI) and percentage rent based on benchmarks that they established in 1994 that are identified as `Benchmark Pair Market Rent Percentage Rental Rate Study Conducted for the San Diego Unified Port District and the San Diego Port Tenants Association". This document is included in the Report Addenda for reference. Interviews with a Senior Asset Manager in the Port Real Estate Department indicates that this study was completed based on comparison with lease data for other harbors along the Southern California coast and that the Port District has no latitude in negotiating percentage rent with prospective tenants. 16 Newport Harbor Tidelands Newport Bcach, California October 9, 2006 NETZER & ASSOCIATES City of Avalon The primary uses of Avalon Harbor are associated with the mooring rentals, shore boat and charter tours. The City of Avalon charges all business engaged in the operation of boats using harbor facilities for landing, discharging loading or embarking passengers 7.0 percent of the gross receipts. They charge cruise ships $2.00 per passenger. Businesses engaged in the operation of "shore boats" are charged 7.0- percent of the gross receipts. City of Los Angeles (San Pedro) The City of Los Angeles has historically charged fees to marina operators, bait barges and other users of tideland properties a fixed rent that was based on a price per square foot of tidelands property and, when applicable, the upland rent is based on a price per square foot of land area both multiplied by a contractually established rate of return. The 'fixed rent was adjusted periodically based on a change in the Consumer Price Index (CPI). It was reported that several of their leaseliolds have recently expired or are expiring in the next few years and they are currently drafting Requests For Proposals (RFP's) that will base the new rents on a percent of the gross income. It was noted that this method of calculating rents allows both the City and the Lessee to benefit from increases in business and does not unduly penalize the lessee in times when business declines. 17 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES SECTION A - Commercial Entities @ Fixed Locations (Gas Docks, etc...) Introduction This category of properties includes those that operate at "Fixed" location with the city and are located in the tidelands. Exhibit "A" of the agreement specifically identifies the gas docks and bait and tackle stores in the harbor. There are three gas docks in the city; however, no specific "bait and tackle" stores were identified. Other properties in this category that are not specifically identified but are considered in this analysis include restaurants and the Pavilion. Location There are three gas docks operating within Newport Harbor that have been specifically identified for this assignment. While there may be other commercial entities operating from fixed locations in the harbor they were either not identified or are addressed in another section of this report. The location and description of the fuel docks, based on a combination of information provided by the City and my research of the city files, are summarized in the following table. Name Location Im rovements Hills Boat Service Inc. 813 E. Bay Avenue Newport Beach Pier, Moats, office, storage, gas pumps, refrigerated box Island Marine Fuel 406 S. Bayfront Pier, Moats, office, storage, gas pumps, refrigerated box Balboa Island Newport Landing 504 E. Edgewater Newport Beach Pier, Floats, office, storage, gas pumps, refrigerated box Description — 813 E. Bay Avenue The fuel dock at 813 E. Bay Avenue is located on the south side of the bay, just east of the Balboa Pavilion. Based on a review of the City records the fuel clock occupies tidelands that are approximately 80 -feet from the Bulkhead line to the Pierhead line and extend an additional 20- feet to the Project line, with approximately 90 feet of bay frontage. The improvements included a fuel dock with pumps, a pier with a storage area and an off ce /store. The fuel tanks are reported to be under a concrete slab below the wooden deck /pier. The Balboa Angling Club also appears to occupy a portion of the tidelands. A drawing of the improvements, taken from the City files, is included in the Addenda at the end of this section for reference. M Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER S ASSOCIATES Description — 406 S. Bayfront The fuel dock at 406 S. Bayfront is located on the north side of the harbor, just west of the Balboa Island Perry, on Balboa Island. Based on a review of the City records the fuel clock occupies tidelands that extend approximately 77 -feet from the Bulkhead line to the Pierhead line and extend an additional 20 -feet to the Project line, with approximately 11.0 feet of bay frontage. The improvements included a fuel dock with pumps, a pier with a store /office and a refrigerated box. A drawing of the improvements, taken from the City files, is included at the end of this section for reference. Description — 406 S. Bavfront The fuel dock at 406 S. Bayfront is located on the north side of the harbor, just west of the Balboa Island Perry, on Balboa Island. Based on a review of the City records the fuel dock occupies tidelands that extend approximately 77 -feet from the Bulkhead line to the Pierhead line and extend an additional 20 -feet to the Project line, with approximately 110 feet of bay frontage. The improvements included a fuel dock with pumps, a pier with a store /off ce and a refrigerated box. A drawing of the improvements, taken from the City tiles, is included at the end of this section for reference. Gas Dock Rental Survey The table on the following page is a summary of the fuel docks that were surveyed to establish the current market rent for the three fuel docks specifically identified. It should be noted that in some cases the comparable fuel docks are part of a larger (POL) marina development; therefore, the following table only summarizes the rent paid for the services directly associated with the fuel dock operation. A summary of the data follows and my conclusions relative to the gas docks follows the table. 19 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NF,TZER & ASSOCIATES Data No. Lease Lease Percent or Location Date Use T e $/ gallon I/ 1-1ieh Seas Fuel Dock 1995 Fuel Dock Fixed D: $0.0075/Gal. San Diego & Sales G:$0.04 /Gal. 2/ Pearson Marine Fuel 1994 Fuel Dock Fixed D: $0.0075 /Gal. San Diego G: $0.04 /Gal. 3/ Harbor Island Fuel Dock 1981 Fuel Dock Fixed D: $0.0075 /Gal. San Diego Rev. 2003 (POL G: $0.04 /Gal. 4/ Cortez Fuel Dock 1997 Fuel Dock Fixed D: $0.0075 /Gal. San Diego (POL) G: $0.04 /Gal. 5/ Islandia Marine Fuel 1988 Fuel Dock Percent D: 1.5% San Diego (POL) G: 3.0 % 6/ Dana Landing 1995 Fuel Dock Percent D: 1_5% San Diego (POL ) G: 3.0% 7/ Sea World Marina 1998 Fuel Dock Percent D: 1.5% San Diego Rev. 2004 (POL) G: 3.0 % 8/ Oceanside Harbor Fuel Dock 1989 Fuel Dock Percent D: 3.0% Oceanside 2005 G: 3.0% 9/ Dana Point Fuel Dock 1995 Fuel Dock Percent D: 10.0% Dana Point Ad'. 2005 G: 10.0% 10/ Alamitos Bay Marine 2003 Fuel Dock Fixed D: $0.015 /Gal. Long Beach & Marina G: $0.03 /Gal. H/ Shoreline Marine Fuels 2003 Fuel Dock Fixed D: $0.015 /Gal. Long Beach & Marina G: $0.03 /Gal. 12/ Mike's Marine 1986 Fuel Dock Fixed D: $0.015 /Gal. San Pedro Rev. 2001 G: $0.025/Gal. 13/ Rocky Point Marine Fuels 2005 Fuel Dock. Percent D: 5.5% Redondo Beach (POL) G: 5.5 %g 14/ Marina Fuel Service Rev. 1996 Fuel Dock Percent D: 6.0% Marina Del Rev G: 6.0% 15/ Dave's Marine Fuel Rev. 1993 Fuel Dock Fired D: $0.015 /Gal. Ventura & Anchorage G: $0.018 /Gal. 16/ Ventura Harbor Marine Fuel 2002 Fuel Dock Fixed D: $0.015 Ventura Annual Rev. & Anchorage G: N.Avail. 17/ McCormix 2003 Fuel Dock Fixed D: $0.04 /Gal. Santa Barbara G: $0.04 /Gal. 20 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Conclusion - Gas Dock Market Rent Based on the market data uncovered and the interviews completed, the gas docks pay rent based on a fixed minimtun amoral rent with excess rent paid based on either on a fixed price per gallon or based on a percentage of their gross sales. It should be noted that when the rent is based on a percentage of the gross sales, the sales figures are calculated exclusive of any sales or excise taxes. Ten of the 17 fuel docks are leased on a "fixed" basis that ranges from $0.0075 to $0.04 per gallon of diesel fuel and $0.018 to $0.04 per gallon of gasoline. The remaining seven leases are based on a percentage of Sales that range from 1.5- to 10.0- percent of gross sales. The following table is a summary of these figures, including the averages based on the total sampling. Fuel T e Fixed Rent /Gallon Average Rent /Gallon Percentage Rent Average °/, Rent Diesel $0.0075 - $0.04 $0.0145 1.5% - 10.0 %n 4.786% Gasoline $0.015 - $0.04 1 $0.337 1 3.0%-10.0% 5.428% The indications are that the more recent leases are based on a percentage of gross sales; therefore I have concluded that the current market rent for the gas docks should be based on a percentage of gross sales. Based on the lease data uncovered, I have concluded that the percentage that should be applied to the gross sales of both diesel and gasoline is 5.0 percent; therefore, the Current Fair Market Rent for the Fuel Docks is 5.0- Percent of Gross Sales. Conclusion - Other Commercial Entities a, Fixed Locations As previously discussed, Exhibit A to the contract for services did not specifically identify other commercial entities that operate from a fixed location; however, many of these exist in the Harbor and Tidelands, including the Pavilion and the restaurants located on the Balboa Pier and the Newport Pier. The following table is a summary of the market data uncovered that applies to different commercial entities at fixed locations that were not specilcally described in Exhibit A. Jurisdiction Restaurants Chandlery /Retail Service /Repair Grocery Off -site Bev. Coin Op Other Food Bev. S.D. Port Auth. 3.0% 5.0% 4.0% 5.0% 3.0% 3.0% 5.0% Citv of S.D. 3.0% 5.0% 6.0% 4.0% 25 -50% 10.0% Oceanside 6.0% 6.0% 6.0% 6.0% 20.0 % 6.0% Dana Point* 9.0% 9.0% 8.0% 9.0% 20.0% 9.0% Ne ort (BBC) 3.0% 5.0% 5.0% 10.0% Lon° Beach 5.0% 5.0% Port Of L.A. (San Pedro) 3.0% 5.0% 35% 3.0% L.A. County 3.0% 5.0% 3.5% 3.0% 5.0% Ventura County (Channel lslJ 3.0% 5.0% 15% 3.5% Santa Barbara 6.0% 6.0% 6.0% 1 6.0% 6.0% 01% ' Dana Point charges an additional 1.0% for Common area maintenance K 114% for parking management 21 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES As illustrated in the above table, there are some variations within the data and complete data was not available from each of the jurisdictions interviewed; however, there does appear to be a central tendency among the data presented. It should be noted that in most eased these jurisdictions are leasing both the upland and tidelands parcels. As noted above, in many parts of Newport Harbor the City only has jurisdictions over the tidelands; therefore, in my opinion the market lease rates for the various uses would tend toward the lower end of the indicated ranges. Based on the market data presented I have concluded that restaurants in the harbor have a market rental rate of 1.0- percent of the food sales and 5.0- percent of the beverage sales. Operations that include ship chandlery and retails sales have a fair mark rent of 5.0 percent of gross sales. Operations that provided boat services and repairs have a current fair market rent of 6.0- percent of gross sales. Operations that include grocery sales and the sale of beverages for off -site consumption have a fair market rent of 5.0- percent of gross sales. If any single location has multiple uses the rent should be allocated between the different uses as set forth above. 22 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Addenda— Section A 23 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NEWER &c ASSOCIATES Subiect Photographs 24 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES SECTION D The submerged tidelands in Newport Harbor that are not leased in conjunction with the adjoining upland parcel have a current market rent of 22.0- percent of the gross income. The submerged tidelands in Newport Harbor that are leased in conjunction with the adjoining upland parcel have a current market rent of 27.0- percent of the gross income. SECTION E Fair market rent for a residential pier used for "commercial" uses is 20- percent of the gross rental income. Fair market rent for a residential pier for non - commercial use is $18.00 per lineal foot per year. SECTION F Fair market rent for the 29`h Street Dock is $20.00 per lineal foot per month, or a total monthly rent of $1,140.00. SECTION G Fair market "transfer value" of the off -shore moorings is $1,000 per lineal foot. Fair market "transfer value" of the on -shore moorings is $475 per lineal foot. Monthly fair market rent for the on -shore and off -shore moorings is $7.25 per lineal foot. SECTION H Annual fair market rent for the oceanfront encroachments is $45.00 per square foot of land SECTION I The land under the Dory Fishermen's Fleet has a market value of $150 per square foot. Respectfully submitted, � i Jame N tzeT MAI Califo is Gin aI Appil1aiser No. AG003I43 1 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES A view of the gas dock at 813 E. Bay Avenue, Balboa. A view of the gas dock at 406 S. Bayfront, Balboa Island. 25 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES A view of the gas dock at 504 E. Edgewater, Balboa. W1 Newport Harbor Tidelands Newport reach, California Dock Drawings October 27 2006 NEWER & ASSOCIATES CITY OF NON CITY OF NEWPORT BERCH PACIFIC occav PROJECT VICINITY MRP IUiRA HIr, 6UrOMR HHHCH 2/ UL- LOT/7NKSG6 <liL/2 AYrrzoPOSC =v �nu.�iu�T�nti� -• /Sr wmo ocCK U'PER MY NEYPORT � — J- A 5 . . 3(`1 .., ,. /. �.... CX /STS BOTTO.vI BRY - -} �1 PPOPOSG l7 STGGL siaccT PiLG BUG/lf /L =A/�. HEST d PROFILE 9 ° = 90' �� EMT JETTY SOUNDINGS RRE EXPRESSED IN FEET RND DENOTE ELEVATIONS BRSED ON MEAN LONER LOW WRTER. A-Vz L oOC /.c %�20/�OSLO A- 00NDA7116W WAI-4L .0' 6ULKNC -`/-1 D -1 C o,vc. PA 1z1<'IAIG ,SLAB N � �. 6AY AVCNUE U U O WOoD AGCK FUEL 7-AA ItS 01,I0C�2 C0A1C2C7-C, 9LA3 G 7 %L U. S. Peo JCCT UIJL: Pk 4 '0 L WG "GL l) CL uB �1LjL V.S. u,s_1I U•S. 13LI< , O LMIE PLAN VIEW 1 v = ..or IRPPLICRNT'S NRNE 61-'I21' /-/ILL .JOB ADDRESS 81 C. RAYAVII7 DATE 2/,/-/9-'3- IMM r , rte ro o,u+ Bcq UU . I /9LAA'p q PqC/ Q1 BAY: _. L I II i r(r� 77'x_ 1 SECTION THROUGH PIER NORIZ• SCAL €* 1 "- so, VERT. 54A6E: 1 "+ 90' .. f LO�A7joN area .�wA. V/C/NIn, SXETCN wr.mr E,,; N6WPoRT BAY, CAL /FORN.W o y/ <err) Souvi�nys are eepreesas /i/ feef and de.o,`e depfhs be /ow Mean Lamer Low /Yager. Mae /man ranya of 'fide a1xknrinw1e4, /O "1 NarbL+✓ Lmes are srlm5 mot /i/ f//i9 sec�ip� aP i/erap�svf Bay � � I I I i I II I II I LY I �Y I 20' 5EGTLON THROUGH PIER WORM. 5CALEi V— 50' VERT, 5CAl-a: 0 a 50' .f i Ao o '! Q Q BALBOA n G /siA,vo u °°vnoN QcE -,qN ylown, sKemq Farr ✓mY E.si NXW^ONr BAY, CALIAAAWSA O Yr `ern c.� srw/� na�rr ",v -4 vir exgessed "'� leaf aAd de�fC sePlhr be /ow Mean Lamar Low A/aler. Ms /mein ioiryo of 'fides a�YUri�afe /y io Pf. 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Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES SECTION B - Commercial Operations (Balboa Island Ferry, Newport Bait Barge) Introduction Within Section B of the contract, two specific commercial operations "emanating from tideland properties" have been identified — the Balboa Island Ferry and the Newport Bait Barge. There are other commercial operations located in the harbor that fit into this category but were not specifically identified in Exhibit A, which include, but are not limited to: sport fishing, boat rentals, harbor tours and parasail operations. Description — Balboa Island Ferry The Balboa Island Ferry moves both pedestrians and automobiles between Balboa Island and the Balboa Peninsula. The ferry travels between Agate Avenue on Balboa Island's south bayfront and Palm Avenue on the Balboa Peninsula. The tidelands parcel on Balboa Island is identified by the Orange County Assessor as Assessor Parcel 050- 052 -30 and title is vested in the City of Newport Beach. The parcel is 50 -feet deep (perpendicular to the bulldread) with 147.07 :feet of bay frontage, and a gross area of 7,354 square feet (rounded). The tidelands parcel on the Balboa Peninsula is also vested in City of Newport Beach and is identifies as Assessor Parcel 048 -112- 13. It has a uniform depth of approximately 145 t:eet (perpendicular to the bullhead) with 50 feet of bay frontage and a gross area of approximately 7,250 square feet. A portion of this parcel is located behind the bulkhead and is dry land that is used for the access ramp to the ferry. The Assessor Plat Map for each property is included in the Addenda at the end of this section. It should be noted that the operator of the Ferry reported that due to regulatory restriction he is no longer permitted to use the section of the Balboa Island tidelands to do maintenance on the ferry boats, which he indicates should have a downward impact on his overall rent. Forry.Rental Survey The ferry is subject to a "Lease" with the City of Newport Beach and City Ordinance No. 88 -33. The Lease with the city is dated October 25, 1988 and it expires on September 30, 2013. The Lessee pays 3.0- percent of its gross sales in rent (payable quarterly) with no fixed minimum rent and is responsible for all operating expenses including, but not limited to, utilities, insurance, maintenance and repairs and taxes. The ferry also operates under City Ordinance No. 88 -33, which is a franchise that commenced November 1, 1988 and expires September 30, 2013. The Grantee (ferry operator) pays 3.0- percent of their gross receipts as "Consideration" for the franchise to operate the ferry and is responsible for all operating expenses. Overall, when the Lease and the Franchise are combined, the Lessee pays a total of 6.0- percent of thew gross receipts as rent. 28 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES The ferry is unique to Newport Harbor, as most other "ferries" in Southern California only offer transport to passengers and do not provide services to transport, vehicles. Given the unique characteristics, I have researched the "rent" being paid at other ferries that transport :just passengers. The following table is a summary of my findings. FERRY RENT SURVEY SUMMARY SEPTEMBER 2006 Percentage Data No. Type of Lease Rent Destination Location Operation T e %" of Cross) Subject Balboa Island Ferry Auto & Percentage 6.0% Balboa Island to Newport Harbor Pedestrian (combined) Balboa Peninsula Perry I/ Two Harbors Shore Percentage 31% Offshore Moorings Catalina Island Boat (combined) to shore (dock) 2/ Avalon Shore Percentage 7.0% Offshore Moorings Catalina Island Boat to shore (dock) 3I Santa Barbara.. Water Taxi Pedestrian Base+ $50 /Month Harbor to Santa Barbara Water Taxi Percentage +1.0% Stearns Wharf 4/ San Diego Bay Ferry Pedestrian Percentage 6.0% Downtown San Diego San Diego Harbor Ferry to Coronado Island 5/ Pier 32 Marina (Proposed) Water Percentage 6.0% Proposed San Diego (National City) Taxi Conclusion — Balboa Island Ferry The first rental data summarizes the information for the shore boat at Two Harbors on the west end of Catalina Island. The 20 -year lease was signed in 2002 and the operator (Two Harbors Enterprises) pays the State of California 25.0- percent of their gross with an additional 6.0- percent paid to the Catalina Island Conservancy. They have a base minimum rent of $270,000 and it was reported that they typically pay above the minimum rent. The shore boats operate year round. The second rental data is the for the shore boat in Avalon Harbor, on Catalina Island. The lease is with the City of Avalon and it was reported that it is renewed annually. The third data item is for the Santa Barbara Water Taxi, which ferry's passengers from Santa Barbara Harbor too Stearn's Wharf. The representative of the City reported that it is an amoral license agreement with a monthly minimum rent of $50 with percentage rent of 1.0- percent of the gross sales. It was further reported that the water taxi pays a low rent as an accommodation to the merchants of Stearn's Wharf (City tenants) as that it helps the tenants by getting people 29 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES (customers) from the Harbor to the Wharf and that the City enjoys the benefit of the added sales tax revenue that is generated at the Wharf businesses. The fourth data item is the San Diego Bay Ferry, which is a passenger ferry that runs between the Broadway Pier in downtown San Diego to Coronado Landing on Coronado Island. The ferry takes passengers and there is a $0.50 fee (each way) for a bicycle. This ferry runs on an hourly schedule with departures from downtown on the hour and departures from Coronado on the half - hour. There rent was reported to be 6.0- percent of their gross sales and no base or minimum rent was reported. The fifth data item is apart of a recently completed lease transaction between the Unified Port of San Diego and the developer /operator of a proposed marina at Pier 32 in the National City section of San Diego Harbor. The water taxi service has not been established and the exact route that it will service is not known; however, the lease permits a water taxi service with rent based on 6.0 percent of the gross income. Based on the market data uncovered and the interviews completed, I have concluded the current combined rent reflects the current market rent for similar operations. I have concluded that the Balboa Island Ferry has a market rent of 6.0- percent of gross sales Description — Newport Bait Barge The Newport Bait Barge is anchored near the Harbor entrance at the foot of the Corona del Mar Jetty. The bait barge is a Floating pier that is anchored to the bottom and provides live bait to the fishing fleet (commercial and recreational) in the Harbor. I have not reviewed a copy of any lease agreement for the operation of the bait barge. It should be noted that the bait barge is often referred to as a "bait receiver" as they have holding tanks that are filled by a conunercial trawler and the bait is resold to individual fishing boats. Bait barges can be either "floating" as in the case of the subject, or are "docked" and associated with another commercial entity. Bait Barge Rental Survey Most of the harbors in Southern California have at least one bait barge, depending on the size of the fishing fleet. The bait barges are either leased directly from the entity that administers manages the tidelands, or in the case of Dana Point, Redondo Beach (King Harbor) and Marina Del Rey they are leased from the operators of the larger marina projects and are a sub- lessee of the entity that administers the tidelands. The following table is a summary of my findings. 30 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES BAIT BARGE RENT SURVEY SUMMARY SEPTEMBER 2006 Data No. Lease Monthly Cost Location T e Basis Rent coop I/ Everingham Bros. Bait floating Fixed with Between 'h Scoop $20 Mission Bay (City of San Diego) Percentage 3.0 %& 5.0% Full SCOOP $30 2/ Bill's Bait/L.A. Harbor Bait Floating Fixed 10% return on Full Scoop $20 City of L.A. (San Pedro) $5.00/S .1 -t. Land Squid Scoop $50 3/ Everingham Bros. Bait Floating Fixed $110,000 base 'A Scoop $10 San Diego Harbor (U.S. Navy) w/ 4.0% annual L Scoop $20 adushnent Full Scoop $30 4/ Captain Hook's Floating Percentage 15.0 %* Not Channel Islands (Ventura Count) Available 5/ Oceanside Bait Company Floating Fixed $1,152.19 /2 Scoop $20 Oceanside Quarterly Full Scoop $30 6/ Oceanside Fuel & Mini Mart Fixed Percentage 6.0% Not Oceanside Available * County owns all improvements Conclusion — Newport Bait Barge Rental Data One is a lease between the City of San Diego and Everingham Bros. for their bait barge in Mission Bay. The operator has an expired lease and has been operating on a fixed basis for several years as a new lease is negotiated. The prior lease was a flat rate that is adjusted annually based on the CPl; however, the flat rate was established in 1987. The City would not disclose the exact percentage rate that the new lease is based on as it is still being negotiated, but noted that it is above 3.0- percent and below -5.0 ,percent for the first five years of the lease. The lease adjusts upwards by %2- percent for years six through tell and another' /2- percent for years 11 through 15. Rental Data Two is the for two bait barges in San Pedro that have older lease that expired on September 11, 2006. One of the leases commenced in 1991 and based on a 10- percent return on the market value of the underlying tidelands, which was $5.00 per square foot and the site area (barge footprint) was approximately 2,400 square feet; therefore, the base rent was $100 per month (2,400 Sq.Ft. x $5.00 /Sq.Ft. x 10% -:- 12 mos.). The second lease was commenced in 1995 and the lease was set up the same way; however, the underlying tidelands were value at 31 Newport Harbor Tidelands NeWDOrt Beach, California October 9, 2006 NETZER & ASSOCIATES $6.00 per square foot. It was noted that a new RFP is being drafted and the Port of Los Angeles (City) is going to negotiate the new leases based on a percentage of the gross income. Comparable Rental Three is a lease that was negotiated by the U.S. Navy in 2004 and applies to the Everingham Bait barge near the entrance to San Diego Harbor near the west end of Coronado Island. The lease has a fixed annual minimum rent of $110,000 in the first year with 4.0- percent amival increases. It was reported by the Navy that the base rent was established by taking the average of the prior three years sales volume and applying a 3.5- percent rate to the commercial bait sales and a 5.5 percent rate to the non- connnercial (recreational) bait sales. It was doted that the base rent is approximately 4.0- percent of the total gross sales. The contact with the Navy reported that he had been told the City of Ventura charged 5.25- percent for their bait barge and that Marina Del Rey based their bait barge lease on 3.0- percent of the commercial sales and 5.0- percent of the recreational sales; however, I could not confirm this with either entity. Comparable Rental Four is for the County of Ventura's bait barge at Charnel Islands Harbor. The County reported that they own all of the improvements (bait barge) and that an operator pays them 15- percent of the gross sales as rent. It was noted that the operator of the charter fishing company supplies the bait and operates the bait barge Comparable Rental Five is the floating bait barge (Oceanside Bait Company) in Oceanside Harbor. The City reported that they renewed their lease in 2005 (a 5 year lease) and that they pay a quarterly rent of $1,100 with annual increases that are the greater of the change in CPI or 4.0- percent. The representative for the city reported that almost everyone that leases in the harbor pays rent based on a percentage of their total revenue and that the bait barge is an exception. Comparable Rental Six is the 2005 lease (10 years) for the Oceanside Fuel Dock that also provides live bait and various other services. The rent for the entire property is based on a fixed minimum versus a percentage of sales, with the percentage rent for the sale of bait calculated based on 6.0- percent of the gross sales. It was noted that the fixed minimum rent is lower in the off season (October thru March) and higher during the high season (April thru September). The market data uncovered indicates that the more recent leases are based on a percentage of the gross income from the sale of bait and the rates may be different depending on the buyer — commercial fleet v. recreational fishermen. Most of the percentage figures reported are between 3.0- and 5.0- percent of the gross sales. Based on the market data uncovered and the interviews completed; I have concluded that the market rent for the Newport Bait Barge is 4.5- percent of total gross sales of live bait. 32 Newport Flarbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Conclusion - Other Commercial Operations As previously discussed, Exhibit A to the professional services agreement did not specifically identify other commercial operations emanating from tidelands properties; however, these operations do exist and include things like parasailing, boat rentals, charter boats and harbor cruises. The following table is a summary of the market data uncovered that applies to different commercial operations that emanate from tidelands properties that were not specifically described in Exhibit A. * When Charter (6.0"/0) is combined with beverages (5.0 %) and food (3.0 %) the sliding scale applies. ** Dana Point charges an additional 1.0% for Common Area Maintenance * ** L.A. County charges 20.0% if Charter is "Commissioned" by Lessee for benefit of sub - lessee. As illustrated in the above table, there are variations within the data and complete data was not available from each of the jurisdictions interviewed or does not apply to their specific jurisdiction. It was reported that these uses are generally in conjunction with other larger projects (marinas and upland improvements) that offer a variety of services and these categories generally are a small component of the overall income derived from the larger project. It was noted that in Dana Point the Parasailing operation pays 20.0- percent of his gross income and is essentially provided a side tie. The location of the parasail operation is very close to the harbor entrance and it is approximately 5 minutes to the harbor mouth. The City of Long Beach has a limited number of harbor cruises, including dinner cruises, and offshore tours. Some of the boats are berthed in Long Beach and are charges slip fees of approximately $12.00 per lineal foot, plus 5.0- percent of all revenue from tours and cruises, including 5.0- perccent of food and beverage service. This information was reported by two different third parties; however, I was unable to verify it with a representative of the City of Long Beach. 3 3 Boat Charters Recreation Uses Fishing Equip. Boat Rental Spurt Fishin Misc. /Other S.D. Port Authority 6.0% 6 %/5 %/3 %* 10.0% 6.0% 10.0% 6.0% 10.0% City of S.D. 7.5% 7.0% 5.0 %- 10.0% Oceanside 7.5% 7.5% Dana Point ** 6.0 % -9.0% 9.0% -20.0% 8,0% 9.0% 9.0% Newport (BBC) 6.0% 1 1 10.0% Avalon 7.0% 7.0% 7.0% 1 7.0% 7.0% 7.0% Long Beach L. A. County 6.0% * ** 6.0% 6.0% 6.0% 6.0% 1.0 %- 7.00 /i Santa Barbara 15.0% * When Charter (6.0"/0) is combined with beverages (5.0 %) and food (3.0 %) the sliding scale applies. ** Dana Point charges an additional 1.0% for Common Area Maintenance * ** L.A. County charges 20.0% if Charter is "Commissioned" by Lessee for benefit of sub - lessee. As illustrated in the above table, there are variations within the data and complete data was not available from each of the jurisdictions interviewed or does not apply to their specific jurisdiction. It was reported that these uses are generally in conjunction with other larger projects (marinas and upland improvements) that offer a variety of services and these categories generally are a small component of the overall income derived from the larger project. It was noted that in Dana Point the Parasailing operation pays 20.0- percent of his gross income and is essentially provided a side tie. The location of the parasail operation is very close to the harbor entrance and it is approximately 5 minutes to the harbor mouth. The City of Long Beach has a limited number of harbor cruises, including dinner cruises, and offshore tours. Some of the boats are berthed in Long Beach and are charges slip fees of approximately $12.00 per lineal foot, plus 5.0- percent of all revenue from tours and cruises, including 5.0- perccent of food and beverage service. This information was reported by two different third parties; however, I was unable to verify it with a representative of the City of Long Beach. 3 3 Newport Harbor Tidelands Newport Reach, California October 9, 2006 NEWER & ASSOCIATES Addenda — Section B 34 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Subject Photographs 35 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES A view of the Balboa Island Ferry landing on Balboa Island. A view of the Balboa Island Ferry landing on Balboa. 36 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES r-� D A view of the bait barge. 37 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATE'S Assessor Plat Mans — Balboa Island Perry 33 POR. SW 1 14r SEC. 35. T 6 Sr R 10 W 048- ; 5o -04 P�P1 LAa9 /RO o NEM'PORT 54Y 50-05 BALBOA r' =60' 1 O5 32 31 29 10 W "--' O6 41 1T. _ sT � vrml.rc access -- fIX'ERr III yl I 19 I I T _ a t yy BLK 2 � Ryll I 122 I -__- _- _BASEMENT I R c4. ALLEY 1 1 W > TRACT �- _l2r_1 -_ X13 i--�Ip— �.Y---�.Y ---1z --1a-- -I axzecr ms- s?- cw -aa0 '• i BA /D ?� _ ° _ m �� - -- I I 1 /AT I a Ise ISM 14 6 X3 1 12 I I /z I I BAY /DE I i 1 I O 1 BL /1^ 8 I I I t 1 I i y ^` fneo' re.ia' 3oM n' e4. C Y. M, I I I ZJ rd T 1 h I P. i e m N0. /2035 j 2 BAY N y AVENUE /o:+o BAL OA TRACT - n' O O ° 113 D Pon a( O IS O l Oq I _ - - - - - -- , r 4 5 M ....>rr BLK 0 4—' N O . 10135 1 z 1 1 5 —P... 1171, —= Z a _ 1. E NARO /NG /PARK Rmr/ 4LL£Y 5 I I f' srREEr; - _ © °BLK 7116 3 a - 2 !d rnw I I 2 O 9 U R� wrzs 14 BLK. 5 O f 4 10- a TRACT - -- - - -- „ -- -- OI I I BLK. 3 I I! a 5 �g P. M. PMr.z Q j---O -- . r+ rtNIE[I - O I1 11 AYERS` ) pa a PO: PAR. t6 I C,,,Ae LE .o BA Cy OA O - BAYSIDE M. U. J-38 BALBOA TRACT H. At. 4 -I1, CN 1949 BALBOANOAYIDE TRACT M.M. 43381. I9 NOTE - As5ES50R's BLOCK s AS5E550R'S MAP TRACT NO. 10135 M.M. 03-5, 6 IZ PARCEL NUMBERS BOOK 048 PACE 11 PARCEL P SHOWN IN CIRCLES COUNTY OF ORANGE - - P. M. 99 -11 l 1 LJ ��f =; ry. POR. NW 114. NE 114. SW 114. SEC. 35. T 6 S. R 10 N PBCPA.ac"D F@9 MAA Oi DASS POPP GY2Y. OG I QSQ- WdES NO D(/ARANfff As IC M1II4 ASSIPES l I Luarury I IL I J. A'OT f0 BE FEPkG0aCE0. E U SERVED. 4ANL4 LDUVfY A55f95¢4 1002 a TOPAZ AVENUE =0 O O®© 0 0 0 0 p 3 Sf TION R ?r z0 19 ]8 :1 16 Is lI r3 12 11 !D 9 8 J v 4 22 IJ N 1+' 26 ZI 2B 19 32 3J JP JS 36 °'° 19 1 ° - 60 e ® 3 i1 r ~O �, OPAL AVENUE a `Q 0 (D O I I 10 :9 /B /) 16 15 rI 1J 12 11 ,16 19 B % 16 1: 11 21 24 15 26 27 28 29 JO ONE Q ® ®® ®® ® ® ® ® ®O B Q 2 l $ AGATE AVENUE y, u F ® ? 04 1949 R£SUB. BALBOA ISLE SEC. ONE M.M. 6 -30 NOTE - ASSESSOR'S BLOCK 6 ASSESSOR'S MAP PARCEL NUMBERS BOOK 050 PAGE 05 SHOWN IN CIRCLES COUNTY OF ORANGE =; ry. Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES SECTION C - Balboa Yacht Basin Introduction The Balboa Yacht Basin is located on the north side of the lower Newport Bay at the end of Harbor Island Drive, in the Beacon Bay/Promontory Bay neighborhood. The location corresponds to the street address of 829 Harbor Island Drive, Newport Beach, California. Description The portion of the Balboa Yacht Basin that is being appraised consists of 161 boat slips and 10 side ties, three apartment units and 31 garages. Based on the information provided by the City, the slips range is size from 31- lineal feet to 75- lineal feet, with a minimum beam (width) of 10- feet, 11- inches and a maximum beam of 21 -feet. The length of the side ties is as follows: one at 20 -feet, one at 25 -feet, four at 32 -feet, one at 34 -feet, one at 37 -feet and one at 50 -feet. The monthly rent includes the use of a dock box, electrical cormection (service paid by tenant) and access to restrooms and showers. A reduction of the marina plan is included at the end of this Section. I was not provided access to the interior of the apartments units; however, I did measure the exterior of the units. Two of the units contain approximately 1,100 square feet with a200 square foot patio and the patio of the third unit has been enclosed and this unit has approximately 1,300 square feet of living space with no patio. It was reported by the marina manager (Lorrie Arcese) that all three units include two bedrooms and one bathroom. The units have a marina and channel view looking south toward Balboa Island. The occupants of the apartments must have a slip in the marina. The marina also includes a total of 31 garage storage units. There are 29 units that are 10 -feet wide and 20 -feet deep with a total of 200 square feet and two units that are 8 -feet wide and 20- feet deep, with a total of 160 square feet. The units include a light and the electrical service is included in the monthly rent. The Marina Manager reported that 30 of the 31 storage garages rent for $200 per month, with one unit rented for $100 per month. Comments The improvements are well maintained and are in a desirable location that provides ample parking. The marina is monitored by security cameras. It should be noted that all of the marina operators reported their rents based on the slip size, but noted that the rent is based on the greater of the length of the slip or the boat as most marina allow some overhang beyond the end of the slip. 39 Newport Harbor Tidelands Newport Beach, California October 9, 2006 N'ETZER S ASSOCIATES Marina Slip Rental Survey The following table is a summary of the marina's that were surveyed to establish the Current market rent for the subject's slips. A discussion of each data items is presented on the pages following the surrunary table. MARINA SURVEY SUMMARY SEPTEMBER 2006 Data No. Slip Sizes Rental Range Name Total 'yo (range) Monthly Bent Location Slips Occupied Lineal Feet /Lineal Foot Subject Balboa Yacht Basin 171 100% 3l'— 75' $18.00 - $23,00 829 Harbor Island Drive I/ Balboa Marina 132 100% 20' — 55' $20.00 - $31.50 201 E. Pacific Coast Highway Side ties $19.00 - $23.00 2/ Bayshore Marina 134 1000/ 15'— 83' $21.50 - $45.50 2572 Bayshore Drive 3/ Bayside Marina 102 100% 20' — 78' $28.50 - $44.50 1 137 & 1353 Bayside Drive Side ties $18.00 - $21.50 4/ Bayside Village (De Anza) 226 100% 12'— 50' $16.00 - $34.75 300 East Coast H ighway Plus Facility Fee 5/ Bel 1port Lido Yacht Anchorage 239 100% 6' — 135' $15.25 - $28.50 151 Shipyard Way 6/ Cannery Village Marina 22 100% 35'— 55' $29.10 - $47.71 700 Lido Park Drive, Suite 8 7/ Harbor Tower Marina 51 100% 20' — 69' $18.50 - $39.00 3335 W. Coast Highway 8/ Lido Marina V illagc 65 100% 36'— W $25.00 - $40.00 3400 Via Oporto, Suite 104 Side ties to 110' 9/ Newport Dunes Marina 450 100% 22' —4G $2050 - $34.00 1.01 N. Bayside Drive to/ Swales Anchorage 55 100% 30' — 45' $17.00 - $45.00 2888 Bayside Drive Side ties $24.00 End ties $14.00 H/ Villa Cove Marina 40 100% 22'— 45' $21.50 - $32.25 1099 Bayside Drive 40 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES MARINA RENTAL — SUBJECT NAME: Balboa Yacht Basin LOCATION: 829 Harbor Island Drive Newport Beach, California CONTACT: NO. OF SLIPS: OCCUPANCY: WAIT LIST: LIVE ABOARD: TIME TO HARBOR MOUTH: BEHIND BRIDGE: UTILITIES: AMENITIES: Lorrie Arcese, 949 - 644 -3034 173 100% Yes, 2 to 10 years No 25 minutes (35 if not under Balboa Island bridge) Yes - Balboa Island Bridge to east Electrical hookups, Metered usage Dock box, showers, restrooms SLIP LENGTH (Lineal Feet): MONTHLY RENT/L.F. 31 to 39 Feet $18.00 40 to 49 Feet $19.00 50 Feet and over $23.00 COMMENTS: This is the subject marina. Its location and amenities are considered good. It is only one of two marinas that have any garage -size storage units. The Balboa Island Bridge is just east of the marina between the manna hand the harbor mouth; therefore, tall boats must go west around Balboa Island to reach the main channel before heading to the harbor mouth. 41 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NEWER & ASSOCIATES MARINA RENTAL ONE NAME: Balboa Marina LOCATION: 201 E. Pacific Coast Highway Newport Beach, California CONTACT: NO. OF SLIPS: OCCUPANCY: WAIT LIST: LIVE ABOARD: TIME TO HARBOR MOUTH: BEHIND BRIDGE: UTILITIES: AMENITIES: Mary Kuhn, 949 - 721 -0111 132 100% Yes No 35 minutes No Water, Trash, Hookups, Metered Electric Dock box, showers, restrooms, telephone and cable hookups, free parking SLIP LENGTH (Lineal Feet): MONTHLY RENT/L.F. 20 Feet side tie $19.50 24 Feet side tie $19.50 25 Feet $20.00 26 Feet $20.00 27 Feet $20.50 30 Feet side tie $23.00 34 Feet $23.50 35 Ft. $23.50 42 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES SUP LENGTH (Lineal Feet): MONTHLY RENTIL.F. 38 Ft. $24.75 40 Ft. $28.00 45 Ft. $28.75 50 Ft. $31.00 55 Ft. $31.50 COMMENTS: This marina is located south of the Coast Highway Bridge at the Bayside Drive adjoining a parking lot. Driving access is convenient from Coast Highway. Amenities are similar to the subject. Access to the Harbor mouth is considered slightly inferior compared to the subject location. 43 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES O E :WL :ICY 1►:� 11111`.=117 W ., NAME: LOCATION: Bayshore Marina 2572 Bayshore Drive Newport Beach, California CONTACT: NO. OF SLIPS: OCCUPANCY: WAIT LIST: LIVE ABOARD: TIME TO HARBOR MOUTH: BEHIND BRIDGE: UTILITIES: AMENITIES: Mary Kuhn 949-72 1 -0111 134 100% Yes No 30 minutes No Water, trash and electrical hookups included. Metered electric. Dock box, showers, restrooms, telephone and cable hookups, free parking SLIP LENGTH meal Feet): MONTHLY RENT/L.F. 15 Feet $21.50 17 Feet $21.50 20 Feet $21.50 23 Feet $21.50 26 Feet $22.50 32 Feet $26.50 M, Newport Harbor Tidelands Newport Reach, California October 9, 2006 NETZER & ASSOCIATES SLIP LENGTH (Lineal Feet : MONTI-IL,Y RENTIL.F. 38 Feet 1$28.00 39 Feet J$28.00 60 Feet 1$4t.25 68 Feet J$41.25 83 Feet 1 $45.50 COMMENTS: This marina is located south of Coast Highway on the south shore of the Bayshore gated community just east of the Balboa Bay Club. The marina lies on the Lido Channel which merges with the Main Channel providing an unobstructed course to the harbor mouth. Driving entry to the marina is via the guarded community entry providing an added measure of security to the slip tenants. The quality and condition of the amenities are considered superior and this comparable is generally considered superior on an overall basis. E Newport Harbor Tidelands Newport Beach, California October 9, 2006 NEWER & ASSOCIATES lu /:l 71\/:fR5Qi 17.\ 111 IV, I'.M D1 NAME: Bayside Marina LOCATION: 1137 & 1353 Bayside Drive Newport Beach, California CONTACT: NO. OF SLIPS: OCCUPANCY: WAIT LIST: LIVE ABOARD: TIME TO HARBOR MOUTH: BEHIND BRIDGE: UTILITIES: AMENITIES: Mary Kuhn 949- 721 -0111 102 100% Yes No 15 minutes No Water, trash and electrical hookups included. Metered electric. Dock box, showers, restrooms, telephone and cable hookups, free parking SLIP LENGTH Lineal Feet): MONTHLY RENT/L.F. 20 Feet inside side tie $18.00 15 Feet outside side tie $21.50 20 Feet outside side tie $21.50 22 Feet side tie $21.50 30 Feet $28.25 35 Feet $28.50 42 Ft. $34.25 46 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER &c ASSOCIATES SLIP LENGTH Lineal Feet : MONTHLY RENT /L.F. 45 Ft. $:35.75 60 Ft. $41.00 65 Ft. $42.50 74 Ft. $44.50 COMMENTS: This marina is located east of Jamboree Road and the Balboa Island Bridge with two non- contiguous slip sites along Bayside Drive. Of the comparable marinas, this marina is closest to the harbor mouth. The quality, condition and amenities are slightly superior. The location is considered superior due to its proximity to the harbor mouth and is superior to the subject on an overall basis. 47 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES MARINA RENTAL FOUR NAME: LOCATION: Bayside Village Marina 300 East Coast Highway Newport Beach, California CONTACT: NO. OF SLIPS: OCCUPANCY: WAIT LIST: LIVE ABOARD: TIME TO HARBOR MOUTH: Nicole Conner 949 - 673 -1331 220 100% Yes No 40 minutes BEHIND BRIDGE: Yes, Coast Highway Bridge @ Lower Newport Bay UTILITIES: Facility Fee ($10.00) charged for utilities AMENITIES: Bathrooms, showers, dock box, parking SLIP LENGTH (Lineal Feet): MONTHLY RENT/L.F. 12 to 19 Feet $16.00 20 to 29 Feet $17.75 30 to 35 Feet $21.75 36 to 39 Feet $22.00 40 to 45 Feet $27.50 46 to 50 Feet 1$28.00 Super Slips 1$27.75 Double Loaders 1 $34.75 48 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES COMMENTS: This marina is located on the north side of the Coast Highway Bridge at the south end of Upper Newport Bay. The bridge- clearance limits marina users to those whose vessels can clear the fixed bridge structure depending on the tide. The marina adds a monthly facility fee depending on boat length for utilities and amenities. Electric boats are charged an additional fee ranging from $10.00 to $40.00 per month based on boat length. This comparable is considered similar in quality and condition and inferior overall primarily due to location. 49 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES MARINA RENTAL FIVE PHOTO NOT AVAILABLE NAME: Bellport Lido Yacht Anchorage LOCATION: 151 Shipyard Way Newport Beach, California CONTACT: NO. OF SLIPS: OCCUPANCY: WAIT LIST: LIVE ABOARD: TIME TO HARBOR MOUTH: BEHIND BRIDGE: UTILITIES: AMENITIES: Jamie Beuthin 949 - 673 -9330 239 100% 10 Years No 45 minutes No Electrical, telephone and cable hookups Bestrooms, showers, storage, laundry facility SLIP LENGTH Lineal Feet): MONTHLY RENT /L.F. 6 to 15 Feet $15.25 16 to 20 Feet $15.75 21 to 31 Feet $16.25 20 to 32 Feet $18.00 32 Feet $20.00 34 to 44 Feet $21.00 37 Feet $21.00 40 to 44 Feet $23.25 50 Feet $24.25 60 to 63 Feet $25.25 50 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES SLIP LENGTH (Lineal Feet : MONTHLY RENT /L.F. 73 to 77 Feet $26.50 1 10 to I')5 Feet $28.50 COMMENTS: This marina is one of the larger marinas in the harbor and includes slips that can accommodate boats up to 135 -feet in length. The slips are located around the southern perimeter of the Lido Peninsula separated by channels between the Balboa Peninsula to the south and Lido Isle to the north. The path to the harbor mouth is via the Newport Channel to the Main Channel. This comparable offers a variety of storage facilities and is the only other marina besides the subject to have garage size storage spaces. The Lido Peninsula has adjoining facilities for boat haulage, repair and dry storage. The quality and condition considered superior to the subject; however, the location is inferior. 51 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES MARINA RENTAL SIX NAME: LOCATION: Cannery Village Marina 700 Lido Park Drive Newport Beach, California CONTACT: NO. OF SLIPS: OCCUPANCY: WAIT LIST: LIVE ABOARD: TIME TO HARBOR MOUTH: BEHIND BRIDGE: UTILITIES: AMENITIES: Bud Martin 949 - 723 -8485 22 100% Yes Yes 45 minutes No Electrical included Dock box, showers, restrooms SLIP LENGTH Lineal Feet): MONTHLY RENT/L.F. 35 Foot $45.71 COMMENTS: This marina is located at the upper end of the Rhine Channel on the Lido Peninsula. It has the smallest number of slips among the comparable marinas. All slips are 35 -feet in length allowing a maximum of 55 -feet boat length and rent for $1,600 per month ($29.09 to $45.71/LF). The quality and condition is considered similar to the subject. Overall this marina is considered inferior to the subject primarily due to the narrow, busy channel it adjoins and the distance to the harbor mouth. 52 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES MARINA RENTAL SEVEN NAME: LOCATION: Harbor Tower Marina 3335 W. Coast Highway Newport Beach, California CONTACT: NO. OF SLIPS: OCCUPANCY: WAIT LIST: LIVE ABOARD: TIME TO HARBOR MOUTH: BEHIND BRIDGE: UTILITIES: AMENITIES: Joe Bergman 949 - 642 -4644 51 100% Yes Yes 45 minutes No Electric Restrooms SLIP LENGTH Lineal Feet): MONTHLY RENT/L.F. 20 to 29 Feet $18.50 30 to 39 Feet $22.00 40 to 49 Feet inside slip) $27.00 40 to 49 Feet outside slip) $29.00 50 to 59 Feet $35.00 60 to 69 Feet 1$39.00 53 Newport Harbor Tidelands Newport Reach, California October 9, 2006 KETZER & ASSOCIATES COMMENTS: This marina is located on W. Coast Highway on the east side of the Newport Boulevard (Arches) Bridge adjoining the turning basin at the upper end of the Main Channel. The marina is slightly inferior in terms of overall location due to its greater distance to the Harbor mouth. The quality and condition of the amenities and its rating overall is judged slightly inferior compared to the subject. 54 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES MARINA RENTAL EIGHT NAME: Lido Marina Village LOCATION: 3400 Via Oporto, Suite 104 Newport Beach, California CONTACT: NO. OF SLIPS: OCCUPANCY: WAIT LIST: LIVE ABOARD: TIME TO HARBOR MOUTH: BEHIND BRIDGE: UTILITIES: AMENITIES: Donna Larson 949 - 675 -8662 65 100% Yes No 45 minutes No Electric hookups Restrooms SLIP LENGTH Lineal Feet): MONTHLY RENT/L.F. Under 36 Feet (inside slips) $25.00 to $30.00 36 to 56 Feet $40.00 COMMENTS: This marina is located east of the Newport Boulevard (Arches) Bridge on the south side of the turning basin. According to the manager, this marina is primarily occupied by commercial tenants with charter and yacht broker boats. It can accommodate a maximum of 110 -foot length vessel on a side tie. The amenities are limited to rstrooms. There are no storage, shower or free parking facilities for slip tenants. On an overall basis this comparable is considered inferior to the subject. 55 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NEWER & ASSOCIATES MARINA RENTAL NINE r i NAME: Newport Dunes Marina LOCATION: 101 North Bayside Drive Newport Beach, California CONTACT: NO. OF SLIPS: OCCUPANCY: WAIT LIST: LIVE ABOARD: TIME TO HARBOR MOUTH: Wade Kerley 949 - 729 -1100 450 100% Yes Yes 40 minutes BEHIND BRIDGE: Yes, Coast Highway Bridge UTILITIES: Metered electrical, telephone. Water & satellite TV hookups included in slip fee AMENITIES: Restrooms, showers, pool, spa, lounge, kitchen, fitness center, laundry, vending machines, storage, free parking, on -site restaurant and grocery store. SLIP LENGTH (Lineal Feet): MONTHLY RENT/L.F. 26 to 28 Feet "T" Dock $19.50 31 Foot LOA "K7& "L" Docks $20.50 29 Feet or less $20.50 30 to 33 Feet $25.00 56 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES SLIP LENGTH (Lineal Feet): MONTHLY RENT/L.F. 34 to 39 Feet $26.00 40 to 45 Feet $32.00 46 Feet & over $34.00 COMMENTS: This marina is located in Upper Newport Bay at the Newport Dunes Resort. The quality, condition and amenities are superior compared to the subject. Driving access to the marina is off Coast Highway via a controlled access gate. However, among the comparable marinas, this location is probably the most remote from the harbor mouth and boats are limited by the Coast Highway Bridge clearance. On an overall basis, this comparable is considered slightly inferior to the subject. 57 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NEWER & ASSOCIATES MARINA RENTAL TEN NAME: LOCATION: Swales Anchorage 2888 Bayshore Drive Newport Beach, California CONTACT: NO. OF SLIPS: OCCUPANCY: WAIT LIST: LIVE ABOARD: TIME TO HARBOR MOUTH: BEHIND BRIDGE: UTILITIES: AMENITIES: Steven Farwell 949 -548 -1501 55 100% Yes Yes. 40 minutes No Electrical, water included in slip fee Restrooms & showers, lockers, dinghy racks, free parking SLIP LENGTH (Lineal Feet): MONTHLY RENT/L.F. End ties $14.00 Side ties up to 24 Ft. $24.00 30 Feet $17.00 40 Feet $18.00 45 Feet $20.00 61.1 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES COMMENTS: This marina is located south of W. Coast Highway at Dover Drive on the west side of the Coast Highway Bridge. The marina adjoins the Bayshores residential community. The location is considered similar to the subject in terms of driving access to the marina. The quality and condition of the amenities are judged inferior. Overall this comparable is considered inferior to the subject. 59 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES MARINA RENTAL ELEVEN NAME: Villa Cove Marina LOCATION: 1099 Bayside Drive Newport Beach, California CONTACT: NO. OF SLIPS: OCCUPANCY: WAIT LIST: LIVE ABOARD: TIME TO HARBOR MOUTH: BEHIND BRIDGE: UTILITIES: AMENITIES: Mary Kuhn 949 -721 -0111 40 100% Yes No 25 minutes (35 if not under bridge) Yes, Balboa Island Metered electrical. Water, trash and hookups included in slip fee. Restrooms, showers, dock boxes, free parking SLIP /BOAT LENGTH (Lineal Feet):- MONTHLY RENT /L.F. 22 Feet $21.50 30 Feet $24.75 45 Feet $32.25 60 Neivport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES COMMENTS: This marina is located on Bayside Drive adjoining the west side of the Newport Beach Yacht Club (formerly the Shark Island Yacht Club). The Balboa Island Bridge adjoins the marina on the east. The quality and condition of the amenities are considered similar. On an overall basis considering amenities, driving access, parking and location, this comparable is considered similar to the subject. M Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Marina Slip Rent Conclusion Based on the market data presented above and the interviews conducted daring the course of completing this assignment I have concluded that the subject slips have the following market rent (broken down by slip size and the number of slips). Slip Length (Lineal Feet Total _____Slips_ Monthly Rent /LF Under 30' 2 $20.00 30' — 34' 43 $21.00 359-391 71 $23.00 40' — 44' 32 $25.00 45' — 49' 3 $28.00 50' & Over 10 $30.00 Side Ties 10 $20.00 TOTAL 171 Apartment Rental Survey The table on the following page is a summary of comparable apartments in the subject's general market area. A brief discussion of each data items is presented on the pages following the summary table. 62 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES APARTMENT SURVEY SUMMARY SEPTEMBER 2006 Data No. Unit Room Total Monthly Name Size View Count Monthly Rent Location S .Et. (Bed -Ba ) Rent Subject Balboa Yacht Basin 1,100 Bay 2 -1 $1,700 $1.55 829 Harbor Island Drive 1,300 2 -1 $2,000 $1.54 New ort Beach I/ Anchorage Apartments Soo Bay 1 -1 $1,500 $1.88 2888 Bayshore Drive 1,500 None 2 -2 $1,450 $0.96 Newport Beach 1,500 Bay 2 -2 $1,900 $1.27 1,700 Bay 2 -2.5 $2,600 S1.53 2,200 None 3 -2.5 $3,400 $1.43 2,200 Bay 3 -2.5 $4,000 $1.82 2/ Newport Marina Apartments 1,800 131y 2 -1- Den -2 $4,100 $2.27 919 Bayside Drive (upper) Newport Beach 3/ 1031 Bayside Cove 2,114 Bay 2 -2.5 $4,795 $2.27 Bayside Cove townhouse 4/ 1508 S. Bayfront N.Avail. Bay 2 -2 $3,200 N.Av. Balboa Island (lower) 5/ 14'/ Beacon Bay N.Avail. Bay 2 -1.5 $2,750 N.Av. Beacon Bay 6/ 1033 Bayside Cove 2,114 Bay 2 -2.5 $4,550 $2.15 Bayside Cove townhouse Auartmcnt Rent Conclusion Comparable Rental One is an older apartment building located at Coast Highway and Bayshores and is slightly inferior compared to the subject in terms ofoverall condition. Comparable Rental Two is located just east of the subject along Bayside Drive. It is superior compared to the subject in terms of overall quality, condition and the amenities that it provides. Comparable Rentals Three and Six are individual condominium units in the Bayside Cove residential development that is east of the subject on Bayside Drive. The complex is gated and superior to the subject in terms of quality, condition and amenities. Comparable Rental Four is the ground floor unit in a duplex located on Balboa Island's south bay :front. The overall location, quality, condition and view are superior compared to the subject. 63 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Comparable Rental Five is located just west of the subject in Beacon Bay. it is an apartment over a garage that has a bay view similar to the subject units. The overall location is generally similar compared to the subject; however, the specific location within the larger Beacon Bay community is slightly superior. Based on the market data presented above and the interviews conducted during the course of completing this assignment l have concluded that the subject apartment units have die following market rent. Unit Type Size (Sq. Ft. Total Units Market Rent Total Month[), Rent 2 -Bed, One -Bath 1,100 2 $2,200 $4,400 2 -Bed, One -Bath 1,300 1 $2,500 $2,500 Total 3 $2,300 av $6,900 Storage Garage Rental Survey The table on the following page is a summary of comparable storage units in the subject's general market area. A brief discussion of each data items is presented on the pages following the summary table. STORAGE UNIT RENTAL SURVEY SEPTEMBER 2006 Data No. Unit Size Monthly Monthly Rent Location T e S .FtJ Rent /S .Ft. Subject Balboa Yacht Basin Garage 200 $200 $1.00 829 Harbor Island Drive Newport Beach I/ Bellport Lido Yacht Anchorage Garage "Car size" S150-S400 N.Av. 151 Shipyard Way Locker N.Av. $30 -$150 N.Av. Newport Beach 2/ Newport Dunes Marina Locker 16 (4' high) $25 $1.56 101 N. Bayside Drive Locker 16 (8' high) $45 $2.81 Newport Beach 3! Stor It Self Storage Garage 190 $289 961 W. 17th Street Costa Mesa Storage Garage Rent Conclusion Comparable Rental One is the storage facilities provided at Bellport Lido Yacht Anchorage (Marina Rental Five). The square footage was not available; however, the larger units were reported to be "car size' or roughly the size of the subject units and lease for $400 per month. 64 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES They also have various size lockers that lease For $30 to $150 per month. Overall this comparable is judged to be the best indicator of market rent for the subject storage garages. Comparable Rental Two reflects the storage lockers at the Newport Dunes (Marina Rental Nine). They offer two units, both are 16 square feet (4' x 4'); however, one unit has a four foot ceiling and the other has an eight foot ceiling. Comparable Rental Three reflects the monthly rent for a 190 square foot (10' x 19') garage at a mini - storage facility on the west side of Costa Mesa. The unit has an exterior entry door; however, it is a "man door" and not a full size garage door like the subject. The project has gated access and the security is good; however, the overall location is significantly inferior for a marine user. Based on the market data presented above and the interviews conducted during the course of completing this assignntnent I have concluded that the subject storage garages have the following market rent. Size S .Ft.) Total Units Market Rent Total Month l 12ent 200 29 $350 $10,150 160 2 $320 $640 Total 31 $348 av . $19,790 65 Newport. Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Addenda - Section C 66 Newport Harbor Tidelands Newport Beach, California Subject Photographs October 67 2006 NETZER & ASSOUATES Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES A view of the Bayside Marina apartments, with storage garage on ground level. A view of the parking area at Bayside Marina. The apartments and garages are on the left with the slips and docks on the right. 68 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES A view of the marina from the water. .GA Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Bayside Marina Slip Man 70 4S'x 179 31y m I� n d c i 1 -lw lan I� 1� 1- Iw I 11 h �N �Q, �V, :c 7Sx dr' 75'x ;Z0'' /a, -75'x °21' rlW r� �s 11= tQ V �, w w iy UU0 w h h �_ X' x x- k� x. w1 x ��`� x tz bo`xIR`4 /a„ x n` t Ij I%j I-t IW n � r II� N Ip IW I� 1� 16 - 19 0 17 I-C. IVA IS m I� n d c i 1 -lw lan I� 1� 1- Iw I 11 h �N �Q, �V, :c 7Sx dr' 75'x ;Z0'' /a, -75'x °21' rlW r� �s 11= tQ V �, w w iy UU0 w h h �_ X' x x- k� x. w1 x ��`� x tz bo`xIR`4 /a„ x n` t Ij I%j I-t IW n � r II� N Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES SECTION D - Commercial Piers Introduction This section is identified as "Commercial Piers" which are defined in Chapter 17.33 of the City Municipal Code as: ... a pier with multiple slips or floats which are rented or leased to boat owners, including any pier used in connection with apartments, marinas and yacht clubs. For purposes of this chapter, multiple piers which are adjacent to a lot or parcel of land occupied by a multi - family dwelling or dwelling units, and structures over the waters of Newport Harbor that are business or income generating in nature shall be deemed commercial. For clarification purposes only, Chapter 1733 of the Municipal Code defines a "noncommercial pier" as: ...a pier used for private recreational purposes by the owner or occupant(s) of the abutting upland property without payment of a separate rental or lease fee. Newport Harbor is unique in that the City of Newport Beach controls and administers the tidelands properties; however, they do not control and administer the upland property as the upland properties throughout most of the harbor are privately owned. In most harbors in Southern California the entity that has jurisdiction and control of the tidelands also controls the uplands parcels and they are generally developed in conjunction with each other. The marinas generally require that panting and facilities for the boat owners (showers, restrooms, etc...) be provided to maximize the rent that they can command and to meet zoning codes. There is very limited data with respect to the rent the rental rates that are paid forjust the tideland properties for the development of commercial piers and /or commercial marinas. "]'here are two marinas within Newport Harbor that are administered by the County of Orange as the Lessor and they do not include the uplands parcel. The fast is Swales Marina and the second is the Bayshore Marina, both of which are located in the Bayshores neighborhood of Newport Beach and were included in the rent survey in the previous section. According to the agent for the county both of these tidelands properties are leased for 20- percent of the gross revenue, while a county controlled property (Newport Dunes) that includes both tideland and upland parcels is leased for 25- percent of the gross revenue. It was reported that all three of the leases are somewhat dated; however, their commencement dates and overall terms are relatively similar and reflective of the overall difference associated with not controlling the uplands parcel. The operator of Swales Anchorage confirmed that they are paying 20- percent of the gross income to the County and that the County asked for 25- percent of the gross. The operator of Swales 71 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES responded that since they did not control the uplands they should pay a reduced percentage as they have to lease the uplands parcel also. Description There are several commercial piers within the harbor with 12 approved boarding locations located throughout the harbor and the List of the Cotrunercial pier permits and the approved boarding locations are included in the Addenda to this section. In general, the commercial piers located in the city are those that are not associated with a residence on the upland parcel. Commercial Pier Rental Survey The following table is a surrunary of the marina's that were surveyed to establish the current market rent for the commercial piers located in Newport Harbor. A discussion of each data items is presented on the pages following the summary table. COMMERCIAL PIER/MARINA RENTAL SUMMARY SEPTEMBER 2006 Data No. Rental Range Jurisdiction As Percent or Comments Location Cross Revenue I/ Unified Port of San Diego Base Rent or 2005 lease, base rent adjusted by CPI every 5 years, San Diego (Pier 32 ) 22.0 °A. percentage rent reviewed ever 5 -years 2/ City of Los Angeles Base Rent or Base rent calculated on 2001 leases at S 1.40 /Sq.Ft. San Pedro (East Basin) 22.5% of a land and $0.325/S .Ft. of tidelands. 3/ City of Redondo Beach 27.0% New 55 year lease commenced 2005, tenant Portofino Marina required to set aside 1.0% for capital improvements and 1.0% for renovation. 4/ City of San Die -o 20.0 % - 25.0% Rate based on older leases in Mission Bay. Also Mission Bay renegotiating all adjustments to the higher rate. 5/ Ventura County 25.0% Two marinas were re- negotiated with no exercise of Peninsula Yacht Anchorage option or lease extension. One was newly bid out Peninsula Yacht Anchorage East via an RFP. All previous marina leases were at Bahia Cabrillo Marina 20% of dross Channel Islands Harbor 6/ Point Loma Marina Base Rent or Option agreement for the development of a new 50 San Diego Harbor (Marina Green) 22.0% sli2 marina in San Diego Harbor. Conclusion — Commercial Piers Rental Data One is a recently negotiated lease (signed between the Unified Port of San Diego and a developer /operator) for approximately 175,975 square feet of land area and approximately 72 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES 724,412 square feet of water located in the Port District's jurisdiction in National City. The developer intends to develop a 250 slip marina with four buildings totaling approximately 8,650 square feet and 220 parking spaces. The lease is effective as of February 2006. Rental Data Two applies to ten marinas and anchorages (Permit Nos. 800 thru 808 & 825) located in the East Basin/Cerritos Channel area of' Los Angeles Harbor (San Pedro). The ten marinas occupy a combined 15.29 acres of land and 48.42 acres of water and represent a total of 1,451 boat slips. The permits became effective in November 1995 and each permit requires that the compensation be reset every five years. The data in the table applies to the readjustment that became effective November 2005. Each marina permit requires that the permittee prepare and implement a plan to repair, refurbish or replace older improvements and the work was to be completed by July 2006; however, due to the potential for the reconfiguration of the East Basin and Cerritos Channel, the operators of the marinas were notified to cease work on their improvements pending the decision regarding the reconfiguration. The current base rent for each leasehold is based on an annual rent of $1.40 per square foot of land and $0325 per square foot of water discounted by 25% for the Districts participation in gross receipts. For 2005 through 2010 the District receives 22.5% of the gross receipts from vessel berthing and anchorage. This rate compares with 20% from the prior five year period (2000 - 2005). Rental Data Three is a new lease agreement between the City of Redondo Beach and the operator of the Portofino Marina. The lease encumber both tidelands and uplands parcels that are developed with a marina, hotel and several retail outlets. The Lessee had previously operated the marina and it was reported by the City that they negotiated a new 55 year lease that commenced in 2005 and there was no renewal or options involved in the new lease. Rental Data Four is the rate reported by the real estate representative for the City of San Diego for older leases (over 10 years old) that are between 20- percent and 25- percent of the gross slip rentals. He also reported that they have started negotiations with all marina operators with older leases and that they are pegging the new lease rate at 25- percent of the gross slip rents. No further specifics were disclosed. Rental Data Five is the renegotiation of two marina/anchorage leases and one new marina/anchorage in Channel Island Harbor. The Lessor is the County of Ventura and they reported that the two renegotiations did not involve any options or lease extensions and that the new lease was negotiated after an RFP had been sent out to interested parties. The properties involved are the Peninsula Yacht Anchorage (PYA), the Peninsula Yacht Anchorage East and the Bahia Cabrillo Marina. The PYA East lease also incorporates the Villa Sirena 1, Villa Sirena 11 and Anchorage parcels. The Lessees will have the option to extend the leases for up to 40 -years 73 Newport Harbor Ticlelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES and they are required to replace (in phases) all the existing docks on each leasehold and failure to complete the improvements will be a default of the lease. It was reported that the County anticipates that the Lessee's will spend approximately $10- million. The County is also negotiating with the lessee of the Channel Islands Landing and Channel Islands Boatyard to consolidate two leases into a single lease. The percentage rent on new slips is to be 25% and under the current lease they are 11.0 - percent and 20.0- percent. As this transaction is still being negotiated no more specific terms were disclosed. Rental Data Sic is a recently negotiated (March 2005 & Amended February 2006) Option to Lease between the Unified Port of San Diego and a developer /operator for tidelands /upland parcel that is proposed to be developed with a 50 -space marina and associated commercial and restaurant space (26,000 Sq.Ft.), marine related offices (15,100 Sq.Ft.), marina support facilities (2,200 Sq.Ft.), a public park with amphitheater, pedestrian pier, promenade and parking lot. The upland parcel contains approximately 75,650 square feet with approximately 163,285 square feet of water. In addition to the market data presented above, two leases in Newport Harbor that were previously identified are considered relevant to the determination of market rent for commercial piers in Newport Harbor. The Balboa Bay Club pays 31- percent of its gross slip rent for its marina (commercial pier), while the American Legion pays 40- percent of its gross slip rent for its marina (commercial pier). Both leases include the upland and tideland parcels. As was previously discussed, Newport Harbor is unique in that most tidelands suitable for commercial piers in Newport Harbor are not leased in conjunction with the adjoining upland parcel. The parties interviewed during the course of completing this assignment did not have a consensus as to whether the percentage rent should be discounted because the tidelands /uplands are not leased together. The representative for the County of Orange (Mike Hentzen) that leases County properties in Newport Harbor reports that the County discounts the two parcels they have that are notjoined to their uplands parcel — Swales Anchorage and Bayshore Marina lease at 20- percent of the gross without the uplands, while the Newport Dunes is leased for 25- percent of the gross and includes the upland parcel. One party interviewed suggested that there would be no discount because the slip rental rates that could be commanded would be impacted by the inability to provide upland amenities and in absolute dollars, the rent to the jurisdiction would be lower. A second suggested that the percentage rent for the tideland parcel without the upland should be that same as a tideland /upland parcel, but that an offset should be made based on the rent required to provide 74 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES the upland amenities including parking facilities. if the amenities could not be provided the rent to the slip users would be lower, but is should not impact the percentage paid. The market data uncovered indicate that current market rent for commercial piers range from 22.0- percent to 27.0- percent of the gross slip income, with two lease in Newport Harbor at 31.0 - percent and 40.0 - percent including both upland and tideland parcels. Based on the market data uncovered and (lie interviews conducted during the course of completing this assignment 1 have concluded that the submerged tidelands in Newport Harbor that are not leased in conjunction with the adjoining upland parcel have a current market rent of 22.0- percent of the gross income. I have further concluded that the submerged tidelands in Newport Harbor that are leased in conjunction with the adjoining upland parcel have a current market rent of 27.0 - percent of the gross income. 75 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Addenda — Section D 76 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZCR & ASSOCIATES Subiect Photographs 77 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES A view of a typical commercial pier along Mariner's Mile. 1.i A view of another typical commercial pier along Mariner's Mile. 78 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NEWER & ASSOCIATES A typical commercial pier in the Rhine Channel at 280i Street. W A typical commercial pier in the Balboa neighborhood. VE Newport Harbor Tidelands Newport Beach, California October 9, 2006 NEWER & ASSOCIATES Commercial Pier Permits & Approved Boarding Locations .1 COMMERCIAL PIER PERMITS 2004 HC # Commercial Permit # Customer Name Service Address Contact Mailing Address Phone Permits Customer No. 45 CTY 018005610110300 Newport Dunes 101 N. Bayside Dr. NB 92660 Wade Kurley same 729 -1100 147040 22 CTY 01101001 De Anza Bayside Village 300 E. Coast Hwy, NB 92660 Dolly same 673.1331 10188 28, 30, 31 CP10111371 Cal Recreation - Bayside & BYC 1137 Bayside Dr., NB 92660 James Mills same 720 -2141 73207 1 CP10216011 Bahia Corinthian Yacht Club 1601 Bayside Dr. CDM 92625 John Richard same 6163 27 County 1041801 Balboa Yacht Club 1801 Bayside Dr. CDM 92625 Bob Hatch same 548 -2070 6179 46- CP10525251 Channel Reef Comm. Assn. 2525 Ocean Blvd. CDM 92625 Jeannie Kelly same 673 -1788 21653 72 CP11203251 Newport Bay Towers 310 Fernando, NB 92661 John O'Donnell 310 Fernando, NB 92661 675 - 8551 80700 69 CP11204001 Balboa Pavilion Co. 400 Main St, NB 92661 Bob Black same 673 -3014 18757 65 CP11205031 Newport Landing Marina 503 E. Edgewater Ave. NB 92662 Doug Salisbury 17042 Gillette Ave. Irvine 92614 251 -4880 12801 8 CP11205111 Balboa Boat Rentals - Vallely (Rodheim) 510 Edgwewater Pl. Balboa 92662 Vivian Vallely 508 So. Bay Front (Also send to Ralph Rodheim) 714557 -5100 x 12 143102 68 CP11206041 Fun Zone Boat Co. 600 Edgewater PI. NB 92661 Hank Wiessner same 673 -0240 80701 68 CP11207051 Fun Zone Boat Co. 600 Edgewater PI. NB 92661 Hank Wiessner same 673-0240 80701 49 CP11208131 Hills Boat Service 814 E. Bay Ave, Balboa 92661 Gary Hill PO Box 660, Balboa 92661 675 -0740 163554 42 Leases 112814 Balboa Angling Club 200 A St. Pier, Balboa 92661 Dare same 673 -6316 2477 50 CP11607201 Newport Harbor Yacht Club 720 W. Bay Ave, Balboa 92661 Tom Gilbertson -same 723 -6854 52459 44 Leases 118215 American Legion 215 15th Street, NB 92663 Linda same 673 -5070 567 32 CP11902231 South Coast Shipyard 223 21 st Street, NB 92663 Pete Stewart same 675 -2837 20672 4 CP11902271 Sullivan Trust 227 20th Street, NB 92663 Bob Sullivan same 678 -5402 921 3 CP11902301 Sea Spray Boat Yard 226 21st Street NB 92663 Paulette Pappas same 948 56 CP12021221 Etco Investments, LLC 2122 Newport Blvd, NB 92663 Jynyvy Urteaga 9952 S. Santa Monica Blvd, Ste. 200 Beverly Hills, CA 90212 310 - 691 -5511 21111 53 CP12023181 Woody's Wharf 2318 Newport Blvd, NB 92663 Ralph Furra 1418 W. Bay Ave NB, 92661 675 -0474 5252 14 CP12024061 James, Steve ? ? ?? (New owner) ? ?? 2406 Newport Blvd, NB 92663 Hooters- Steven James same 714- 914 -6711 123939 17 CP12024141 Balboa Boat Yard 2414 Newport Blvd, NS 92663 Art Lewis same 673 -6834 20684 34 CP12406111 Vista Del Lido 611 Lido Park Dr, NB 92663 Skip Smith same 675 -6244 17933 13 CP12406331 Lido Park Place Marina 633 Lido Park Dr, N8 92663 George Ross PCM Management Co., 23726 Birtcher Or, Lake Forest 92630 - 465 -2416 17960 Page 1 of 3 COMMERCIAL PIER PERMITS 2004 HC # 'Commercial Permit # Customer Name Service Address Contact Mailing Address Phone Permits Customer No. 64 CP12433001 Lido Sailing Club 3300 Via Lido NB 92663 No" Rest same 230 -5570 31582 66 CP12434001 Lido Marina Village - Marvin Eng. 3366 Via Lido, NB 92663 Donna Larson 3400 Via Oporto #104 92663 675 -8662 32140 47 CP12534561 Elks Lodge #1767 3456 Via Oporto, NO 92663 Tracy Burik same 673 -6110 32144 52 CP12829011 Waterfront Newport Beach LLC 2901 W. Coast Hwy #200, NB 92663 fah —, A'' ' °;-i 1- Robin Lombardo f'' L,yy same 256-4388 10157 67 CP12830171 Mariners Mile Professional Building 3101 W. Coast Hwy, NB 92663 Margaret Ferrigno 3191 -D Airport Loop Dr, Costa Mesa, CA 92626 714- 433 - 7300x212 96115 62 CP12831211 Newport Towers HOA 3121 W. Coast Hwy, NB 92663 Superintendent - David same 650 -0507 10259 37 CP12831311 Villa Nova 3131 W. Coast Hwy, NB 92663 Susan Emmett same 642 -7880 10265 23 Leases 1291221 Balboa Bay Club 1221 W. Coast Hwy, NB 92663 Bob Wilson same 630 -4422 9859 40 County 1291801 OCC, Intercollegiate Sailing & Rowing 1801 W. Coast Hwy, NB 92663 Brad Avery same 645 -9412 163936 41 County 1291931 Newport Sea Base 1931 W. Coast Hwy, NB 92663 Catherine Malm same 949- 642 -5031 51624 24 CP12920011 Duffy Electric Boat Company 2001 W. Coast Hwy, NB 92663 Marshall Duffy same 645 -6812 165638 15 CP12921011 Ardell Marina 2101 W. Coast Hwy, NB 92663 Dan Daniels same 642 -1626 126406 9 CP12924311 VMA Mariners Mile LLC- Homblower 2439 W. Coast Hwy, NB 92663 Mark Mural 2439 W. Coast Hwy #200 722 - 1131 x203 61640 CP12924311 VMA Mariners Mile LLC - Olympic 2439 W. Coast Hwy,, NB 92663 Mark Mumel 2439 W. Coast Hwy #200 722 -1131 x203 61640 11 CP12925051 VMA Mariners Mile LLC - Bayport 2505 W. Coast Hwy, NB 92663 Mark Murrel 2439 W. Coast Hwy #200 722- 1131 x203 61640 19 CP12925271 Goodin Family Trust 2527 W. Coast Hwy, NB 92663 Norm Goodin POB2736, NB 92659 2449832 13924 33 CP12925471 Viking's Port 2547 W. Coast Hwy, NB 92663 Don Pedersen 423 Redlands Ave, NB 92663 548 - 3024/5481202 26327 21 Cty RP12925721 Cal Rec- Sayshore Marina 2572 Bayshore Dr, NB 92663 James Mills 1137 Bayside Dr, NB 92660 720 -2141 6030 63 CP12926011 Pdmm Family Trust 2601 W. Coast Hwy, NB 92663 Roy Newhouse PO 94825, Las Vegas, NV 89193 702 - 795 -1715 143113 59 CP12926071 Marina Properties 2607 W. Coast Hwy, NB 92663 Jim Parker 2633 W. Coast Hwy, NB 92663 887 -5755 17938 58 CP12926331 Port Calypso 2633 W. Coast Hwy, NB 92663 Jim Parker same 887 -5755 71934 5 CP12927031 Newport Bay Management - Larson's Shipyard 2703 W. Coast Hwy, NB 92663 Ted Robinson 2717 W. Coast Hwy 646 -5055 112658 26 CP12927351 Dick Dock LLC (Rusty Pelican) 2735 W. Coast Hwy, NO 92663 Dave Winkler- 497 -2487, 212 -4241 668 N. Coast Hwy #193, Laguna Beach, Ca 92651 497 -2487 71929 57 CP12927511 Crows Nest - Gordon Barienbrock 2751 W. Coast Hwy, NB 92663 Gordon or Kirk Temple 2801 W. CoasbHwy #260, N8 92663 _ 723 -0300 71925 57 ICP 12928011 Crows Nest - Gordon Barienbrock 2801 W. Coast Hwy, NB 92663 Gordon or Kirk Temple 2801 W. Coast Hwy #260, NB 92663 723 -0300 71925 Page 2 of 3 t% l/ V Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES SECTION E — Residential Docks Introduction Newport Harbor is one of the largest pleasure craft harbors in California, and many of the residential properties surrounding the harbor include the ownership rights to a residential dock. The assignment is to determine the market rent for 1) residential piers that are being used for "commercial" uses, i.e. the residential property owner is leasing the dock to a third party on a monthly or quarterly basis, and 2) residential piers that are being used solely for non- commercial use. Residential Dock Rental Survey The following table is a summary of residential docks that are rented to third parties for "commercial" use (non - resident). Due to the sensitive nature of the information, in most cases the parties iiterviewed would not disclose exact location of the property or requested that it not be disclosed. RESIDENTIAL DOCK SPACE SUMMARY SEPTEMBER 2006 DATA NO. LENGTH MONTHLY MONTHLY LOCATION Lineal Feet RENT RENT /L.F. I/ Bayside Drive 85' $3,000 $35.29 Carnation Cove 2/ Bayside Drive 55' $2,200 $40.00 Near Bahia Corinthian Y.C. 3/ Evening Star 36' to 56' $3,000 $8333 to $53.57 Dover Shores Under 35' $2;500 $71.42+ 4/ Beh ind Newport Bou levard Bridge 37' $700 $18.91 Balboa Coves 5/ Lido Isle 65' $3,000 $46.15 East end of island + Electric Conclusion — Residential Pier for Commercial Use Rental Data One is an 85 -foot dock that is being offered for lease at a rate of $3,000 per month, or $35.29 per lineal foot. The owner requires an annual, pre -paid lease, and will only consider a single boat and a single lessee, regardless of the boat length. This dock is close too the harbor entrance, but is subject to wind and titles and is beyond all the commercial services in the harbor. ff Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Comparable Rental Two is a 55 -foot U- shaped dock that is located near the Bahia Corinthian Yacht Club on Bayside Drive. The owner includes the electric and water service. The owner reported that he is looking for a "low - impact" user and is not willing to allow two small boats and would like a minimum of a 35 -foot vessel. Comparable Rental Three is located in the Dover Shores neighborhood and is a "parallel" dock that will accommodate up to a 56 -foot vessel. The asking rent is $2,500 per month for a vessel 35 -feet and under and $3,000 per month for a vessel between 36- and 56 -feet. The rent includes the utilities. Comparable Rental Four is a 37 -foot dock that is 1 I -feet wide and is located in Balboa Coves. The location behind the Newport Boulevard Bridge limits the boats that it can accommodate. The monthly rent includes the water and electrical service Comparable Rental Five is a dock that accommodates a 65 -foot power boat. The monthly rent is $3,000 per month ($46.15/LF), plus electric service (separately metered). The Lessee reported that he looked at all of the marina's in the harbor and there was a wait list for a slip that would accommodate his boat and was essentially at the Lessor's mercy and believes he is paying a lease rate that is in excess of what he would be charged in a commercial marina. The rental data suggests that the rent that a third party is willing to pay is somewhat dependent on the size of the boat and the availability of the similar size space in the commercial marinas in the harbor. In general, the rental rates reflected in the above survey are for larger (over 35 -feet) piers. Based on the market data uncovered it appears that the "market rent" for private piers used for commercial purposes are generally similar to those outlined in Section C. In terms of the upland property owner's interest and the "rent" that they should be paying for the "commercial" use of the tidelands associated with a single- family residence and the upland parcel, the survey data presented in Section D pertaining to commercial piers is in the range of 20- to 27- percent of the gross income. Based on the market data uncovered and the interviews conducted I have concluded that a residential property owner that leases a residential pier for "commercial" uses would pay 20- percent of the gross rental income as market rent. For example only, the following is the calculation of the annual rent for a 40 -foot residential pier that is ]eased for "commercial' use to a third party for $25.00 per lineal foot: 82 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Monthly Pier Rent - $25 /LF x 40 Peet: $1,000 Annualized: x 12 months Total Annual "Commercial" Rent: $12,000 Annual Rate For Commercial Pier x 0.20 Indicated Amaral Rent: $ 2,400 In the above example the property owner would pay an annual rent of $2,400 for the "commercial" use of the tidelands associated with the upland residential property. The total annual rent would vary depending on the size of the pier and on the monthly rent being paid to the upland property owner and the rent for the "commercial" use of the pier would only apply while it is being rented to a third party. Conclusion — Residential Pier Non - Commercial Use A residential pier that is being used for "non - commercial" use is essentially the use of the pier by the uplands residential property owner. The market rent for this type of use is essentially equivalent to what is a reasonable fee to charge the upland property owner for the use of tidelands for the construction of a pier for the property owner's exclusive use. As a property owner within Newport Harbor, many of the upland properties have rights to the tidelands for the construction of a residential pier and the pier length and configuration varies depending on the location in the harbor. Most upland property owner's with these rights exercise their rights and construct piers in the adjoining tidelands. These piers are available for their exclusive use and they can choose to place a vessel on the pier or leave it empty. Upland property owner's that do not enjoy the rights to the tidelands and wish to maintain a boat in Newport Harbor are required to lease from one of the marina's within the harbor. The upland property owner with the right to the tidelands has the alternative to not construct a pier and go lease dock space within one of the other marinas in the harbor — and pay rent to a marina owner. As set forth in Section C of this report my monthly market rent conclusion for dock space in the harbor ranges from $20 to $30 per lineal foot; depending on the slip length. The simple average is $25.00 per Lineal foot, which I have concluded is the fair market rent to apply to all residential dock space in the harbor. The upland property owner is analogous to the marina operator rather than a marina tenant (boat owner) and the rent that the upland property owner is paying is for the use of the tidelands similar to what a marina operator would pay — a percentage of the potential gross slip rents. 83 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZCR & ASSOCIATES The appropriate return that an upland property owner would pay is less than what a commercial operator would pay as there is no "commercial" benefit to the upland property owner. A more appropriate rate of return would be what a property owner pays for a leasehold interest in a single upland residential lot or residential tideland property. Within Newport Harbor, most of the homeowners on Harbor Island lease the "filled" tidelands from either the City or the County. The rent for these tidelands is based on a formula for the revaluation that is set :forth as follows Value of the Upland Parcel x 0.375 (thirty -seven and one -half percent) x 0.09 (nine percent) This formula recognizes that the tidelands have less utility than the uplands parcel and the upland land value is multiplied by 37.5- percent and the resulting tidelands value is multiplied by a rate of return to derive the annual rent. In the case of the Harbor Island filled tidelands, the rate of return on the tidelands is 9.0- percent. This rate was established at the time of the lease; however, the rate of return varies depending on market conditions and overall return requirements. I3istorically these return requirements have ranged from 6.0- percent to 10.0- percent. In the current market, long -term return requirements are near historical lows; therefore, I have concluded that a return of 6.0- percent is appropriate to apply to residential piers being used by the upland property owner for non - commercial piers. Using the same 40 -foot pier as in the previous example the annual rent for the non - commercial use of the pier is calculated as follows: Monthly Pier Rent - $25 /LF x 40 Peet: $12000 Annualized: x 12 months Total Annual "Commercial' Rent: $12,000 Animal Rate For Commercial Pier x 0.06 Indicated Annual Rent: $720 The indicated annual rent for a non - commercial pier is $720 per year, or $18.00 per lineal foot. Based on the market data an analysis presented I have concluded that the market rent for a residential pier for non - commercial use is 818.00 per lineal foot per year. Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES SECTION F — City Owned Docks Introduction The City owns a dock located at the end of 29 °i Street along the Rhine Channel, in the Lido Village neighborhood of the City. The dock is commonly referred to as the "Schock Dock" as Schock Boats has a License Agreement with the City that encumbers the dock. Based on a review of the City files and the License Agreement that encumbers the dock it includes approximately 57 -feet of dock with floats and an access ramp. Schock conducts a boat sales, service and repair business at 2900 Lafayette Avenue and owns the commercial properties on both sides of the 29`x' Street Street end. License Agreement As noted above, the dock is encumbers with a License Agreement that is summarized as follows: Licensor: City of Newport Beach Licensee: Schock Boats, a California Corporation Date: December 14, 1998 Term: May 1, 1998 to June 30, 2006 Services By Schock: Maintain the dock in safe and working condition Maintain vehicle access on surrounding streets Prohibit vessels from being moored overnight Restrictions: Shock agrees that the dock is and continues to be public property and that the public shall not be denied access to and use of dock. Base Rent: $6,000 per year Rent Adjustment: Conunencing July 1, 2001 fees adjusted to rental rate per lineal foot of comparable facilities. The Licensee is responsible for insurance for the dock. Commercial Dock Rental Survey Based on a review of the above referenced License Agreement, the rent for the dock space is based on the price per lineal foot for comparable facilities. The table on the following page is a summary of the conunercial dock space surveyed to establish the current market rent for the subject dock. A discussion of each data items is presented on the pages following the summary table. PR Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES COMMERCIAL DOCK SPACE SUMMARY SEPTEMBER 2006 DATA NO. LEASE LENGTH MONTHLY LOCATION TYPE (Lineal Feet) RENT /L.F. I/ Mainer's Mile Direct 35' $24.29 Newport Beach Side Tie 2/ 2804 Lafayette Direct 50' $30.00 Newport Beach 3/ 28 "' Street Marina Direct Various 30 -40 Feet@ 520.00 /1-F Newport Beach Over 40 Feet @ $24.00 /LF 4/ Cannery Village Marina Direct Various 30 -40 Feel@ $20.00 /LF Newport Beach Over 40 Feet a $24.00 /LF 5/ Lido Marina Village Direct Various Under 36'@ $25.00 - S30.00 /1,F 3400 Via Oporto 36' — 56'@ $40.00 /LF Lido Village 6/ Lido Marina Village Sub -lease 40' S47.50 3400 Via Oporto Lido Village 7/ 27 "' Street Sub -Lease 68' $55.88 Newport Beach 8/ 2300 Newport Boulevard Sub -Lease 100' $40.00 9/ 401 -2 &.401 -3 Edgewater Sub- Leases 45' $44.44 Newport Beach 45' $44.44 Conclusion — Commercial Dock Rental Data One is a 35 -foot side tie in the Mariner's Mile neighborhood of Newport Beach. Like the subject, Rental Data Nos. Two, Three and Four are all located in the Rhine Channel in the Lido Village neighborhood and are most similar compared to the subject in terms of locational characteristics. Rental Data Five was included in Section C and reflects the fact that most (reportedly 85 %) of the slips in the Lido Marina are leased to commercial users. The overall location is slightly superior compared to the subject. Rental Data Six is a sub -lease within the same marina. 10.6 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Rental Data Nos. Seven, Eight and Nine are all sub - leases of a single slip within other commercial marinas in Newport Harbor. As these are sub -lease they are given secondary consideration in estimating market rent for the 29`x' Street Dock. All of the rental data are commercial docks /slips that are leased on an "exclusive" basis, unlike the subject, which has a requirement in the License Agreement that "the public shall not be denied access" and the licensee is required to get the City's permission for overnight mooring. Based on my limited observations during the course of completing this assignment, the fact that the dock is available for public use is not well advertised and it appears that the Licensee has fill use of the dock. Given the restrictions on use of the dock I have concluded that the market rent is at the low end of the range. The rental data uncovered indicate a range for the most comparable dock space (Data Nos. 1, 2, 3 & 4) from $20.00 to $40.00 per lineal foot. Based on the market data presented and the lease restrictions I have concluded that the 29'x' Street Dock has a monthly market rent of $20.00 per lineal foot, or a total monthly rent of $1,140.00. 87 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NEWER & ASSOCIATES Addenda — Section F m Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Subject Photographs Em Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES A view of the 29'" Street Dock, with two boats on it. Ell Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES 29th Street Dock Drawing 91 CI r I I I ,I I I II . It '2 ; /' -o? 900 � U I e E N T o• <eoA s. Q p e e q OG ^60• J PAL 1, T�eev Y p r,cg .. L Ce��N� sp" w. -d VICINITY SKETCH w " /V6 ^r i•�,., NdWie Rr BAY CAL WORNIA y / R Jerry w soan01'495 ore expressed in faef ono, dbnofe dap/A5 be /ow Meon Lower Low Wofer. Morr.+ ron9e e/ / /o'e Horbor /.ices ore cPYob/ished d+ IA;S . S.eC fieh of Newoorf Box La101effe Ave, / /r3©� /AME 'S�NOLK 80>ri'TS X900 LAT-AYFT r M 3 BL,r, 3a8 7RAc CroA,SU)IFT OATS Newport Harbor Tidelands Newport Beach, California October 9, 2006 NEWER & ASSOCIATES SECTION G — On -Shore and Off -Shore Moorings Introduction This section of the report applies to the "transfer value" and market rent for both on -shore and off -shore moorings within Newport harbor. There are approximately 1,235 on -shore and off- shore moorings in Newport Harbor. The offshore moorings are located at ten locations throughout the harbor with two additional locations located by the Newport Harbor Yacht Club and the Balboa Yacht Club. These two locations are for the exclusive use of the yacht club membership. The on -shore moorings are located surrounding Balboa Island and Newport Island, on sections of both the north and south sides of Lido Isle and along various sections of the bay side of the peninsula from Peninsula Point to 20 °i Street. Two maps showing the location of the moorings are included in the Addenda to this section. City Mooring Regulations The city of Newport administers the moorings through the County Harbor Patrol, and the following is a summary of the mooring regulations: 1. Telephone numbers and addresses of all mooring permittee must be up to date at all times through the Harbor Patrol Office. 2. It is illegal to rent your mooring to anyone. If said mooring is unoccupied, it may be temporarily assigned as a mooring for guest vessels by the City Manager, via the Harbor Patrol. 3. Mooring permittees may not loan their moorings out to anyone without a letter of permission, submitted prior to the vessel going on the mooring, and approved by the Harbor Patrol. Note: A mooring may only be loaned out for 30 days out of it 90 -day period. 4. Vessels on moorings must be registered to the permit holder and assigned to the mooring permit through the L- Iarbor Patrol. 5. Only one boat is allowed on a mooring at any one time. 6. Spreader lines must be adequately marked and buoyed at all times. 7. Living aboard a vessel on a mooring, without a City permit, is a violation of the Newport Beach Municipal Code. 8. All offshore mooring buoys and shore mooring post must be painted white with the mooring number painted in black, 3" block letters, clearly visible. 9. Mooring pendants must be kept in good condition at all times. 10. Boats over 18' in overall length are not allowed on shore moorings. 92 Newport Harbor Tidelands Newport Reach, California October 9, 2006 NETZER & ASSOCIATES IL No boats with a fixed keel, fixed rudder, or fixed underwater propulsion apparatus or gear are allowed on shore moorings. 12. Moorings may not be vacant for a period longer than 90 days. 13. Off -shore moorings have been rated for a maximum size and camiot be decreased. VIOLATION OF MOORING REGULATIONS MAY RESULT IN THE CANCELLATION OF THE MOORING PERMIT In addition to the above regulations mooring permits are not transferable, unless the vessel that occupies the mooring is sold and then the mooring permit can be "transferred" with the sale of the vessel. According to the Harbor Permit Policy, mooring Fees for both onshore and offshore moorings shall be set annually by Resolution of the City Council Moorine "Sale" Survev As noted above, the "sale" of on -shore and off -shore moorings is not permitted in Newport Harbor. They may be transferred if the registered mooring permit holder sells the registered vessel, then the mooring permit can be "transferred" to the new vessel owner, who can then remove the vessel and place a new vessel on the mooring. In some cases, the vessel that transfers has virtually no value, or if the vessel has a motor and fuel tanks the vessel may have be a burden to the mooring due to the cost associated with removing the vessel and the environmental concerns associated with the removal of the fuel and oil. Given that the "sale" of a mooring is not permitted, gathering data relative to the "sale" of on- shore and off -shore moorings was difficult as most of the parties interviewed would not disclose any terms of the "transfer" for fear of loosing the mooring. In the context of this appraisal, all of the "sales" discussed in this section involve the sale of a vessel and the permitted transfer of a mooring permit. In interviews with people that have transferred several moorings over the years, it was noted that several factors impact the "value" of a mooring, including the following: 1. Location of the mooring within the harbor (sheltered v. not sheltered); 2. Location within the mooring field or group (interior v. edge); 3. Size (length) of the mooring; 4. Balance in supply and demand for moorings and slip space. One of the patties interviewed noted that in 2001 through 2003/04 the average price of a mooring was from $8,000 to $12,000, which equated to approximately $200 to $300 per lineal foot for an offshore mooring. On shore- mooring did not transfer that often but when they did they transferred for $1,000 ($55.55/LF) to $5,000 ($277.77/1,F). The relatively low prices were due to 93 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES limited demand for moorings at that time. As the following table will show, the current transfer values have appreciated substantially and tend to be in the $1,000 per lineal foot range. A review of City records indicates that in the second half of 2004 approximately 42 mooring transferred, in 2005 approximately 74 moorings transferred and through June 2006 approximately 32 moorings transferred, excluding those to related parties. Some of the transfers were boat "trades: between existing permitees (i.e. vessel at J -101 trades with vessel at J -102). The following table is a summary of the mooring "transfers" that information was disclosed. A discussion of each data items is presented on the pages following the summary table. MOORING TRANSFERS SEPTEMBER 2006 DATA NO. BOAT LENGTH TRANSFER PRICE LOCATION (Type/Length) (Lineal Feet ) PRICE /L. F. I/ 1-1 Group N.Av. 40' $54,000 $1,350 Lido Isle Outside 2/ Not Disclosed 50' 60' $907000 $1,500 Corner 3/ Not Disclosed 1987 Apollo 40' $55,000 $1,375 S ortfisher 4/ No Disclosed Cal 34 35' $53,000 S1,514 Sailboat (askin 5/ FI Group Islander 36 40' $50,000 $1,250 Lido Isle 6/ J Group 40' motor 40' $38,000 $950 Lido Isle Boat 7/ J or 1-1 Group Not 40' $50,000 $1,250 Lido Isle Disclosed Outside (asking) 8/ DGroup Not 45' $49,500 $1,100 Balboa Island Disclosed 9/ Not Disclosed Not 30' $30,000 $1,000 Disclosed 10/ A Group 1997 40' $58,000 $1,450 Peninsula Point Catalina 25 ( askin. I I/ 1-1 Group Not 65' $30,000 $46150 Lido Isle Disclosed Inside 94 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Conclusion — Mooring Transfer Value The data presented above is for off -shore moorings only and includes both completed "transfers" and the prices being asked to transfer a boat and mooring. The market data is somewhat incomplete as most of the parties interviewed were very hesitant to discuss the transfer and would only give partial information. Transfer One is a 40 -foot outside mooring that transferred with a boat that was reported to be of nominal value. It was reported that this is a prime mooring due to its accessibility on the outside of the H —Group in a relatively sheltered section of the group. Transfer Two is a 50 -foot corner mooring that transferred with a 50 -foot boat. It was reported that the transferee valued the boat at approximately $20,000 and the mooring was worth $70,000, or approximately $1,166 per lineal foot. The mooring reportedly is in a sheltered area with very easy access and the transferee was reportedly had an "empty" 50 -foot mooring and needed a place for a 60 -foot boat. Transfer Three is the transfer of 40 -foot mooring with a 1987 Apollo Sportfisher. Neither the location of the mooring nor the condition of the boat was disclosed. Transfer Four is the current offer to sell a Cal 34 sailboat along with the transfer a 40 -foot mooring. The location of the mooring was not disclosed. Transfer Five is the sale of an Islander 36 that included a 40 -foot mooring that is located in the H Group. The specific location within the group was not disclosed and it was noted that the boat had "some value ". Transfer Six is the sale of a "nice" 40 -foot motor boat with a 40 foot mooring that is located in the J Group. The transferee noted that the boat has value and that this was a "good deal' given the quality and condition of the boat. Transfer Seven is the current offer of a 40 -Foot outside mooring in either the .1 or H Group. The type of boat on the mooring was not disclosed and it was indicated that it would likely be removed. Transfer Eight is the transfer of a 45 -foot mooring in the D Group on the north side of Balboa Island. The location reportedly is sheltered from the winds and is a desirable location. It was noted that the transferee has replaced the vessel. Transfer Nine is a 30 -foot mooring that recently transferred with a boat; however, the type and condition of the boat and the location of the mooring was not disclosed. 95 Newport Harbor Tidelands Newport Beach, California October 9, 2006 N'ETZER & ASSOCIATES Transfer Ten is the current listing of a 25 foot sailboat that includes a 40 -foot mooring. The boat was built in 1997 and is reported to be in good condition. This mooring is located in the A Group near Peninsula Point. Transfer Eleven is the transfer of a 65 -foot mooring with a virtually worthless vessel. The transferee reportedly had transferred it to the transferor several years ago when he did not need a 65-foot mooring. The transferee has subsequently acquired a larger boat and needed to acquire a boat on a large mooring so that he could moor his larger boat. It was reported that this transfer may be artificially low due to the prior relationship between the parties. All of the "transfers" are for off-shore moorings and they are located throughout the harbor. The transfers included boats that had some value and others that have little or no value to the transferee. The limited market data uncovered supports the information gather from the interviews completed that the "transfer" value of the average mooring in the harbor is approximately $1,000 per lineal foot. It should be noted that depending on the location (sheltered v. non- sheltered) in the harbor, the location within the group (interior v. outside) and the sire (lineal feet) of the mooring the value may be higher or lower than the concluded Transfer value of $1,000 per lineal foot; however, when all of the moorings in the Harbor are considered in bulk I have concluded that the market "transfer value" of the off -shore moorings is S1,000 per lineal foot. I did not uncover the transfer of any on -shore mooring were the sale of the boat could be confirmed. The on -shore moorings are not as desirable as the off -shore moorings due to the restrictions on the length (18 -feet) and type of (no boats with a fixed keel, fixed rudder, or fixed underwater propulsion apparatus or gear) vessel permitted. The motivation of the owner of the upland parcel adjacent to an on -shore mooring is also a factor in the limited transfers uncovered. If the upland property owner holds the mooring permit they are unlikely to transfer it due to the loss of control of what is in the tidelands beyond their property and the potential impact on the view. The interviews conducted indicate that on -shore moorings will typically transfer with a vessel that barely meets the specifications required to maintain a mooring permit and that they typically transfer for $7,000 to $10,000, which equates to $389 to $556 per lineal foot. It was reported by one party that they had heard of one on -shore mooring transferring for $12,000 to a nearby upland property owner that wanted to control the view from their property. Based strictly on the interviews conducted 1 have concluded that the average on -shore mooring has a market "transfer value" of 5475 per lineal foot. 96 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NEWER & ASSOCIATES Mooring Rental Value As set forth in the City Mooring Regulations it is specifically emphasized that it is illegal to rent your mooring to anyone. The exceptions to this regulation are the off -shore mooring fields that are controlled by the Newport harbor Yacht Club and the Balboa Yacht Club. Although no formal agreement was uncovered, the yacht clubs are permitted to lease moorings to their club members. According to the City, there is no city policy with regard to these two mooring groups and this arrangement has been around for as long as anyone can remember. The Balboa Yacht Club has a total of 70 moorings in the basin in front of the Yacht Club, which is located at 180113ayside Drive. They lease their mooring for $7.25 per lineal foot and report that they are virtually 100 percent occupied, 100 percent of the time. The Newport Harbor Yacht Club is located at 720 W. Bay Avenue and has moorings that range from 20 -feet to 80 -feet. It was reported that they lease them to their members for $7.25 per lineal foot. They also report that they are 100- percent occupied. None of the other parties interviewed would even admit to lutowing of any mooring that is being rented by the permit holder to a third party and would not speculate as to the potential lease rates. It was noted that some permit holders will become a "partner" in a boat and register the in their name and the partnership pays them a monthly fee to maintain the mooring permit. These "partnerships" are usually set up with the mooring permit holder having a I- percent "partnership" interest and the boat owner having a 99- percent "partnership" interest. The majority owner pays the minority owner for the use of the mooring and the payments within partnerships are negotiated individually by the partners. I was unable to uncover any fees being paid to the mooring permit holder within one of these partnerships. Based on the lese rates being paid at the two yacht clubs, I have concluded that the moorings within the harbor have a monthly market rental rate of $7.25 per lineal foot. "['his applies to both the on -shore and off -shore moorings. 97 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Addenda — Section G Newport Harbor Tidelands Newport Beach, California October 9, 2006 NGTZCR & ASSOCIATES Subiect Photographs .. 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Ta r ay YY°.� o u < Q v R G' .y gt M=� n g LL cg 6 7$ n 'r v r -�� �. s f✓ >i+ =^ the 1 d r m d vi b ri m of -. 3' r Y '' ` t Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES SECTION H — Oceanfront Encroachments Introduction Much of the southern boundary of the City is comprised of the beaches along the Newport Peninsula and West Newport extending from Newport Harbor and the Wedge .lefty on the southeast to the Santa Ana River Channel on the northwest. Along portions of this stretch of beach there is no boardwalk or other man-made barrier between the houses and the beach. In certain areas, residential property owners have extended their yards beyond their property line and created an encroachment onto the beach. The two locations that the encroachments occur most frequently is in West Newport from 36`x' Street where the boardwalk ends to the Sunnnit Street at the Santa Ana River Jetty and in the general area of Peninsula Point from the E Street to the end of the Peninsula at the Wedge Jetty. Based on a review of the City data base, the encroachments extend into the public right of way (beach) anywhere from 1 -foot to 15 -feet for the width of the lot. Depending on the location, individual lot widths range from 25 -feet to 40 -feet; however, in a few locations property owners have combined more than one legal lot and they have more beach frontage. Most of the property owners that have an encroachment pay an annual fee that ranges from $308 to $925, which is set forth as follows: De Yh of Encroachment Annual Fee I -foot to 2.49 -feet $308 2.5 -feet to 4.99 -feet $308 5 feet to 7.49 -feet $462 7.5 -feet to 0.99 -feet $616 10- feet to 15 -feet $925 The City's summary of the address, depth of the encroachment and encroachment fee has been retained in my file. It should be noted that the individual encroachments have not been measured as a part of this appraisal assiginnent and the land values presented are for a "global" analysis of all the encroachments and may or may not be specific to any single parcel. The Newport Beach City Council voted on August 12, 2006 to hire a surveyor to complete a survey of the encroachments along the beach front in the Peninsula Point neighborhood. Beachfront Land Sales The following table is a sununary of the beachl.'ront residential land sales or nominally improved lots located between Peninsula Point on the southeast and West Newport and the Santa Ana River Jetty on the northwest. 102 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES RESIDENTIAL LAND SALE SUMMARY SEPTEMEER 2006 DATA NO. SALE SITE BEACH TOTAL PRICE LOCATION DATE AREA FRONTAGE SALE /SQ.FT. ASSESSOR PARCEL DOC. NO. (S .Ft. ) PRICE /L. F. 1/ 6410 W. Oceanfront 113012003 2,250 30 Feet $1,800,000 $800.00 West Newport 03- 116972 $60,000 045- 093 -08 2/ 3204 W. Oceanfront 10/9/2003 2,250 25 Feet $1,800,000 $800.00 West Newport 03- 1242294 (Boardwalk) $72,000 423- 343 -17 3/ 7104 W. Oceanfront 11/18/2003 2,252 30 Feet $2,500,000 $1,110.12 West Newport 03- 1401604 $83,333 045- 024 -06 4/ 6904 W. Oceanfront 5/27/2004 2,252 30 Feet $2,200,000 $976.91 West Newport 04- 476261 $73,333 045- 032 -06 5/ 4508 Seashore Drive 8/3/2004 2,550 30 Feet $2,500,000 598039 West Newport 04- 700229 $83,333 424- 442 -02 6/ 5705 Seashore Drive 9/30/2004 2,430 30 Feet $3,800,000 $1,563.79 West Newport 04- 875908 $126,667 424- 482 -04 7/ 2060 E. Oceanfront 12/17/2004 3,200 40 Feet $5,700,000 $1,781.25 Peninsula Point 04- 1120786 5142,500 048 - 262 -I6 8/ 1018 W. Oceanfront 4/27/2005 4,100 40 Feet $3,750,000 $914.63 Newport Beach 05- 318795 (Boardwalk) $93,750 047 - 252 -19 9/ 2156 E. Oceanfront 8 /22/2005 3,1180 40 Feet $5,300,000 $1,522.99 Peninsula Point 05- 6577746 $132,500 048 - 282 -22 10/ 3911 Seashore Drive 1/31/2006 2,125 25 Feet 53,700,000 $1,741.18 West MI wport 06 -71279 $148,000 423 - 326 -03 it/ 3400 Seashore Drive 2/16/2006 2,700 25 Feet $3,750,000 $1,388.89 West Newport 06- 109983 (Boardwalk) $150,000 423 - 334 -09 103 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Conclusion — Beachfront Land Value The comparable market data is analyzed on an absolute basis, a price per square foot of land area and a price per front foot. The sale data show a wide range in absolute terms from $1,800,000 to $5,700,000, a range from $800.00 to $1,741.18 per square foot of land area and $60,000 to $150,000 per front foot along the beach. All of the sales included above are nominally improved and any improvements located on the site, if not already razed for redevelopment of the site, are best described as "tear downs ". With the exception of Sales Two, Eight and Eleven, all of the sales area located along sections of the beachfront that do not have a boardwalk, and are judged to be most similar to the properties that have an encroachment. In order to estimate the market value of the subject as of the date of value, an analysis of the change in market conditions from the date the comparable property sold to the date of value is warranted. The preferred method of quantifying the change in market conditions is the "matched pairs" analysis. Using the "matched pairs" analysis to measure the change in market conditions attempts to isolate the difference in market value (price) by comparing properties with otherwise similar characteristics that sold at a different time, or under different market conditions. The most reliable measure is the sale and subsequent resale of the same property, where no improvements have been made to the property between the two sale dates. In theory, if the sale properties have similar physical and locational characteristics any difference in market value can be attributed to the "changing market conditions ". A second method of measuring and quantifying the changing market conditions is an analysis using the median price for detached single - family residential units in the subject's Gip Code area (92663) during the time period between the comparable sale dates (January 2005 through February 2006) and the date of value (September 2006). It should be noted that the most recent figures available as of the date of this report are for August 2006. The median figures are based on the prices provided by DataQuick Information Services. The median prices are presented in $1,000's and the price per square foot is the actual median figure. I have also included the median figures for Orange County as a whole for the same time periods. The following table is a summary of the analysis for changing market conditions. 104 Time Period A Time Period B Absolute Difference B —A =C Percentage Difference C -: -A =D Monthly Percentage D -: - C Date 1/2003 8 /2006 44 months N.A. N. A. Median 1-Ionic Price 92663 $1,000 $1,703 $703 70.3% 1.60% Median Price /Sq. Ft. (92663) $695 $1,113 $418 60.1"/ 137% vledian Home Price (Count) $395 $685 $290 73.4% 1.67% Median Price /S .Ft. (County) 1 $241 $435 $194 80.5% 1.83% 104 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZEI2 & ASSOCIATES The analysis of the median detached home price within the subject "Lip Code area reflects that over the time period covered there was relatively uniform appreciation between the subject market area and the county as a whole. Given the analysis of the change in market conditions using the median price and median price per square foot analysis, I have concluded that the sales warrant a non - compounded adjustment of 1.5- percent per month to reflect the change in the market conditions. Based on the analysis presented, all of the sales are adjusted by 1.5- percent per month from the date of sale through August 2006, the most recent date that the statistics are available. It has generally been recognized that the market appreciation is slowing and the market has begun to level off. The adjustment for changing market conditions is presented in the following table. Sale No. Sale Price Sale Date Months Total Adjustment i 1.5 % /Mo. Adjusted Price (rounded) Adjusted Price /Sc.Ft. Adjusted Price /Front Foot 1 $1,800,000 1/30/2003 44 66.0% $2,988,000 $1,328.00 $99,600 2 $1,800,000 10/9/2003 34 51.0% $2,720,000 $1,208.89 $108,800 3 $2,500,000 11/18/2003 33 49.5% $3,735,000 $1,658.53 $124,500 4 $2,200,000 5/27/2004 27 40.5% $3,100,000 $1,376.55 $103,333 5 $2,500 000 8/3/20046 24 36.0% $3,400,000 $1.333.33 $113,333 6 $3,800,000 9/30/2004 23 34.5% $5,100,000 52,103.29 $170,000 7 $5,700,000 1 12/17/2004 1 20 1 30.0% $7,400,000 1 $2,312.50 $185,000 8 $3,750,000 4/27/2005 16 24.0% $4,650,000 $1,134.15 $116,250 9 $5,300,000 8/22/2005 12 18.0% $6,ti0000 $1,795.97 $156,250 10 $3,700,000 1/31/2006 7 10.5% $4,090,000 $1,924.71 $163,600 11 $3,750,000 2/16 /2006 6 9.0% $4,090,000 $1,514.81 $163,600 After adjusting the sale for the change in market conditions, the comparable sales reflect an absolute range is from $2,720,000 to $7,400,000, the adjusted price per square foot indications range fron $1,134.15 to $2,31.2.50, and the adjusted price per 'front ' foot indications ranging from $99,600 to $185,000. Typically with beach front or waterfront property the most reliable measure is the price per front foot comparison; however, in the case of the subject sites, the encroachments do not extend the entire depth of the property, rather they extend from approximately 1 -foot to 15 -Feet out beyond the beachfront property line into the public land. Given the nature of the encroachment, the price per square foot comparison is more appropriate than the price per front foot comparison. As previously noted, the analysis does not apply to any specific property; rather it applies to all properties along the beachfront between the Wedge Jetty on the southeast and the Santa Ana River Jetty on the northwest. The market data and the interviews conducted suggest that in general land values can vary based on the location along the beachfront and the factors to consider include, but are not limited too, the depth of the beach, the location along the beach front, traffic patterns (on an alley vs. a street), availability of public parking and access to 105 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES commercial facilities (restaurants, stores, etc..). Lot specific factors to consider are the difference between corner and an interior lot, lot depth, amount of beach frontage and zoning (some lots permit 2 units). ht the final analysis, all of the sales are given generally equal emphasis and I have concluded that the beachfront lots have a market value of $1,500 per square Moot. This market value conclusion is a "global" conclusion as it applies to all the properties on the beachfront regardless of the influencing factors discussed above. A more specific analysis may be warranted if a property has a unique feature such as excess width along the beachfront (more than 25- to 40- feet), or a depth that is more or less than the "typical" depth of approximately 75 -feet to 100 -feet. Based on the market data presented, I have concluded that the beachfront lots have a market value of $1,500 per square foot; however, the land within the e7croaclmnent cannot be used for construction of permanent improvements and cannot be used to measure setbacks for construction purposes and its primary function is as additional yard area. Given that the overall utility is limited to yard area, 1 have concluded that the land value should be conditioned by a factor of 50- percent; therefore, the value of the land within the encroachment area has a market value of $750 per square foot. Residential Return Rate to Apply to Land Value The second component of estimating the market rent for the land that is being utilized by the residential property owner's along the beachfront is the appropriate rate of return to apply to the market value of the land. As I did not uncover any recent arm's length lease transactions to compare to the encroachments, I have looked at historic data for other leasehold properties in Newport Beach and the surrounding communities. In the City of Newport Beach, there are residential properties in Newport Harbor that lease the filled tidelands either form the City or the County. In particular, most of the residents of Harbor Island lease filled tidelands and the leases with the County and the City include re- adjustment provisions based on a formula for the value of the land with a 9.0- percent rate of return applied to the land value. Other tracts within the City that were originally developed as leaseholds include Irvine Terrace, Newport Shores, Beacon Bay and portions of Bayshores, Harbor View Homes and Lastbluff. In most cases the property owner's have had the opportunity to purchase the underlying leased 'fee interest at a discount relative to the market value and there are a very limited number of leasehold properties remaining making the derivation of an appropriate return rate difficult. As discussed in Section E, historically tine return requirements for residential lots /land in Newport Beach and Orange County have ranged from 6.0- percent to 10.0- percent of the underlying land value. Based on the limited data available, given the current low interest rate 106 0 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES environment and low return requirements for real estate in general, I have concluded that the annual market rent should be based on a 6.0- percent rate of return applied to the underlying land value. The following is the calculation of the annual rent for a "typical" beachfront encroachment assuming a 30 -foot wide lot and a 5 -foot encroachment: Encroachment Area — 30' x 5': 150 Sq.Pt. Market Value of Land: x $750 /Sq.Pt. Total Market Value of Encroachment: $112,500 Annual Rate of Return @ 6.0 %: x 0.06 Indicated Annual Rent: $6,750 Annual Rent Per Sq. t. of Land: $45.00 /Sq.Pt. Based on the analysis of the market data presented I have concluded that the oceanfront encroachments have an annual market rent of $45.00 per square foot of land area that is being used in conjunction with the adjoining residential property. 107 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES SECTION I — Dory Fleet Introduction The Dory Fleet occupies a section of beachfront land at the foot of the Newport Pier. The City of Newport Beach policy on the Dory Fishermen's Fleet is as follows: DORY FISHERMENS' FLEET It is a general policy of the City of Newport Beach that an area immediately west of the Newport Pier be reserved for the Newport Dory Fishermens' Fleet. The dory fishing fleet, founded in 1891, is a historical landmark designated by tlhe Newport Beach Historical Society. The City Council, in developing an official position with respect to the dory dishing fleet, has examined and evaluated the following: A. The historical significance and relative size of the fishing fleet; B. The desirability of preserving a small area of public beach for commercial dory fishing fleet activity, primarily for catching and selling fish; and C. The responsibility of the City to protect the health, safety and welfare of beach users and swimmers in the vicinity of the dory fleet. After considering these factors, the Newport Beach City Council has adopted policy provisions concerning the Dory Fishermens' Fleet operations. A. The dory fishing fleet zone is delineated by pilings erected by the City and is reserved for full time Dory Fishermen who derive their livelihood from commercial fishing. Dory Fishermen are required to maintain a current conunercial fishing license. B. Dory Fishermen will have a current City business license. C. Dory fishing vessels allowed to be launched and stored on the public beach will be a traditional dory design vessel. D. The dory fishing fleet zone is not to be used as a launching facility for itinerant corninercial or sport fishing enterprises. L. The use of vehicles to launch and retrieve boats during the summer months and weekends in the spring and fall when beach use is heavy, will be restricted to the hours before 11:00 a.m. and after 6:00 p.m. Vehicles and trailers used by the dory fleet will be parked in a location and manner prescribed by the Fire Department. F. The dory fishing fleet will be responsible for cleanup and maintenance of the designated dory fleet zone. 108 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZEI2 & ASSOCIATES G. The City will furnish two water hose bib outlets to be shared by the Dory Fishermen. Electricity will consist of one light switch and one plug switch per shed, with the monthly costs prorated amongst the shed assignees. H. The dory sheds permitted within the designated boundaries are to be used by the Dory Fishermen only for the storage of equipment and supplies and are not to be used for temporary or permanent housing occupancy. 1. There shall be a maximum of 20 dory storage sheds no larger than 10' by 10', with roof ridge heights not to exceed 9 feet. The size, type of construction and architectural style shall be developed with input from the dory fleet. J. The Dory Fishermen will abide by all City ordinances and California Boating Laws in the operation of their vessels near the beach and surf zone where there are swimmers and surfers. Dory vessels will ingress and egress immediately ocean ward of their designated beach zone. K. The dory fishing fleet may designate a spokesperson to represent their concerns and will meet with appropriate City department(s), as designated by the City Manager to resolve conflicts of use and safety problems. Adopted - November 23, 1987 Reaffirmed - January 24, 1994 Amended - September 10, 2002 The City does not delineate the square footage of public land that the dory fleet occupies; however, based on the Assessor's Plat Map and my cursory inspection of the site it appears to occupy approximately one acre of land. Commercial Land Sales A search for unimproved, or nominally improved, oceanfront land was conducted to estimate the value of the land that the Dory Fleet occupies. Due to the built -out nature of the Orange County coastal strip and the limited amount of commercial development directly on the beachfront, the search was expanded to include bayfront commercial properties and commercial properties that are influenced by their location proximate to either the oceanfront or the bayfront in Newport Bach. The following table is a summary of the commercial land sales or nominally improved commercial sites that are judged to be pertinent to the valuation of the land occupied by the Dory Fleet. 109 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES COMMERCIAL LAND SALE SUMMARY SEPTEMBER 2006 DATA NO. SALE SITE PROPOSED TOTAL LOCATION DATE AREA USE SALE PRICE ASSESSOR PARCEL DOC. N0. S .Ft. WATERFRONT PRICE /S .FT. I/ 2601 W. Coast Highway 8/7/2003 12,000 Restaurant $3,100,000 $25833 Mariner's Mile 03- 947657 Bayfront 049 - 150 -05 2/ 2300 Newport Boulevard 2/26/2004 103,247 Redevelopment $15,000,000 $14530 Newport Peninsula 04- 150855 Bayfront 047 - 120 -31 M 100 -600 W. Coast 4129/2004 112,355 Redevelopment $6,350,000 $5650 Highway 04- 371663 No (approx.) Mariner's Mile 049 - 280 -39, -40, -51, -53, -55 that -63, -71 thru -73 4/ 2209 W. Balboa Blvd. 7/29/2005 17,100 Redevelopment $2,589,000 $151.40 McFadden Square 05- 592507 No 147 - 143 -30 5/ 209 Washington Sheet 5/11/2006 3,000 Parkins Lot $900,000 $300.00 Balboa 06- 315831 No 048 - 116 -05 6/ 503 W. Balboa Boulevard 7/27/2006 2,565 Redevelopment $900,000 S350.57 Balboa 06- 499472 No 048 - 122 -02 Conclusion — Commercial Land Sales The comparable market data are all commercially zoned parcels located along the coastal strip in Newport Beach and benefit fi-om their location relative to the beach and /or bay front. With the exception of Comparable Five, which is a parking lot, all of the sites are improved and were purchased for the underlying value of the land and their redevelopment potential. Comparable Sale One is located on the bayfront in the Mariner's Mile neighborhood. It is improved with an approximately 3,650 square foot restaurant (Josh Slocum's) that is in average condition and was nearing the end of a five year lease. The buyer acquired the site because it has a dock that will accommodate his boat which measures over 100 feet. Overall this comparable is judged to be superior compared to the subject. 110 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Comparable Sale Two is located on the east end of the Mariner's Mile and is proposed to be developed with a high -end retail center. The sale price is approximate as (here is a confidentiality agreement between the parties and they are not to disclose the exact sale price. Overall this comparable is judged to be inferior compared to the subject. Comparable Sale Three is located on the bayfront on the peninsula in the general area of McFadden Square. The site has over 300 -feet of bay frontage. The site is improved with an approximately 45,000 square foot retail and office building complex that also includes a sail loft and boat service facilities. The buyer is a residential developer that proposes to redevelop the site with a mixed use (commercial on ground Poor and residential on two upper Floors) development along with dock space. Overall this comparable is judged to be relatively similar compared to the subject. Comparable Sale Four is a 17,100 square foot site that is improved with an approximately 12,700 square foot retail building. It is located on the corner of Balboa Boulevard and 23rd Street in McFadden Square. The improvements are leased to a surf shop; however, their lease expires in 2006 and it was reported that the site is scheduled for redevelopment; however, the exact plans were not disclosed. Overall, this comparable is judged to be relatively similar compared to the subject Comparable Sale Five is a small lot located near the Balboa Pavilion and the Fun Zone on the corner of Bay Avenue and Washington Street. It is improved with a parking lot and was acquired by the owner of the Pavilion for additional parking. Given the size of this lot relative the approximate size of the subject the price per square foot indication defines the extreme upper limit of the probable market value range for the subject. Comparable Sale Six is located on Balboa Boulevard, one block west of Patin Street. The site is improved with an approximately 488 square foot commercial building that has no contributory value to the site. The buyer intends to raze the improvements and redevelop the site. Given the size of this lot relative the approximate size of the subject the price per square foot indication defines the extreme upper limit of the probable market value range for the subject. All of the land sale data are commercial lots that are nominally improved and all but Sales One and Five are proposed for redevelopment. The sale data uncovered reflect a price per square foot range from $56.50 to $350.87, with the two most comparable sales (Nos. 3 & 4) reflecting a range from $145.30 to $151.40. Based on the market data presented, I have concluded that the land underlying the Dory Fishermen's Fleet has a market value of $1.50 per square foot. Ill Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES VALUATION Based upon the work undertaken, and my experience as a real estate analyst and appraiser, I have formed the opinion, as of the 30th day of September 2006, subject to the Assumptions and Limiting Conditions contained in this report, that the subject has the following market values: SECTION A Current Fair Market Rent for the Fuel Docks is 5.0- Percent of Gross Sales. SECTION B Current Fair Market Rent for the Balboa Island Ferry is 6.0- percent of gross sales. Current Fair Market Rent for the Newport Bait Barge is 4.5- percent of gross sales. SECTION C The slips at the Balboa Yacht Basin have the following fair market rent: Slip Length (Lineal Feet) Total Slips Monthly Rent /LF Under 30' 2 $20.00 30' — 34' 43 $21.00 35' — 39' 71 $23.00 40' — 44' 32 $25.00 45' — 49' 3 $28.00 50' & Over 10 530.00 Side Ties 10 $20.00 TOTAL 171 The apartment units at the Balboa Yacht Basin have the following market rent. Unit Type Size (Sq.Ft.) Market Rent 2 -Bed, One -Bath 1,Io0 $2,200 2 -Bed, One -Bath 1 1,300 1 $2;500 The storage garages at the Balboa Yacht Basin have the following market rent. Size (S .Ff. Total Units Market Rent Total Monthl Rent 200 29 $350 $10,150 160 2 $320 $640 112 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES SECTION D The submerged tidelands in Newport IIarbor that are not leased in conjunction with the adjoining upland parcel have a current market rent of 22.0- percent of the gross income. The submerged tidelands in Newport Harbor that are leased in conjunction with the adjoining upland parcel have a current market rent of 27.0- percent of the gross income. SECTION E Current fair market rent for a residential pier used for "commercial" uses is 20- percent of the gross rental income. Fair market rent for a residential pier for non- commercial use is $1 5.00 per lineal foot per year. SECTION F Fair market rent for the 29'h Street Dock is $20.00 per lineal foot per month, or a total monthly rent of $1,140.00. SECTION G Fair market "transfer value" ofthe off -shore moorings is $1,000 per lineal foot. Fair market "transfer value" of the on -shore moorings is $475 per lineal foot. Monthly fair market rent for the on -shore and off-shore moorings is $7.25 per lineal foot. SECTION H Annual fair market rent for the oceanfront encroaclunents is $45.00 per square foot of land SECTION I The Dory Fishermen's Fleet has a market value of $150 per square foot. 113 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES ADDENDA 114 Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Unified Port of San Diego — Benchmarks 115 Board off�o t Commfsslonndrrss }} r a r �cS�an�DiegoyUn�fedPoD�strct December�7�'049� Y y =1� .fti Percentage of Property Type Category Gross Sales Revenue Lodging Properties Guest rooms & related services 7.0% Rental conference /banquet rooms and related srvcs 7.0% Revenues for barber /beauty shops 5.0% Revenues from boat and breakfast operations 7.0% Restaurants Food sales from full service. restaurants 3.0% Food sales from limited service restaurants 3.0% Beverages for consumption off site 3.0% Beverages . for consumption on site 5.0% Revenues from admission or cover charges 5.0% Retail Sales of California lottery Pickets 0.5% Sale of groceries 10% Sales (or value) of fish exchanging operations 3.0% Sales of merchandise, sundries and incidentals 2%-5% Revenues from vending machines owned by lessee 5.0% Revenues from ship chandlery operations 4.0% Revenues from health club /spa services 10.0% Revenues from rental of automobiles 10.0% Revenues from recreation lessons 10.0% Revenues from rental of office space 10.0% Revenues from bicycle and rec. equip. rental 15% & 10% Revenues from vending machine commissions 25.0% (machines not owned by lessee) Revenues from telecommunications equipment 50.0 %. Marinas Revenues from minor marine services 5,0% Revenues from slips, dock lockers, dinghy racks and dry storage spaces 22% & 15% Revenues from yacht club dues and guest fees 10.0% Revenues from sailing school operations 10.0% Revenues from boat rentals (< 24 hours) 10.0% Sportfishing and � Revenues from crew operated. excursion boats 6% & Harbor Excursions 6%15%/3% Revenues from sportfishing and whale watching 6.0% .Revenues from boat charters (> 24 hours) 6.0% Revenues from bait sales and equipment rentals 6.0% =ter Fuel Sales c--- .,,— .--�— — - Revenues from petroleum products other than -- -1- --=- -^ - -=� gasoline, diesel or mixed fuel 5.0% Revenues from sales of gasoline, diesel or mixed fuel $0.025 /gal for use in motor vehicles Revenues from gasoline or mixed fuel used in boats $0.04 /gal Revenues from diesel fuel for use in boats $0.02 /gal Miscellaneous Revenues from any activities permitted in the lease but not listed above 10.0% Revenues from any activities not permitted in the lease but not listed above 20.0 %° Newport Harbor Tidelands Newport Beach, California October 9, 2006 NETZER & ASSOCIATES Harbor Permit Policy 116 , HARBOR INSTALLATIONS GENERALLY A. Shore connected piers and floats bayward of residential zoned areas shall be controlled by the Harbc Permittee. Vessels .moored at residential piers shall not create a nuisance with regard to vehicl parking, vessel waste, liveaboards, or noise disturbances to adjoining residents. Shore connected piers and floats bayward of commercial -zoned areas may be rented. Only piers, floats, certain patio decks and their appurtenances shall be permitted bayward of th bulkhead. D. No private piers shall be permitted at street ends. E. In R -1 zones, only a single pier and float or slip shall be permitted bayward of each parcel or lot. DEFINITIONS k. The term "Pier" shall mean any fixed or floating structure for securing vessels, loading or unloadin, persons or property, or providing access to the water, and includes wharf, dock, float, or othe landing facility, and dry dock. 3. The "Harbor Lines" are established Bulkhead, Pierhead, and Project Lines. The 'Bulkhead Lines," as established, shall define the limit of solid filling or solid structures. D. The " Pierhead Lines," as established, typically shall define the limit for pier and float -type structures. E. The 'Project Lines" shall define the channel lines of the improvements and by the Federe Government in 1935 -36. F. The term "Liveaboard" shall mean the use or occupancy of a vessel for living quarters eithe permanently or on a temporary basis for a period exceeding 72 hours. G. The term "Standard Drawings" refers to Standard Drawings adopted by the City of Newport Beach a minimum standards of construction whenever harbor permits are required. H. The term "Design Criteria" refers to Design Criteria adopted by the City of Newport Beach minimum standards for design whenever harbor permits are required. T. The term "Mean Low Low Water" is abbreviated, M.L.L.W., and refers to the lowest tide of the dail two -tide cycle. The term "Harbor Structures" refers to any pier float, piling, bulkhead, sea wall, reef, breakwater o other structure in, upon or over the waters of Newport Harbor or the Pacific Oceanor any other wate where the tide ebbs and flows within the City of Newport Beach. :. The term "Harbor Permittee" refers to upland property owner or long term lessee immediatel adjacent to water in whose name the Harbor Permit is issued. r"ERMITS REQUIRED FOR HARBOR STRUCTURES A. No person or agency shall build, maintain, extend or make structural alterations on any building, " pier, piling, bulkhead, sea wall, reef; breakwater; or other structure in, upon or over the waters of Newport Harbor or the Pacific Ocean or any other water where the tide ebbs and flows within the r City, or do any filling, excavating in said waters or ocean, without first obtaining a written 'Building Permit" to do so from the City's Building Department, R. The Orange County District may do construction work or fill or dredge within Newport Harbor, or cause the same to be done, without such a permit so long as such work is done pursuant to a harbor development plan on lands not owned by the City or pursuant to a request therefore by the City Council. C. A separate permit will be required by the Harbor Resources Division for dredging. e_ENERAL PROVISIONS FOR PERMITS FOR HARBOR STRUCTURES Acceptance of Provisions. It is understood and agreed by the Permittee that the doing of any work under the permit shall constitute an acceptance of all the applicable provisions of Municipal Code and City Council Harbor Permit Policies. B. Permit from Other Agencies. The party or parties to whom the permit is issued shall, whenever the same is required by law, secure the written order or consent to any work hereunder from the U.S. Corps of Engineers, California Coastal Zone Commission, or any other public body having jurisdiction, and the permit shall be suspended in operation unless and until such order or consent is obtained. C. Transferring Permit. The permit is not transferable without the written consent of the City of Newport Beach. D. Inspection. Inspection shall be done by the Building Department for conformity with the Uniform Building Code, design criteria and standard drawings for Harbor construction. p Protection of Traffic. Adequate provisions shall be made for the protection of the traveling public. Barricades shall be placed on streets with lights at night, also flagmen employed, all as may be required by the particular work in progress. The Permittee shall not attempt to forbid the full and free use by the public of all navigable waters at or adjacent to the work or structure. If the display of lights and signals on any work hereby authorized is not otherwise provided by law, such as lights and signals, as may be prescribed by Bureau of Light Houses, Department of Commerce, shall be installed and maintained at the expense of the Permittee. Structures shall be so constructed as not to obstruct, interfere with or prevent the free use of adjacent harbor structures or passage of any sidewalks, street, alley, public way or navigable channel. F. Liability for Damages. The Permittee is responsible for all liability for personal injury or property damage which may arise out of work herein permitted, or which may arise out of the use or possession of said works, and in the event any claim is made against the City of Newport Beach or any department, officer, or employee thereof, though, by reasons of, or in connection with such work, permittee shall defend, indemnify and hold them and each of them, harmless from such claim. G Revocation of Permit. The rights given under this permit are permissive only and the City of Newport Beach reserves full right, power and authority to revoke this permit at any time. In the event the Permittee fails to remove said works within the time specified, then the Harbor Resources Division shall have the right to immediately remove same at the cost and expense of the Permittee. H. Repairs. The Permittee shall keep the structures in good repair at all times. Failure to repair, when written notice has been given by the Harbor Resources Division, shall be cause for the revocation of the permit. I Pollution Control. The Permittee shall maintain the area delineated on the harbor permit free and clear from beached or floating rubbish, debris or litter at all times. Adequate safeguards shall be maintained by the Permittee to avert any other type of pollution of Newport Harbor from recreational and /or commercial use of the tidelands. Failure to comply with the provisions of this section shall be cause, after written notice has been given to the Permittee by the City, for the revocation of the permit. When unusual circumstances arise with respect to the collection of debris ' or litter, the City Manager may authorize by the use of City forces or by contract the removal of said debris. J. Rights to Impose Rental or Other Charges. The approval of the foregoing permit by the City of Newport Beach shall not constitute a waiver of any rights which it may now have or hereafter have to impose rental or other charges in conjunction with the maintenance of the proposed facility and user of the same. The imposing of tidelands rental, or use, fees shall not be extended to include private residential piers and slips, constructed and used solely by the abutting uplands owner for recreational purposes, unless otherwise directed by State mandate. k: In those areas of the harbor where the piers and floats are bayward of residential zoned areas, liveaboards shall not be permitted. C Special Event Permits. If a Harbor Permittee proposes a use of the harbor installation, other than that allowed by the Newport Beach Municipal Code or the Council Harbor Permit Policy, he /she must first obtain a "Special Event Permit" as provided by Section 510 of the Newport Beach Municipal Code. Upon issuance of the Special Event Permit, the City of Newport Beach may impose conditions on the permit to assure that the proposed use does not affect the health, safety or welfare of the residents of Newport Beach. [SSUING OF PERMITS A. The Building Department is authorized to approve and issue new permits and revisions to existing permits that conform to the standard harbor drawings and the adopted Harbor Permit Policy in conjunction with plan reviews by the Harbor Resources Division. B Prior approval, when applicable, from the California Coastal Commission and /or the U.S. Corps of Engineers will be required before issuing any permit. Application to the California Coastal Commission and /or the U.S. Corps of Engineers may be made on forms provided by those agencies. Prior approval of Orange County will be required when work extends over tidelands claimed by the County. Before issuing a Permit for any work on oceanfront beaches or for any unusual type of harbor .structure, or for a structure on which the applicant proposes a use that is not in keeping with the surrounding area, all property owners or long term lessees within 300' of the proposed work shall be notified in writing by the Harbor Resources Division of the pending application. Notice will be sent ten (1 days prior to a decision by the Harbor Resources Division, and after the Department has rendered decision. The permit shall not be issued until the appeal period provided in Newport Bea( Municipal Code Chapter 17.24 has run. E. Painting, replacement of rub -rails and work considered cosmetic in nature does not require a permit F. Prior to the issuance of a permit, the applicant will show proof of insurance coverage as required I the Longshoremen's and Harbor Worker's Compensation Act. APPLICATION FOR HARBOR PERMITS A. Applications for authority to erect, revise and do maintenance work on structures shall be submitte to the Building Department upon forms provided therefor. Plans showing the location, extent an character of the proposed work and required fees shall accompany the application. ( B. The application must be signed by the Harbor Permittee or his authorized agent. PLANS TO ACCOMPANY PERMIT APPLICATIONS A. Plans accompanying the application will form a part of the permit and must be carefully prepared i the form prescribed in the Building Department. 3. Number of plans submitted shall be determined by the Building Department, depending on tk nature of the work. EXPIRATION OF PERMIT A. The time limit for the completion of all work authorized by a permit shall be 180 days from date c approval. 3. All permits shall expire unless the work contemplated shall have been completed within the tim limit specified. =. If the work contemplated has been started and diligently prosecuted but not completed in the tim limit specified, a time extension may be granted by the Building Department upon receipt of written request from the Permittee. BOND REQUIREMENTS f the nature of the proposed work is such that if left incomplete it will create a hazard to human life c endanger adjoining property, a cash bond or surety bond satisfactory to the City Attorney in the sum of 10 )ercent of the estimated cost of the work will be required to guarantee the faithful performance of th proposed work. CRANSFER OF ANNUAL HARBOR PERMITS S. Permits for harbor structures are issued subject to the condition that any improvements constructe, shall not be sold in whole or part, leased, or transferred, without the written consent of the City. 3. Whenever a permittee sells the abutting upland property, a request shall be made to the City b ransfer the permit. Forms for this purpose may be obtained from the Harbor Resources Division. Failure 1 apply for a transfer within 30 days from the date that the abutting upland property change ownership will result in an additional fee by the City. C. The Harbor Resources Division is authorized to approve transfers to the new owners or long -tern lessee of the abutting upland property. D. Prior to the transfer of a Harbor Permit, all harbor structures shall be inspected for compliance wit the City's minimum plumbing, electrical and structural requirements, and the conditions of th existing permit. All structural deficiencies must be corrected prior to the transfer of the permit. A fe will be charged for this inspection, established by Resolution of the City Council. )KEDGING All dredging will require a permit from the Harbor Resources Division and may be subject engineering approval by the Public Works Department. 3. Major dredging outside the established harbor lines will require prior approval by the Harbc Resources Division and the U.S. Corps of Engineers. =. Maintenance dredging bayward of residential and commercial property shall be the responsibility c the Harbor Permittee for the zone delineated by the bayward prolongations of upland side propert lines and the U.S. Project line. FEES V INITIAL PERMIT FEES The Harbor Resources Division may charge the fees identified in the Master Fee Schedule for initiz permits and for pier fees. Initial permit fees do not include Building Department fees, but they d, include Public Works Department fees. 13. PIER FEES Non - commercial pier permit fees are due and payable on the schedule established by th Administrative Services Directorin accordance with the amount identified in the Master Fe Schedule. All commercial piers over City Tide and Submerged Lands will be billed annually as follows: 1. Permittees having commercial piers over City Tide and Submerged Lands shall pay an annua rent identified in the Master Fee Schedule for each square foot on permit area (base rental). 2. Annual rent shall be paid on or before March 1. 3. The Base Rental shall be adjusted annually to reflect the increase or decrease in Consume Price Index (CPI) for each twelve month period. The CPI (all urban consumers, all items) fo the Los Angeles -Long Beach - Anaheim, California area as published and released by th. Bureau of Statistics for the U.S. Department of Labor shall be the index utilized for calculatin; the rental adjustment. 4. The base rental shall be recalculated every ten years pursuant to an appraisal commission( by the City of Newport Beach. In determining the value of tide and submerged lands, tl appraiser shall consider the fact that commercial use of publicly owned tidelands economically feasible only in conjunction with privately owned uplands. 5. All appraisals shall be conducted by an MAI appraiser(s) with membership in the Americz Institute of Real Estate Appraisers and experienced in assessing the value of tidelands. 6. The provision of this subsection shall not apply to tidelands subject to a written lease requirir the payment of rent based on gross receipts. iTANDARD DRAWINGS The following Standard Drawings have been approved and are on file in the Public Works Department: Precast Reinforced Concrete Groin Panel I Dwg. No. STD -600 -L Detail For Raising Bulkheads lDwg. No. STD-601 -L Grand Canal - Platform and Steps Type I I Dwg. No. STD -602 -L Grand Canal - Platform and Steps Type II IDwg. No. STD -603 -L Single or Joint Residential Use Gangway Single Residential Use Float Without Pier Dwg. No. STD -604 -L IDwg. No. STD -605 -L Single Residential Use Float West Newport Channels Dwg. No. STD 606 L Commercial Pier and Float Installation IFDwg. No. STD -607 -L Single Residential Use Float With Pier IDwg. No. STD -608 -L IlSingle or Joint Residential Use Pier Sections IlDwg. No. STD -609 -L Pile Details Dwg. No. STD -610 -L Bolt For Boat Anchorage Dwg. No. STD -611 -L IjEye Gangway Hanger Bracket Dwg. No. STD -612 -L Datum Planes Dwg. No. STD -613 -L Natural Sand Profiles in Newport Harbor JJDwg. No. STD -614 -L DESIGN OF STRUCTURES 4. Design of harbor structures that do not conform to the Standard Drawings contained within "Desigi Criteria and Standard Drawings for Harbor Construction," needs the approval of the Buildin; Department prior to the issuance of a harbor permit. a. Harbor structures shall be designed in accordance with design criteria adopted by the City o Newport Beach and contained within "Design Criteria and Standard Drawings for Harbo Construction." The decking of all piers and pier platforms shall not exceed an elevation of 9.0 M.L.L.W. nor be les than an elevation of 8.0 M.L.L.W. DINT OWNERSHIP PIERS A. Permits may be granted for joint ownership piers at the prolongation of common lot lines subject the following conditions: 1. No permits will be granted to persons other than the owners or long -term lessee of tl abutting upland properties. 2. The permit application must be signed by the fee owners or long -term lessee of all abuttii upland property having access to the facility' 3. The permit shall provide that all parties shall have equal rights under the permit and shall 1 held jointly responsible for compliance with all rules, regulations, and conditions set forth the permit. B. The policy for setbacks applies to joint ownership piers with the exception that the slips, floats ar piers, may extend over the common property line. BULKHEADS A. All bulkheads in residential districts shall be installed on the established bulkhead line or at location behind the bulkhead line that would preserve the design profile of the harbor. Any retainir or ornamental wall installed landward of the bulkhead line shall be considered a bulkhead if it al: serves to contain the waters of the harbor and shall be processed in the same manner as if it were c the bulkhead line. The Harbor Resources Division may issue permits for bulkheads, between U.S. Bulkhead Static Numbers 112 -109 not to exceed the bayward side of the "Vacated East Bay Avenue." U.S. Bulkhea Station 104 for the addresses at 2209, 2223, 2227, 2231 and 2233 Bayside Drive: Staff recommendatie for a bulkhead at these properties shall not exceed a point bayward of the average high tide lir established at a point 40 feet landward of the face of the bulkhead at the property at 2137 Baysic Drive, and then on a straight line from that point to the bayward most point of the bulkhead at th property at 2301 Bayside Drive. B. Bulkheads shall be at the existing height established for the area and shall be connected to adjacel bulkheads. In cases where no adjacent bulkhead or bulkheads exist, a wing wall or wing walls sha be constructed from the bulkhead landward adequate to contain the fill behind the bulkhea constructed from the bulkhead landward adequate to contain the fill behind the bulkhead. No soli or masonry structure shall be constructed on a bulkhead. C. The height and design of all bulkheads and wing walls shall be subject to the design and constructio standards of the Building Department. D. All bulkhead permits may be subject to a detailed construction drawing being approved by th Building Department. Drawings signed by a Civil or Structural Engineer may be required. E. The bulkhead shall not be used to support any structure on the abutting upland property unless th bulkhead has been properly designed to carry the additional loads. F. In areas where there is existing development and it is of direct benefit to the City to have a bulkhea constructed, the City may contribute 1/3 of the cost of constructing a bulkhead across street ends. PARKING REQUIREMENTS �. All commercially operated boat docking facilities shall provide 0.75 parking stalls for each single bo; slip and 0.75 parking stalls for each 25 feet of available mooring space not classified as a slip. 3. For dry boat storage areas, 0.33 parking stalls shall be provided for each storage space available. C. For floating dry docks, at least two (2) off - street parking stalls shall be provided exclusively for eac dry dock. D. All parking shall conform to the City of Newport Beach off - street parking standards. E. Commercial Activities Permits 1. On -site Parking a. On -site parking shall be provided as follows: i. Charter vessels: one parking space for each three occupants, includin crewmembers; ii. Sport fishing vessels: one parking space for each two occupants, includin crewmembers. b. Said on -site parking shall be provided on the adjoining upland property. If adequat parking is not available on -site, all or a portion of the required parking spaces may b provided at an off -site location, subject to the approval of the Assistant City Manage and the Planning Director. The use of an off -site lot shall not be approved unless: i. Such is so located as to be useful in connection with the use of the vessel. ii. Parking on such lot will not create undue traffic hazards in the surroundin, area. iii. Such lot and the adjoining upland property are in the same ownership and th owner is entitled to the immediate possession and use thereof. Ownership of th off -site lot is defined as ownership in fee or a leasehold interest of a duratioi adequate to serve the proposed commercial activity. C. When a vessel will not offer services to the general public, all or a portion of th required parking may be provided at a remote off -site location, if transportation i provided from the off -site parking location to the site where the vessel is moored Parking for the shuttle vehicles must be provided near the site where the vessel i moored unless said vehicles will be stored at the remote off -site location at all time when not in use. d. If the use of the off -site parking location is approved, the owner(s) and the City shal execute a written instrument (the form and content of which is acceptable to the Cit Attorney) providing for the maintenance of the required parking spaces on such lot fo the duration of the commercial activity. Said instrument shall be recorded in the offica of the County Recorder prior to issuance of a Commercial Harbor Activities Permit, an( copies thereof shall be filed with the Harbor Resources Division. ' ;AFETY REQUIREMENTS A. All commercially operated boat docking facilities shall be equipped with fire fighting facilities specified by the Fire Chief of the City of Newport Beach. B. Any electrical service upon any pier, dock or float shall be installed under a permit obtained from th City of Newport Beach Building Department. C. Any domestic water service upon any pier, dock, or float shall be installed under a permit obtaine from the City of Newport Beach Building Department. �. All commercial piers, floats or docks used for the loading of passengers, shall be lighted in such manner as to provide an illumination level of 0.5 -foot candles for all areas used for the loading c such passengers. JANITARY REQUIREMENTS �. A permit for a pier, dock or float shall not be issued until the rough plumbing for the dwelling unit o the required restrooms serving such pier, dock or float, has been installed and approved by the Cit• Building Inspector. The use of a pier, dock or float will not be allowed until restroom facilities ar completed and in operation. ^. All public or private commercially operated shore - connected boat anchorages shall have a minimun of two restroom facilities, one for women and one for men, for each 20 boat slips or boat berth available in the anchorage area. The minimum walking distance from the farthest boat berth to th restroom facility shall not exceed 400 feet. C. Sewage Pumping Facilities. Permission may be granted to install and operate sewage pumping facilities for boats moored tc shore - connected structures providing such installations are first approved by the Harbor Resource: Division. In requesting approval, the following information must be submitted in letterform to the Harbo: Resources Division: 1. . The name and address of the person responsible for the installation; 2. The name and address of the manufacturer of all pumping equipment; 3. A complete description of the materials and the pumping equipment to be used; 4. An 8" x 11 ", or larger, sketch clearly showing the location of the sewage discharge lines, the connection to the sewer system, and the area to be served. -ETBACKS 1. All piers and floats for residential properties shall be set back a minimum of five feet from the projection of the property line. All piers and floats for commercial properties may extend to the projection of the property line. C. The projection of the property line bayward of the same bearing from the bulkhead shall generally used in determining the allowable setbacks for piers and floats. Because there are certain physic conditions which preclude the strict application of this policy without prejudice to adjoinii properties, special consideration will be given to areas where precise projections of the property li) have not been determined and the following conditions exist: 1. Where property lines are not approximately perpendicular to the bulkhead line. 2. Where curves or angles exist in the bulkhead line. 3. Where bridges, topography, street ends or publicly owned facilities adjoin the property. MOORINGS A. Boats moored at private or public docks shall not extend beyond the projection of the property lin of the property to which the dock facility is connected in accordance with Section 20 -C. B. Any boat moored at a pier, dock, or float shall not extend bayward a distance of more than the wid of its beam beyond the pier, dock or float. Between bulkhead station 256, beginning at Collie Avenue to bulkhead station 255, boats moored at a pier dock or float shall not extend more than 1 bayward from the end of the pier dock or float or more than the width of the beam of the boy whichever is less. Mooring Fees for both onshore and offshore moorings shall be set annually by Resolution of the City Council. BALBOA ISLAND A. No new, non - commercial piers on Balboa Island shall be approved unless in the public interest. Ne non - commercial piers, if approved, shall be constructed in strict conformance with this Policy an standard drawings. Piers presently permitted may be maintained and repaired upon securing maintenance permit. Any revision of an existing pier or float shall be in strict conformance with th Policy and shall not be approved if the addition or revision would, in comparison to the existin structure, further restrict or impair the public's use of the bay or beach in the vicinity of the pier c floats. B. Revision to existing structures shall be limited to the following: 1. The overall square footage of the revised structure shall be equal to or less than the squat footage of the permitted structure; 2. , The revised structure does not extend landward more than the permitted structure; 3. The revised structure does not extend beyond the City permit line (the U.S. Pierhead line c such other bayward extension of the permit area thatis permitted by this Policy; and 4. The revised structure is wholly within the original permitted area as specified in the existin permit on file with the City. C. Whenever any application to install a new, non - commercial pier or revise an existing pier -ibmitted to the Harbor Commission all property owners (according to the latest equalized assessment ; prepared by the County of Orange and available to the City) within 300 feet of the exter boundaries of the parcel for which the application is submitted shall be no in writing by Harbor Resources Division of the pending application. The applicant shall provide the Hart Commission with a list of property owners and envelopes addressed with postage prepaid. 3AYWARD LOCATION OF PIERS AND FLOATS A. U.S. Bulkhead Sta. No. 107 to No. 109. Piers will be permitted to extend out to the U.S. Pierhead Lir ti. U.S. Bulkhead Sta. No. 109 to No. 110. Piers may be permitted to extend 16 feet channelward of d U.S. Pierhead Line. C. U.S. Bulkhead Sta. No. 110 to 112. Piers will be permitted to extend out to the U.S. Pierhead Line. U.S. Bulkhead Sta. No. 112 to No. 113. Piers will be permitted to extend out to the U.S. Pierhead Lin Commercial piers between "A" Street and Adams Street will be subject to special permits approve. by Harbor Commission. E. U.S. Bulkhead Sta. No. 113 to 114. Piers shall be subject to a special permit approved by the Harbo Resources Division. F U.S. Bulkhead Sta. No. 114 to No. 119. Piers will be permitted to extend to the U.S. Pierhead Line. G. U.S. Bulkhead Sta. No. 119 to No. 120. Piers may be permitted to extend 20 feet beyond the U.S. Pierhead Line. H. U.S. Bulkhead Sta. No. 120 to No. 221. Piers may be permitted to extend 20 feet beyond the U.S. Pierhead Line. I. The Rhiue. Special permits approved by the Harbor Resources Division shall be required for construction of piers in the Rhine, extending northerly from U.S. Bulkhead Sta. No. 120. U.S. Bulkhead Sta. No. 122 to No. 125. Piers or boat slips may be permitted to extend 20 feet channelward of the U.S. Pierhead Line. ". West Newport Channels. Piers may be permitted in the Rivo Alto, the Rialto, and the channel lying westerly of Newport Boulevard. Piers, slips, and floats will be permitted to extend channelward a distance of 30 feet maximum from the channel lines in the Rivo Alto, the Rialto, and the channel lying westerly of Newport Boulevard. Property extending to the ordinary high tide line, with a frontage exceeding thirty (30) feet will be allowed 1 -foot increase in float width parallel to the Pierhead Line, for each additional 2 feet frontage. The piers, slips and floats in Balboa Coves shall not extend into the channel a distance greater than 30 feet from north line of channel shown on Tract 1011. Floats. Up to 20 feet in length may extend into the bay the 30 feet from the said line of waterway; however, for floats over 20 feet in length, the 30 feet distance shall be reduced 1 -foot for each 2 feet added to the length of the float. The maximum permissible length of float shall be 30 feet. (Second paragraph of Sec. 23 (k) added by Resolution No. 6139.) U.S. Bulkhead Sta. No. 226 to No. 227. Piers or boat slips will be permitted to extend to the U.S. , 'ierhead line. M. U.S. Bulkhead Sta. No. 227 to 128. Piers or boat slips will be permitted to extend to the bulkh line. N. U.S. Bulkhead Sta. No. 128 to No. 130. Piers or boat slips will be permitted to extend to the L Pierhead line. ,n. U.S. Bulkhead Sta. No. 130 to No. 131. Piers or boat slips may be permitted to extend 20 fl channelward of the U.S. Pierhead Line. ". Upper Bay. Piers or boat slips may be permitted to extend to the pierhead lines as shown on Harb Lines Map approved by City Council and on file in the Public Works Department. �. U.S. Bulkhead Sta. No. 132 to No. 137. Pier or boat slips will be permitted to extend to the U. Pierhead Line. U.S. Bulkhead Sta. No. 137 to east property line of Beacon Bay Subdivision. Piers shall be grante under special permits approved by the Harbor Resources Division to extend 16 feet beyond the U.: Pierhead Line. 5. East Property Line of Beacon Bay Subdivision to U.S. Bulkhead Sta. No. 104. Piers may be permitte( to extend 20 feet channelward of the U.S. Pierhead Line. T. U.S. Bulkhead Sta. No. 104 to No. 106. Piers shall be subject to special permits approved by th( Harbor Commission. U. Bay Island. Piers will be permitted to extend to the U.S. Pierhead Line on the west, northerly and easterly sides of the Island. Piers will not be permitted on the north side of the channel south of Bay Island. Balboa Island. All new piers and revision to existing permits shall be subject to special permits approved by the Harbor Commission. Revisions to existing piers will be permitted providing they do not lessen the use of either the immediate water or land areas. 1. South Bay Front East of U.S. Bulkhead Sta. No. 256. Piers may be permitted to extend 16 feet channelward of the U.S. Pierhead Line. Dredging around floats shall not exceed a depth of minus 4 feet at mean lower low water along a line 85 feet channelward of and parallel to the bulkhead line. 2. South Bay Front between U.S. Bulkhead Sta. No. 256 and No. 259. Piers may be permitted to extend 10 feet channelward of the U.S. Pierhead Line. Dredging around floats shall not exceed a depth of 2 feet at mean lower low water along a line 60 feet channelward of and parallel to the bulkhead line. 3. South Bay Front from Emerald Avenue Northwesterly to the Westerly Prolongation of the Northerly Line of Lot 5, Block 1, Resubdivision of Section 1, and Balboa Island. Piers will be permitted to extend to City pierhead line. Dredging around floats shall not exceed a depth of minus 2 feet at mean lower low water along a line 45 feet channelward of and parallel to the existing concrete bulkhead. 4. North Bay Front. Piers may be permitted to extend 10 feet channelward of the U.S. Pierl, Line, except where a pier line has been established by the City. Dredging around floats s not exceed a depth of minus 2 feet at mean lower low water along a line 60 feet chaiulelw of the parallel to the U.S. Bulkhead Line or the existing concrete bulkhead. 5. East Bay Front. Piers may be permitted to extend 10 feet channelward of the U.S. Pierh Line northerly of the northerly line of Park Avenue and 16 feet channelward of the t Pierhead Line southerly of the northerly line of Park Avenue. Dredging around floats sI not exceed a depth of minus 2 feet at mean lower low water along a line 60 feet channelwi of and parallel to the bulkhead line. V. Collins Isle. Piers will be permitted to extend to the U.S. Pierhead Line on the southwest and w, side of Collins Isle. No piers will be permitted on the north or east side of Collins Isle. Harbor Island. Piers will be permitted to extend to the U.S. Pierhead Line. Special permits approv( by the Harbor Commission will be required for piers northeasterly of Lots 14,15,16 and 36. Lido Isle. Piers may be permitted to extend out to the U.S. Pierhead Line, except on the westerly sic between U.S. Bulkhead Sta. No. 172 and No. 174. Piers may be permitted to extend 20 feet beyon the U.S. Pierhead Line between U.S. Bulkhead Sta. No. 172 and 174. 1. Piers and floats will not be permitted in the beach area along the northerly side of Lido Isl between the easterly line of Lot 849 and the westerly line of Lot 493. 2. Piers and floats will not be permitted in the beach area along the southerly side of Lido Isli between the easterly line of Lot 919 and the westerly line of Lot 457. Z. Linda Isle. Piers or boat slips will be permitted to extend to the pierhead lines as shown on Harbor Lines Map approved by City Council and on file in the Public Works Department. *Based on Harbor Regulations adopted by the City Council on December 15,1941. bXCEPTIONS xceptions may be approved by the Harbor Commission to any of the requirements and regulations sei forth if there are special circumstances or conditions affecting the harbor installations that would impose ndue hardship on the applicant, or a waterfront property owner's access to the water is impacted by a ublic works project, or if it would be detrimental to the best interest of the City. [GNS A. No signs shall be permitted beyond the bulkhead lines with the exception of the following: 1. Informational and directional signs of service to the public such as fuel, gasoline, live bait, ice, beer and similar signs which in general list services and commodities but do not advertise a specific brand. 2. Brand name signs which are customarily a part of a fuel pump or a vending machine installation. No sign permitted beyond the bulkhead lines shall exceed 4 square feet in total area. STORAGE LOCKERS Storage lockers and boat boxes may be installed on shore - connected piers and floats subject to the folloi [imitations: A. The overall height shall not exceed 30 inches when located bayward of residential property zones. B. The overall height shall not exceed 30 inches when located bayward of commercial and indus property zones where the piers and floats are used primarily for the mooring of pleasure boats. C. The overall height shall not exceed 60 inches when located on facilities bayward of commercial industrial zoned property where the use is not primarily for the mooring of pleasure boats. The overall height shall be measured from the deck of the pier or float to the top of the storage lock ' (Sec. 26 adopted as Sec. 2 of Addendum No.1 by Resolution No. 6041.) RACE COMMITTEE PLATFORM Race committee platforms and instruction platforms may be constructed bayward of the bulkhead lines recognized yacht clubs and recognized sailing schools. All work shall require issuance of a Harbor Permit ENCROACHING PIERS AND FLOATS In areas where existing piers and floats encroach in front of abutting upland property owned by others, new permit approved by the Harbor Commission, shall be required upon: A. Any change in type of existing use of the piers and floats. Any change in type of existing use of the abutting upland property owned by the permittee. Any change of existing ownership of the abutting upland property owned by the permittee or upo the death of the permittee. D. Any destruction of the pier and float in which over 60% of the replacement value of the pier and floz has been destroyed. Before the Harbor Commission acts on the new permit, the owner of the abutting upland property, i front of which the harbor facility encroaches, shall be notified in writing of the meeting in which th new permit will be considered. PATIO DECKS in areas where the waterways are privately owned, and within Promontory Bay, patio type decks may cantilevered beyond the established bulkhead lines subject to the following conditions: A. The maximum projection of patio decks encroachments beyond the bulkhead line shall be limited to feet. B. The minimum setbacks from the prolongations of the side property lines shall be 5 feet. :. No float shall be permitted within 2 feet of the decks. A No permanent structure shall be permitted on the projecting portion of the patios except: 1. Planters and benches not over 16 inches in height. 2. Railings not over 42 inches in height with approximately 95% open area. I"LOATING DRY DOCKS A. Permits for floating dry docks may be considered by the Harbor Resources Division, subject to tl following conditions: 1. The location is in waters bayward of commercial, manufacturing or unclassified zones. 2. The prior approval of a Use Permit by the Planning Commission. Permits for floating dry docks are issued for one location only. A new permit must be obtained t move a floating dry dock from one location to another location within the harbor. ROMONTORY BAY "'he following conditions are to be placed on each harbor permit when approved: A. That the permittee shall be responsible and maintain the area delineated on the harbor permit free and clear from floating rubbish, debris or litter at all times. B. That the permittee shall be responsible for all maintenance dredging, in accordance with the design profile for Promontory Bay, for the area between the bulkhead line and pierhead line as delineated by the harbor permit. RAND CANAL The following conditions are to be in effect and placed on each harbor permit for the Grand Canal: 1. That the permittee shall be allowed either one pier platform, or in lieu thereof, two shore mooring type appurtenances per lot. Pier platforms and shore moorings shall be constructed according to "Design Criteria and Standard Drawings for Harbor Construction" adopted by the City of Newport Beach. 2. That all vessels (maximum length 18 feet) moored in the Grand Canal shall be tied off to pier platform structures or shore moorings. Floating platforms or slips will not be allowed. Vessels tied to the bulkhead or by alternate methods not approved by the Harbor Resources Division shall be prohibited. 3. That the permittee shall be allowed no more than one vessel per shore mooring. 4. That any shore mooring approved for the Grand Canal shall display a permit number issued by the Harbor Resources Division. 5. That each vessel tied to any pier platforms in the Grand Canal be anchored from the stern in such a method as to prevent the vessel from swinging into adjoining vessels or across bayw prolongations of private property lines. There shall be no permits issued for shore moorings or pier platforms fronting on alleys, avenues other public easements terminating on the Canal. :. There shall be no new permits issued for shore moorings or pier platforms bayward of those lots the extreme south end and north end of Grand Canal. )CEAN FRONT SAND DUNES s a result of wind, storm and tidal conditions, sand has built up in specific locations forming sand dune -hose range from a height of a few inches to as much as five feet. This build up can present problems f adjacent property owners in the form of increased pressure on ornamental and retaining walls ar Lterfering with views of the ocean. To resolve these problems, property owners may apply for a Harbi 'rermit to do excavation of beach sand directly oceanward of their property in the area bounded by tl ,nrolongation of their side property lines. Reaffirmed - January 24, 1994 .mended - June 27, 1994 •.mended - June 26, 1995 Amended - March 25, 1996 mended - June 8, 1998 (effective July 22, 1998) mended - December 14, 1998 Amended - May 8, 2001 mended - September 10, 2002 mended - October 28, 2003 Amended - April 13, 2004 RETURN TO TABLE OF CONTENTS RETURN TO CITY OF NEWPORT BEACH HOME PAGE Newport Harbor Tidelands Newport Beach, California October 9, 2006 NEWER & ASSOCIATES Qualifications 117 QUALIFICATIONS of James B. Netzer, MAI Professional Background Prior to forming Netzer & Associates, he was associated for over three years with Urban Pacific Services Corp. Actively engaged as a real estate analyst, appraiser and consultant since 1987. Principal of the appraisal and consulting firm of Netzer & Associates with offices at: 170 E. Seventeenth Street, Suite 206 Costa Mesa, California 92627 Educational Activities Bachelor of Arts in Liberal Studies with a Concentration in Economics, California State University, Long Beach, 1986. Has successfully completed the following courses sponsored by the American Institute of Real Estate Appraisers and the Appraisal Institute: A.I.R.E.A Course IA -1: Principles of Real Estate Appraisal A.I.R.E.A Course IA -2: Basic Valuation Procedures A.I.R.E.A Course 1 B -A: Capitalization Theory and Techniques, Part A A.I.R.E.A Course I B -B: Capitalization Theory and Techniques, Part B A.I.R.E.A Course SPP: Standards of Professional Practice A.I. Course 2 -1: Case Studies in (Zeal Estate Valuation A.1. Course 540: Report Writing and Valuation Analysis A.I. Course 550: Advanced Applications Professional Affiliations Member of the Appraisal Institute - MAI Designation State Licenses State of California - Certified General Real Estate Appraiser - Certificate No. AG003141 State of California - Real Estate Broker License Court Qualification Qualified as an expert witness in the Superior Courts of Orange, Los Angeles and San Diego Counties, U.S. Bankruptcy Court — Los Angeles Division. Teaching Experience Orange Coast College - Adjunct Professor (retired) - Business 140 "Real Estate Appraisal Principles" Scone of Ixperience During the period in which Mr. Netzer has been engaged as a real estate appraiser and analyst, lie has been involved in most aspects of the Geld having completed assignments for multiple purposes, including: estate planning; bankruptcy; conflict -of interest analysis (Political Reform Act of 1974); construction defects Litigation; soil subsidence; dissolution of marriage; ground lease re- valuation; leasehold & sub - leasehold valuation; property tax appeals; lease and ground lease arbitration; casement /access /encroaclunent disputes (based on Overholtzer v. Northern Counties Title); soils contamination litigation; mortgage lending; construction financing; portfolio valuation; market and feasibility analysis; fractional interest valuation; and, due diligence. He has experience appraising the following property types: Vacant Land Residential lots, sub- division sites, condominium sites, commercial and industrial sites, mountainous acreage, raw acreage, mitigation land (Delhi Sands Plower Loving Fly, Stephens Kangaroo Rat & Open Space). Residential Single - family residences, condominiums, townhomes, planned unit developments, multi - family units, apartment buildings, mobile home parks, proposed and existing sub - divisions. Commercial Office buildings, medical office buildings, restaurant buildings, retail centers, neighborhood shopping centers, conmwnity centers, connnerce centers, congregate care facilities, parking structures, golf courses, mixed -use developments, auto dealerships, gas stations. Industrial Manufacturing and warehouse buildings, distribution facilities, multi- tenant buildings, mini- storage facilities. Special Use Submerged tidelands, boat harbor, auto ferry, bait barge, civic center, fire stations, police stations, emergency corm-nun ications facilities, temporary construction easements, steel fabricating plant, car wash facilities. PARTIAL LIST OF CLIENTS ATTORNEYS. LAW FIRMS & ACCOUNTANTS Barton Klugman & Getting Law Offices of David G. Boss Browne & Woods LLP Burd & Naylor Gibson, Dumi & Crutcher Goldstehr & Ward Greines, Martin, Stein & Richland LLC Jeffer, Mangels, Butler & Marmaro LLP Landels, Ripley & Diamond Larsen & Associates Latham & Watkins Law Offices of Michael Leight Loeb & Loeb, LLC Lynberg & Watkins LENDING INSTITUTIONS Bank Midwest, N.A. Bank of America Bankers Mutual (Berkshire Mortgage) California Federal Bank Citicorp Real Estate, Inc. Credit Suisse Comerica Bank Escondido National Bank GOVERNMENTAL AGENCIES City of Costa Mesa City of Huntington Beach City of Newport Beach GENERAL CLIENTS AMRESCO Management, Inc. Arnold Construction The Boy's Republic Capital Guardian Trust Chicago Title Company Decron Management First American Title Insurance Hamilton Company Kinder Morgan Energy Partners Lee & Associates Ne,,vport Sports Collection Foundation McDermott, Will & Emory Law Offices of Erik B. Michelsen Millar, Hodges & Bemis Hart, King & Coldren Palmieri, Tyler, Wiener, Wilhelm & Waldron Richard Shaffer (Court Appointed Receiver) Rubin & Eagan Severson & Werson Stradling, Yocca, Carlson & Rauth Turner & Reynolds Richard Wildman, Attorney at Law Wolf & Richards Wright Ford Browning & Young Wynne, Spiegel & Itkin GE Capital Investment Advisors Hawthorne Savings Huntington National Bank Merrill Lynch Credit Corporation Park View Mortgage Strategic Mortgage Services Tokai Bank Wells Fargo Bank Federal Deposit Insurance Corporation (FDIC) Resolution Trust Corporation (RTC) Securities & Exchange Commission (SEC) PNL Asset Management Pulte Home Corporation Ramsey Color Lab, Inc. S & S Construction /Shappell Industries St. Clair Company LLC Santa Fe Pacific Pipeline Partners, L.P. Staples, Inc. State Farm Insurance Stewart Title Guaranty Company Texaco Refining & Marketing, Inc. Western National Properties PROFESSIONAL SERVICES AGREEMENT WITH NETZER & ASSOCIATES FOR THE APPRAISAL OF COMMERCIAL TIDELAND PROPERTIES IN THE CITY OF NEWPORT BEACH THIS AGREEMENT is made and entered into as of this 13+1 day of IAyx/ 2006, by and between the CITY OF NEWPORT BEACH, a Municipal Corporation ( "City'), and NETZER & ASSOCIATES, a sole proprietorship, whose address is 234 E. Seventeenth Street, Suite 209, Costa Mesa, California, 92627 ( "Consultant"), and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City would like to gather information regarding the fair market rent or fees of various public tidelands uses in order to establish an equitable price for such uses. These tideland properties include the boat slips, garages and apartments at the Balboa Yacht Basin, the City's residential and commercial piers;: the commercial use of residential piers, on -shore and off -shore moorings, the dory fishing fleet zone, and various other tideland properties under contract with the City. C. City desires to engage Consultant to conduct an appraisal of the commercial tideland properties within the City of Newport Beach ( "Project "). D. Consultant possesses the skill, experience, ability, background, certification and knowledge to provide the services described in this Agreement. E. The principal member of Consultant for purposes of Project shall be James B. Netzer. F. City has solicited and received a proposal from Consultant, has reviewed the previous experience and evaluated the expertise of Consultant, and desires to retain Consultant to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: HlI1EEFffZTTUI The term of this Agreement shall commence on the above written date, and shall automatically terminate on the 31st day of December 2006, unless terminated earlier as set forth herein. 0 2. SERVICES TO BE PERFORMED Consultant shall diligently perform all the services described in the Scope of Services attached hereto as Exhibit "A" and incorporated herein by reference. The City may elect to delete certain tasks of the Scope of Services at its sole discretion. 3. TIME OF PERFORMANCE Time is of the essence in the performance of services under this Agreement and Consultant shall perform the services in accordance with the schedule included herein. The failure by Consultant to strictly adhere to the schedule may result in termination of this Agreement by City. Consultant shall prepare the Appraisal Report (as defined in Exhibit "A ') within Twelve (12) weeks of the execution of this Agreement. Notwithstanding the foregoing, Consultant shall not be responsible for delays due to causes beyond Consultant's reasonable control. However, in the case of any such delay in the services to be provided for the Project, each party hereby agrees to provide notice to the other party so that all delays can be addressed. 3.1 Consultant shall submit all requests for extensions of time ' for performance in writing to the Project Administrator not later than ten (10) calendar days after the start of the condition that purportedly causes a delay. The Project Administrator shall review all such requests and may grant reasonable time extensions for unforeseeable delays that are beyond Consultant's control. 3.2 For all time periods not specifically set forth herein, Consultant shall respond in the most expedient and appropriate manner under the circumstances, by either telephone, fax, hand - delivery or mail. 4. COMPENSATION TO CONSULTANT City shall pay Consultant a lump sum amount of Forty -Two Thousand Five Hundred and 001100 Dollars ($42,500.00) ( "Consultant Fee ") to complete the Project and perform all services set forth in Exhibit "A ". Consultant's compensation for all work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed the Consultant Fee. City shall pay Consultant the Consultant Fee within forty -five (45) days of Consultant's completion of the Project and delivery of the three (3) copies of the Appraisal Report (as defined in Exhibit `A ") to the City. Consultant shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the z parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit "B ". City shall pay Consultant for approved Extra Work within thirty (30) days after receipt and approval of an invoice that sets forth the name of the person who performed the Extra Work, a detailed description of the services performed, the date the services were performed and the number of hours spent on all work billed on an hourly basis. 5. PROJECT MANAGER Consultant shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Consultant has designated James B. Netzer to be its Project Manager. Consultant shall not remove or reassign the Project Manager or assign any new or replacement personnel to the Project without the prior written consent of City. City's approval shall not be unreasonably withheld with respect to the removal or assignment of non -key personnel. Consultant, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of services upon written request of City.. Consultant warrants that it will continuously furnish the necessary personnel to . complete the Project on a timely basis as contemplated by this Agreement. 6. ADMINISTRATION This Agreement will be administered by the City's Revenue Division. Evelyn Tseng shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or her authorized representative shall represent City in all matters pertaining to the services to be rendered pursuant to this Agreement. CITY'S RESPONSIBILITIES In order to assist Consultant in the execution of its responsibilities under this Agreement, City agrees to provide access to, and upon request of Consultant, one copy of all existing relevant information on file at City. City will provide all such materials in a timely manner so as not to cause delays in Consultant's work schedule. 8. STANDARD OF CARE 8.1 All of the services shall be performed by Consultant or under Consultant's supervision. Consultant represents that it possesses the professional and technical personnel required to perform the services required by this Agreement, and that it will perform all services in a manner commensurate with community professional standards. All services shall be performed by qualified and experienced personnel who are not employed by City, nor have any contractual relationship with City. 0 0 8.2 Consultant represents and warrants to City that it has or shall obtain all licenses, permits, qualifications, insurance and approvals of whatsoever nature that are legally required of Consultant to practice its profession. Consultant further represents and warrants to City that Consultant shall, at its sole cost and expense, keep in effect or obtain at all times during the term of this Agreement, any and all licenses, permits, insurance and other approvals that are legally required of Consultant to practice its profession. Consultant shall maintain a City of Newport Beach business license during the term of this Agreement. 8.3 Consultant shall not be responsible for delay, nor shall Consultant be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of City to furnish timely information or to approve or disapprove Consultant's work promptly, or delay or faulty performance by City, contractors, or governmental agencies. 9. HOLD HARMLESS To the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents and employees (collectively, the "Indemnified Parties ") from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims "), which may arise from or in any manner relate (directly or indirectly) to any work performed or services provided under this Agreement (including, without limitation, defects in workmanship) or Consultant's presence or activities conducted on the Project (including the negligent and /or willful acts, errors and /or omissions of Consultant, its principals, officers, agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them). Notwithstanding the foregoing, nothing herein shall be construed to require Consultant to indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Consultant. 10. INDEPENDENT CONTRACTOR It is understood that City retains Consultant on an independent contractor basis and Consultant is not an agent or employee of City. The manner and means of a 0 0 conducting the work are under the control of Consultant, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. Nothing in this Agreement shall be deemed to constitute approval for Consultant or any of Consultant's employees or agents, to be the agents or employees of City. Consultant shall have the responsibility for and control over the means of performing the work, provided that Consultant is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Consultant as to the details of the performance or to exercise a measure of control over Consultant shall mean only that Consultant shall follow the desires of City with respect to the results of the services. 11. COOPERATION Consultant agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the work to be performed. City agrees to cooperate with the Consultant on the Project. 12. CITY POLICY Consultant shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 13. PROGRESS Consultant is responsible for keeping the Project Administrator and/or her duly authorized designee informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. 14. INSURANCE Without limiting Consultant's indemnification of City, and prior to commencement of work. Consultant shall obtain, provide and maintain at its own expense during the term of this Agreement, a policy or policies of liability insurance of the type and amounts described below and in a form satisfactory to City. A. Certificates of Insurance. Consultant shall provide certificates of insurance with original endorsements to City as evidence of the insurance coverage required herein. Insurance certificates must be approved by City's Risk Manager prior to commencement of performance or issuance of any permit. Current certification of insurance shall be kept on file with City's at all times during the term of this Agreement. B. Signature. A person authorized by the insurer to bind coverage on its behalf shall sign certification of all required policies. u 9 0 C. Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, with an assigned policyholders' Rating of A (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. D. Coverage Requirements. Workers' Compensation Coverage. Consultant shall maintain Workers' Compensation Insurance and Employer's Liability Insurance for his or her employees in accordance with the laws of the State of California. In addition, Consultant shall require each subcontractor to similarly maintain Workers' Compensation Insurance and Employer's Liability Insurance in accordance with the laws of the State of California for all of the subcontractor's employees. Any notice of cancellation or non - renewal of all Workers' Compensation policies must be received by City at least thirty (30) calendar days (10 calendar days written notice of non- payment of premium) prior to such change. The insurer shall agree to waive all rights of subrogation against City, its officers, agents, employees and volunteers for losses arising from work performed by Consultant for City. ii. General Liability. Coverage. Consultant shall maintain commercial general liability insurance in an amount not less than one million dollars ($1,000,000) per occurrence for bodily injury, personal injury, and property damage, including without limitation, contractual liability. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement, or the general aggregate limit shall be at least twice the required occurrence limit. iii. Automobile Liability Coverage. Consultant shall maintain automobile insurance covering bodily injury and property damage for all activities of the Consultant arising out of or in connection with work to be performed under this Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than one million dollars ($1,000,000) combined single limit for each occurrence. iv. Professional Errors and Omissions Insurance. Consultant shall maintain professional errors and omissions insurance, which covers the services to be performed in connection with this Agreement in the minimum amount of one million dollars ($1,000,000). u C, J E. Endorsements. Each general liability and automobile liability insurance policy shall be endorsed with the following specific language: i. The City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insureds with respect to liability arising out of work performed by or on behalf of the Consultant. ii. This policy shall be considered primary insurance as respects to City, its elected or appointed officers, officials, employees, agents and volunteers as respects to all claims, losses, or liability arising directly or indirectly from the Consultant's operations or services provided to City. Any insurance maintained by City, including any self- insured retention City may have, shall be considered excess insurance only and not contributory with the insurance provided hereunder. iii. This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. iv. The insurer waives all rights of subrogation against City, its elected or appointed officers, officials, employees, agents and volunteers.. V. Any failure to comply with reporting provisions of the policies shall not affect coverage .provided to City, its elected or appointed officers, officials, employees, agents or volunteers. vi. The insurance provided by this policy shall not be suspended, voided, canceled, or reduced in coverage or in limits, by either party except after thirty (30) calendar days (10 calendar days written notice of non - payment of premium) written notice has been received by City. F. Timely Notice of Claims. Consultant shall give City prompt and timely notice of claim made or suit instituted arising out of or resulting from Consultant's performance under this Agreement. G. Additional Insurance. Consultant shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the work. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Consultant, or of n • • the interest of any general partner or joint venturer or syndicate member or cotenant if Consultant is a partnership or joint- venture or syndicate or cotenancy, which shall result in changing the control of Consultant. Control means fifty percent (50 %) or more of the voting power, or twenty -five percent (25 %) or more of the assets of the corporation, partnership or joint- venture. 16. SUBCONTRACTING The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Consultant. Assignments of any or all rights, duties or obligations of the Consultant under this Agreement will be permitted only with the express written consent of City. Consultant shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of City. 17. OWNERSHIP OF DOCUMENTS Each and every report, draft, map, record, plan, document and other writing produced (hereinafter "Documents "), prepared or caused to be prepared by Consultant, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Consultant or any other party. Consultant shall, at Consultant's expense, provide such Documents to City upon prior written request. Documents, including drawings and specifications, prepared by Consultant pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Consultant will be at City's sole risk and without liability to Consultant. Further, any and all liability arising out of changes made to Consultant's deliverables under this Agreement by City or persons other than Consultant is waived against Consultant and City assumes full responsibility for such changes unless City has given Consultant prior notice and has received from Consultant written consent for such changes. 18. CONFIDENTIALITY All Documents, including drafts, preliminary drawings or plans, notes and communications that result from the services in this Agreement, shall be kept confidential unless City authorizes in writing the release of information. 19. INTELLECTUAL PROPERTY INDEMNITY The Consultant shall defend and indemnify City, its agents, officers, representatives and employees against any and all liability, including costs, for infringement of any United States' letters patent, trademark, or copyright infringement, including costs, contained in Consultant's drawings and specifications provided under this Agreement. 0 0 20. RECORDS Consultant shall keep records and invoices in connection with the work to be performed under this Agreement. Consultant shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours, at City's sole cost and expense. Consultant shall allow inspection of all work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. 21. WITHHOLDINGS City may withhold payment to Consultant of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Consultant shall not discontinue work as a result of such withholding. Consultant shall have an immediate right to appeal to the City Manager or his/her designee with respect to such disputed sums. Consultant shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. 22. ERRORS AND OMISSIONS In the event of errors or omissions that are due to the negligence or professional inexperience of Consultant which result in expense to City greater than what would have resulted if there were not errors or omissions in the work accomplished by Consultant, the additional expense shall be borne by Consultant. Nothing in this paragraph is intended to limit City's rights under any other sections of this Agreement. 23. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS City reserves the right to employ other Consultants in connection with the Project. 24. CONFLICTS OF INTEREST Consultant or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act "), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the work performed under this Agreement, and (2) prohibits such persons from 51 making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, Consultant shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Consultant shall indemnify and hold harmless City for any and all claims for damages resulting from Consultant's violation of this Section. 25. NOTICES All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, to City by Consultant and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first -class mail, addressed as hereinafter provided. All notices, demands, requests or approvals from Consultant to City shall be addressed to City at: Attn: Revenue Division Evelyn Tseng City of Newport Beach 3300 Newport Boulevard Newport Beach, CA, 92663 Phone: 949 - 644 -3153 Fax: 949 -644 -3073 All notices, demands, requests or approvals from CITY to Consultant shall be addressed to Consultant at: Attn: James B. Netzer Netzer & Associates 234 E. Seventeenth St., Suite 209 Costa Mesa, CA 92627 Phone: 949 - 574 -0261 Fax: 949 - 574 -0271 26. TERMINATION In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, the non - defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. 10 0 0 Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving seven (7) calendar days prior written notice to Consultant. In the event of termination under this Section, City shall pay Consultant for services satisfactorily performed and costs incurred up to the effective date of termination for which Consultant has not been previously paid. On the effective date of termination, Consultant shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 27. COMPLIANCE WITH ALL LAWS Consultant shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all work prepared by Consultant shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 28. WAIVER A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 29. INTEGRATED CONTRACT This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 30. CONFLICTS OR INCONSISTENCIES In the event there are any conflicts or inconsistencies between this Agreement and the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govern. 31. AMENDMENTS This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney. 32. SEVERABILITY If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of 11 reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the day and year first written above. APPROVED AS TO FORM: C_8 Aa'ron'C. Harp Assistant City Attorney for the City of Newport Beach LaVonne Harkless, City Clerk CITY OF NEWPORT BEAC , A Muni' 'ice oration By: Ov Don Webb Mayor for the City of Newport Beach CONSULTANT: Attachments: Exhibit A — Scope of Services Exhibit B — Schedule of Billing Rates 12 Exhibit "A" SCOPE OF SERVICES Consultant shall perform the following services as part of this Agreement: Provide a summary appraisal, rental survey, and fair market rent recommendation ( "Appraisal Report") for the following properties or services: Commercial entities operating at fixed locations on tideland properties, i.e. gas dock operations, bait and tackle stores; Commercial operations emanating from tideland properties, i.e. the Balboa Island Ferry, Newport Bait Barge; C. Balboa Yacht Basin, i. 200 boat slips, ii. 3 apartments, iii. 31 garages; which contains approximately: Note: Balboa Yacht Basin is subject to the terms of Council Policy F -7. Commercial piers within the City of Newport Beach; e. Two categories of residential piers within the City of Newport Beach, including: • Those which have been leased by the residential property owners to third -party boat owners on a monthly or quarterly basis; • Those which are used solely for personal, non - commercial use; The licensing of City-owned docks, i.e. the 29th Street dock; g. On -shore and off -shore moorings within the City of Newport Beach; h. Oceanfront encroachments; and The Dory Fisherman Fleet Zone. 2. Prepare the Appraisal Report in accordance with the Standards of Professional Practice and the Code of Professional Ethics of the Appraisal Institute. 3. Deliver three (3) copies of the Appraisal Report to the City. 4. Meet with City in a timely manner, at City's request, in order to explain or clarify any aspect of the Appraisal Report. 13 0 Exhibit "B" SCHEDULE OF BILLING RATES James B. Netzer - $250.00 per hour 0 In the event Consultant is subpoenaed or otherwise required to give testimony or to attend any public or private hearing, or public meeting, as a result of having prepared the appraisal report pursuant to this Agreement, Consultant shall bill the City $250.00 per hour for attendance or testimony required. 14 • E r 1 \_I • • X38 / ��0� � By THE CITY OF NEWPORT BEAC CITY COUNCIL STAFF REPORT JUN 13 2�q `16 Agenda Item No. Sail June 13, 2006 e cot" o TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL a 314 FROM: Dave Kiff, Assistant City Manager City Manager's Office — 949 - 644 -3002 dkiff cDeity.newport- beach.ca.us SUBJECT: HARBOR VALUATION — THREE STUDIES (ECONOMIC EVALUATION, APPRAISAL, COST OF SERVICES STUDY); BUDGET AMENDMENT #BA- RECOMMENDATIONS: 1. Authorize the City Manager to execute Professional Services Agreements in substantially similar form to the attached draft agreements with: A. Netzer & Associates for the appraisal of commercial tideland properties within Newport Beach; B. Maximus, Inc. to identify and analyze cost -of- service activities pertaining to City tidelands; and C. Professors Hanemann and DeShazo to conduct an economic analysis of the Lower Harbor and its assets; and 2. Approve a Budget Amendment in the amount of $119,500.00 (BA #--) from 010 -3605, to 0310 -8080 to fund these three agreements. DISCUSSION: It has been ten years since the City has contracted for an independent analysis of the cost of providing services at the City, and five years since a study of the economic value associated with Lower Newport Bay ( "LNB ") and LNB's tidelands has been conducted. The Beacon Bay Bill (Chapter 74 of the Statutes of 1978) and other legislation directs the City to administer the tidelands on behalf of the people of the State of California (also referred to as our "Tidelands Trust ") as trustee of those tidelands. The Beacon Bay Bill says the following: (a) (Tidelands) shall be used by the city and its successors for purposes in which there is a general statewide interest, as follows: • Harbor Valuation June 13, 2006 Page 2 (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) ...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. (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. The City has interpreted the Beacon Bay .bill and other directives of the State Lands Commission ( "SLC °) — especially the prohibition against granting, conveying, or giving the tidelands to others without franchises or leases — as directing us to consistently seek to get fair market value where tidelands franchises, leases, or permits are granted. In addition, Council Policy F -7 provides that where there is a lease, concession, or similar contract, being considered for income property, the City must conduct an appraisal to determine the maximum or open market value of that property. All negotiations pertaining to income property contracts shall include a review of an appraisal conducted by a reputable appraiser. There are various types of commercial and other income - generating operations in LNB. These include: • Marinas • Gas docks • Dry boat storage facilities • Mobile gas refueling vehicles • Bait barges • The Balboa Island Ferry 0 0 0 r] • Charter boats, including party boats and commercial fishing or sports - fishing boats. • Moorings, both shore moorings and off -shore moorings • Shipyards • Boat cleaning /detailing facilities • Piers adjacent to residences, where the pier is rented out via a rental 41 Harbor Valuation June 13, 2006 Page 3 agency. Piers that are for the upland property owners' sole use are not considered to be commercially in use. • Residential pier fees • Hotel • Yacht club • Oceanfront encroachments • Dory fishing and sales of fish Some of these properties are managed via long -term leases. Others pay an annual permit fee. The current fee schedule for these permits is attached. City staff believes that it is long past time to analyze the resource value of the Harbor, in part to fulfill our obligations under the Tidelands Trust, but also to ensure that we are fairly and equitably distributing Harbor costs across Harbor uses. The attached PowerPoint presentation — given to the City Council in January 2006 — is abbreviated from January 2006 and summarized some of the issues involved in this Harbor valuation. One of the issues discussed in January 2006 was the challenge of fairly valuing the Harbor and its resources. Previous efforts — such as a detailed 1999 appraisal done by George Hamilton Jones — were not implemented because of the complexity of the appraisal and the difficulty (both practical and political) in applying the new values to each use. As a result of that discussion, we concluded that we should look at the Harbor through three lenses: A fair market value appraisal; A cost of services study; and The valuation of the Harbor from an economist's perspective — in other words, does the Harbor bring a value to the community, to the region, or to adjacent properties that can be translated into a per square foot amount? This agenda item asks the Council's approval to enter into a separate contract for each of the three "lenses ". A budget amendment is required as well. Appraisal As noted, the City regulates some of its commercial Harbor properties through Council Policy. For example, Council Policy H -1 provides that commercial pier permit fees shall be increased each year by CPI, and subject to a recalculation based on an appraisal every ten years (Non- commercial piers are not subject to these fees, and mooring permit fees are increased by City Council resolution each year). The City must update the fees and rental amounts for, among other things, its commercial piers, the commercial use of its non - commercial piers, its moorings, and the Balboa Yacht Basin slips, garages and apartments. In late 2005, the City issued a Request for Proposal for a fair market value appraisal of such properties. Based on the submissions, we recommend that the City hire Mr. James B. Netzer to conduct a comprehensive appraisal of the fair market rental value of these properties. Mr. Netzer's Scope of Services and proposed contract is attached. 0 Tidelands Cost -of- Services Study ' Harbor Valuation June 13, 2006 Page 4 The City has not conducted a comprehensive cost -of- services study since 1996. City staff suspects that fees currently charged for tidelands uses are outdated and insufficient to cover the costs of City services to those tidelands. Moreover, several services provided by the City were not included in the 1996 study. In order to accurately update the Master Fee Schedule as it pertains to City tidelands, the City needs to contract with an experienced consultant who will analyze the fee - for - service activities which the Harbor Resources and appurtenant divisions provide to the tidelands. The consultant will identify the full costs for each fee - for -service activity, recommend fee adjustments accordingly, identify City services for which there may not be a current fee, determine the costs of those activities, and recommend the addition of those fees to the Master Fee Schedule. City staff has selected Maximus, Inc. to provide this analysis. City staff has worked with Maximus, Inc. on state mandate issues, and has first -hand knowledge of Maximus's responsiveness and experience. The terms of agreement upon which its contract will be based is attached. Economic Analysis The Harbor and related shoreline infrastructure owned and maintained by the City of Newport Beach constitute valuable public assets that generate benefits to a variety of private parties, including private businesses that operate along the shore and on the pier, and the members of the public who visit the area for recreation, for entertainment, for shopping, and for business. This particular value has never been examined. City staff recommends such an economic analysis of City tidelands in order to: (1) ensure the sustainable management of the Harbor and related infrastructure, and (2) ensure that the City receives a fair share of the economic value generated by this infrastructure. The analysis will have three components: 1) it will develop an economic basis for the City to account for and capture some of the public benefits to private entities that are generated by City assets; 2) it will provide examples of other publicly -owned natural assets (at all levels of government) from which commercial entities profit and for which they pay charges or fees; and 3) it will provide the forms that charges take for specific types of commercial properties in other harbors. The consultant will make recommendations regarding the scope, level, form and phase -in process for a range of charges. After reviewing several proposals, City staff selected Professor Hanemann and Professor DeShazo's proposal for this study. Professor Hanemann analyzed the economic damages from the loss of beach recreation after the American Trader tanker leaked several hundred thousand gallons of crude oil into the ocean in 1990, affecting beaches from Seal Beach to Crystal Cove. Professor Hanemann is currently a Professor of Public Policy at University of California, Berkeley. Professor DeShazo is an Associate Professor of Public Policy at University of California, Los Angeles, and the Associate Director for the Lewis Center for Regional Public Policy. The terms of agreement upon which their contract will be based is attached. Committee Input: The Finance Committee recommended the valuation study be conducted last November, and will be examining the preliminary information submitted to city staff by the three consultants. 0 LJ • Harbor Valuation June 93, 2006 Page 5 Committee Review: The Harbor Commission is aware of this proposal, but because of potential conflicts of interest, we have not asked them to comment on it. Environmental Review: Environmental review is not required for this agenda item. Fundino Availability: Upon approval of the recommended Budget Amendment, sufficient funds will be available in the following account for the project: Account Description City tidelands fair market appraisal Cost -of- Services Study Economic Analysis Submitted by: Davf Kiff Assistant City Manager Account Number Amount 0310 -8080 $42,500.00 0310 -8080 $22,000.00 0310 -8080 $55,000.00 Attachments: Draft Professional Services Agreement with Netzer & Associates Draft Professional Services Agreement with Maximus, Inc. Draft Professional Services Agreement with Professors Hanemann and DeShazo Selected Portions of the January 2006 PowerPoint 0 PROFESSIONAL SERVICES AGREEMENT WITH NETZER & ASSOCIATES FOR THE APPRAISAL OF COMMERCIAL TIDELAND PROPERTIES IN THE CITY OF NEWPORT BEACH THIS AGREEMENT is made and entered into as of this day of 2006, by and between the CITY OF NEWPORT BEACH, a Municipal Corporation ( "City "), and NETZER & ASSOCIATES, whose address is 234 E. Seventeenth Street, Suite 209, Costa Mesa, California, 92627 ( "Consultant'), and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City would like to gather information regarding the fair market rent or fees of various public tidelands uses in order to establish an equitable price for such uses. These tideland properties include the boat slips, garages and apartments at the Balboa Yacht Basin, the City's residential and commercial piers, the commercial use of residential piers, on -shore and off -shore moorings, the dory fishing fleet zone, and various other tideland properties under contract with the City. C. City desires to engage Consultant to conduct an appraisal of the commercial tideland properties within the City of Newport Beach ('Project'). D. Consultant possesses the skill, experience, ability, background, certification and knowledge to provide the services described in this Agreement. E. The principal member of Consultant for purposes of Project shall be James B. Netzer. F. City has solicited and received a proposal from Consultant, has reviewed the previous experience and evaluated the expertise of Consultant, and desires to retain Consultant to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM The term of this Agreement shall commence on the above written date, and shall automatically terminate on the 31st day of August, 2006, unless terminated earlier as set forth herein. i 2. SERVICES TO BE PERFORMED Consultant shall diligently perform all the services described in the Scope of Services attached hereto as Exhibit "A" and incorporated herein by reference. The City may elect to delete certain tasks of the Scope of Services at its sole discretion. 3. TIME OF PERFORMANCE Time is of the essence in the performance of services under this Agreement and Consultant shall perform the services in accordance with the schedule included herein. The failure by Consultant to strictly adhere to the schedule may result in termination of this Agreement by City. Consultant shall prepare the Appraisal Report (as defined in Exhibit "A ") within Ten (10) weeks of the execution of this Agreement. Notwithstanding the foregoing, Consultant shall not be responsible for delays due to causes beyond Consultant's reasonable control. However, in the case of any such delay in the services to be provided for the Project, each party hereby agrees to provide notice to the other party so that all delays can be addressed. 3.1 Consultant shall submit all requests for extensions of time for performance in writing to the Project Administrator not later than ten (10) calendar days after the start of the condition that purportedly causes a delay. The Project Administrator shall review all such requests and may grant reasonable time extensions for unforeseeable delays that are beyond Consultant's control. 3.2 For all time periods not specifically set forth herein, Consultant shall respond in the most expedient and appropriate manner under the circumstances, by either telephone, fax, hand - delivery or mail. 4. COMPENSATION TO CONSULTANT City shall pay Consultant Forty-Two .Thousand Five Hundred and 00/100 Dollars ($42,500.00) ( "Consultant Fee ") for its services in accordance with the provisions of this Section. This fee is based upon Consultant's projection in accordance with the Scope of Work and his hourly fee of One Hundred Fifty and no /100 Dollars ($150.00). Consultant's compensation for all work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed the Consultant Fee. 4.1 Consultant shall submit monthly status reports to City describing the work performed the preceding month. Consultant's reports shall include the name of the person who performed the work, a detailed description of the services performed and /or the specific task in the Scope of Services to which it relates, the date the services were performed, and the number of 2 Q ................ hours spent on all work billed on an hourly basis. City shall pay Consultant no later than thirty (30) days after receipt of Consultant's completion of the Scope of Work as described in Exhibit "A ". 4.2 City shall reimburse Consultant only for those costs or expenses specifically approved in this Agreement, or specifically approved in advance by City. 4.3 Consultant shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any work that is determined by City to be necessary for the proper completion of the Project,. but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit "B ". 4.4 City shall pay Consultant within forty -five (45) days of Consultant's delivery of the three (3) copies of the Appraisal Report (as defined in Exhibit "A ") to the City. 5. PROJECT MANAGER Consultant shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable is times during the Agreement term. Consultant has designated James B. Netzer to be its Project Manager. Consultant shall not remove or reassign the Project Manager or assign any new or replacement personnel to the Project without the prior written consent of City. City's approval shall not be unreasonably withheld with respect to the removal or assignment of non -key personnel. Consultant, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of services upon written request of City. Consultant warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 6. ADMINISTRATION This Agreement will be administered by the City's Revenue Division. Evelyn Tseng shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or her authorized representative shall represent City in all matters pertaining to the services to be rendered pursuant to this Agreement. 7. CITY'S RESPONSIBILITIES In order to assist Consultant in the execution of its responsibilities under this Agreement, City agrees to provide access to, and upon request of Consultant, one copy of all existing relevant information on file at City. City will provide all 3 • 0 such materials in a timely manner so as not to cause delays in Consultant's work schedule. 8. STANDARD OF CARE 8.1 All of the services shall be performed by Consultant or under Consultant's supervision. Consultant represents that it possesses the professional and technical personnel required to perform the services required by this Agreement, and that it will perform all services in a manner commensurate with community professional standards. All services shall be performed by qualified and experienced personnel who are not employed by City, nor have any contractual relationship with City. 8.2 Consultant represents and warrants to City that it has or shall obtain all licenses, permits, qualifications, insurance and approvals of whatsoever nature that are legally required of Consultant to practice its profession. Consultant further represents and warrants to City that Consultant shall, at its sole cost and expense, keep in effect or obtain at all times during the term of this Agreement, any and all licenses, permits, insurance and other approvals that are legally required of Consultant to practice its profession. Consultant shall maintain a City of Newport Beach business license during the term of this Agreement. 8.3 Consultant shall not be responsible for delay, nor shall Consultant be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of City to furnish timely information or to approve or disapprove Consultant's work promptly, or delay or faulty performance by City, contractors, or governmental agencies. HQ151:L1Vad III * *: To the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents and employees (collectively, the "Indemnified Parties ") from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims'), which may arise from or in any manner relate (directly or indirectly) to any work performed or services provided under this Agreement (including, without limitation, defects in workmanship) or Consultant's presence or activities conducted on the Project (including the negligent and /or willful acts, errors and/or omissions of Consultant, its principals, officers, agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them). 0 a ID 1 Notwithstanding the foregoing, nothing herein shall be construed to require Consultant to indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful misconduct -of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Consultant. 10. INDEPENDENT CONTRACTOR It is understood that City retains Consultant on an independent contractor basis and Consultant is not an agent or employee of City. The manner and means of conducting the work are under the control of Consultant, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. Nothing in this Agreement shall be deemed to constitute approval for Consultant or any of Consultant's employees or agents, to be the agents or employees of City. Consultant shall have the responsibility for and control over the means of performing the work, provided that Consultant is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Consultant as to the details of the performance or to exercise a measure of control over Consultant shall mean only that Consultant shall follow the desires of City with respect to the results of the services. 0 11. COOPERATION Consultant agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the work to be performed. City agrees to cooperate with the Consultant on the Project. 12. CITY POLICY Consultant shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 13. PROGRESS Consultant is responsible for keeping the Project Administrator and /or her duly authorized designee informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. 14. INSURANCE 0 Without limiting Consultant's indemnification of City, and prior to commencement of work. Consultant shall obtain, provide and maintain at its own expense during s '�t the term of this Agreement, a policy or policies of liability insurance of the type and amounts described below and in a form satisfactory to City. A. Certificates of Insurance. Consultant shall provide certificates of insurance. with original endorsements to City as evidence of the insurance coverage required herein. Insurance certificates must be approved by City's Risk Manager prior to commencement of performance or issuance of any permit. Current certification of insurance shall be kept on file with City's at all times during the term of this Agreement. B. Signature. A person authorized by the insurer to bind coverage on its behalf shall sign certification of all required policies. C. Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, with an assigned policyholders' Rating of A (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest .edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. D. Coverage Requirements. i. Workers' Compensation Coverage. Consultant shall maintain Workers' Compensation Insurance and Employer's Liability Insurance for his or her employees in accordance with the laws of the State of California. In addition, Consultant shall require each subcontractor to similarly maintain. Workers' Compensation Insurance and Employer's Liability Insurance in accordance with the laws of the State of California for all of the subcontractor's employees. Any notice of cancellation or non - renewal of all Workers' Compensation policies must be received by City at least thirty (30) calendar days (10 calendar days written notice of non- payment of premium) prior to such change. The insurer shall agree to waive all rights of subrogation against City, its officers, agents, employees and volunteers for losses arising from work performed by Consultant for City. ii. General Liability Coverage. Consultant shall maintain commercial general liability insurance in an amount not less than one million dollars ($1,000,000) per occurrence for bodily injury, personal injury, and property damage, including without limitation, contractual liability. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement, or the general aggregate limit shall be at least twice the required occurrence limit. iii. Automobile Liability Coverage. Consultant shall maintain automobile insurance covering bodily injury and property damage s 0 • for all activities of the Consultant arising out of or in connection with work to be performed under this Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than one million dollars ($1,000,000) combined single limit for each occurrence. iv. Professional Errors and Omissions Insurance. Consultant shall maintain professional errors and omissions insurance, which covers the services to be performed in connection with this Agreement in the minimum amount of one million dollars ($1,000,000). E. Endorsements. Each general liability and automobile liability insurance policy shall be endorsed with the following specific language: i. The City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insureds with respect to liability arising out of work performed by or on behalf of the Consultant. ii. This policy shall be considered primary insurance as respects to City, its elected or appointed officers, officials, employees, agents and volunteers as respects to all claims, losses, or liability arising directly or indirectly from the Consultant's operations or services provided to City. Any insurance maintained by City, including any self- insured retention City may have, shall be considered excess insurance only and not contributory with the insurance provided hereunder. iii. This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. iv. The insurer waives all rights of subrogation against City, its elected or appointed officers, officials, employees, agents and volunteers. V. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its elected or appointed officers, officials, employees, agents or volunteers. vi. The insurance provided by this policy shall not be suspended, voided, canceled, or reduced in coverage or in limits, by either party except after thirty (30) calendar days (10 calendar days written notice of non - payment of premium) written notice has been received by City. F. Timely Notice of Claims. Consultant shall give City prompt and timely notice of claim made or suit instituted arising out of or resulting from Consultant's performance under this Agreement. �3 L 0 G. Additional Insurance. Consultant shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the work. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Consultant, or of the interest of any general partner or joint venturer or syndicate member or cotenant if Consultant is a partnership or joint- venture or syndicate or cotenancy, which shall result in changing the control of Consultant. Control means fifty percent (50 %) or more of the voting power, or twenty -five percent (25 %) or more of the assets of the corporation, partnership or joint- venture. 16. SUBCONTRACTING The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Consultant. Assignments of any or all rights, duties or obligations of the Consultant under this Agreement will be permitted only with the express written consent of City. Consultant shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of City. 17. OWNERSHIP OF DOCUMENTS Each and every report, draft, map, record, plan, document and other writing produced (hereinafter "Documents "), prepared or caused to be prepared by Consultant, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Consultant or any other party. Consultant shall, at Consultant's expense, provide such Documents to City upon prior written request. Documents, including drawings and specifications, prepared by Consultant pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Consultant will be at City's sole risk and without liability to Consultant. Further, any and all liability arising out of changes made to Consultant's deliverables under this Agreement by City or persons other than Consultant is waived against Consultant and City assumes full responsibility for such changes unless City has given Consultant prior notice and has received from Consultant written consent for such changes. 18. CONFIDENTIALITY 6 \A 0 0 All Documents, including drafts, preliminary drawings or plans, notes and communications that result from the services in this Agreement, shall be kept confidential unless City authorizes in writing the release of information. 19. INTELLECTUAL PROPERTY INDEMNITY The Consultant shall defend and indemnify City, its agents, officers, representatives and employees against any and all liability, including costs, for infringement of any United States' letters patent, trademark, or copyright infringement, including costs, contained in Consultant's drawings and specifications provided under this Agreement. 20. RECORDS Consultant shall keep records and invoices in connection with the work to be performed under this Agreement. Consultant shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours, at City's sole cost and expense. Consultant shall allow inspection of all work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. 21. WITHHOLDINGS City may withhold payment to Consultant of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Consultant shall not discontinue work as a result of such withholding. Consultant shall have an immediate right to appeal to the City Manager or his /her designee with respect to such disputed sums. Consultant shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. 22. ERRORS AND OMISSIONS In the event of errors or omissions that are due to the negligence or professional inexperience of Consultant which result in expense to City greater than what would have resulted if there were not errors or omissions in the work accomplished by Consultant, the additional expense shall be borne by Consultant. Nothing in this paragraph is intended to limit City's rights under any other sections of this Agreement. 9 i�J 23. 24. 25. 0 17, CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS City reserves the right to employ other Consultants in connection with the Project. CONFLICTS OF INTEREST Consultant or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act "), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, Consultant shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Consultant shall indemnify and hold harmless City for any and all claims for damages resulting from Consultant's violation of this Section. NOTICES All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, to City by Consultant and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first -class mail, addressed as hereinafter provided. All notices, demands, requests or approvals from Consultant to City shall be addressed to City at: Attn: Revenue Division Evelyn Tseng City of Newport Beach 3300 Newport Boulevard Newport Beach, CA, 92663 Phone: 949 - 644 -3153 Fax: 949 -644 -3073 All notices, demands, requests or approvals from CITY to Consultant shall be addressed to Consultant at: 26. TERMINATION Attn: James B. Netzer Netzer & Associates 234 E. Seventeenth St., Suite 209 Costa Mesa, CA 92627 Phone: 949- 574 -0261 Fax: 949 - 574 -0271 10 L • 0 I I U 0 • In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, the non - defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving seven (7) calendar days prior written notice to Consultant. In the event of termination under this Section, City shall pay Consultant for services satisfactorily performed and costs incurred up to the effective date of termination for which Consultant has not been previously paid. On the effective date of termination, Consultant shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 27. COMPLIANCE WITH ALL LAWS Consultant shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all work prepared by Consultant shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 28. WAIVER A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 29. INTEGRATED CONTRACT This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 30. CONFLICTS OR INCONSISTENCIES In the event there are any conflicts or inconsistencies between this Agreement and the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govern. „ 31. AMENDMENTS E This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney. 32. SEVERABILITY If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 33. CONTROLLING LAW AND VENUE The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. 34. EQUAL OPPORTUNITY EMPLOYMENT Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the day and year first written above. APPROVED AS TO FORM: Aaron C. Harp Assistant City Attorney for the City of Newport Beach ATTEST: is LaVonne Harkless, City Clerk CITY OF NEWPORT BEACH, A Municipal Corporation By: Don Webb Mayor for the City of Newport Beach CONSULTANT: By: James B. Netzer Netzer & Associates 0 11 0 12 i 0 0 Exhibit "A" 0 SCOPE OF SERVICES Consultant shall perform the following services as part of this Agreement: 1. Provide a summary appraisal, rental survey, and fair market rent recommendation ( "Appraisal Report") for the following properties or services: a. Commercial entities operating at fixed locations on tideland properties, i.e. gas dock operations, bait and tackle stores; b. Commercial operations emanating from tideland properties, i.e. the Balboa Island Ferry, Newport Bait Barge; C. Balboa Yacht Basin, which contains approximately: i. 200 boat slips, ii. 3 apartments, and iii. 31 garages; Note: Balboa Yacht Basin is subject to the terms of Council Policy F -7. d. Commercial piers within the City of Newport Beach; • e. Two categories of residential piers within the City of Newport Beach, including: • Those which have been leased by the residential property owners to third -party boat owners on a monthly or quarterly basis; • Those which are used solely for personal, non - commercial use; f. The licensing of City -owned docks, i.e. the 29th Street dock; g. On -shore and off -shore moorings within the City of Newport Beach; h. Oceanfront encroachments; and i. The Dory Fisherman Fleet Zone. 2. Prepare the Appraisal Report in accordance with the Standards of Professional Practice and the Code of Professional Ethics of the Appraisal Institute. 3. Deliver three (3) copies of the Appraisal Report to the City. 4. Meet with City in a timely manner, at City's request, in order to explain or clarify any aspect of the Appraisal Report. 0 14 is 0 • • Exhibit "B" SCHEDULE OF BILLING RATES James B. Netzer - $150.00 per hour In the event Consultant is subpoenaed or otherwise required to give testimony or to attend any public or private hearing, or public meeting, as a result of having prepared the appraisal report pursuant to this Agreement, Consultant shall bill the City $250.00 per hour for attendance or testimony required. is • • PROFESSIONAL SERVICES AGREEMENT WITH MAXIMUS, INC. FOR THE APPRAISAL OF COMMERCIAL TIDELAND PROPERTIES IN THE CITY OF NEWPORT BEACH THIS AGREEMENT is made and entered into as of this _ day of 2006, by and between the CITY OF NEWPORT BEACH, a Municipal Corporation ("City"), and MAXIMUS, INC., a Virginia corporation, whose address is ( "Consultant'), and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City would like to accurately update the Master Fee Schedule as it pertains to City tidelands. In order to do so, an analysis of the fee - for - service activities which the Harbor Resources and appurtenant Divisions provide to the tidelands must be performed. The consultant will identify the full costs for each fee -for- service activity, recommend fee adjustments accordingly, identify City services for which there may not be a current fee, determine the costs of those activities, and recommend the addition of those fees to the Master Fee Schedule fair market rent of its commercial tideland properties. C. City desires to engage Consultant to conduct the services as described above ( "Project'). D. Consultant possesses the skill, experience, ability, background, certification and knowledge to provide the services described in this Agreement. E. The principal member of Consultant for purposes of Project shall be Richard Pearl. F. City has solicited and received a proposal from Consultant, has reviewed the previous experience and evaluated the expertise of Consultant, and desires to retain Consultant to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM • The term of this Agreement shall commence on the above written date, and shall automatically terminate on the 30th day of September, 2006, unless terminated earlier as set forth herein. • • 2. SERVICES TO BE PERFORMED Consultant shall diligently perform all the services described in the Scope of Services attached hereto as Exhibit "A" and incorporated herein by reference. The City may elect to delete certain tasks of the Scope of Services at its sole discretion. 3. TIME OF PERFORMANCE Time is of the essence in the performance of services under this Agreement and Consultant shall perform the services in accordance with the schedule included herein. The failure by Consultant to strictly adhere to the schedule may result in termination of this Agreement by City. Consultant shall prepare the work described in Exhibit "A" within two (2) months of the execution of this Agreement. Notwithstanding the foregoing, Consultant shall not be responsible for delays due to causes beyond Consultant's reasonable control. However, in the case of any such delay in the services to be provided for the Project, each party hereby agrees to provide notice to the other party so that all delays can be addressed. 3.1 Consultant shall submit all requests for extensions of time for performance in writing to the Project Administrator not later than ten (10) calendar days after the start of the condition that purportedly causes a delay. The Project Administrator shall review all such requests and may grant reasonable time extensions for unforeseeable delays that are beyond Consultant's control. 3.2 For all time periods not specifically set forth herein, Consultant shall respond in the most expedient and appropriate manner under the circumstances, by either telephone, fax, hand - delivery or mail. 4. COMPENSATION TO CONSULTANT City shall pay Consultant for the services on a time and expense basis in accordance with the provisions of this Section and the Schedule of Billing Rates attached hereto as Exhibit "B" and incorporated herein by reference. Consultant's compensation for all work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall be Twenty Thousand and no /100 Dollars ($20,000.00), plus a maximum of Two Thousand and no /100 Dollars ($2,000.00) in expenses ( "Consultant Fee "). Consultant's compensation shall not be greater than this amount without prior written authorization from City. No billing rate changes shall be made during the term of this Agreement without the prior written approval of City. 4.1 Consultant shall submit monthly statements to City describing the work . performed the preceding month. Consultant's statements shall include the name of the person who performed the work, a detailed description of z ,a ! • the services performed and /or the specific task in the Scope of Services to which it relates, the date the services were performed, the number of hours spent on all work billed on an hourly basis, and a description of any reimbursable expenditures. Consultant shall invoice City for completed work in accordance to the schedule attached as Exhibit "B ". 4.2 City shall reimburse Consultant only for those costs or expenses specifically approved in this Agreement, or specifically approved in advance by City. Unless otherwise approved, such costs shall be limited and include nothing more than the following costs incurred by Consultant: A. The actual costs of subconsultants for performance of any of the services that Consultant agrees to render pursuant to this Agreement, which have been approved in advance, in writing, by City and awarded in accordance with this Agreement. B. Approved reproduction charges. C. Actual costs and/or other costs and /or payments specifically authorized in advance in writing and incurred by Consultant in the performance of this Agreement. 4.3 Consultant shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit "B ". 5. PROJECT MANAGER Consultant shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Consultant has designated Richard Pearl to be its Project Manager. Consultant shall not remove or reassign the Project Manager or any personnel listed in Exhibit "A" or assign any new or replacement personnel to the Project without the prior written consent of City. City's approval shall not be unreasonably withheld with respect to the removal or assignment of non -key personnel. Consultant, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of services upon written request of City. Consultant warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 6. ADMINISTRATION 3 a 0 0 This Agreement will be administered by the City's Revenue Division. Evelyn Tseng shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or her authorized representative shall represent City in all matters pertaining to the services to be rendered pursuant to this Agreement. 7. CITY'S RESPONSIBILITIES In order to assist Consultant in the execution of its responsibilities under this Agreement, City agrees to provide access to, and upon request of Consultant, one copy of all existing relevant information on file at City. City will provide all such materials in a timely manner so as not to cause delays in Consultant's work schedule. 8. STANDARD OF CARE 8.1 All of the services shall be performed by Consultant or under Consultant's supervision. Consultant represents that it possesses the professional and technical personnel required to perform the services required by this Agreement, and that it will perform all services in a manner commensurate with community professional standards. All services shall be performed by qualified and experienced personnel who are not employed by City, nor have any contractual relationship with City. 8.2 Consultant represents and warrants to City that it has or shall obtain all licenses, permits, qualifications, insurance and approvals of whatsoever nature that are. legally required of Consultant to practice its profession. Consultant further represents and warrants to City that Consultant shall, at its sole cost and expense, keep in effect or obtain at all times during the term of this Agreement, any and all licenses, permits, insurance and other approvals that are legally required of Consultant to practice its profession. Consultant shall maintain a City of Newport Beach business license during the term of this Agreement. 8.3 Consultant shall not be responsible for delay, nor shall Consultant be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of City to furnish timely information or to approve or disapprove Consultant's work promptly, or delay or faulty performance by City, contractors, or governmental agencies. 9. HOLD HARMLESS To the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents and employees (collectively, the "Indemnified Parties ") from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, a 'V 0 without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims "), which may arise from or in any manner relate (directly or indirectly) to any work performed or services provided under this Agreement (including, without limitation, defects in workmanship) or Consultant's presence or activities conducted on the Project (including the negligent and/or willful acts, errors and /or omissions of Consultant, its principals, officers, agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them). Notwithstanding the foregoing, nothing herein shall be construed to require Consultant to indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Consultant. 10. INDEPENDENT CONTRACTOR It is understood that City retains Consultant on an independent contractor basis and Consultant is not an agent or employee of City. The manner and means of conducting the work are under the control of Consultant, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. Nothing in this Agreement shall be deemed to constitute approval for Consultant or any of Consultant's employees or agents, to be the agents or employees of City. Consultant shall have the responsibility for and control over the means of performing the work, provided that Consultant is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Consultant as to the details of the performance or to exercise a measure of control over Consultant shall mean only that Consultant shall follow the desires of City with respect to the results of the services. 11. COOPERATION Consultant agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the work to be performed. City agrees to cooperate with the Consultant on the Project. 12. CITY POLICY Consultant shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 13. PROGRESS s r. • 0 Consultant is responsible for keeping the Project Administrator and/or her duly authorized designee informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. 14. INSURANCE Without limiting Consultant's indemnification of City, and prior to commencement of work, Consultant shall obtain, provide and maintain at its own expense during the term of this Agreement, a policy or policies of liability insurance of the type and amounts described below and in a form satisfactory to City. A. Certificates of Insurance. Consultant shall provide certificates of insurance with original endorsements to City as evidence of the insurance coverage required herein. Insurance certificates must be approved by City's Risk Manager prior to commencement of performance or issuance of any permit. Current certification of insurance shall be kept on file with City's at all times during the term of this Agreement. B. Signature. A person authorized by the insurer to bind coverage on its behalf shall sign certification of all required policies. C. Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, with an assigned policyholders' Rating of A (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. D. Coverage Requirements. i. Workers' Compensation Coverage. Consultant shall maintain Workers' Compensation Insurance and Employer's Liability Insurance for his or her employees in accordance with the laws of the State of California. In addition, Consultant shall require each subcontractor to similarly maintain Workers' Compensation Insurance and Employer's Liability Insurance in accordance with the laws of the State of California for all of the subcontractor's employees. Any notice of cancellation or non - renewal of all Workers' Compensation policies must be received by City at least thirty (30) calendar days (10 calendar days written notice of non- payment of premium) prior to such change. The insurer shall agree to waive all rights of subrogation against City, its officers, agents, employees and volunteers for losses arising from work performed by Consultant for City. ii. General Liability Coverage. Consultant shall maintain commercial general liability insurance in an amount not less than one million dollars ($1,000,000) per occurrence for bodily injury, personal s injury, and property damage, including without limitation, contractual liability. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement, or the general aggregate limit shall be at least twice the required occurrence limit. iii. Automobile Liability Coverage. Consultant shall maintain automobile insurance covering bodily injury and property damage for all activities of the Consultant arising out of or in connection with work to be performed under this Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than one million dollars ($1,000,000) combined single limit for each occurrence. iv. Professional Errors and Omissions Insurance. Consultant shall maintain professional errors and omissions insurance, which covers the services to be performed in connection with this Agreement in the minimum amount of one million dollars ($1,000,000). E. Endorsements. Each general liability and automobile liability insurance policy shall be endorsed with the following specific language: . i. The City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insureds with respect to liability arising out of work performed by or on behalf of the Consultant. ii. This policy shall be considered primary insurance as respects to City, its elected or appointed officers, officials, employees, agents and volunteers as respects to all claims, losses, or liability arising directly or indirectly from the Consultant's operations or services provided to City. Any insurance maintained by City, including any self- insured retention City may have, shall be considered excess insurance only and not contributory with the insurance provided hereunder. iii. This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. iv. The insurer waives all rights of subrogation against City, its elected or appointed officers, officials, employees, agents and volunteers. V. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its elected or appointed officers, officials, employees, agents or volunteers. 0 0 vi. The insurance provided by this policy shall not be suspended, voided, canceled, or reduced in coverage or in limits, by either party except after thirty (30) calendar days (10 calendar days • written notice of non - payment of premium) written notice has been received by City. F. Timely Notice of Claims. Consultant shall give City prompt and timely notice of claim made or suit instituted arising out of or resulting from Consultant's performance under this Agreement. G. Additional Insurance. Consultant shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the work. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Consultant, or of the interest of any general partner or joint venturer or syndicate member or cotenant if Consultant is a partnership or joint- venture or syndicate or cotenancy, which shall result in changing the control of Consultant. Control means fifty percent (50 %) or more of the voting power, or twenty -five percent (25 %) or more of the assets of the corporation, partnership or joint- venture. 16. SUBCONTRACTING The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Consultant. Assignments of any or all rights, duties or obligations of the Consultant under this Agreement will be permitted only with the express written consent of City. Consultant shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of City. 17. OWNERSHIP OF DOCUMENTS Each and every report, draft, map, record, plan, document and other writing produced (hereinafter "Documents "), prepared or caused to be prepared by Consultant, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Consultant or any other party. Consultant shall, at Consultant's expense, provide such Documents to City upon prior written request. Documents, including drawings and specifications, prepared by Consultant pursuant to this Agreement are not intended or represented to be suitable for 8 n r reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Consultant will be at City's sole risk and without liability to Consultant. Further, any and all liability arising out of changes made to Consultant's deliverables under this Agreement by City or persons other than Consultant is waived against Consultant and City assumes full responsibility for such changes unless City has given Consultant prior notice and has received from Consultant written consent for such changes. 18. CONFIDENTIALITY All Documents, including drafts, preliminary drawings or plans, notes and communications that result from the services in this Agreement, shall be kept confidential unless City authorizes in writing the release of information. 19. INTELLECTUAL PROPERTY INDEMNITY The Consultant shall defend and indemnify City, its agents, officers, representatives and employees against any and all liability, including costs, for infringement of any United States' letters patent, trademark, or copyright infringement, including costs, contained in Consultant's drawings and specifications provided under this Agreement. 20. RECORDS • Consultant shall keep records and invoices in connection with the work to be performed under this Agreement. Consultant shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Consultant shall allow inspection of all work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. 21. WITHHOLDINGS City may withhold payment to Consultant of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Consultant shall not discontinue work as a result of such withholding. Consultant shall have an immediate right to appeal to the City Manager or his /her designee with respect to such disputed sums. Consultant shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. 9 0 0 22. ERRORS AND OMISSIONS In the event of errors or omissions that are due to the negligence or professional inexperience of Consultant which result in expense to City greater than what would have resulted if there were not errors or omissions in the work accomplished by Consultant, the additional expense shall be borne by Consultant. Nothing in this paragraph is intended to limit City's rights under any other sections of this Agreement. 23. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS City reserves the right to employ other Consultants in connection with the Project. 24. CONFLICTS OF INTEREST Consultant or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act "), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, Consultant shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Consultant shall indemnify and hold harmless City for any and all claims for damages resulting from Consultant's violation of this Section. 25. NOTICES All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, to City by Consultant and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first -class mail, addressed as hereinafter provided. All notices, demands, requests or approvals from Consultant to City shall be addressed to City at: Attn: Revenue Division Evelyn Tseng City of Newport Beach 3300 Newport Boulevard Newport Beach, CA, 92663 Phone: 949 - 644 -3153 All notices, demands, requests or approvals from CITY to Consultant shall be addressed to Consultant at: io �1 Attn: Richard Pearl Maximus, Inc. 4320 Auburn Blvd. Suite 2000 Sacramento, CA_ 95841 Phone: 916 -715 -9666 26. TERMINATION In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, the non - defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving seven (7) calendar days prior written notice to Consultant. In the event of termination under this Section, City shall pay Consultant for services satisfactorily performed and costs incurred up to the effective date of termination • for which Consultant has not been previously paid. On the effective date of termination, Consultant shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 27. COMPLIANCE WITH ALL LAWS Consultant shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all work prepared by Consultant shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 28. WAIVER A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 29. INTEGRATED CONTRACT This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations 11 0 0 and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 30. CONFLICTS OR INCONSISTENCIES In the event there are any conflicts or inconsistencies between this Agreement and the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govern. 31. AMENDMENTS This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney. K3� =1:7s1- 11111 wil If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 33. CONTROLLING LAW AND VENUE The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. 34. EQUAL OPPORTUNITY EMPLOYMENT Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the day and year first written above. APPROVED AS TO FORM: Aaron C. Harp Assistant City Attorney for the City of Newport Beach ATTEST: CITY OF NEWPORT BEACH, A Municipal Corporation By: Don Webb Mayor for the City of Newport Beach CONSULTANT: f._ J 1 0 12 - +s i 1J By: LaVonne Harkless, City Clerk By: Its: By: Its: Attachments: Exhibit "A" — Scope of Services Exhibit "B" — Schedule of Billing Rates 13 Exhibit "A" SCOPE OF SERVICES 0 Consultant shall perform the following services as part of this Agreement: 1. Review all curent and potential Harbor fee activities; 2. Determine the full costs of those activities; and 3. Recommend fee adjustments as needed. Consultant will analyze only those fees where time -based data for services can be obtained and use existing City data to input into Harbor fee dvelopment. Consultant shall use two separate fee models to calculate service costs: 1. Process Analytics model for standard -time fee /cost determination for Planning, Engineering, Fire Prevention, Police, etc. operations associated with Harbor; and 2. NEXUS model for Building and Safety fees associated with Harbor. Each model will initially identify and define those work processes that produce Harbor services. The second step will be to: 1. Calculate productive hourly rates; 2. Develop time /estimate data; and 3. Input volume data. Consultant shall provide City with a draft of the user fee analysis, and three (3) copies of the final user fee report. If required, Consultant shall, at additional cost to the City, make presentations to the Harbor Commission and the City Council. 14 0 0 0 0 Exhibit "B" SCHEDULE OF BILLING RATES Consultant shall deliver the complete Harbor fee - for - service analysis study for a fixed price of $20,000.00 plus a maximum of $2,000.00 in expenses. Consultant shall invoice the City for complete work according to the following schedule: Completion of user fee intial interview and data collection 40% Delivery of final draft user fee analysis 35% Delivery of draft user fee report 15% Delivery of final user fee report 10% Presentations to the City Council, Harbor Commission or other groups shall be charged on a time and expense basis at the following hourly rates: Vice President $215 Director $175 Senior Manager $150 Manager $140 Associate $110 Support Staff $75 15 • • PROFESSIONAL SERVICES AGREEMENT WITH MICHAEL HANEMANN AND J.R. DESHAZO FOR AN ECONOMIC ANALYSIS OF THE HARBOR TIDELANDS THIS AGREEMENT is made and entered into as of this day of 2006, by and between the CITY OF NEWPORT BEACH, a Municipal Corporation ( "Cit)(), and Professor Michael Hanemann, an individual, whose address is , California, and Professor J.R. DeShazo, an individual, whose address is , California, (collectively, "Consultant "), and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City requires an economic analysis of City tidelands in order to: (1) ensure the sustainable management of the Harbor and related infrastructure, and (2) ensure that the City receives a fair share of the economic value generated by this infrastructure. C. City desires to engage Consultant to develop the methodology and performance of such an analysis ( "Project "). D. Consultant possesses the skill, experience, ability, background, certification and knowledge to provide the services described in this Agreement. E. The principal member of Consultant for purposes of Project, shall be Professor JR DeShazo. F. City has solicited and received a proposal from Consultant, has reviewed the previous experience and evaluated the expertise of Consultant, and desires to retain Consultant to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: lii I ;INiT, The term of this Agreement shall commence on the above written date, and shall terminate on the _ day of , 200_, unless terminated earlier as set forth herein. 40 2. SERVICES TO BE PERFORMED �5 Consultant shall diligently perform all the services described in the Scope of Services attached hereto as Exhibit A and incorporated herein by reference. The City may elect to delete certain tasks of the Scope of Services at its sole discretion. 3. TIME OF PERFORMANCE Time is of the essence in the performance of services under this Agreement and Consultant shall perform the services in accordance with the schedule included in Exhibit "A ". Time is of the essence in the performance of services under this Agreement and the services shall be performed to completion in a diligent and timely manner. The failure by Consultant to perform the services in a diligent and timely manner may result in termination of this Agreement by City. Notwithstanding the foregoing, Consultant shall not be responsible for delays due to causes beyond Consultant's reasonable control. However, in the case of any such delay in the services to be provided for the Project, each party hereby agrees to provide notice to the other party so that all delays can be addressed. 3.1 Consultant shall submit all requests for extensions of time for performance in writing to the Project Administrator not later than ten (10) calendar days after the start of the condition that purportedly causes a delay. The Project Administrator shall review all such requests and may grant reasonable time extensions for unforeseeable delays that are beyond Consultant's control. 3.2 For all time periods not specifically set forth herein, Consultant shall respond in the most expedient and appropriate manner under the circumstances, by either telephone, fax, hand - delivery or mail. 3.3 The parties agree that it is extremely difficult and impractical to determine and fix the actual damages that City will sustain should the Consultant fail to complete the work called for in this Agreement. Should Consultant fail to complete the work called for in this Agreement, Consultant agrees to the deduction of liquidated damages in the sum of ($ ) per day for every day beyond the date scheduled for completion provided in Section . Execution of this Agreement shall constitute agreement by the City and Consultant that the sum of ($ ) per day is the minimum value of costs and actual damages caused by the failure of Consultant to complete the project within the allotted time. Such sum is liquidated damages and shall not be construed as a penalty, and may be deducted from payments due the Consultant if such delay occurs. 4. COMPENSATION TO CONSULTANT City shall pay Consultant for the services on a time and expense not -to- exceed basis in accordance with the provisions of this Section and the Schedule of is Billing Rates attached hereto as Exhibit "B" and incorporated herein by 2 Lb • . t reference. Consultant's compensation for all work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall be Forty-Five Thousand and no /100 Dollars ($45,000.00) ( "Consultant Fee "). 4.1 Consultant shall submit monthly status reports to City describing the work performed the preceding month. Consultant's bills shall include the name of the person who performed the work, a brief description of the services performed and /or the specific task in the Scope of Services to which it relates, the date the services were performed, the number of hours spent on all work billed on an hourly basis, and a description of any reimbursable expenditures. City shall pay Consultant no later than thirty (30) days after approval of the monthly invoice by City staff. 4.2 City shall reimburse Consultant only for those costs or expenses specifically approved in this Agreement, or specifically approved in writing in advance by City. Unless otherwise approved, such costs shall be limited and include nothing more than the following costs incurred by Consultant: A. The actual costs of subconsultants for performance of any of the services that Consultant agrees to render pursuant to this Agreement, which have been approved in advance by City and awarded in accordance with this Agreement. • B. Approved reproduction charges. C. Actual costs and /or other costs and /or payments specifically authorized in advance in writing and incurred by Consultant in the performance of this Agreement. 4.3 Consultant shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit "B ". 5. PROJECT MANAGER Consultant shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Consultant has designated J.R. DeShazo to be its Project Manager. Consultant shall not remove or reassign the Project Manager or assign any new or replacement personnel to the Project without the prior written consent of City. City's approval shall not be unreasonably withheld with respect to the removal or assignment of non -key personnel. 3 u� 0 0 Consultant, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of services upon written request of City. Consultant warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 6. ADMINISTRATION This Agreement will be administered by the Revenue Division. Evelyn Tseng shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or his/her authorized representative shall represent City in all matters pertaining to the services to be rendered pursuant to this Agreement. 7. CITY'S RESPONSIBILITIES In order to assist Consultant in the execution of its responsibilities under this Agreement, City agrees to, where applicable: A. Provide access to, and upon request of Consultant, one copy of all existing relevant information on file at City. City will provide all such materials in a timely manner so as not to cause delays in Consultant's work schedule. B. Provide blueprinting and other services through City's reproduction company for bid documents. Consultant will be required to coordinate the required bid documents with City's reproduction company. All other reproduction will be the responsibility of Consultant and as defined above. C. Provide usable life of facilities criteria and information with regards to new facilities or facilities to be rehabilitated. 8. STANDARD OF CARE 8.1 All of the services shall be performed by Consultant or under Consultant's supervision. Consultant represents that it possesses the professional and technical personnel required to perform the services required by this Agreement, and that it will perform all services in a manner commensurate with community professional standards. All services shall be performed by qualified and experienced personnel who are not employed by City, nor have any contractual relationship with City. 8.2 Consultant represents and warrants to City that it has, shall obtain, and shall keep in full force in effect during the term hereof, at its sole cost and expense, all licenses, permits, qualifications, insurance and approvals of whatsoever nature that is legally required of Consultant to practice its profession. Consultant shall maintain a City of Newport Beach business license during the term of this Agreement. 4 r � J 8.3 Consultant shall not be responsible for delay, nor shall Consultant be responsible for damages or be in default or deemed. to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of City to furnish timely information or to approve or disapprove Consultant's work promptly, or delay or faulty performance by City, contractors, or governmental agencies. 9. HOLD HARMLESS To the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers, and employees (collectively, the "Indemnified Parties ") from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims "), which may arise from or in any manner relate (directly or indirectly) to any breach of the terms and conditions of this Agreement, any work performed or services provided under this Agreement (including, without limitation, defects in workmanship or materials and /or design defects [if the design originated with Consultant]) or Consultant's presence or activities conducted on the Project (including the negligent and /or willful acts, errors and /or omissions of Consultant, • its principals, officers, agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them). Notwithstanding the foregoing, nothing herein shall be construed to require Consultant to indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Consultant. 10. INDEPENDENT CONTRACTOR It is understood that City retains Consultant on an independent contractor basis and Consultant is not an agent or employee of City. The manner and means of conducting the work are under the control of Consultant, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. Nothing in this Agreement shall be deemed to constitute approval for Consultant or any of Consultant's employees or agents, to be the agents or employees of City. Consultant shall have the responsibility for and control over the means of performing the work, provided that Consultant is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Consultant as to the details of the performance or to 5 41; 11 Ii PA 13. 0 exercise a measure of control over Consultant shall mean only that Consultant shall follow the desires of City with respect to the results of the services. COOPERATION Consultant agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the work to be performed. City agrees to cooperate with the Consultant on the Project. CITY POLICY Consultant shall discuss and review all direction with City's Project Administrator in order to ensure the Project proceeds and policies. PROGRESS matters relating to policy and Project in advance of all critical decision points in a manner consistent with City goals Consultant is responsible for keeping the Project Administrator and /or his /her duly authorized designee informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. \J 14. INSURANCE . Without limiting Consultant's indemnification of City, and prior to commencement of worts. Consultant shall obtain, provide and maintain at its own expense during the term of this Agreement, a policy or policies of liability insurance of the type and amounts described below and in a form satisfactory to City. A. Certificates of Insurance. Consultant shall provide certificates of insurance with original endorsements to City as evidence of the insurance coverage required herein. Insurance certificates must be approved by City's Risk Manager prior to commencement of performance or issuance of any permit. Current certification of insurance shall be kept on file with City's at all times during the term of this Agreement. B. Signature. A person authorized by the insurer to bind coverage on its behalf shall sign certification of all required policies. C. Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, with an assigned policyholders' Rating of A (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. 0 L ;y 0 0 D. Coverage Requirements. . i. Workers' Compensation Coverage. Consultant shall maintain Workers' Compensation Insurance and Employer's Liability 'Insurance for his or her employees in accordance with the laws of the State of California. In addition, Consultant shall require each subcontractor to similarly maintain Workers' Compensation Insurance and Employer's Liability Insurance in accordance with the laws of the State of California for all of the subcontractor's employees. Any notice of cancellation or non - renewal of all Workers' Compensation policies must be received by City at least thirty (30) calendar days (10 calendar days written notice of non- payment of premium) prior to such change. The insurer shall agree to waive all rights of subrogation against City, its officers, agents, employees and volunteers for losses arising from work performed by Consultant for City. ii. General Liability Coverage. Consultant shall maintain commercial general liability insurance in an amount not less than one million dollars ($1,000,000) per occurrence for bodily injury, personal injury, and property damage, including without limitation, contractual liability. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement, or the general aggregate limit shall be at least twice the required occurrence limit. iii. Automobile Liability Coverage. Consultant shall maintain automobile insurance covering bodily injury and property damage for all activities of the Consultant arising out of or in connection with work to be performed under this Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than one million dollars ($1,000,000) combined single limit for each occurrence. iv. Professional Errors and Omissions Insurance. Consultant shall maintain professional errors and omissions insurance, which covers the services to be performed in connection with this Agreement in the minimum amount of one million dollars ($1,000,000). E. Endorsements. Each general liability and automobile liability insurance policy shall be endorsed with the following specific language: i. The City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insureds with respect to liability arising out of work performed by or on behalf of the Consultant. 7 15 ii. This policy shall be considered primary insurance as respects to City, its elected or appointed officers, officials, employees, agents and volunteers as respects to all claims, losses, or liability arising directly or indirectly from the Consultant's operations or services provided to City. Any insurance maintained by City, including any self- insured retention City may have, shall be considered excess insurance only and not contributory with the insurance provided hereunder. iii. This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. iv. The insurer waives all rights of subrogation against City, its elected or appointed officers, officials, employees, agents and volunteers. V. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its elected or appointed officers, officials, employees, agents or volunteers. vi. The insurance provided by this policy shall not be suspended, voided, canceled, or reduced in coverage or in limits, by either party except after thirty (30) calendar days (10 calendar days written notice of non - payment of premium) written notice has been received by City. 0 F. Timely Notice of Claims. Consultant shall give City prompt and timely notice of claim made or suit instituted arising out of or resulting from Consultant's performance under this Agreement. G. Additional Insurance. Consultant shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the work. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Consultant, or of the interest of any general partner or joint venturer or syndicate member or cotenant if Consultant is a partnership or joint- venture or syndicate or cotenancy, which shall result in changing the control of Consultant. Control means fifty percent (50 %) or more of the voting power, or twenty -five percent (25 %) or more of the assets of the corporation, partnership or joint- venture. 0 16. SUBCONTRACTING 8 4, The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Consultant. Assignments of any or all rights, duties or obligations of the Consultant under this Agreement will be permitted only with the express written consent of City. Consultant shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of City. 17. OWNERSHIP OF DOCUMENTS Each and every report, draft, map, record, plan, document and other writing produced (hereinafter "Documents "), prepared or caused to be prepared by Consultant, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Consultant or any other party. Consultant shall, at Consultant's expense, provide such Documents to City upon prior written request. Documents, including drawings and specifications, prepared by Consultant pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Consultant will be at City's sole risk and without liability to Consultant. Further, any and all liability arising out of changes made to Consultant's deliverables under this Agreement by City or persons other than Consultant is waived against Consultant and City assumes full responsibility for such changes unless City has given Consultant prior notice and has received from Consultant written consent for such changes. 18. CONFIDENTIALITY All Documents, including drafts, preliminary drawings or plans, notes and communications that result from the services in this Agreement, shall be kept confidential unless City authorizes in writing the release of information. 19. INTELLECTUAL PROPERTY INDEMNITY Consultant shall defend and indemnify City, its agents, officers, representatives and employees against any and all liability, including costs, for infringement of any United States' letters patent, trademark, or copyright infringement, including costs, contained in Consultant's drawings and specifications provided under this Agreement. 20. RECORDS Consultant shall keep records and invoices in connection with the work to be • performed under this Agreement. Consultant shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any services, expenditures and disbursements charged to City, for a minimum 0 0 period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Consultant shall allow inspection of all work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. 21. WITHHOLDINGS City may withhold payment to Consultant of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Consultant shall not discontinue work as a result of such withholding. Consultant shall have an immediate right to appeal to the City Manager or his /her designee with respect to such disputed sums. Consultant shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. 22. ERRORS AND OMISSIONS In,the event of errors or omissions that are due to the negligence or professional inexperience of Consultant which result in expense to City greater than what Would have resulted if there were not errors or omissions in the work accomplished by Consultant, the additional design, construction and /or restoration expense shall be borne by Consultant. Nothing in this paragraph is intended to limit City's rights under the law or any other sections of this Agreement. 23. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS City reserves the right to employ other Consultants in connection with the Project. 24. CONFLICTS OF INTEREST The Consultant or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act "), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, Consultant shall conform to all requirements of the Act. • Failure to do so constitutes a material breach and is grounds for immediate . termination of this Agreement by City. Consultant shall indemnify and hold 10 • • harmless City for any and all claims for damages resulting from Consultant's violation of this Section. 25. NOTICES All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first -class mail, addressed as hereinafter provided. All notices, demands, requests or approvals from Consultant to City shall be addressed to City at: Attn: Evelyn Tseng Revenue Division City of Newport Beach 3300 Newport Boulevard Newport Beach, CA, 92663 Phone: 949 - 644 -3153 All notices, demands, requests or approvals from CITY to Consultant shall be addressed to Consultant at: Attention: Phone: Fax: 26. TERMINATION In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non - defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving seven (7) calendar days prior written notice to Consultant. In the event of is termination under this Section, City shall pay Consultant for services satisfactorily performed and costs incurred up to the effective date of termination for which Consultant has not been previously paid. On the effective date of 11 G �4 0 0 termination, Consultant shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 40 27. COMPLIANCE WITH ALL LAWS Consultant shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all work prepared by Consultant shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 28. WAIVER A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 29. INTEGRATED CONTRACT This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 30. CONFLICTS OR INCONSISTENCIES In the event there are any conflicts or inconsistencies between this Agreement and the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govern. 31. INTERPRETATION The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either parry by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 32. AMENDMENTS This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney. 33. SEVERABILITY 0 If any term or portion of this Agreement is held to be invalid, illegal, or otherwise 12 5'� C�J 0 unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 34. CONTROLLING LAW AND VENUE The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. 35. EQUAL OPPORTUNITY EMPLOYMENT Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the day and year first written above. APPROVED AS TO FORM: City Attorney for the City of Newport Beach ATTEST: By: LaVonne Harkless, City Clerk CITY OF NEWPORT BEACH, A Municipal Corporation By: Mayor for the City of Newport Beach CONSULTANT: By: Michael Hanemann L0 JR DeSchazo Attachments: Exhibit A — Scope of Services Exhibit B — Schedule of Billing Rates 13 J EXHIBIT "A" Scope of Services The analysis has three components: A) The primary output of this analysis will be a report developing an economic basis for the City to charge for facilities that it leases in and around the Harbor in a manner that accounts for, and captures, some of the public benefits to private entities and individuals that are generated by these City assets. This analysis extends beyond the cost of services approach to a designing a charge policy, which the City is also considering, and will complement it. The economic analysis clarifies why the public, as the property owner of the harbor, may be entitled to a fair market return on any valued added that the harbor conveys to adjacent properties. B) As part of the analysis, Consultants will provide examples of other publicly -owned natural assets (at all levels of government) from which commercial entities profit and for which they pay charges or fees. This analysis will go beyond the scope of work outlined for the appraisal of commercial and residential properties currently requested by the City. Consultants will review public charges levied by other cities and agencies for commercial properties in comparable locations (e.g., along the West Coast or in Florida). Properties of specific interest will include: commercially -used piers, fueling docks, retail stores, restaurants and housing /lodging establishments. The purpose of this comparison is to provide a "benchmark" from which to assess the reasonableness of existing 1) charge coverage and 2) charge levels. Consultants will also evaluate 3) the forms that charges take for specific types of commercial properties in other harbors. . This is important because the form that charges take may affect their public acceptability and the completeness with which the charge reflects the public service costs and public valued -added to commercial properties. Consultants will make recommendations regarding the scope, level, form and phase -in process for a range of charges. C) In addition, Consultants will evaluate the costs of services study paying particular attention to those "overhead costs" for services that the city provides both inside and outside of the harbor itself. Particular attention will be paid to services render to the uplands that spillover to significantly benefits harbor property owners. Drawing on the existing economics literature, the consultants will evaluate the importance of these services, which may include water quality, dredging, public safety, etc. • 14 • • • 1 EXHIBIT "B" Schedule of Billing Rates Consultant shall deliver the complete Harbor fee - for - service analysis study for a fixed price of $45,000.00. Presentations to the City Council, Harbor Commission or other groups shall be charged on a time and expense basis at the following hourly rates: 15 . ..................... C' of Newport Beach• NO. BA- 06BA -077 BUDGET AMENDMENT 2005 -06 AMOUNT: $119,500.00 EFFECT ON BUDGETARY FUND BALANCE: Increase Revenue Estimates Increase in Budgetary Fund Balance X Increase Expenditure Appropriations AND �X Decrease in Budgetary Fund Balance Transfer Budget Appropriations No effect on Budgetary Fund Balance SOURCE: from existing budget appropriations from additional estimated revenues PX from unappropriated fund balance EXPLANATION: This budget amendment is requested to provide for the following: To increase expenditure appropriations for the comprehensive appraisal cost -of- services study, and economic analysis pertaining to the City tidelands. ACCOUNTING ENTRY: BUDGETARY FUND BALANCE Amount Fund Account Description Debit Credit 010 3605 General Fund - Fund Balance $119,500.00. REVENUE ESTIMATES (3601) Fund /Division Account Description EXPENDITURE APPROPRIATIONS (3603) Description Division Number 0310 City Manager Account Number 8080 Services - Prof & Tech NOC $119,500.00 Division Number Account Number Division Number Account Number Division Number Account Number ' Division Number Account Number * Automatic System Entry. I i Signed: 1yo yGac �'- Financial Approval: Administr ive Sery ices Director Date Signed: Administrative roval: City Manager eate Signed: City Council Approval: City Clerk Date