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Home My WebLink About01 - Mooring Permits, Rent & Other ProvisionsCTY OF F NEWPORT BEACH City Council Staff Report June 16, 2015 Agenda Item No. 1. TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: David A. Webb, Public Works Director- (949) 644 -3330, dawebb @newportbeachca.gov PREPARED BY: Chris Miller, Harbor Manager and Shannon Levin, Harbor Analyst PHONE: 949 - 644 -3041 TITLE: Mooring Permits, Rent and Other Provisions: Harbor Commission Recommendations ABSTRACT: In January 2015, City Council directed the Harbor Commission to review conditions related to moorings and mooring operations. Subsequently the Commission held four meetings to solicit public input for mooring permits, annual rents, transferability, and other mooring - related issues. Their finding and recommendations are included in this staff report. RECOMMENDATION: a) Receive, review and file the Harbor Commission's recommendations on suggested modifications to the current Mooring Permit policy and fee structure as requested by City Council; and b) Provide direction to staff on mooring policies and /or fee recommendations, which may be brought back at a future City Council Meeting with an enactment resolution(s). FUNDING REQUIREMENTS: If the Harbor Commission's rate recommendations are adopted, revenue reductions of about $1.067 million should be recorded. Similarly, expenditure reductions of a similar amount should be made to the Tidelands Capital Fund or other tidelands operations. DISCUSSION: In January 2015, City Council directed the Harbor Commission to review conditions related to moorings and mooring operations. Subsequently, the Harbor Commission held four meetings to solicit public input for mooring permits, annual rents, transferability, and other mooring - related issues. On April 7, 2015, the Commission voted to formalize its recommendations to City Council. These recommendations are summarized below. MOORINGS Moorings are located in designated mooring fields throughout Lower Newport Harbor, with approximately 400 onshore moorings (accessible via public beaches or street ends) and 800 offshore moorings (accessible via dinghies or shore boat service). There are ten mooring fields over City tidelands and two mooring fields over County tidelands. Each mooring is assigned a specific number, and is billed on a per - foot basis for the maximum length vessel approved at that particular location. A mooring typically consists of a mooring can /buoy, chains, weights, lines, and other equipment collectively referred to as "tackle" HISTORY The City's tidelands trust, also known as the Beacon Bay Bill (Chapter 74 of the Statutes of 1978), dedicates certain tide and submerged lands ( "Tidelands ") held in trust by the City on behalf of the people of California. These lands include most of Lower Newport Bay, home to about 1,200 onshore and offshore moorings, as well as residential and commercial piers, and other harbor operations. In 2010 the City Council conducted an extensive review of the City moorings to address the lapse in updates to the permit rents and discuss issues such as open- market transfers, transfer fees, and sub - rentals. Prior to the review, mooring rates in Newport Harbor had not been evaluated or adjusted since 1994. As an outcome of this review, the City Council ultimately voted to increase mooring fees using a market index of mid - priced marinas in Newport Harbor. Council voted to set rates at 14 % of that index. Council also decided to phase -in these increased rates over a 5 -year period as shown in the below table. 40' Slip 2011 Rate 2012 Rate 2013 Rate 2014 Rate 2015 Rate 2015 Rent (Marina) 10.5% 12.3% 14.0% $38.73 $47.64 $55.43 $1,549.20 $1,905.60 $2,217.20 $19.37 $23.82 $27.21 $348.66 $428.76 $489.78 $15,400 CURRENT REVIEW EFFORT BY HARBOR COMMISSION In January 2015, the City Council directed the Harbor Commission to study the mooring rents and other related mooring issues, and then return with a recommendation. Subsequently the Harbor Commission held four meetings to solicit input from the public including the mooring users and other interested parties. These meetings were well attended by roughly 90 -100 people, mostly from members of the Newport Mooring Association. The two major topics discussed were the annual mooring rent (per foot, per year) and the mooring transfer process, along with other related issues. Ultimately, the Harbor Commission recommended that the following mooring issues be considered by the City Council. 1. Annual Mooring Permit Rental Rate Recommendation: The annual mooring permit rental rate should start at $25 per foot, per year, then increase by an annual CPI adjustment thereafter. This proposed rental rate was derived by calculating the CPI increase from the $6.00 rate in 1976 to present. It was not recommended that a new appraisal be done. Staff notes that a discussion of a rebate or a return of "overpaid" rental rates occurred and was desired by members of the NMA. Discussion: Currently, the annual mooring permit rental rate is calculated by taking 14% of a basket of average marina slip rents in Newport Harbor (Resolution 2010 -132). In 2010, the City Council felt that 14% represented the value of a mooring when compared to the value of a slip at an average marina in Newport Harbor. The current rate for an offshore mooring is $55.43 per foot, per year, and the current rate for an onshore mooring is half that rate at $27.71. Example for a 40' boat: Annual rental rate is $55.43 x 40 = $2,217.20 As a point of reference, the annual mooring permit rate from 1995 through 2010 was $20 per foot, per year for offshore and $10 for onshore moorings. Rates and Annual Marina Rents CPI Option Offshore $25.00 40' Example $1,000.00 6.5% of Moderately Priced Marinas 7.1% 8.8% Offshore $26.52 $30.71 40' Example $1,060.80 $1,228.40 Onshore $13.26 $15.35 18' Example $238.68 $276.30 10.5% 12.3% 14.0% $38.73 $47.64 $55.43 $1,549.20 $1,905.60 $2,217.20 $19.37 $23.82 $27.21 $348.66 $428.76 $489.78 $15,400 CURRENT REVIEW EFFORT BY HARBOR COMMISSION In January 2015, the City Council directed the Harbor Commission to study the mooring rents and other related mooring issues, and then return with a recommendation. Subsequently the Harbor Commission held four meetings to solicit input from the public including the mooring users and other interested parties. These meetings were well attended by roughly 90 -100 people, mostly from members of the Newport Mooring Association. The two major topics discussed were the annual mooring rent (per foot, per year) and the mooring transfer process, along with other related issues. Ultimately, the Harbor Commission recommended that the following mooring issues be considered by the City Council. 1. Annual Mooring Permit Rental Rate Recommendation: The annual mooring permit rental rate should start at $25 per foot, per year, then increase by an annual CPI adjustment thereafter. This proposed rental rate was derived by calculating the CPI increase from the $6.00 rate in 1976 to present. It was not recommended that a new appraisal be done. Staff notes that a discussion of a rebate or a return of "overpaid" rental rates occurred and was desired by members of the NMA. Discussion: Currently, the annual mooring permit rental rate is calculated by taking 14% of a basket of average marina slip rents in Newport Harbor (Resolution 2010 -132). In 2010, the City Council felt that 14% represented the value of a mooring when compared to the value of a slip at an average marina in Newport Harbor. The current rate for an offshore mooring is $55.43 per foot, per year, and the current rate for an onshore mooring is half that rate at $27.71. Example for a 40' boat: Annual rental rate is $55.43 x 40 = $2,217.20 As a point of reference, the annual mooring permit rate from 1995 through 2010 was $20 per foot, per year for offshore and $10 for onshore moorings. Rates and Annual Marina Rents CPI Option Offshore $25.00 40' Example $1,000.00 6.5% of Moderately Priced Marinas Onshore $12.50 18' Example $225.00 Current Practice Offshore $55.43 40' Example $2,217.20 Onshore $27.21 18' Example $489.78 Moderately Priced Marinas Index 2015 40' Slip $15,400 Current and proposed mooring permit revenues have been calculated. All revenues generated are deposited into the Tidelands account for Tidelands related expenditures only. Current & Proposed Revenues Moorings Total Feet 2015 Current 2015 Revenue Rate On Shore 6040 $ 27.71 $ 167,368.40 Off Shore 32091.5 $ 55.43 $ 1,778,831.85 Moorings Total Feet Proposed Rate Proposed Revenue On Shore 6040 $ 12.50 $ 75,500.00 Off Shore 32091.5 $ 25.00 $ 802,287.50 The difference in revenue is about $1.067 million between the current rental rates and the proposed rental rates. In the proposed Capital Improvement Plan for FY 15 -16, the staff proposed budgeting and /or rebudgeting (carrying -over) about $2.4 million from the Tidelands Capital Fund, for projects such as: Balboa Island Sea Walls ($650,000) Central Avenue Public Pier ($441,000) Grand Canal Dredging ($500,000) Harbor Piers and Gangway Maintenance ($551,600) Harbor Tide Guage ($50,000) Lower Castaways Park ($200,000) RGP #54 ($75,000) At the May 26th Council Meeting, the Council acted to delete funding for the Central Avenue Public Pier $441 K) and Harbor Piers and Gangway Maintenance ($551.6K), therefore reducing planned expenditures by $992,600. But at the same time, staff stated to Council that staff intended to complete bidding on these projects and bring them forward separately as budget amendments. A sense of the Council was that these projects could be designed to cost less than $992,600 in total (but not zero dollars). If the mooring fees are reduced by $1.067 million, Council may wish to provide direction on how to also reduce expenditures of a similar amount, whether that be ongoing operational costs or the capital projects noted above (or a combination). 2. Mooring Transfers Recommendation: Harbor Commission recommends to allow transfers between private parties. Unlimited transfers allowed with a maximum of one transfer per year. Discussion: Currently, each mooring may only be transferred twice from 2010 through 2020. After 2 transfers or 2020, if the permittee no longer wishes to keep the mooring, then it must be returned to the City who will give to the next person on the wait list. The City pays the former permittee for the value of the mooring tackle, and then sells that same tackle to the next permittee. 3. Mooring Transfer Fee Recommendation: The mooring transfer fee should be 100% of the annual mooring permit fee. Alternatively, the mooring transfer fee could be 5% of the private -party mooring sale, but admittedly, this fee may be difficult to monitor. Discussion: The current fee is 50% of the annual mooring permit rental rate. If annual mooring rent is reduced to the $25 /ft amount then the 100% recovery is roughly equal to the current "50W transfer fee. 4. Single Name / Permittee Per Mooring Recommendation: Maintain the current rule requiring one name per mooring permittee. Discussion: Over the years, some have requested two names be allowed on a single mooring permit, especially for those vessels which are owned by two different parties, or by both spouses etc. However, it is best practice to have one point of contact and one responsible individual. 5. Centralized Location for Posting Moorings For Sale Recommendation: If a mooring permittee wishes to sell a mooring to a private, third party, then the mooring location, asking price, contact information etc... must be posted on a City maintained website. Discussion: Posting on a City maintained website promotes transparency, and provides a central location for the public to review trends etc ... when considering purchasing a mooring. 6. Mooring Transfer Fee Between Family or Trust Recommendation: No fee required for mooring transfers between family or trust. Discussion: This is current practice — no change. 7. Maximum Number of Mooring Permits Allowed Recommendation: Any one individual may have two mooring permits. For those current permittees who own more than two, they shall be allowed to keep those moorings until they divest themselves of those moorings. Discussion: Decades ago, the onshore moorings were primarily used for dinghies to access the offshore moorings, hence the need for two permits. As the value for onshore moorings increased, other non - dinghy type vessels began occupying the onshore moorings, and subsequently, the offshore mooring permittees developed alternate ways to access their moorings. 8. Short and Long Term Mooring Rentals to Third Parties Recommendation: Only the City may rent moorings to third parties. The City will collect/retain the revenue which will only be used for harbor amenities /projects. Discussion: Every mooring in the harbor has a permittee assigned to it. However, not all permittees keep a boat on their mooring for various reasons (no longer own a boat, extended voyage etc...). These "vacant' moorings may be rented by the City to other boaters who visit Newport. The rent collected for these rentals is kept by the City. The underlying mooring permittee is still responsible for paying the annual mooring permit fee as well as maintaining the mooring. This is current practice — no change. 9. Rental Fee for Short and Long Term Mooring Rentals to Third Parties Recommendation: The Harbor Commission felt that this was not a significant issue and could be decided later. Discussion: The current, offshore mooring rental rate is $26 per night (May to October) and $16 per night (November to April). Approximate annual revenue collected is $60,000 to $80,000. 10. Frequency of Billing for Annual Mooring Permit Rental Rate Recommendation: Staff to develop a manageable system such as bi- monthly, quarterly etc... Discussion: Currently, as a non - resident, the mooring permits are billed on a lump sum basis every January, payable in March. With the current mooring rental rates, staff has received complaints about receiving a large bill all at once. As a Newport resident, the mooring permits are billed every other month on the Municipal Services Statement. 11. Wait List Recommendation: Abolish the wait list. Discussion: The Harbor Patrol maintains the wait list which currently has several hundred names on it. In the mid- 2000's, the wait list was significantly longer with some names dating back to the early 1970's. Because moorings were privately sold to third parties and rarely returned to the City, the wait list essentially never moved for decades. With that said, however, many of those on the wait list genuinely wanted a place to store their boats, but there were also those who wanted a "free" mooring to then sell to a third party for profit. Under the current policy and after 2020, the wait list, in theory, would begin to move as permittees would no longer be allowed to sell moorings to third parties and would instead be required to return them to the City. As expected in this period prior to 2020, the wait list has not yet moved, but admittedly, the intended current program hasn't been given a chance to work. 12. Mooring Revocation Recommendation: If a mooring is revoked for non - payment or other reasons, then public auction(s) will be held at regular intervals throughout the year. Discussion: Under the current system, if a mooring is revoked, then that mooring shall go to the next person on the wait list. If the wait list is abolished as described in No. 11 above, then publically auctioning the mooring is a viable solution. 13. Insurance Requirements for Permittees and Renters Recommendation: Maintain current insurance requirements per NBMC Title 17. Discussion: Insurance requirements are not currently enforced by the Harbor Patrol who is the current mooring administrator. Better enforcement is required. With the presentation of the Harbor Commission's above recommendations on suggested modifications to the current Mooring Permit Policy and Rental Rate Structure as requested by City Council, staff is now requesting City Council provide direction to staff on which, if any, policies and /or fees modification recommendations to implement. Upon receiving direction, staff will prepare and process the any policy and /or rental rate modifications and return the item to City Council for approval. ENVIRONMENTAL REVIEW: Staff recommends the City Council find the approval of this ordinance and Council Policy exempt from the California Environmental Quality Act ( "CEQK) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. Alternatively, the City Council finds the approval of this ordinance is not a project under CEQA Regulation Section 15061(b)(3) because it has no potential for causing a significant effect on the environment. NOTICING: The agenda item has been noticed according to the Brown Act (24 hours in advance of the special meeting at which the City Council considers the item). ATTACHMENTS: Description Attachment A - Vicinity Map - Offshore Mooring Locations OFFSHORE MOORINGS VICINITY MAP ATTACHMENT A e+ynar�e 1 CITY OF NEWPORT BEACH PUBLIC WORKS DEPARTMENT