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HomeMy WebLinkAbout06/16/2015 - Special MeetingCITY OF NEWPORT BEACH City Council Minutes Special Meeting June 16, 2015 I. ROLL CALL - 5:00 p.m. Present: Council Member Peotter, Council Member Petros, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Pro Tem Dixon, Mayor Selich Flag Salute - Council Member Muldoon II. CURRENT BUSINESS 1. Mooring Permits, Rent and Other Provisions: Harbor Commission Recommendations Harbor Resources Supervisor Levin presented a PowerPoint presentation which included a brief history of mooring rates, changes adopted in 2010, mooring permit rent requirements, options for consideration, and transferability. Harbor Commission Chairman Avery addressed the Commission's review process and addressed public meetings, historical practices in terms of transferability and allowing people to build equity, loss of equity, lack of alternative methods regarding rent and transferability, difficulties in terius of comparisons with other harbors, the focus of the Harbor Commission's efforts, and Harbor Commission recommendations. Additionally, he provided information regarding fiscal impacts and revenue adjustments. Recommendations were also presented in terms of mooring transfers, transfer fees, single name /permittee per mooring, centralized posting, the transfer fee between family or a trust, maximum mooring permits allowed, short - and long -term mooring sub - rentals, rental fee for short -term and long -term sub - rentals, billing frequency, eliminating the wait list, mooring revocation, and proof of insurance. He discussed the next steps and thanked staff for their help. Council Member Curry thanked Chairman Avery and the Commission for their work, noting that the Commission was short - handed since several Commissioners have moorings and recused themselves from considering the item. He reported that the proposed changes reduce Tidelands revenues by approximately $1 million and asked for Commissioner Avery's opinion regarding which projects the City could obtain savings. Council Member Muldoon stated that is a topic for staff to address, not Chairman Avery. Council Member Curry indicated that, since the Harbor Commission oversees the Harbor, he would like the Commission's opinion in terms of what projects should be cut if Council recommends the proposed changes. Chairman Avery stated that the City's needs for infrastructure improvements should not be related to what is a fair price and delivering fairness to mooring permitees. He added that rents are higher in Newport Beach than anywhere else. Council Member Muldoon expressed appreciation to the Harbor Commission for their time and effort in addressing this matter. Chairman Avery assured that no Commissioner who reviewed this issue was a mooring holder at the time it was acted upon. Volume 62 - Page 352 City of Newport Beach Special Meeting June 16, 2015 In response to Council Member Peotter's question, Harbor Resources Manager Miller estimated that four to six transfers occur each year and addressed the potential revenue from the transfers. Council Member Peotter asked regarding the recommendation to allow one transfer per year and Chairman Avery noted that a few people have profited from the buying and selling of moorings and that the recommendation was intended to discourage that practice. Discussion followed regarding the number of names required on a mooring permit, the public auction process, and developing a formula for pricing moorings for sale. In response to Mayor Pro Tern Dixon's question, Chairman Avery addressed Consumer Price Index (CPI) methodology used to develop the rate. He added that CPI is commonly used in municipalities to develop these types of rates. He reported that the Harbor Commission is open to new ideas. Discussion followed regarding results of comparison studies, use of formulas to develop rates, and the services provided by different cities. Chairman Avery reported that Newport Beach does not provide the services that demand a higher rent, such as parking and dinghy racks. Additionally, there are no dedicated docks for boaters to wash down. He stated that the Harbor Commission will review the possibility of providing additional services for mooring permitees in the future and then consider the possibility of increasing rents. He believed that increasing rates may be acceptable if more services were provided and that $55 per foot is too high a rate. Patricia Newton, Newport Mooring Association (NMA), thanked the Harbor Commission and Council, and provided a PowerPoint presentation, noting support for the Harbor Commission's recommendations. She addressed the methodology for their proposed recommendations, the need to preserve the market - driven process, and the desire to set the transfer fee at 100% of the proposed annual fee since it would increase revenue for the Tidelands fund and guarantee the fee when moorings are transferred with the sale of a vessel. She indicated that NMA's measure for annual fees include Tidelands valuation, the CPI, and comparable moorings. She noted that the three measures are approved by the State Lands Commission as valid measures for determining fees. Ms. Newton reported that their suggested rate is $25 per lineal foot. She further addressed the Beacon Bay Bill, current rates, permit transfers, public benefit, the impacts of the Harbor Commission's recommendations, accounting for Tidelands, budget consistency, the CIP funding history, and NMA recommendations. Brief discussion followed regarding Marina Park. Thomas O'Keefe referenced Proposition 218 and applicable legal cases relative to the setting of mooring fees. He emphasized the requirement to conduct a study to show increased service costs as justification for increasing fees. Don Beatty provided a brief history of mooring fee increases in the City. He indicated that charging $25 per lineal foot is acceptable and suggested leaving this fee in.place for at least five years. He noted that he has never seen a report relative to the amount of revenues or expenses associated with Tidelands sources. He commended the Harbor Commission for listening to residents and asked Council to do the same. Denise Petersen spoke in opposition to increasing mooring fees and hoped that Council will consider the Harbor Commission's recommendations and allow transferability. Volume 62 - Page 353 City of Newport Beach Special Meeting June 16, 2015 Mike Henn expressed appreciation for the Harbor Commission's work, but spoke in opposition to their recommendations. He stated that the City has a fiduciary requirement to charge fair market value for use of public tidelands. He indicated that Council's 2010 action clearly establishes a fair market value relationship to the only market - driven numbers in the Harbor (slip rents). He added that the requirement for market rates also precludes any scheme whereby private parties benefit from the transfer of a public permit, noting that this could be the potential gifting of public funds. Mr. Henn stressed that Newport Beach has higher valuations and that mooring rates of $55 per lineal foot may not be actual market value. He commented on the Harbor Commission's scope of responsibility, adding that Council's scope is much broader, especially since Council needs to take into account the budgetary impacts of its decisions and must represent the interests of all residents. He urged Council not to reauthorize the private sale of mooring permits or to decrease the mooring fees to $25 per lineal foot unless Council can show that anything over that is above fair market value. He stated that the only way to do so is to have an independent agency or qualified private professional appraiser do a full appraisal. Dan Gribble spoke in favor of the Harbor Commission's and the NNIA's recommendations. He noted that Council also represents the people directly affected by this decision, the mooring holders. He referenced a letter sent to Council and highlighted the issue of fairness and integrity. He expressed the opinion that moorings are owned by private individuals, although the permit is a lease. He addressed the proposed rates and believed that dock holders receive a better deal than mooring holders. He urged Council to adopt the recommendations of the Harbor Commission. Mike Glenn referenced the Beacon Bay Bill and disagreed with Mr. Henn's comments. IIe addressed the Tidelands Grant and believed that this is a fee that requires a fee study before any increase can take place. He suggested conducting a fee study to determine what is fair. Don Potenza commented on how changes to mooring fees have impacted him and his father. He addressed moorings versus docks and believed that the fees should be comparable to each other. He asked that Council consider the transferability of moorings and that fees become more reasonable. Elaine Linhoff indicated that mooring holders should not have to bare the bulk of the Tidelands budget. She added that the Harbor Commission has done exhaustive research, collected a lot of input, and developed reasonable recommendations. She urged Council to approve their recommendations. Cathy Wolcott, former City employee, spoke in support of the Harbor Commission's recommendations. She noted that mooring rates should be compared to other cities' mooring rates rather than to slips. She compared Newport Beach fees with Shelter Island fees, and noted that Shelter Island maintains the moorings and provides 24 -hour access to the boats. Scott Karlin commented on the Beacon Bay Bill and the 1919 Tidelands Grant. He addressed the methodology used by the Harbor Commission and believed that their recommendations are fair and reasonable. He addressed the comparative approach, adjustments made, and referenced an article he wrote, and presented it to the City Council. Paul Bahan spoke in support of the Harbor Commission's recommendations. He noted that, if someone can afford a slip in Newport Beach, they can have one. Additionally, he reported differences in service between Newport Beach and other cities, and stressed that yachting should not be synonymous with wealth and that, at the current rates, the City is forcing the middle class out of boating in Newport Beach. Volume 62 - Page 354 City of Newport Beach Special Meeting June 16, 2015 Randy Timmons commented on his and his brother's experience with moorings in the City and noted that current fees are hurting him since he is on a fixed income. Gary Pickett, Ardell Marina, expressed the opinion that Mike Henn's statements are based on two flawed appraisals that used incorrect assumptions with regard to occupancy and slip rates, and used market comparisons of other leases that should not be used. He reported that there is no economic analysis in the appraisal and referenced another appraisal done in 2001 by George Jones. He urged Council to look at that 2001 appraisal and thanked Council for reconsidering this matter. John Panek spoke in favor of the Harbor Commission's recommendations, adding that he would like to see rates consistent with what residents with beach moorings are paying. He added that slip rates are not comparable as they have many amenities that moorings will never have. Cindy Bowman spoke in support of the Harbor Commission's recommendations. She suggested allowing a primary and secondary contact on the permit and providing each mooring holder with a parking permit. Brian Ouzounian spoke in support of the Harbor Commission's recommendations, but in opposition to the NMA's recommendation relative to the fee. He asked that Council charge $0.50 per square foot of the shadow of the vessel, not the mooring field, and add $2.00 per foot for the stern line to each mooring can. He addressed differences between moorings and docks. A member of the public spoke in support of the Harbor Commission's recommendations. Council Member Curry referenced a letter from the States Lands Commission which asked that Council delay this action since the State Lands Commission would like to know how the proposed mooring rates relate to the value of the property and whether those rates reflect fair market rent. They also requested more information about potential sale of moorings. He commented on the risk that the State Lands Commission could take over jurisdiction and impose its own conditions. City Manager Kiff stated that he reviewed the letter and respects what they have to say. He provided options for Council to consider and noted that Council may take action on this matter at this time. In response to Council Member Muldoon's question, City Manager Kiff indicated that neither he nor anyone working for the City contacted the State Lands Commission about this matter. In response to Council Member Muldoon's questions, Assistant City Attorney Torres noted that he received a call from the State Lands Commission's staff informing him that the City would be receiving a letter from them. Staff indicated that they would like a chance to speak with City representatives regarding this matter before a final decision was made by the City Council. He added that they acknowledged that, if Council acted on this matter today, they would have the opportunity to speak with City staff prior to final action. Additionally, he stated that setting rates would be at the discretion of the City Council, as long as it was in accordance to fair market value and the findings of an appraiser. He added that there is no indication that the State Lands Commission will be taking away the City's jurisdiction over the Tidelands; however, there is a provision within the Beacon Bay Bill dictating the process for doing so. Assistant City Attorney Torres addressed requirements for an appraisal Volume 62 - Page 355 City of Newport Beach Special Meeting June 16, 2015 Mayor Pro Tom Dixon noted that she has no objection to the State Lands Commission discussing this matter with City staff. Assistant City Attorney Torres reported that the City has a great relationship with the State Lands Commission. He indicated that they recognize it is within City Council's discretion to set the rates and want to determine what assistance they can provide. He stated that, if the City Council wanted to move forward at this time, the State Lands Commission recognizes that the City can do so, but they want to participate as the process moves forward. In response to Mayor Pro Tern Dixon's question, City Manager Kill stated that City staff consulted with the State Lands Commission when this matter was previously considered by Council. He added that mooring rates are currently the highest amount since the commercial pier fees have not yet occurred. He added that it is fourth in terms of revenue sources and reported that the State Lands Commission approved the Balboa Bay Resort's lease. He addressed Beacon Bay residents. Mayor Pro Tom Dixon noted that there are other sources of revenue going into the Tidelands Operating and Capital Funds and believed that the moorings' share of that is disproportionate. She added that none of the fees should be unfairly burdened in terms of providing revenues to the Tidelands Capital Fund. Council Member Duffield commented on the State Lands Commission letter, and addressed the location of mooring fields, the lack of parking, the difficulty for people to get to the boats, the lack of dinghies and amenities, and spoke in support of the Harbor Commission's recommendations. He added that there is no need to replace any public dock float or gangway listed in the CIP and, therefore, would save the City almost $800,000. Council Member Curry reported that there was a 20 -year period where Council did not adjust mooring fees and that the City does not set fees based on the CIP, but rather on an established methodology. He suggested showing an appropriate transfer fee reflecting the value of the mooring and setting the mooring fee between $35 and $40 per lineal foot. Council Muldoon suggested finding a balance point for the fees. Motion by Council Member Muldoon, seconded by Council Member Petros, to a) receive 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) direct staff to accept Harbor Commission Recommendation Items 1 to 13, using $35 per lineal foot, allow the transfer amount to be 10% of the value of the mooring sale, and bring back an enactment resolution at a future City Council meeting. Council Member Peotter commented on the Beacon Bay Bill and referenced a conversation he had with Assemblyman Harper in which he wanted to let Council know that he was in support of the Harbor Commission's recommendations and offered to help with respect to the State Lands Commission. He noted that moorings are also used by non - residents. He suggested an amendment to the Harbor Commission recommendation to allow unlimited annual mooring transfers, remove the limitation of only one person on a mooring permit, and restrict exempt familial transfers to "direct family." Council Member Duffield noted the importance of sending a message that the City does not want to let people profit from such transactions and suggested maintaining the Harbor Commission's recommendations. Volume 62 - Page 356 City of Newport Beach Special Meeting June 16, 2015 Mayor Pro Tern Dixon proposed an amendment to look at the CPI or use the State Lands Commission's five -year benchmark appraisal of commercial and mooring rates in Newport Harbor. It was noted that staff may need to resolve the matter with the State Lands Commission. Council Member Muldoon accepted Mayor Pro Tern Dixon's amendment, accepted having two names on the mooring permit when appropriate, and accepted changing Item 6 to "direct family." Council Member Petros accepted the amendments which included a $35 lineal foot charge, a 10% transaction charge on mooring transfers and to include either the CPI or the State Lands Commission's five -year appraisal, allowing two names on the permit, and limiting exempt familial transfers to "direct family." Council Member Curry expressed support for the amended motion. Mayor Pro Tem Dixon recommended indicating a primary and secondary point of contact. Council Member Petros expressed appreciation for the Harbor Commission's work. Mayor Selich expressed support, although he is not comfortable with all of the components. The amended motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Petros, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Pro Tom Dixon, Mayor Selich Mayor Selich recessed the meeting at 7:06 p.m. and reconvened the meeting at 7:17 p.m. with all members of the City Council in attendance. 2. Civic Center Audit City Manager Kiff referenced the staff report and offered to respond to questions from Council Mike Glenn expressed concerns with the limited scope of the audit and believed the City should conduct a forensic audit. He addressed costs and expressed the opinion that the proposal is not what residents want. He noted that a former Assistant City Manager is currently under investigation by the District Attorney and stated that there is a need for something deeper and more substantial. Dana Roberts, C.W. Driver, offered his company's complete cooperation should the City decide to conduct an audit. Mayor Pro Tom Dixon assured that this will be a professional third party review as far from politics as possible. She listed issues that she wants to see addressed with a common understanding of what went wrong and what went right. She addressed the benefits of the audit and indicated her support for this item. She added that she wants complete thoroughness and suggested that the audit be completed by March 1, 2016, or sooner. Motion by Mayor Pro Tern Dixon, seconded by Council Member Petros, to a) set forth the scope of work as proposed for a Civic Center Project close -out audit /post implementation review; b) set minimum qualifications as proposed; c) seek qualifications via a Request for Qualifications (RFQ) of firms capable of completing a post - construction review of the Newport Volume 62 - Page 357 City of Newport Beach Special Meeting June 16, 2015 Beach Civic Center; d) designate Mayor Pro Tem Dixon, Council Member Petros, and Council Member Muldoon as the audit review Working Group; e) authorize the Working Group to interview and select the audit management review firm and identify a principal construction - management auditor manager to report to the Working Group. The auditors will report to the Working Group with periodic updates of findings; 0 provide that the City Attorney's office will administer the contract that results from the RFQ; g) establish a "not to exceed" budget of $100,000 for the audit /review; and h) determine that the audit /review should be completed by March 1, 2016, and if more time is needed, it needs to be brought back to the City Council. Council Member Curry addressed the scope of work and indicated there has been plenty of discussion. He suggested doing a full construction oversight. He indicated that he would like to amend the motion to include the following: Amended motion by Council Member Curry, seconded by Council Member Peotter, to a) remove the Working Group from the process; b) ensure that the process is conducted independently of political influence; c) have the City Attorney conduct a Request for Qualifications (RFQ) process and select the audit manager and auditing firm; d) provide direction to the RFQ respondents that they are forbidden from contacting any City Council Member; e) require the City Manager and City staff to report to the public and the City Council any efforts by City Council Members to tamper with the selection process, to aid or recommend the selection of any contractor, or to influence the results of the analysis; and f) direct the audit manager to report directly to the City Council, but have the City Attorney manage the contract. Council Member Peotter liked the idea of not having a Working Group, as well as a separation of staff. He asked if Council Member Curry would consider modifying the amended motion to indicate that the City Attorney would hire the independent manager and the City Attorney would work with the independent manager to hire an auditor. He added that the independent manager would be separate and apart from the consultant firm, and would be independent. Discussion followed regarding Council selecting the independent manager. In response to Council Member Curry's question, City Manager Kiff stated that he would rather not have his perspectives taint this process. He indicated that the City has competent staff that could manage the contract, under the direction of the City Attorney. Council Member Peotter stated that he would prefer an independent manager with construction experience. City Manager Kiff agreed with Council Member Peotter, but believed that someone can do an effective RFQ process to help oversee that and that the City Manager should not be making that selection. In response to Council questions, City Manager Kiff indicated that he was approached about Bill Dunlap acting as the independent manager for this audit. Council Member Curry indicated that this approach violates Council Policy A -6 and, if the motion is adopted, this matter could return to Council. Council Member Peotter stated that he accepts the amendment, adding that he wants a true, independent audit with an independent manager who has good construction experience. Council Member Curry added that this could be done within $100,000 Volume 62 - Page 358 City of Newport Beach Special Meeting June 16, 2015 Council Member Curry restated the modification to the amended motion that an independent manager shall be selected by a process organized by the City Attorney, as discussed, and this is to be done as quickly as possible. Council Member Muldoon stated that he will not support the amended motion, believing that the auditor should report to the City Council, rather than staff. Bill Dunlap noted that he has supported all of the present Council Members in their campaigns and has no political agenda in this. Council Member Curry commented positively regarding Mr. Dunlap's character and contributions to the community. Mayor Pro Tem Dixon commented on the amount of experience required and stated that she would be supportive of someone with Mr. Dunlap's experience. She added that this is a normal, good business practice and that there is nothing to be afraid of. Council Member Petros voiced support for the amended motion and believed that it is naive to believe that this is not a political move and that the more Council and staff can distance itself from this process, it would be better for transparency, honesty and integrity. Council Member Peotter clarified that the independent manager would need to report to the City Council as a whole. Council Member Curry agreed that the manager would, but that there are contract administrator issues that would be handled by the City Attorney's Office. Council Member Peotter agreed. City Attorney Harp clarified that his office would select the RFQ for the independent manager and for the auditing firm, with input from the independent manager. Mayor Selich asked for a restatement of the motion and amendment, and noted that the independent manager needs to be very careful with the City Attorney. in developing the scopes of work to ensure they are specific to avoid any mission creep. Amended motion by Council Member Curry, seconded by Council Member Peotter, to a) remove the Working Group from the process; b) ensure that the process is conducted independently of political influence; c) have the City Attorney conduct a Request for Qualifications (RFQ) process and select the audit manager and, once selected, work with the audit manager to select an auditing firm; d) provide direction to the RFQ respondents that they are forbidden from contacting any City Council Member; e) require the City Manager and City staff to report to the public and the City Council any efforts by City Council Members to tamper with the selection process, to aid or recommend the selection of any contractor, or to influence the results of the analysis; and f) direct the audit manager to report directly to the City Council, but have the City Attorney manage the contract. Council Member Muldoon objected to allowing anyone in staff to oversee a project that staff ran. In response to Mayor Pro Tern Dixon's question, Council Member Muldoon believed that the only people that have a duty to the residents are Council Members. City Attorney Harp suggested that a better way to do this would be for a City Council subcommittee to put together an RFQ, select a manager as a body, and select the audit review Volume 62 - Page 359 City of Newport Beach Special Meeting June 16, 2015 firm as a body. He added that the City Council would need to conduct interviews and make selections during a Brown Act meeting. The City Council indicated that they would like to move forward with the City Attorney developing the scopes of services and selecting the manager and auditor. The amended motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Petros, Council Member Curry, Mayor Selich Noes: Council Member Duffield, Council Member Muldoon, Mayor Pro Tem Dixon The main motion, without the Working Group involvement in the process, carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Pro Tem Dixon, Mayor Selich Noes: Council Member Petros Following discussion, Council Member Petros indicated that he wanted to vote in the affirmative during the last vote and requested, without objection, to change his vote. The main motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Petros, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Pro Tem Dixon, Mayor Selich III. PUBLIC COMMENTS ON NON - AGENDA ITEMS -None IV. ADJOURNMENT - 7:45 p.m. The agenda for the Special Meeting was posted on the City's website and on the City Hall Electronic Bulletin Board located in the entrance of the City Council Chambers at 100 Civic Center Drive on June 12, 2015, at 4:00 p.m. Volume 62 - Page 360