Presentation to City Council Regarding Newport Harbor Mooring Fees and Transferability

1. Presentation to City Council Regarding Newport Harbor Mooring Fees and Transferability November 23, 2010

2. Decision Parameters • FAIR outcome for all tidelands users • Based on the relevant facts & market information • Consistent with tidelands grant requirements • Sensibly address Grand Jury concerns • Capable of providing sufficient funds to maintain and protect the tidelands environment

3. Harbor Mooring Fees • Review Staff proposed rate increase from $20/ft. to approx. $55-$60/ft. • CPI based adjustment would be $29/ft. compared to current $20/ft.

4. Comparison of 40’ Mooring FeesNewport vs Other Harbors – Current & Proposed

5. It Is NOT Fair To Include These Marinas In The Newport Harbor Berth Index

6. City Now Includes The Highest Priced Marinas In The Newport Harbor Index. This Is Not A Reasonable Basis For Determining Fair Market Value.

7. Comparison of Projected Cash Surplus/Deficit • Bottom blue line - the City financial forecast Nov 9 shows $19mm deficit • Red line - our forecast adding omitted revenues and the City proposed increase for mooring fees • Purple line - our forecast with no changes to fees and everyone pays • Green line - our forecast if everyone pays and the increase is CPI indexed • Turquoise is projected capital expenditures

8. City Proposal will impose financial hardship. Only a few benefited. Most will lose. • Calculation = Price received minus (original cost + permit fees + maintenance for the period held). • For years 2015 and 2021 the assumption is the Council has reduced the value to $2,000 for the cost of the mooring tackle alone. • For most people this policy guarantees a significant loss and not a profit. • THIS OUTCOME DOES NOT SERVE THE PUBLIC!

9. Trend is moving downward 3 year average is 55 per year

10. Transferability • City has facilitated mooring transfers for 50 years; custom and practice in Newport Harbor. • Staff Proposal causes significant financial harm • There are other proven solutions from other cities • A legal response, which addresses Grand Jury concerns, preserves transferability • June 2010 the City and County Board of Supervisors formalized transfers on page 13 of the mooring administration contract with the Harbor Patrol.

11. City Facilitated Selling Permits Mooring transfers per se are not illegal…but value must be given back to the public. The City of Newport Beach has itself sold moorings as recently as 2004 City of Newport has followed the same practice as other ports such as Avalon, Morro Bay, Port San Luis and Pillar Point. No City or County ordinance requires ANY waiting list for moorings.

12. “No transfer” policies don’t work - case studiesSanta Barbara, City of Monterey & Santa Cruz • The City of Monterey Harbor and City of Santa Cruz Port District grappled with the administration and enforcement of a no-transfer policy for slips for approximately 20 years. • Santa Cruz still maintains a no-slip-transfer policy. Butover 1,200 individuals remain on a wait list for approximately 1,000 slips. Waiting lists don’t work; they get “gamed.” • Enforcement difficult, “underground” transfers, unrecorded vessel ownership documents, phony receipts and exchanged checkbooks for slip payments. • Permits have inherent value. Monterey, in 1997, adopted a policy similar to Santa Barbara’s,which benefits the Tidelands byincreasing revenues to Tidelands Fund. SIGNIFICANT TRANSFER FEE RETURNS VALUE to the public. • Free market serves public better than waiting list.

13. A Pragmatic Solution:Santa Barbara City Council’s Reply to the Grand Jury 2001 Santa Barbara Grand Jury Recommendation 1a:The Waterfront Department rules should be changed to eliminate the ability of a permit holder for a slip to transfer that slip along with the sale of a boat. City Council Reply: The City does not intend to eliminate the slip transfer policy but instead will continue to assess and pursue a substantial transfer fee for the privilege of transferring slip permits…

14. Mooring People-Who Are They? • Major contributors to Tidelands Fund - $700,000 • Many are Newport Residents • Most patronize and support Newport businesses • Local business people, including marine related business owners • Members of local work force • Retired people, some live aboard residents • Many long time Newport and OC families • Yacht Club members • People from all walks of life with varied resources • People depending on Elected Officials to govern well

15. This is Poor Public Policy • Staff proposed fee increase is neither justified nor reasonable • Newport Harbor Berth Index is flawed as a basis for adjusting mooring fees • Most permit holders will be hurt financially if transfer rights are eliminated • Harming many to stop a very few is a poor cure. Transfers are not widespread, only 55 transfers happening per year, half of which are within families • An imposed value should not be a policy objective • Discriminatory pricing is bad public policy – piers and moorings should be treated equally • Voting without adequate consideration of all the facts is premature and ill advised

16. This is Good Public Policy Adopt a CPI adjusted index – It is a better index as it represents actual prices paid - not published prices. Adopt Original Transfer Document – It solves speculation issue and generates income. Learn from others – Waiting lists haven’t worked elsewhere, no reason to think they will work in Newport. These cities have systems that return value to the public with transfers: slips in Santa Barbara and Monterey, moorings in Avalon, and Morro Bay. Preserve Market Driven Process - An imposed value should not be a policy objective. End Discrimination Against Mooring Holders - We need a fair resolution to end an era of discrimination. Create Comprehensive Pricing Structure – All users sharing expenses solves the Cash Flow Problem.