Presentation to City Council Regarding Newport Harbor Mooring Fees and Transferability

1. Presentation to City Council Regarding Newport Harbor Mooring Fees and Transferability November 9, 2010

2. Issues • Harbor Mooring Fees – Chip Donnelly • Budgetary Analysis – Patricia Newton • Transferability – Dan Gribble • Transferability Document – Bill Moses • Recommendations and Summary – John Fradkin

3. Harbor Mooring Fees • Methodology used for rate increase is arbitrary and not independently, professionally verified • Relative value of moorings versus slips is different in Newport than other harbors due to quantity of moorings compared to slips and supply – demand issues • Very high upland values in Newport Beach distort relative value of tidelands so tying mooring fees to slip costs is unreasonable • City previously set a “market value” in 1996 and using a CPI based adjustment the fully indexed rate would be $29/ft., from the current $20/ft.

4. Harbor Mooring Fees • Comprehensive revenue plan needs to be developed before any fees are changed • Discriminatory to do it piecemeal • Previously the City promised to look at other fees when they raised mooring fees but never did • Substantial fee increases will drive many on fixed incomes out of the harbor • NB General Plan allows for affordable boat storage – p. 381, R8.6, “Provide moorings as an important source of low cost public recreational access to the water and harbor.”

5. Harbor Mooring Fees Budgetary Analysis Fee increase is not justified or reasonable There is no cash flow analysis that includes the proposed fee increase Ongoing costs should be considered separately from one time capital expenditures Funds from the Federal Government are not included

6. Harbor Mooring Fees Budgetary Analysis Sources of revenue not represented in City’s analysis PIT (Possessory Interest Tax) Unsecured property tax returned to City Tidelands boat storage contribution Potential rental income from vacant mooring NMA cash flow projection shows $2.6 million surplus in 2017 – City is est. at $6 million

7. Tidelands Harbor Expenditures (Revised)

8. Tideland Harbor Revenues- City Proposed Mooring Increases

9. Water Adjacent Revenue & Other Revenue Sources

10. Projected Tidelands Harbor Revenues – Net Surplus/(Deficit)(including City mooring fee increase and 2% inflation)

11. Comparison City Mooring Fee Increase to NMA

12. Transferability • City condoned the process of selling mooring rights: • Recommending to interested parties that the only practical way to attain a mooring was to buy a boat on a mooring since the waiting list was so long – the value of that right became a function of market demand and inflation • The majority of moorings have been transferred in this fashion for over 50 years • The City of Newport Beach has itself sold moorings as recently as 2004…does that not indicate acceptance of the practice? • City of Newport has followed the same practice as other ports such as Avalon, Morro Bay, Port San Luis, and Pillar Point. • As recently as June 2010 the City and County Board of Supervisors formalized transfers on page 13 of the Mooring Administration contract with the Harbor Patrol.

13. Transferability • The proposed elimination of transferability will harm existing mooring holders on a massive scale • Unfair to existing mooring permit holders who in good faith followed the established and accepted practice and only wish to be able to recoup their investment if they move out of boating • Since the City embraced and encouraged that practice they have the obligation to protect the value of that asset for their citizens

14. A Reasonable OptionTransferability Document Strikes an Appropriate CompromiseWorthy of True Consideration by Council Members • Who worked on it? • HRD Staff members Rossmiller, Miller, Stakeholders, both City Attorneys, City Revenue Department, Harbor Commissioners & Mooring Master Plan Committee Citizen Group; Harbor Master Deputies • How long in the works? Over three years • Who reviewed it? • Harbor Commissioners Duffield, Collins, Beek, Corrough, Rodheim, Lawrenz, Rhyne, Rossmiller, Miller, Stakeholders, MMPSC, Harbor Patrol, Dave Kiff, both City Attorneys, City Revenue Dept., • Who liked it? • All Harbor Commissioners, MMPSC, Harbor Patrol, NMA and other stakeholders • Former City Attorney reviewed and encouraged process and ideas, current City Attorney, David Hunt, reviewed twice and would like to re-word “rental” • Dave Kiff supported the concept for over a year • Where is it now? • In the City’s court, everyone wonders why no input from Council until formation of ad hoc Committee. • Worthy of full consideration by City Council between now and their vote on mooring fees and transferability

15. Transferability Document providesWell thought out solutions What does the Transferability Document Do? • Improves and updates definitions and terms currently in the Ordinance • Improves public access with both short and long term rental of empty, or underutilized moorings • Generates additional income to City with predictable, year-round rental opportunities, effectively allowing City to double dip from mooring permit fee and additional income from rental. • Defines entities that may be mooring permit holder (business entities, trusts, yacht clubs, etc.) • Allows for Multi Vessel Mooring Systems • Clearly spells out permit requirements: name of responsible person, city’s rights, provides for proof of liability insurance,

16. Transferability Document - Transfers • Sets rigid qualifications for transferees and permittees • Establishes Mooring Permit Transfer Fee (new income to city) • Eliminates mooring speculation • Limits transfer to one offshore mooring per 12 month period • Addresses unpaid fees and consequences • Gives Harbor Resources discretion on transfers • Mooring vacant 60 days after transfer may be used for long term rental • No live-aboards on long term rental moorings • Allows two mooring permit holders to trade moorings for mutual convenience • Addresses revocation and surrender of mooring permit

17. Transferability Document Provides solutions to significant issues: • Stops people from buying and selling moorings for profit • Word crafted a document that provides solid language to prevent the buying and selling of moorings • Allows those who have used long standing, condoned methods to acquire a mooring to transfer the mooring to another individual when necessary • Improve transfer process • Sets out clear definitions, conditions and process for controlled transfers

18. Transferability Document – A “win – win” Adoption of the Transferability Document suggestions would support the interests of all mooring stakeholders including the City of Newport Beach, improve public access by way of short and long term rentals, and it would generate new revenues for the city for its forecasted capital expenditures in the harbor. It is a “win-win” that the Council should consider

19. Recommendations • Adjust mooring fees in a fair and reasonable manner • Adopt the Transferability Document amending Section 17.01.030 of Chapter 17.40 and Section 17.60.040 of Chapter 17.60 of Title 17 of the NB Municipal Code • Consider additional sources of income for the City • Charge same $ per foot for all tidelands boat storage • Moorings and piers • Estimated minimum $700,000 in the first year from boats on private piers • Charge fee on mooring transfers • Charge fee for long-term rental of vacant moorings

20. Summary The City Manager’s proposal – “Outcome of changes to mooring fees and policy should be fair, reasonable, and legally defensible.” • Is not reasonable • Indexes mooring fees to expensive upland real estate values • Is not fair • Make dramatic changes to mooring transferability in a cavalier manner while ignoring Transferability Draft Document approved by Harbor Commission • City Needs to do the right thing, not just the legal thing • While the City may feel it is on firm legal ground by drastically altering the city’s transferability policy, are they on firm moral ground? Is a complete reversal of the city’s long sanctioned method the right thing to do to the mooring stakeholders. Are they punishing the many for the actions of a few? Alternative Proposals • Mooring fees should be immediately indexed to the Consumer Price Index using the date of the last mooring fee increase (Jan. 1996) as a base point and shall be indexed annually going forward. • No changes shall be made at this time to the rules regarding mooring transferability. Transferability Document needs to be studied and adopted in the future.