HomeMy WebLinkAbout21 - Proposed Legislation Regarding Terrace Apartments - Balboa Bay Club/Terrace ApartmentsTO:
FROM:
SUBJ:
CITY OF NEWPORT BEACH
OFFICE OF THE CITY ATTORNEY
April 6, 1994
Mayor Clarence Turner
Members of City Council
Robert H. Burnham
AGENDA N0. 21
€ APR I 11994
Proposed Legislation Regarding Terrace Apartments
Balboa Bay Club/Terrace Apartments
In 1985, as the City and the Balboa Bay Club were negotiating
a lease extension, the State Lands Commission advised us they
considered the Balboa Bay Club parcel to consist of state
tidelands. State Lands staff presented some documentation to
support their claim, but the documentation was not conclusive. The
City had long assumed the parcel consisted of tidelands and uplands
with the Terrace Apartments located on uplands. According to State
Lands staff, permanent residential or apartment uses are
incompatible with the public trust inherent in tidelands.
The parties had nearly concluded lease negotiations and
resolution of the tideland issue would have required lengthy
litigation or time consuming legislation. Accordingly, the City
and the Balboa Bay Club agreed that there would be no permanent
residential use of the property subsequent to December 31, 1998
unless, prior to that date:
"a determination is made through the legislative,
judicial or other appropriate process that said permanent
residential apartments are legally proper uses on the
leased premises." (1986 Lease - paragraph 30)
The Staff had long assumed that Senator Marian Bergeson who
has a good relationship with the State Lands Commission, would be
the best person to carried legislation to resolve the dispute. The
time for submitting legislation expired at the end of February and
Staff hurriedly prepared draft legislation to be authored by
Senator Bergeson and carry it if the City Council approved.
Senator Bergeson has reserved a spot for the Bill but neither her
staff nor City staff has taken further action pending Council
review. I have attached a copy of the proposed legislation
submitted to Holly Veale, Senator Bergeson's Field Coordinator.
The proposed legislation is similar to the Beacon Bay Bill and
9 r
would free the Terrace Apartment site from restrictions inherent in
Tidelands. Revenue derived from the Terrace Apartments would
continue to go into the Tidelands Fund. The legislation would
allow, but not require, the Terrace Apartments to continue to be
used for residential purposes.
According to Bay Club representatives the cost of converting
the Terrace Apartments to a hotel would exceed $20,000,000 and the
City would lose substantial revenue during conversion process.
Major modifications to the terms and conditions of tenancy could
significantly increase the vacancy rate and also reduce City
leasehold revenue. Resolution of the tideland dispute relative to
the use of the Terrace Apartments will ma imize income to the City
regardless of the outcome of any redevel,,pment proposal submitted
by the Balboa Bay Club. /
City Attorney
RHB:gj
Terrace.mem
UNCODIFIED STATUTE
The people of the State of California do enact as follows:
SECTION I
The legislature makes the following findings and
determinations:
(a) By virtue of the provisions of Chapters 74 of the
Statutes of 1978 (Beacon Bay Bill) the legislature
conveyed certain tide and submerged lands, in trust, to
the City of Newport Beach for various purposes, but
primarily for the promotion and accommodation of
commerce, fishing and navigation.
(b) Certain portions of these tide and submerged lands have
been filled and reclaimed as a result of a plan of
improvement including the development of a harbor
facility. In addition to the filled tide and submerged
lands identified in the Beacon Bay Bill, the following
additional parcel has been filled and reclaimed
(Parcel D).
(c) Parcel D has been fully developed, leased, and is
producing income to support the statutory trust pursuant
to which the tide and submerged lands are held by the
City, and, except for the production of income, Parcel D
is no longer required or needed for the promotion of the
public trust inherent in tide and submerged lands.
(d) Parcel D is hereby freed of the public trust for
navigation, commerce and fishing and may continue to be
used for those purposes set forth in the existing lease
between the City and the Balboa Bay Club, but shall
continue to be held in trust by the City of Newport Beach
subject to the other terms and provisions of this Act and
the laws applicable to the tide and submerged lands.
Parcel D shall be held subject to the condition that
revenues derived from the leasing or administration of
Parcel D shall be used as provided in this act.
(e) The present use of Parcel D and the preservation of that
use for the production of income to promote the public
trust is in the best interest of the people of the State.
Section II
Notwithstanding any provision of the Beacon Bay Bill or other
law, the public trust inherent in tide and submerged lands is
hereby removed from Parcel D, and Parcel D may be used for such
purposes as will produce the maximum revenue for the fund created
pursuant to this -Act; --or the use of property on January 1, 1994,
provided the City complies with the following:
(a) The consideration received by the City for any lease of
Parcel D shall be the fair market rental value of the
real property and the improvements existing as of January
1, 1994 subject to any lease advantage held by the
current tenant.
(b) The form of any lease of Parcel D, and the range of
consideration to be received by the City, shall be
approved by the State Lands Commission prior to the
approval of any future lease or re-leasing.
(c) All money received by the City from the existing or
future lease of Parcel D shall be deposited in a City
tideland fund with the revenue used only for purposes
consistent with the promotion of the public trust over
the remaining tide and submerged lands granted to the
City.
ChaAmod.doc