HomeMy WebLinkAboutI-1 - Balboa Bay Club0 4
CITY COUNCIL
Agenda Item No. —L-1
CITY OF NEWPORT BEACH
OFFICE OF THE CITY MANAGER
November 27, 1989
CY T- -il COUNCIL
TO, MAYOR AND CITY COUNCIL CIT" `P:.,_:".'KO',T 3FAV
FROM: City Manager/ 2 7 1f�9
(,,�ec 7Ytt-r2et fo�—..
SUBJECT: BALBOA BAY CLUB
On October 30th of this year the City Council had a
Memorandum of Understanding for the Balboa Bay Club on the
agenda for consideration and action. Attached you will find a copy of
the memo appearing on the October 30th agenda. The Council
continued this item to the council meeting of November 27th. In the
interim, I have had the opportunity of reviewing the lease between
the Balboa Bay Club and the City of Newport Beach which was
approved with Agee, Cox, Hart, Maurer, Plummer and Strauss voting
aye and Heather abstaining on May 12, 1986. This lease or
agreement provides language covering many of the items within the
proposed MOU. Paragraph 28 and 29 of the lease or agreement reads
as follows:
"28. MW. Consistent with the term of the Memorandum
of Understanding between Lessor and Lessee dated June 10, 1985,
upon execution of this lease Lessor and Lessee shall cooperate and
work together on a comprehensive plan for redevelopment of the
leased premises. As part of that comprehensive plan of
redevelopment, Lessee shall:
a. Prepare a master plan consistent with the City of
Newport Beach General Plan and Land Use Element;
b. Participate in appropriate public hearings and
meetings for the purpose of gaining community input and consensus
relative to approval of the master plan concept and specific land
uses; and
C. Review the master plan with the California Coastal
Commission and obtain approval in concept of the master plan from
the Commission.
29. LEASE EXTENSION. It is acknowledged that
implementation of a comprehensive plan of redevelopment of the
leased premises may extend over a significant period of time. It is
further acknowledged that such implementation may necessitate
substantial and immediate long-term financial commitments by
Lessee. It is therefore understood that when Lessee complies with
conditions (a) through (c) of Paragraph 28 of this lease, a further
lease term extension for the leased premises may be sought by
Lessee consistent with the financing requirements associated with
implementation of the master redevelopment plan and the Charter of
the City of Newport Beach. Lessor agrees to consider such further
lease extension under terms and conditions to be mutually agreed
upon at that time."
Additionally, Paragraph E in the same document reads as
follows:
"E. This lease provides that Lessor shall become the owner of
all structures and improvements on the premises at the end of this
lease and the lease further constitutes the re-leasing of property
under lease prior to the date of adoption of the Charter of the City of
Newport Beach and is therefore exempt from the election provisions
in Sections 420 and 1402 of said Charter."
It appears that the provisions of the proposed MOU for the
most part have already been covered by the 1986 agreement. I
would, therefore, conclude that the Council has the option of either
approving the proposed MOU or filing the MOU with the
understanding that the "lessor agrees to consider such further lease
extension under terms and conditions to be mutually agreed upon at
that time."
ROBERTL. WYNN
A
CITY COUNCIL
RECYCLED
CITY OF NEWPORT BEACH
OFFICE OF THE CITY MANAGER
October 30, 1989
TO: MAYOR AND CITY COUNCIL
FROM City Manager
SUBJECT: MEMORANDUM OF UNDERSTANDINGBALBOA BAY CLUB
The original 50 -year Balboa Bay Club lease was signed on
March 24, 1948 and was to have expired on August 31, 1998, On
June 10, 1985 the City entered into a Memorandum of Understanding
with the BBC outlining procedures for the consideration of a new 25 -
year lease. On May 12, 1986 the City Council approved of a new
lease adding twelve years to the original lease and increasing the
rental payments to the City. Both the 1985 MOU and the 1986
Agreement required the BBC to prepare a new redevelopment plan
for the BBC consistent with the newly adopted City General Plan and
Land Use Element.
On February 13, 1989 representatives of the Balboa Bay
Club appeared before the City Council at the Study Session and
presented the conceptual redevelopment plan to the City. This
conceptual plan was consistent with the newly adopted City General
Plan. During the presentation of February 13th, it was stated to the
City Council that a new MOU would be presented on March 13, 1989
for the Council's consideration. On March 13th the new MOU and
approval of a refinancing plan was on the Council's evening agenda.
During deliberation by the City Council, it became apparent that
several concerns existed regarding a new 50 -year lease of the Balboa
Bay Club. Additionally, the MOU being considered along with an
authorization for refinancing became somewhat confusing. As a
result, representatives of the BBC verbally withdrew the MOU from
consideration and the City Council requested an independent opinion
as to the ability of the City to legally enter into a 50 -year lease with
the Balboa Bay Club.
3
9 0
Since March 13th the engineers and architects for the BBC
have continued their work, an environmental impact report has been
commenced, and meetings have been held with different
homeowners' associations within the City to explain the proposed
redevelopment plan. The BBC has now requested that the MOU be
reconsidered by the City Council. Members of the Council will find a
copy of the proposed MOU and a copy of the independent legal
opinion concerning a 50 -year lease attached to this memo. In
essence, the MOU says that the City will, in good faith, consider a 50 -
year term lease provided the City Council agrees with the rental
terms and conditions, and further provided that the final
redevelopment plan is approved by the City and the Coastal
Commission.
ROBERT L. WYNN
Attachments
4
9
0
SUMNER'S OPINION CONTAINED WITH
THE MEMO FROM THE CITY ATTORNEY.
NOT CONTAINED HERE
5
0 0
MEMORANDUM OF UNDERSTANDING
The CITY OF NEWPORT BEACH ("CITY") and INTERNATIONAL BAY CLUBS,
INC. ("CLUB") acknowledge the following:
RECITALS
A. On March 24, 1948, CITY and CLUB's predecessor
entered into a fifty (50) year lease ("Original Lease") of
waterfront property owned by the City, now commonly known as the
Balboa Bay Club ("The Property").
B. On May 12, 1986, CITY and CLUB agreed to extend the
term, and otherwise amend provisions, of the Original Lease ("New
Lease").
C. CLUB has, through a series of transactions, acquired
the right to possession of the property pursuant to the New Lease.
D. CLUB contends the financial commitments necessary to
implement the Master Plan cannot be justified in the absence of a
lease with a term of fifty (50) years.
E. Prior to incurring additional expenses relative to
the Master Plan, CLUB wishes to confirm CITY's commitment to
consider an extension of the New Lease sufficient to ensure CLUB's
ability to finance, and amortize, improvements contemplated by the
Master Plan.
In light of the foregoing, CITY and CLUB confirm the following:
1. CITY has the legal authority, but is not required, to
approve an extension of the New Lease for a term not to exceed
fifty (50) years.
2. CITY and CLUB shall immediately commence negotiations
regarding the terms and conditions of an amendment to the New
Lease which could, among other things, extend the term for a
period of up to, but not more than, fifty (50) years.
3. Negotiations between CITY and CLUB shall be conducted
as follows:
a. The Ad Hoc City Council Budget Committee shall
represent the CITY in negotiations with CLUB representatives.
b. CITY shall commission an appraisal of the
property to assist in determining Fair Market Rental Value.
C. The Budget Committee shall periodically report
to the City Council on the status of negotiations and to receive
direction if necessary.
d. All terms and conditions of any amendment to the
IN WITNESS WHEREOF, the undersigned have executed this
Memorandum of Understanding as of the day of October,
1989.
Date:
APPROVED AS TO FORM:
Robert H. Burnham
City Attorney
ATTESTED TO:
Wanda Raggio
City Clerk
Date:
BALBAYI.MOU
10/23/89
CITY OF NEWPORT BEACH
By:
Donald A. Strauss
Mayor
INTERNATIONAL BAY CLUBS, INC.
BALBOA BAY CLUB, INC.,
a California corporation
Bv:
W. D. Ray
Chairman of the Board
By:
Thomas G. Deemer
President
CITY OF NEWPORT BEACH
J �19i[9�9 iilY.1�9(11►'f:V W r�l•.�f W1
November 16, 1989
TO: Mayor and Members of the City Council
FROM: Robert H. Burnham
1-1
NOV 27 1989
Al
SUBJ: Memorandum of Understanding/Balboa Bay Club ( ` /J
On October 30, 1989, Council Member Hart indicated she had
received a phone call from Judge Tully Seymour regarding the
Council's ability, without voter approval, to grant a 50 -year
lease of the Bay Club property. Judge Seymour indicated that he
and Judge Walter Charamza, both former Newport Beach City
Attorneys, had prepared written legal opinions concluding the
Council could not approve any lease with a term in excess of 25
years absent voter approval. The Charamza opinion (Exhibit A)
does not analyze the exceptions to the Charter that, according to
Judge Sumner (Exhibit B) and Dennis O'Neill (Exhibit C), permit
Council approval of a 50 -year lease. We have not been able to
locate the Seymour opinion, but I have talked to him and located
the Pollard opinion (Exhibit D) which apparently prompted his
analysis.
Subject to one exception, the Charter requires voter approval
of any lease or contract with a term in excess of 25 years. Voter
approval of a contract with a term in excess of 25 years is not
required "if it provides for the accuisition by the City at the
end of such Period of the real or personal property so leased or
contracted for." The Seymour and Pollard opinions suggest the
exception applies only when the City is leasing property from
others, not when it is the lessor. As Pollard notes, a lessor
acquires buildings or improvements constructed on leased property
at the end of the term absent contrary provisions in the lease.
However, the conclusions drawn by Pollard and Seymour regarding
the meaning of the "exception language" ignore the rules of
statutory construction and the power of the parties to give the
lessee the right to remove structures.
0 9
-2-
The City Council derives its power from the constitution. The
charter does not operate as a grant of power, but as a restriction
on the Council's authority over all municipal affairs. As Judge
Sumner notes, if the restriction on authority is not clearly and
expressly stated it will not be implied or assumed to exist. The
courts will construe charter language in favor of the full
exercise of power and against the existence of any restriction.
This means the court will try to construe the Charter to give the
Council the power to approve a 50=year lease without voter
approval.
The exception language is not meaningless when the City is the
lessor. A lease may provide for removal of structures by the
lessee at the end of the term. In fact, the original Beacon Bay
Residential Leases allowed the lessee to remove his or her
residence when the lease expired.
Courts will try to ascertain the meaning of laws only if the
wording is ambiguous. At least one member of the original
Charter Committee has offered the opinion the exception language
applies to the proposed Bay Club lease.
Pollard makes convincing legal arguments that the restrictions
in §420 do not apply to City owned waterfront property. Section
1402 of the Charter deals expressly with the powers of the City
Council regarding the lease of waterfront property while §420 is a
general provision covering all contracts. In the event of a
conflict between two laws on the same subject, courts will apply
the special provision, not the general law. Pollard also argues
that §420 does not apply to City owned property because it would
impose a restriction on leasing property which the Council has
the unrestricted right to sell.
Finally, the recent revelation that the Bay Club parcel may
consist solely of tidelands could render all Charter restrictions
inapplicable. The proper use of tidelands and associated revenue
is a statewide affair, while the administration of tidelands,
including the manner in which a grantee conducts negotiation for
leasing, is a municipal affair. The City has power over municipal
affairs, but only to the extent there is no conflict with state
law. State law provides that tidelands may be leased for a period
not to exceed 66 years or the period specified in the grant, "as,
in the judgment of the City Council, .... may be necessary for the
proper development and use of its waterfront .. " Since long
term leases may be necessary to encourage private investment and
development, any restriction in the Charter may intrude upon a
matter of statewide concern and do so in a manner inconsistent
with state law.
- 3 -
In summary, in my opinion the City Council does not need voter
approval to enter into a 50 year lease of the Bay Club property,
assuming the lease provides for City acquisition of all structures
at the conclusion of the term, because:
1. The voter approval requirements of §420 of the
Charter do not apply to leases which provide for City ownership of
improvements at the conclusion of the lease;
2. Section 420 of the Charter may apply only when the
City is a lessee;
3. Section 1402 of the Charter may prevail over contrary
provisions of §420 when waterfront property is involved; or
4. The voter approval provisions of the City Charter may
not apply to any lease of state tidelands.
This memorandum represents my opinion of the ruling a court
would make if this issue is litigated. My opinion does not
express any personal or professional support for, or opposition
to, the proposed Bay Club Lease. The Council has no present
obligation to approve a 50 -year lease, but this office will
determine if any rights may be lost by virtue of continued
expenditures in processing redevelopment plans.
Robert H. Burnham
City Attorney
RHB:jg
Attachments
n v 16 'E'9 13:3 . EXHIBIT A
i
CITY 07 1c4?C1kT DIACli
CITY 4TTCC<NrY
DfP.a:CT�*IT
August 29, 1963
To: City Cmjnail Comm, -tree Councilman
Stoddard, :lsrstall and Lorenz.
iron: City Attorney
Subject:'.ec,_ast for extension, Baltica Bay Club lease
In your memorand"—, you have requested an o?inion re6arding the
propriety of axtending the Balboa Bay Club lease from 1958 to
2013 in sccordtnce with the lessee's request.
Tha_p appear to be two s_ctionsof the Charter which relate to
the subject '_ease. Section 1402 provides
"n -e City Council shall not sell or convey any waterfront
or beach property, excepting to the Stats or to the County
for use as a public beach or park.
"l:o such property owned by the City shall be leased by the
City unless and until the leasing thareof shell have been
epp-cued by a majority of the aloctors voting or. such
pre;o=ition at s.ny general or special r.unicipa.l election,
Provided, however, that this Section shall not invalidate
any leaso o! such property in existence at the titre of the
effective date o£ the Charter nor the future leasing or
ra-'_acair.� of a.. -.y auch property under lease at the ef!ec=
tive dste of ibis, Charter. ....."
The ozhe_ section of the Charter which would appear to epp_y is
Sect` -on 4.20. vnta &action provides:
"The City Council shell not have toe pa er to rel:e or, au-
t`toriZe any conrraCt or lease or axtensior. ther--of for a
'Grgarperiod than twenty-five years vniess --a:d contract,
ease er extension be arprovad.by d majority of the qu21i-
`4e6 el:cto s cf the City voting or. such q;:estion at any
election. F. co^tract, lease ar zstenaicn for a longer
pe'rio3 she'll be valid without such approval if it provides
for the :ccu:siticn by the City at Oie end of such period
of the real or personal property so leased or contracted
for. "
cc
114 LD1 UO a rtII,.J ICJIGR
NOV f3 199 !3'Z4
TO: City Co-neil C-,r-DittiB Cou%cil sl
Srcd'dsrd, x.ers^all and, L.c:enz
11/1V�OJ 1J•.JO VVJ
P.6
-2- August 29, 1963
Since the property in queaticn was under lease at the *date' the
Charcer took effect, January 7, 1955, it would appear that the
fu;ure laasind or re-leasing of ora Bay Club pro,erty would not
be pro5ibired by Section 1=:02 ar.d char ro vote o: the people on
such lesleirg or r4 -leasing would be necessary under Section 1402.
Sectit. 420 3.,scribvs en additional lini;ation on rho pcaer of
the Ciry Ccunail wlhich aratas tha City Co.r.cil shall not have the
power to t•.?"ke cr a•.thoriza ar.yy ccr.tract or lease or exter.gi.on
thereof fcr a longer period -,tar. tws-ty-fiva years unless said
cc -.tract, lease or exte^.eicn is spproved by a majprity vote of the
elaczors vor g on such quest -for. in eacT instance where the City
vee ?ereto_'ore co:sidereJ the efface of Section 420, it as beer.
felt the tatcion 1' --mica the City Council from approving any cor.-
tr--ct or lease (except thoso wit`.in the exceptions 5 ecified in
the section), the termination of Y}hich occurs more Nan twenty-
five years after the action of the City Council approving such
lease, or contract. This is the cox:arvative, but I believe the
cor:_ce, acproach. Any oc':er interpretecion would seem to enable
the City Council to •vole a vote of tht people by tierely granting
a series of ty.tensiors which totalled sora rhan twenty-five years
but of which alone exceeded twenty-five years. The tzcep-
r-ons do not seem reasenably to incluea this lease. However, It
is possible to intarprat the section that a least or extension
which in !-,self does not srcr.ed a tctsl pexiod of twenty-five
yews could be approved by the City Council withoat voter speroval
even tough the actual rermi:srioa. ;ate is more than twenty-five
yz=rs fr= the ti^e O%e City Council ac's or. such contract, lease,
or exLenslon. T^E current proYoaaj ole rt:e Bay Club would be an
eXtension that etas not exceed twen=z-five, years and it is cor.
caivable that it was the intent of t..a fro^erz of the Charter that
s::c'.i en extension would be allcwtd.
T}is view is, of course,'being taken by the lessae and a legal
opinion su;perring the authority of tha City Council to act as re-
q�est.d ':se, teen pre?a.ed and a co;y :h.eraof is transmicc_d for
jour'r.`o—atior.. Aedirior., the lessaa I- s sent * copy of an
'-nrcrral letter fr:;m ^'irle Insurance and Trust Company indicocine
a willi-o".e63 to ins -art the proposed cord-,ninit--s lesseho'-ds. The
'.ettsr _cplies :he tide co.:,;;anv had ravitwed the Chaxtar sections.
A copy 15 tr;nszitted fcr your inforkricn.
A co,y o£ the lease and the a-,andxtnts ore also trcnsmitted is re -
e.
W 110 I believe our lnrerpretatien to be that ince^.ded by the fra;-
ers of the Charter, it is possible a"different result would be.
M
. Noy 1Q''89 13 24 • • P.7
J' /.
So: City CCuncil Co=ittif.. Couatil-an.
Stoddard, Vzrshc-1 and Lorenz -3- August,29, 1S��
rearhtd if t!t3 :ctte: Fere submitted to a court for in.erpretaticn.
It: is, therefore, s-u>3ested =hat -,hp epplicaticr of tha i_SsEa for
r
an axtsnsion ba cxa-zllnad on the merits a -,d if the proposed a\-en-
sion appears to bs in the inter?Ste o£ Lhe_City t^e Cicy Council
r.3y wien to roves a catemi-a!ion of its authority to afprove the
request.
r�
C[L_ }`araxZ6
i�zrc:.Ec city attorney
£res.
n
• EXHIBIT B •
WYMAN BAUTZER KUCHEL & SILBERT
A 4V IYIYIYYV IY(AygY( P10TW10YLL CgPWIN2q
IV61NE L. WYMAN(192P197)) 2500 MICHELSON DRIVE, SUITE 700
IRVINE, CALIFORNIA 92715
'■I CSON 1AUTIEE(IPII'IH7) 1 714.652.4700
THOMAS H. KUCHEL GBLf ADDRESS. WTEAROK
01 COUNSEL TELECOPIER: 719.553,0549
1�.
A
BRUCE W. SUMNER
OF COUNSEL
May 180 1989
Robert H. Burnham, Esq.
City Attorney
City of Newport Beach
Post Office Box 1768
Newport Beach, California 92658-5915
Re: Balboa Bay Club Lease
Dear Mr. Burnham:
I, INTRODUCTION
TWO CE107V9T FLAIAJOURTEENTH FLOOR
10.9 CENTURY PAR[ GST
LOS ANGELES, CALIFORNIA 90067
211 331 9000 111.170.1000
1919 FENNSTLVANIA AVENU4 N W..SUITE 100
WASHINGTON, D.C. 20006
201 u7an6
DIRECT DIAL NUMBER
On behalf of the City Council of the City of Newport Beach
("City"), you have requested our opinion regarding a proposed
ground lease ("Proposed Lease") between the City and Balboa Bay
Club, Inc., a California corporation (`Bay Club"), for a term of
fifty (50) years covering certain water -front property ("Bay Club
Site") owned by the City and currently leased by Bay Club pursuant
to that certain Lease dated May 13, 1986 ("Existing Lease"). In
particular, you have requested our opinion on the following
issues:
1. Does Section 1402 of the City Charter require voter
approval of the Proposed Lease of the Bay Club Site?
2. Does Section 420 of the City Charter prevent the City
Council from leasing the Bay Club Site for a term in excess of
twenty-five (25) years if the Proposed Lease provides for City
ownership of all buildings, structures and improvements on the Bay
Club Site when the Proposed Lease expires or is otherwise
terminated?
rtf/NES86-DDI(op:n1on
Robert H. Burnham, Esq.
City Attorney
City of Newport Beach
May 18, 1989
Page 2
II. OPINIONS
Based upon current California law and the facts and
assumptions set forth below and subject to the discussions and
qualifications set forth below, we are of the opinion that:
1. The express provisions of Section 1402 of the City
Charter do not require approval of the Proposed Lease by a
majority of the electors voting on the issue at a general or
special municipal election.
2.. The express provisions of Section 420 of the City Charter
do not prohibit the City Council from entering into the Proposed
Lease of the Bay Club Site to Bay Club without voter approval for
a term in excess of twenty-five (25) years if the Proposed Lease
provides for the City to acquire ownership of all buildings,
structures and improvements on the Bay Club Site when the Proposed
Lease expires or is otherwise terminated.
III. PACTS AND ASSUMPTIONS
We have examined copies of the following documents for
purposes of this opinions (i) the letter dated as of March 28,
1989, from City Attorney Robert H. Burnham to the Honorable Bruce
Sumner (the "City Attorney Letter"), and (ii) the Existing Lease,
a copy of which was furnished to us by you. With respect to all
factual matters referenced herein, we have relied solely on the
City Attorney Letter, and we have not made any independent inquiry
with regard to factual matters upon which our opinions are based.
In rendering our opinions herein, we have assumed with your
approval and at your direction that Sections 420 and 1402 are the
only provisions of the City Charter which are applicable to the
questions presented.
A. Factual Background
The electorate of the City of Newport Beach adopted a city
charter in 1955 ("City Charter"), including Section 420, entitled
"Contracts. Restrictions." That section provides in pertinent
part:
The City Council shall not have the power to make or
authorize any contract or lease or extension thereof for
a longer period than twenty-five (25) years unless said
WINE586-D011opinton
Robert H. Burnham, Esq.
City Attorney
City of Newport Beach
May 18, 1989
Page 3
contract, lease or extension be approved by a majority
of the qualified electors of the City voting on such
question at any election. A contract, lease or
extension for a longer period shall be valid without
such approval if it Provides for the acquisition by the
City at the end of such Period of the real or Personal
Property so leased or contracted for... (Emphasis
added).
In 1957, the City added to its City Charter Section 1402,
entitled "Waterfront Property". That section provides:
The City Council shall not sell or convey any water-
front or beach property, excepting to the State or to
the County for use as a public beach or park.
No such property owned by the City shall be leased by
the City unless and until the leasing thereof shall have
been approved by a majority of the electors voting on
such proposition at any general or special municipal
election, provided, however, that this Section shall not
added).
In 1948, prior to adoption of the City Charter, the City
entered into a fifty (50) year lease of the Bay Club Site ("1948
Lease").
In 1986, the City entered into the Existing Lease of the Bay
Club Site with Bay Club, the assignee of the lessee's interest
under the 1948 Lease. The Existing Lease provides that it is a
re -lease of property under lease prior to the date on which the
City Charter was adopted, and that the City will become the owner
of all structures and improvements upon termination of the
Existing Lease, thereby exempting the Existing Lease from the
voter approval requirements of Sections 420 and 1402. The term of
the Existing Lease extends for 25 years, expiring in 2011.
Bay Club is presently contemplating redevelopment of the Bay
Club Site, but desires that the City and Bay Club enter into a new
fifty (50) year lease to facilitate Bay Club proceeding with such
redevelopment.
rtiA[SH-0o1/opinion
Robert H. Burnham, Esq.
City Attorney
City of Newport Beach
May 18, 1989
Page 4
IV. LEGAL ANALYSIS
our legal analysis will first review the general authority of
the City to enter into the Proposed Lease, then summarize the
nature and scope of a city charter, discuss the rules for
construing city charter provisions and apply those rules of
construction to the City Charter provisions which are expressly at
issue.
A.
Subject to certain restrictions, California law confers upon
a city the right to lease real property owned by the city.
California Government Code Section 37350 expressly confers on
cities the general power to purchase, lease, receive, hold and
enjoy real and personal property and .control and dispose of it for
the common benefit. Government Code Section 37380 authorizes a
city to.lease property owned by it, or any of its departments, for
terms not to exceed a specified number of years. In general, a
city may.not lease real property for a term which exceeds fifty-
five (55) years, unless certain conditions are satisfied, in which
case the maximum term is ninety-nine (99) years. Additionally,
various statutory provisions authorize and restrict the ability of
cities to lease properties for various specified purposes and
terms. See, e.g., the following Government Code Sections:
Section 37382 (land used for agricultural or horticultural
purposes not to exceed 25 years), Section 37383 (land used for the
production of minerals, oil, gas or other hydrocarbons not to
exceed 35 years), Section 37384 (tide or submerged lands not to
exceed 50 years), Section 37385 (water -front or harbor facility
development lands not to exceed 66 years); and Civil Code Section
718 (lease for a term in excess of 99 years not valid).
B. Nature and Scone of a City Charter.
Section 3 of Article 11 of the California Constitution
empowers a city to adopt a charter by vote of its electors. A
city charter represents the supreme law of a city, subject only to
�. conflicting provisions in the California and United States
Constitutions or to preemptive state or federal law. Harman v.
San Francisco, 7 Cal.3d 150, 161 (1972); Stuart v. Civil Service
Com., 174 Cal.App.3d 2011 206 (1985). As such, the charter is a
municipal corporation's constitution and will be upheld unless it
rtf/NE 586-D01/opinion
41
Robert H. Burnham, Esq.
City Attorney
City of Newport Beach
May 18, 1989
Page 5
is clearly shown to have been, at the time of its enactment,
repugnant to or inconsistent with the then fundamental law. A
charter supersedes all laws, ordinances, rules or regulations that
are inconsistent with its provisions. California Constitution,
Article 11, Section 5(a).
C. Applicable Law Regarding Review and Statutory
Construction of Charters.
Notwithstanding its priority and position, a city charter
operates not as a grant of power, but only as an instrument of
limitation and restriction on the exercise of power over all
municipal affairs, which power a city council is assumed to
possess. City of Grass valley v. Walkinshaw, 34 Cal.2d 595, 598-
99 (1949); DeYoung v. City of San Diego, 147 Cal.App.3d 11, 17
(1983). If a limitation or restriction is not clearly and
expressly stated, it may not be implied and the full exercise of a
municipal power will be permitted. DeYoung v. City of San Diego,
supra, 147 Cal.App.3d at 17. A construction in favor of the
exercise of this power and against the existence of any limitation
�- or restriction thereon which is not expressly stated in the city
charter is clearly indicated. Id. at 17. All rules of statutory
construction as applied to charter provisions are subject to this
principle. Id. at 17.
D. Construction of City Charter Sections 420 and 1402.
(1) Section 1402 - Water -front Property
Section 1402 expressly restricts the leasing of water-
front property by the City by requiring that the City first obtain
voter approval. An exception to that restriction is created,
however, for the future leasing or re-leasing of any water -front
property under lease at the effective date of the City Charter.
Governed by the rule that a city charter is solely an
Instrument of express limitation regarding power over municipal
affairs, Section 1402 limits the City's power to lease water -front
property without first obtaining voter approval, but the
limitation does not apply in the case of a future leasing or re-
leasing of any water -front property under lease as of the 1955
effective date of the City Charter. For the future leasing or re-
leasing of such property, no voter approval is expressly required,
and according to the rule of construction articulated in City of
Grass valley and DeYoung, a voter approval requirement cannot and
should not be implied.
rtf IN[ 585-001/opinIon
Robert H. Burnham, Esq.
City Attorney
City of Newport Beach
May 18, 1989
Page 6
The Bay Club Site was under lease in 1948, prior to the
1955 effective date of the City Charter. By the terms of Section
1402, no voter approval would be required for a future lease or
re -lease of the Bay Club Site to the Bay Club, because the Bay
Club Site was under lease as of 1955. Thus, Section 1402 would
not serve to require voter approval of the Proposed Lease.
(2) Section 420 - Leases in Excess of 25 Years
Section 420 expressly prohibits the City from entering
into a lease having a term of more than twenty-five (25) years
without voter approval, unless the lease provides for the City to
acquire the real or personal property so leased at the end of the
lease term.
The City Charter excludes from its restriction, and
therefore reserves unto the City, the power of the City to enter
into leases longer than twenty-five (25) years without voter
approval upon the satisfaction of a certain condition; namely, the
lease must provide for the City to acquire the leased real or
personal property at the end of the lease term. It follows that
leases for terms longer than twenty-five (25) years are thus
permissible without voter approval, subject to the condition set
forth in Section 420 and to the general limitations of California
law pertaining to leases.
By the terms of the City Charter, and pursuant to the rule of
construction set forth in situ of Grass Valley and DeYouna, the
City can enter into the Proposed Lease without voter approval,
notwithstanding the fifty (50) year term of the Proposed Lease, so
long as the Proposed Lease provides for City ownership of all
buildings, structures and improvements on the Bay Club Site upon
the expiration or earlier termination of the Proposed Lease term.
Based on the foregoing, the express provisions of Sections
420 and 1402 of the City Charter do not prohibit the City from
entering into the Proposed Lease for the Bay Club Site, and the
interpretation and construction of those Sections in a manner
consistent with the character of the City Charter and relevant
rules of statutory construction do not yield a different result.
It is important to note that the City's ability to enter into
the Proposed Lease without voter approval is based upon exceptions
to the general limitations contained in City Charter Sections 420
and 1402. While the City has the power to enter into the Proposed
Lease without voter approval, the City may wish to submit the
Proposed Lease matter to the electorate in recognition of the
rtf/NE586-001/opinion
Robert H. Burnham, Esq.
City Attorney
City of Newport Beach
May 18, 1989
Page 7
unique nature of the Bay Club Site and the general sensitivity to
long term leases and leases of water -front property expressed by
Sections 420 and 1402. The judgment on the question of submission
of the Proposed Lease matter to the voters is not a legal one,
however, but is left to the discretion of the City Council.
In rendering the foregoing opinions, our examination of
matters of law has been limited to the laws of the State of
California.
This letter is intended solely for use by the City in
connection with the possible execution of the Proposed Lease by
the City and may not be relied upon for any other purpose by the
City or for any purpose whatsoever by any other party without the
express written consent of the undersigned.
rtf /HE 586-001/opinion
Ire]
Very truly yours,
Bruce W. Sumner
WYMAN BAUTZER RUCHEL & SILBERT
EXHIBIT C
CITY OF NEWPORT BEACH
office of
CITY ATTORNEY
To: City Manager
From: City Attorney
Subject: Balboa Bay Club Lease Extension
February 23, 1978
I have received certain informal inquiries from the Balboa
Bay Club with regard to a possible request for a lease exten-
sion. The existing lease was entered into on March 24, 1948,
and will expire on September 1, 1998. The Club management
would apparently like to further develop and upgrade the
property which is presumably not economically feasible unless
the term of the existing lease is extended.
Whether or not the Bay Club will submit a formal request for
a lease amendment is uncertain at this time. Also, the terms
and conditions of any such lease renewal would, I'm sure, have
to be arrived at by a lease renewal negotiating committee
composed of representatives of the City Council, staff and
Bay Club.
There are, however, two sections in the City Charter which
relate to a possible lease extension and which may have some
bearing on any decision to proceed or not proceed with a
request.
Section 1402 prov-ides:
"The City Council shall not sell or convey
any waterfront or beach property, excepting to
the State or to the County for use as a public
beach or park.
No such property owned by the City shall be
leased by the City unless and until the leasing
City Manager
February 23, 1978
Balboa Bav Club Lease Extension
thereof shall have been approved by a majority
of the electors voting on such proposition at
any general or special municipal election, pro-
vided, however, that this Section shall not
invalidate any lease of such property in
existence at the time of the effective date
of the Charter nor the future leasing or re-
leasing of any such property under lease at
the effective date of this Charter...."
The other section of the Charter which would appear to apply
is Section 420. This section provides:
"The City Council shall not have the power
to make or authorize any contract or lease or
extension thereof for a longer period than
twenty-five years unless said contract, lease
or extension be approved by a majority of the
qualified electors of the City voting on such
question at any election. A contract, lease
or extension for a longer period shall be valid
without such approval if it provides for the
acquisition by the City at the end of such
period of the real or personal property so
leased or contracted for...."
Since the property in question was under lease on the date the
Charter took effect, January 7, 1955, it would appear that the
future leasing or re-leasing of the Bay Club property would not
be prohibited by Section 1402 and that no vote of the people
on such leasing or re-leasing would be necessary under Section
1402.
Section 420 describes an additional limitation on the poorer of
the City Council which states that the City Council shall not
have the power to make or authorize any contract or lease or
-2-
E
City Manager
February 23, 1978
Balboa Bay Club Lease Extension
rj
extension thereof for a longer period than twenty-five years
unless said contract, lease or extension is approved by a
majority vote of the electors voting on such question. In
each instance where the City has heretofore considered the
effect of Section 420, it has been felt the section limits
the City Council from approving any contract or lease (except
those within the exceptions specified in the section), the
termination of which occurs more than twenty-five years after
the action of the City Council approving such lease or
contract. This is the conservative, but I believe the correct
approach. Any other interpretation would seem to enable the
City Council to avoid a vote of the people by merely granting
a series of extensions which totaled more than twenty-five
years but none of which alone exceeded twenty-five years.
However, it is possible to interpret the section that a lease
or extension which in itself does not exceed a total period
of twenty-five years could be approved by the City Council
without a vote even though the actual termination date is
more than twenty-five years from the time the City Council
acts on such contract, lease, or extension.
If the request from the Bay Club is for an extension that does
not exceed twenty-five years, it is conceivable that it was
the intent of the framers of the Charter that such an ex-
tension would be allowed. I am sure that valid arguments
could be advanced on either side of this issue should the matter
be submitted to a court for interpretation. Therefore, I
would suggest that any application for extension be reviewed
on its merits and that the City take whatever action deemed
to be in its best interest at that time.
Regardless of how one chooses to interpret the 25 -year limita-
tion of Charter Section 420, it is interesting to note that
Section 420 further provides that a lease or extension thereof
for a period beyond 25 years shall be valid without prior
voter approval if the lease provides for the acquisition by
the City at the end of the extended lease period of the real
estate and leasehold improvements located thereon.
-3-
City Manager
February 23, 1978
Balboa Bay Club Lease Extension
0
The existing lease with the Balboa Bay Club provides that:
"All buildings, structures and improvements
Placed at, in or about the demised premises
by the Company shall, upon the expiration of
the term of this lease or the earlier termina-
tion thereof, belong to and become the property
of the City and the Company shall have no right,
title or interest therein or any right or privi-
lege of removing the same therefrom."
Accordingly, the lease presently provides for the acquisition
by the City at the end of -the lease period of the lease premises
and improvements. A literal reading of Section 420 under these
circumstances would appear to authorize a lease extension
beyond ,the 25 years without submitting the issue to the elec-
torate. However, this seemingly obvious conclusion is confused
in light of the prior 1968 request of the Bay Club for a lease
extension which at that time amounted to an additional 26 years.
There is reference in some of the correspondence in the file
that the City Attorney at that time had expressed an opinion
that an extension of the lease for the proposed term would
require approval of the citizens by vote.
No such opinion can be found in writing in either my files or
that of the City Clerk. In trying to reconstruct the history
of events which took place in 1968 and 1969 during the period
of the lease renewal negotiations, I contacted the former
City Attorney Tully Seymour for his input. It appeared that
it was mutually decided at that time that the best course of
action was to place the issue on the ballot. Apparently the
political climate was such that the issue of the Bay Club lease
extension was very controversial. I'm sure it was thought to
be in the best interest of both sides to obtain a consensus
of the people residing in the City. Also, there is some indi-
cation that a public vote would avoid any possible challenge
of a lease extension under Section 420 of the Charter.
-4-
0
City Manager
February 23, 1978
Balboa Bav Club Lease Extension
On January 13, 1970, a special election was held to consider
the extension, and the measure was defeated by a wide margin.
Should the Bay Club decide to proceed with a request for an
extension sometime in the near future, the decision may again
be made to seek public approval. S don't believe, however,
that Charter Sections 420 or 1402 read literally would require
such a public vote.
Several other issues should be mentioned. Since the Bay Club
lease is located partially on tide and submerged lands, it may
be necessary to obtain approval of any lease extension by
the State Lands Commission. Also, the environmental documenta-
tion required by the California Environmental Quality Act
would have to be followed. And finally, any new development
would be subject to the jurisdiction of the Coastal Commission,
as well as local General Plan compliance.
tom" J
DEQ,, IS D. O'1�EIL
City Attorney
EXHIBIT D
��_:i t:, L1!:':G�TO`:. GC'u�`•'i1:1 d
DATW 16,
of ._
C:u!D, Inc. is C_'-E'_-at'_ny ti.: -ay Club
pursuant Lo c _.c c.=,:. :iR _2.-'. ...:.rC.i r, 13 3, DEtwe I t.^.e .;i'Y
of T::s _:_v^J't C� nw. T"-_ Ie_ -se ..as
_n=. gin:,. _.._ '.1 _.3 SalJOa
cap Ciu:i� in C. CI: ..aYC.-i Zoe 1:0'� 1PE tC�l o= t:?=_. -
i) years CC:': ?l :1:1g .�.E7L£. 5+__ 1� 1�=c, aY.d LE= :_:7=ting on
= 1, 1913.
_
:'P.c: real rC•^-erty CoT'rcled by t".e Leua.,c •:73_ _ __.__
?derty.r.._Ci' .._.� .-.:.C... tJ r.r'J City of T':e-;port ..E.4.C.: by
Caiiforniain h;27. The gre.nt. -,rovided that _: C-'. __-;:
__ase .9 n,. of tiie real :ro'ne-c 1° .o. ._ Ceriod to t:;Ca2
a
25+vears. In 292, the grant L:a- :..a.-. Y __.._ _ Iaizes f
v c
a period not to e::ceed 50 %Ear_.
bcl:✓o? 3av clu.J, inc. _nIc;nds to c7•7ly to the City Council
of i:e•.roarteach for a 15 yea_ e.:t-_nsion of tie ter, of the
Lease, as l;ell as ot_.^.C-;: I.C'iif=Cl=_r o-- C _3in
o± :.�:-2 +.=C;:ic• $u r2 tens ion Of t.i C- tEl�: O f t:7'_' =e352 a:iC. :,uOa
o&.er r8ti:iifications are na C323c in o=''<i_ -D= -.,alboa E=_y Clu!D,
Inc. to -. <.))'_e to unc.?rta%e tha proposed program ,OT
t^e 13'ii3.: .
The cue,'CiJn has been raised ac to het,er tie C'. 'c Cov'.rci--
has :h: a- n` ;^_r -'-• --•_ _�� of t^e Lease •::zthout
s L_G.^.
ili.-g the matt.Erte
-o a Vo, Of `..�.e :.'?•.e O'J=L Beach alECorate.
on Cne JaSis of the follJ:ailg cf the ap;li Cablc ;: o-
vis=on_- o= t!i Ccarter, it %Cull. scem t:a[. sl:: ai.
Sit 'i-= _• _ =r'c --^s
cc 'on 1402 of t"e
s2_i•o- c -n, an .•a:E_ �rO'.-`Cr bta C;t PI— .
to t.' ._
._ Lc -L.. o2: :o t e CCun "_o_ use as a Gu:=iir
•.'Jou c.. JrJ^3....
.:J sL:=.. "'1-= 0...^•_.. D" t*ie Ci CIbe 1Ec. :r
tliE L.i t'V U7?'EE.: Zn:" until t, 1C_si1= t::E=a7= s.". :1 i(.. =.4'E
baan a:J �_•�':'E 1J�' a of t112 c1--c--ors 7J`_inG 01
s _.. c_:.a_'al o_ s-ccial .:,u1ic_ e.l
J ; r
=_J": 5"a1i :JC.
1
�l
.._..�E L1':
w
t -
_..__ __..C% C_
t.-
Z❑t:._e _____n'; cr- sin, o_ > £L7 c' _YC rzy 1:.__r
lea -z --at t`le E f::C.`':c `Ca to Of
COr7'_ll a.. , '.zt R "ie the .:Ei `o ^a -:e
2:1\*o= Or E::CSln_?R ther'zof for a
Cer_o t[lc% t:7�:i'i -. _'JE t_ c__E um; _355
tract, le-asa c_ L'A `o _�ro:y
--d a
of t:18 CUE
211_1.i ei:: ::emirs O.t';
Ie �..i-i.l '•i Ot_I27 Oil
SU_::
questio:l at any elect. -*.On. r contract, lsasE o- e:: -
tension fora shell .}.e v=lic. er_tnoct
such ate_ scval if it _7r the ac Sitio : b..
the Citi° at t_"le end of such _erio3 of t:.e real or
parsz:nal CrJ•'.erty so icasea. or Coai
to _... --f r: Z'.1 =.% .._ ':_'._2J ._- 1T_ :.=L n n.. CL'n.= C -
c.i v n o 1 to r.:.' _
a "-a=, 0-1 25 _ars or lc:s),
It is
LG =
CV .ic°.i, L.._ C'7^.C1ii^1_^i': ts:<_O"=:`=t1
.7CC.1 J: 1 D2 ..C_ %7 '.-e L7 also .7 C7TCrcd ill.
Sec=10'1 20L7 ^'3 C•7 _'�4 CC. _R8
fro-. Sect-'on 1402 Vc_ C'rJ__`_'-•_' under lease at ti'.e este C`.'_:'e
1 date .:;Z an in:£ nCic'a t0 C_="C2L:=IIi.1b,
free IZO-, any CF:?CLer ria°:'=_CS O:75 Lire f-iture 1e3S1n- 0
Su C.:-'J-•crLy _._sy -n ons contained in
y secri-_n i= 2 in S--c-ion .- ::e Justified on the
j basis t.ldt "'St of Siaah 7_O�:C-t✓ muSi: h=ve uz2en alre-ady
2 del'flo'.C:? _C_ r2C_..c Lio_al us--_ at tPe
lner2=:>re, 1t ;:oald have
3_- - 1' t_`l C'_' C ;:'.nail to th rc- f
� iJ :] ca SG..�-x _G �_�.J II.._G/. E c_.,o t2�
1 dt:al- ;:i.`.-- su GI L�%C rt`• On suc:l `salsas as it deE'.eC
i and not to re:;ire the-City Council to cet elect7ra:e a_-
proval for any is `_u "c _9'.•'e QF such P=O-e'rti%.
1
1 If it is ass-x�ci that Section 402 does ap: to :Eter-
7 front Cr'7crt,•, t:1e = : SC:, cn C? Ot SECti•7n X20 1S
u o u s in that iL 0.oc ..7t i:. .r_acc ...let_-lEr or n it is is -
S
ten.-ed t0 c. _ __`-J 1e= ses Of City G::nE:i pro-arty, leas=_s
4 by the City as 1_ssee of p_:,;erty o-.ned ot:lers, cr bo ::.
__ .: E'•IE"^,
t:-,c S£•C7:1 sentence O.
' t:1e first Sc-nL e'1 Ct` ?._ _^LC:`.'ad to Cover only le--.se,
Ot _rs a1 the City_ Lha esa.e.
.s only as to a leasa t::_s t :e t:,at z
the "ac_,;_siciol bcy t: _ Ci•=_ at .:1e en3 of (the t£s l of =: e
lease) of the _col Or ._ so icaca1" CO'1'.I
cC"=u_re
_^e _c Dc_. - _ 7: r_ -_ _. ..--nit LJ It _ a. ErS= ..__� _^.ter---
-
-v-lE __ :._ _ _ .. Lc_'1 -Ja-cr =:1='•7 25 C--r5, un,
C'_ sL:: _
•
9 1
cls r<.c •_•:? ti:
is C 2 .. .. 1_ i-. =_.-C: _= 1: aI G'^J_ =-..1 I.o 0. T- n - _..?O_]
�-
1'
�C:.r C::In _ _.�� ... _1. �.-_ _ .. [~i.. ?..C' .-ice ^•l. ^L _��
_e O fn 1 t:l
th'E C1.=�� :a=tee„
----*-1f, -aS irJ "_ra Tii-. a -7'i , 1`.1=_So L:JE C•__OP.
427 :as P.Jt �r `.c v:1_ -r .:.iic: T- 2
Cit] is 125571, -_ t'_C L7.__YZ C=J_ o iS :-aC:I ems,
it b.•J.__Q that t:1E Sec P. 8Er, 7ti o E Ct_cn J.cv
TE" �i"L cC t7 a�„Jt? G❑1�� ter.=C-t: ::c t:ec ..SC Ec_-_ O '?f�L3_^_IIy
EleCtoratt- 2OJ107dT Of t -'Ie Cfo]—Ss' c..`E £iCA„J C}:2
JI t.:n re25,"_. '.'!]15 sEC07:. sStc c G".O"J1:. .._C TJ uch
_O -
Vi C:es 'Or t :! aCSL`-21: -J Cn by he C4.tV E t;• t_]L- c.,-'
te_'1 Of the Iczi .3cII if s-ic1 sent -ante i5 a70' iC3=.=E
to leap=, L' ?r ;::ii Cl: '.c]? Cit'_ i5 t}:2 '1e3a0-, C2..^. L'_Y 7.t
,,:as J._ 0-
:�-is SE P. :. c:i,C..
Val.^.P l'_ fr. CnC.S J. - E's :�_" L: .._-^_''� JI _..'.E'L .::Z:._..
u 2 lEs ?.as a::
Leise ales i.J.y .G`.'�31A cS. sR�_fl :.1-.'. C:•.a:3 OCCkGP.,, ^]. is C::_i.9
Clear in =eGGiriIIc, tte --c a?li Vcr to t=,e City pC, c£E iC:
of tis ls= .._ =o =_c _c e.:.--__ o" c:=_ LE .. o_
_:1_
r.
Oc-__..c=..._
f
W%
:i cn, In _c .lac_
cG
ter,: c` a lcc.:c; zS- e:.._.__ ---.n nd -=;a' __,t
CaL rL,_ __-
��.. __.:e tc. 1t ca:; s
ae_.c..
the _-. - vo..___.c-
'JiJL`S aCGa tCn -I —I, . -1:. ,'i8'n Oi t�:1S
C:115 i&a.:ati Jnr 1- Sec"- ion D i5 in::c.cto tBa &O c.5 tC
O f a 2..7 -,_ .. ci:e i0=: 0� H
tiiti.Ji1= F_�_i:-�:G.._=: `„C' 2:: `,'�OV�� GP.I•_: ::i `�`:: L_:4' E:' J=:i:.i 0i O
tcrm Of t:,e L =-Sc.. t'— n---- D_acriCal 2=JcCi.
a *-O
t'edr e:tension otha- _c_ __'_1::1551 aE ul-A6Cr 432.
an i`.:-e:J-_Ct_t_'.On '.:'-'i:i, 'O:ce, a? c:._ t.0 'Ze
Sn=e_i-
ci Section 4;2 to alio".: t,e City council to bran_ 25 yea_
E:a6i15iCn:3 '.'.� 1,;^.J�eS taCUC Elect:l :tc lin, c_
Sect is -;2' L is on c e =a Civ_ 15 t?e^lc' _--n 0z
L:c E:.:c:12 tE i::.; L[1e fact :...at SL'.Gi r t,:!n; _ ....::5
not C:'Ii2Cce tntil £^::>? futu e Gate, SP.oL•lii IJ? 'JT_llatciial
October 30, 1989
To: The City Council
:,ewport Beach
COUNCIL AGENDA 0 �
NO.REQ 1VEj�lq
� 1
V:e: Item J-1 City of Eewport Beach Council I•eetin
Cctober 30, 1989 - rescheduled for Nov 27,
A I1ew 50 -Year Lease for Balboa Bay Club
We, the undersigned (a list of signaturesrepresenting 77 individual
Newport Beach homeowners and voters is attached)wish to petition to
the City Council to let the voters decide whether a 50 -year new
lease should be granted to the Balboa Bay Club.
Ever the Honorable Bruce Sumner, who was hired by the City Attorney
to render a legal opinion on this subject, said in his letter dated
Nay 18, 1989, "The City may wish to submit the proposed lease matter
to the electorate in recognition of the unique nature of the Bay
Club site and the general sensitivity to long term leases and leases
of water -front property expressed by Sections 420 and 1402."
CORP W100
Balboa Bay Club is owned by an individualkand being operated for
profit. It is in the Club's interest to request a long lease to
maximize its profits. However, if the lease terms are fair., and
if 50 -year leases are the norm for commercial properties, then
the Balboa Bay Club should not be afraid to present its case to
the voters and get their approval.
In summary, since we are talking about the future of 25 acres of
prime bayfront land given by The Irvine Company "for the beneficial
public use of Newport as a city" and 50'years is a long period of
time, we hope that the City Council will find that this is an
issue important enough to let all voters be informed and involved.
s ctful subm'tted
Keith Hosfiel
1300 Kings Hoad
Newport Beach
Enc: 77 signatures from other Newport Beach citizens who share
t e same feelings.
CY7P '.ITYCOUNCIL
�l ._002T OEACII
NOV 2 T 1989
5 JECP: Extension of the Balboa Bay Club Lease from
25 years to 50 years by the City of Newport Beach. P%'49). o
subject will be voted on by the City Council on October % 1989.
We, the undersigned, feel that any extension of the Lease
beyond 25 years should be approved by the people of Newport
Beach according to the original City Charter.
Phe Balboa Bay Club is a private club and should not be granted
any preferential treatment by the City Council.
SIGNAPURE ADDRESS DAPE
r I � 0.
L'/
z -Z j
Akri
i Vic: i _,.,�,�, 1%1 /C•.�.� -�'�
io
L'/
z -Z j
Akri
i Vic: i _,.,�,�, 1%1 /C•.�.� -�'�
SUBJECP: Extension of the Balboa Bay Club Lease from
25 years to 50 years by the City of Newport Beach. Phis
subject will be voted on by the City Council on October 30, 1989•
j X10/ •••-� �,�� u++�+=t �i�,iieu, ieei Lnai any extension of the Lease
beyond 25 years should be approved by the people of Newport
Beach according to the original City Charter.
Phe Balboa Bay Club is a private club and should not be granted
any preferential treatment by the City Council.
NAME SICNAPURE ADDRESS DATE
1
X71 U �/��%A•[n�—�G "z /4
1
IV
l/1�=-���V a5o Je✓z r %�C.zs ��33,rL �r� C �'�, lI
/?
;i �• _1 %t-1 �r �t /% �,�7 _�� '� x �/Grp '.',�-44/ter
l.L - 7tCiu;�_. k .i � (y c`-dt1-a_ �,�t1k U• ��' � �
44 h
L"
�:4cc.C"��.2� �l� ✓fit ¢'��(�.(._ �i��� tCC��cc�: �,C:<' .'f`Z".: �'C✓'i "-7
SUBJECT: Extension of the Balboa Bay Club Lease from
25 years to 50 years by the City of Newport Beach. Phis
subject will be voted on by the City Council on October 30, 1989•
We, the undersigned, feel that any extension of the Lease
10, beyond 25 years should be approved by the people of Newport
Beach according to the original City Charter.
the Balboa Bay Club is a private club and should not be granted
any preferential treatment by the City Council.
NAME
SIGNATURE
[;u1;PM
DATE
Ir4, k Yc,k�. / i%„r �. .o ff% �// lc; ,75 'r'. 1/ 97
4
SUBJECP: Extension of the Balboa Bay Club Lease from
25 years to 50 years by the City of Newport Beach. Phis
subject will be voted on by the City Council on October 30, 1989.
We, the undersigned, feel that any extension of the Lease
beyond 25 years should be approved by the people of Newport
Beach according to the original City Charter.
Phe Balboa Bay Club is a private club and should not be granted
any preferential treatment by the City Council.
NAME' SICNAME ADDRESS DAM
� ),41.x. + `/. —� �/��.�...�, �_ �/V /q (i.�' `.f .lJ;;'Lv`l--T. f..l�> /` 1 °,_•%, l � /, �
_...--
ALLaii 6EK � 2�=% FiIU°I�LAND /la' T �Cf� 42660 W/(6
ri
Lit., (•) r' Q�.Lr �(C-1�u<a ( c°hl._.. �_. �LLa[(.b_ !V//!.,
JLdL l /-L!�. ___.==�'tt 92. .. C_C ,,:.i..� l/�I 9yG� iti: h... ��e� ��. lc•.�J /C//!/if
c,1; 4.�t uyj �•','. ' ';_ .1/ E/;� ... /' �1� `,SccLi�. /�/�//
_%i,,/`'—_ .�t�.�, ���til�.%ti FY%c')? : `'L{� C�([� '. 9.
: [ ".iu-, <t.,' ' 'r ' "/� �. rnfl�.7. ^ �f'io-.i moi' �i/I
i
1
SUBJECPi Extension of the Balboa Bay Club Lease from
25 years to 50 years by the City of Newport Beach. Phis
subject will be voted on by the City Council on October 30, 1989•
We, the undersigned, feel that any extension of the Lease
beyond 25 years should be approved by the people of Newport
Beach according to the original City Charter.
Phe Balboa Bay Club is a private club and should not be granted
any preferential treatment by the City Council.
NAME SIGNAPURE ADDRESS DAPE
'
S-� 4,24L
�1. c .�[.LC� y
=rn ' � 1) A Al,
1C�yGi�j /;��i<�� lloc cork r]2 lel-S
AtJk h F! ��1/1?R�t�-- Jo KGs P! /V PB . /0/117/9?
SUBJECE: Extension of the Balboa Bay Club Lease from
25 years to 50 years by the City of Newport Beach. Phis
subject will be voted on by the City Council on October 30, 1989•
'he, the undersigned, feel that any extension of the Lease
Obeyond 25 years should be approved by the people of Newport
S Beach according to the original City Charter.
Phe Balboa Bay Club is a private club and should not be granted
any preferential treatment by the City Council.
NAME SIGNA ME ADDRESS DAPE
17
- 10pp5 %
L�2 /E2a c/Vd
��
Jmt4; �� 3�IIQ lz �s l � vil
SUBJECP: Extension of the Balboa Bay Club Lease from
25 years to 50 years by the City of Newport Beach. Phis
subject will be voted on by the City Council on October 30, 1989.
We, the undersigned, feel that any extension of the Lease
beyond 25 years should be approved by the people of Newport
Beach according to the original City Charter.
Phe Balboa Bay Club is a private club and should not be granted
any preferential treatment by the City Council.
NAME SIGNAPUREE�l^� ADDRESS < DAPE
tf i- H
�
�
\ ? �, � 2
l
l � '�
W. CHANNING LE'AJVRE 2112 EAST BALBOA BLV D. WBOA, CA 92661
1 •:.�"�_A dED FTER AGENDA (714) 675 0558
City Council RECEIVES November 27, lsas
City Of Newport Beach 0 21
crry xa
VwWKW
Reference: j5aIhgij 44M..Lease Extention
Honorable Mayor Strauss:
In 1985 REAN (Appraisers) were retained to advise the City as to Fair Market Rental Value of
the leased property. REAN recommended phasing in additional ' Percentage Activity Rent'
over the next Q years so that by 1998 the City would achieve a 9% return on the 1985 Fair
Market Fee Value of $27,422,222 or $2,468,000 per annum. The 1986 Lease ultimately
incorporated the conclusions of REAN. Following is a comparison of the BEAN Estimate vs
Actual Rents:
-�\
Y 11:1=.•
�=LL
� •
7 11<s•
i=!
.h
cl �e�e
c•
'includes 5 quarters
1986 1987 1988 1989 1998
493,000 519,000 545,000 572,000 887,000
561,000 661,000 769,000 885,000 2,468,000
458,000 111 1: 111 584,000
68,000 142,000 224,000 313,000
111 275,000 111 12,000
Based on the foregoing schedule we can see that:
a) During 1989 the Actual increase in rent is only 4% of the REAN Estimate
b) For the period 1986-1989 rents actually increased only 8.2% per annum vs the
BEAN Estimated increase of 16.4% 1 50% ti
c) For the period 1978-1984 rents increased from $247,000/A to $443,000/A or
10.2% per annum --in other words the rent was increasing faster before the 1986
Lease than after it went into effect
Did the City and REAM understand during the 1985-86 negotiations that the Club intended to
demolish all buildings except the Terrace Apartments and construct an additional 125,000
square feet of building area? Apparently REAN was not aware of the extent of the
reconstruction Plan becau a their rental income estimates do not reflect the substantial
diminishment of income which will result during the reconstruction period nor is there any
reference to additional building area in their appraisal conclusions
From the above schedule it is obvious that the expected result of the 1986 Lease, i.e., a
substantial increase in income sufficient to provide the City with a Fair Market return on the
value of its property has not occurred. It is a virtual certainty that the continuation of rents
Begged to a percentage of Club revenue will perpetuate an extremely disadvantageous Lease
gYer the next 25 or 50 years No prudent owner of a prime Darcel would accept such an
arrangement. The Irvine Co. leases many commercial parcels --none on a percentage
minimum rent. The universal arrangement is that there is a minimum fixed rent determined
by a fair yield --8% to 10%-- on the Fair Market Value of the Fee title, together with periodic
increases.
i`
W. CHANNING LARE 2112 EAST BALBOA BLV D. QLBOA, CA 92661
(714) 675 0558
The Memorandum of Understanding before you tonight should be amended to cover all major
remaining issues because the public is getting a very distorted picture in the press and from
the Club mailings. I respectfully suggest the following language should you decide to proceed:
I. The City will consider a new separate 50 year lease on the easterly portion of the
presently leased property which the Club desires to completely redevelop. The City may
decide to submit the new Lease to the voters for approval.
2. The City will require a 9% return on the Fair Market Fee Value of the redevelopment
parcel, as appraised after the Master Plan is approved, together with periodic increases.
Such fixed annual rent shall commence upon completion of the the redevelopment but not later
that a date to be agreed upon.
3. The City will immediately commence preparation of guidelines for the Master Plan
Including such criteria as building mass, density, public access, view corridors to the bay,
traffic mitigation measures, etc., and reserves the right to be more restrictive than the City
General Plan. The purpose of the guidelines is to expedite the process leading to final Master
Plan approval, as provided in the 1986 Lease.
4. In view of the Tidelands cloud on the Terrace Apartment site and the fact that no
' substantial improvements are planned for that site, the 1986 Lease will remain in effect,
except that the Rent shall be amended to provide for fixed annual increases equal to the REAN
Estimated increases so that the rent is $471,900 in 1998.
5. The City will arrange for the drafting of the new lease of the redevelopment parcel, using
as a general guide the current form of the Irvine ground lease.
6. The Council will appoint an Advisory Committee consisting of residents with ground
leasing experience to assist and advise the Council.
The Club has been a good neighbor and has served the community. And the City and it's
taxpayers have given the Club an enormously generous lease for the past 42 years--REAN
measured the Bonus Value of the lease in 1985 to be in excess of $15,000,000, and the
present rent is only 23.7% of the 1985 Fair Market Rent.
Now is the time for tough business negotiations to produce the proper fair income for the City
now and in the future, so that 42 years hence our grandchildren can say we did a good job.
Respectfully,
DECEIVED R AGENDA
PRINTED:'
November 27, 1989
Ms. Wanda Raggio, City Clerk
City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA. 92663
Re:
The
Agenda Item - 11/27/89
Dear
Ms.
Raggio:
Attached for the record at tonight's City Council meeting
are signatures and letters in favor of the Council action
requested by the Club.
The signatures on the petitions and cards were collected
over a four day period. From a quick count it appears that
the total of "in favor" is 3303. Additionally enclosed are
copies of previously submitted letters in favor.
It might be noted that a total of 9 "opposed" responses
were also received.
The majority of the signatures are from residents of
Newport Beach, although a few are from enthusiastic
supporters outside of Newport Beach.
I'd also like to note that the number of registered voters
in each of the households far out numbers the actual
signatures gathered, and please note that there may be some
minor duplications.
The enclosed is submitted only as an indication that many
individuals favor the proposed Council action requested by
The Balboa Bay Club.
Sincerely,
Thomas G. D emer
President
TGD:jh
1221 West Coast Highway. Newport Beach. California 92663 (7141 645-5000
0
"RECEIVER AGENDA
PRINTED:" add
PETITION TO THE CITY COUNCIL
November 1989
TO: The Newport Beach City Council
0
W the Ci ence good faith negotiations of new lease
terms with the Balboa u ired by the existing lease and authorized by the
City Charter. ..
"meats.
i OF VOTERS
*NAME ADDRESS TELEPHONE IN HOUSEHOLD
r
e
G
4
L>
( e ep-
3 c ca 0hij
7l,:2
*Signa to vole. P ease return st
High b November 22.
"RECEIVED AFTER AGENDA '"°" much"' F "n
PRINTED" '�Y'/
TO The Newport Beach City Council
I urge tha support Evelyn Hart in
her opposition to extending the lease
to the Balboa Bay Club.
This is public property and should be
made available to the citizens of our
City.
Make the Bay Club tear down those
buildings, so that we may enjoy our
beaches.
300 Vista Trucha • Newport Beach, Calitomia 92660 • (714) 640-1373
Ll
"RECEIVFR AFTER AGENDA
PRINTED:"
November 22, 1989
City of Newport Beach
Mayor and City Council
3300 Newport Blvd.
Newport Beach, CA 92663
Dear sirs:
E
W5A Suri lowe• Avem,e
Cola Mesa. Cah'or,a 726?6.1b3e
U.S.A. Telex. 1830/6EPi ANH
(/ 14) 5571EX
GAX 714/796•6:i
I am a home owner on Kings Road in Newport Beach, and
have resided in Orange County since 1960. It is with
noted concern that I am writing regarding the property
currently occupied by the Balboa Bay Club.
I firmly feel that the land should be converted to
a public park for the entire area to enjoy now, and
for future generations. I have spoken to several other
Newport Beach homeowners and know that I do not maintain
a lonely opinion.
The Balboa Bay Club is an establishment enjoyed by a
select few. A public park would be an attraction for which
the entire city could reap benefit. The revenue generated
by the Bay Club can be more than compensated for by
new restaurant owners, a marina, and a significant increase
in tourism.
Short term, restoring the Balboa Bay Club would appreciate
the value of my property, however, I am concerned for
all of Newport Beach and future generations.
I would appreciate a response acknowledging my concerns,
and an update on the status of this issue.
Thank
S
PetYeanlParts
Piper
Pres
Euro International
0
i� 60e.,A6e,. mol
lid eA. Ma„ 10 v S" ,
n
U
17nA u� WAZA his" Lmk
14 VM6a�, 1r,1 C" aw �ov. .
bH 1 , 6 24.
609 S' + 7 RO
CM,..,, :,ZL M
CALL. i+.. a;.•. 9262 '^
"RECEIVED AFTER AGENDA
PRINTED:" _ Y ./
4
RECEIVED
Nov 21 1989
c7rr CLUK
cin or
4EWP09T 0"
0
November 21, 1989
Mr. Donald Strauss
Mayor of Newport Beach
3300 Newport Boulevard
Newport Beach, California 92663
• "RECEIVED AFTER AGENDA
P170NTE0:° I - /
REFERENCE: EXTENSION OF GROUND RELEASE
FOR BALBOA BAY CLUB
4 -
RECEIVED
oCo MERK989
%;410W
IV
Mr. Strauss:
I am presently and have been (for the last three years) a
resident of Newport Beach. I reside at 542 Fullerton
Avenue, Newport Beach, in the Newport Heights area.
It has recently come to my attention through the media and
press as well as conversations that I have had with
neighbors that the City is having some reluctance in
extending the lease to the Balboa Bay Club to allow them to
do a significant renovation to their property within the
next couple of years.
It is my opinion as a resident of Newport Beach and one who
sees that facility on a very regular basis that that ground
lease should be extended for a period of time necessary for
a lessee to obtain the financing necessary to do the
improvements. I think it will do nothing but enhance the
area. The thought of that ground lease expiring in the next
twenty years and the property and improvements reverting
back to the City to possibly build a park for public use
seems to me to be rather absurd. How much use is there
going to be for a park along Pacific Coast Highway and the
Newport Beach Bay for swimming use. In addition, the Balboa
Bay Club currently and will continue over a long period of
time to create significant revenues for the City.
0 0
Mr. Donald Strauss
Re: Balboa Bay Club
November 21, 1989
Page 2
I am also sure that the Bay Club has been a good neighbor in
this community and I anticipate will continue to do so for a
long period of time. That facility is presently being used
by local residents on a very regular basis. I am definitely
in favor of extending that ground lease as it is evident by
this letter. I am not a member of the Bay Club nor have any
affiliation or involvement with either side of this issue.
My opinion is strictly from a neutral position.
Verr/� yours,
Thomas L. Taillon
TLT/bl
P.S. Please circulate to the members of the City Council.
• • "RECEIVED AFTER AGENDA
PRINTED:" Z
SANTA MAF2C .AJRYrA COMPANY
November 22, 1989
ANTHONY R.1.10180
FKIEBMWiCHIEF EXECU71V OFFICER
Mayor Don Strauss
Newport Beach City Hall
3300 Newport Blvd.
Newport Beach, CA 92667
Dear Don:
I respectfully urge your positive support November 27 of
renovation and long term improvement plans of the Balboa
Bay Club.
The Bay Club is a community asset. Projected increased
rentals more than justify the requested lease extension.
More important, the Bay Club has always been a "strong
citizen", a real giver to our community. To turn one's
back on the Club's ownership and membership and to "play
politics" with its future is - to say the least -
inappropriate.
Don, I hope you're well and wish you a very "Happy
Thanksgiving 189".
t10
28811 ORTEGA HIGHWAY • P.O. BOX 9 • SAN JUAN CAPISTRANO, CA 92693 • (714) 831-6450
CONFAB •
2301 DUPONT
IRVINE CA 0271.5+ 21AM
4-022b025325 11/21/89 ICS IPMRNCZ CSP SNAG
7140552690 MGMB TORN IRVINE CA 103 i1-21 0326P EST
"RECEIVED FT R AGENDA
PRINTED."
ATTNt CITY CLERK NEWPORT BEACH CITY MALL
3300 NEWPORT BLVD
NEWPORT REACH CA 92663
4
RECEIVED
NOY 27 1989
NFNPUgf gF�f3�
TOI DON STRAUS
CLARENCE TURNER
PHIL SONSUME
JOHN COxS
RUTH ELLEN PLUMME
ELLEN WARD
JEAN WATT
WE BELIEVE THAT THE BALBOA BAY CLJB IS A VERY IMPORTANT PART OF THE
SOCIAL STRUCTURE OF THE CITY OF NEWPORT BEACH. ALTHOUGH THE SAY CLUB
IS CALLED A PRIVATE CLUB, IN ESSENCE. IT IS A PRIVATE CUMMUNITY
ASSET, INVOLVED IN ALL COMMUNITY FUNCTIONS. AND AVAILABLE TO ALL WHO
LIVE IN NEWPORT REACH, IT DESERVES THE SUPPORT OF EVERYONE IN THE
CITY AND THE MEMBERS OF THE CITY COUNSEL,
LEONARD AND MELBA PEARLSTE14
15123 FST
MG4COMP
TO REPLY BY MAILGRAM MESSAGE. SEE REVERSE SIDE FOR WESTERN UNION "S TOLL - FREE PRONE NUMBERS
• CONFAB •
2301 DUPONT
• IRVINE CA 92715 21AMMlm• o •
U-0223525325 11/21/89 ICS IPMRNCZ CSP SNAB •
71u955269n MGMB TORN IRVINE CA 131 11-21 0321P EST
• "RECEIVE 711 AGENDA
PRINTED:"
ATTNI CITY CLERK •
NEW PORT BEACH CITY WALL 3300 NEWPORT BLVD
. NEWPORT REACH CA 92663 41111 �� •
0/1 96
rttv •
•
TO REPLY BY MAILGRAM MESSAGE, SEE REVERSE SIDE FOR WESTFRN UNION "S TOLL FREE PHONE NUMBERS _ •
TO: DON STRAUS
CLARENCE TURNER
•
PHIL SnNSOME
JOHN COXS
RUTH ELLFN PLUMME
•
ELLEN WARD
JEAN WATT
•
THE BALBOA BAY CLUB IS A VERY VALUABLE ASSET TO THE CITY OF NEWPORT
BEACH AND TO ALL THE RESIDENTS OF THE CITY. ALMOST EVERY COMMUNITY
FUNCTInN, PUBLIC OR PRIVATEP MAKES USE OF ITS FACILITIES. IT PROVIDES
•
HORSING FOR AN OUTSTANDING GROUP OF RETIRED CITIZENS# AND IT PROVIDES
•
ENTERTAINMENT ANI) RELAXATION FOR THOUSANDS OF ORANGE COUNTY
RESIDENTS. THE REDEVELOPMENT PLANS FOR THE CLUB ARE VERY IMPRESSIVE#
•
AND CAN nNLY ADD Tn THE PRESTIGE OF THE CITY AND MAKE IT A BETTER
•
PLACE TO LIVE. IT NEEDS THE SUPPORT OF EVERY MEMBER OF THE CITY
CU1INSEL.
•
•
G. MARRY AND HILDA RDTHBERG
•
•
15!17 FST
•
MGMCOMP
•
TO REPLY BY MAILGRAM MESSAGE, SEE REVERSE SIDE FOR WESTFRN UNION "S TOLL FREE PHONE NUMBERS _ •
•JAN D. VANDERSLOOT MD JO
2221 E16 Street
Newport Beach, CA 92663
November 27, 1989
Mayor Don Strauss, and
Newport Beach City Council Members
3300 Newport Blvd.
Newport Beach, CA 92663
Re: Agenda Item I.1. MOU/Balboa Bay Club
Dear Mayor Strauss and City Council Members,
"RECEIVED AFTER AGENDA
PRINTED:" _ _ /
RECEIVED
p 21 1989
CM CLLRK
M"110
I would like to request that any negotiations concerning
the Balboa Bay Club lease include a provision that the ultimate
product be submitted to the voters of Newport Beach for ratification.
The issues surrounding this lease are important enough that the
voters should have the ultimate responsibility for approving such a
lease. It is the spirit of the Newport Beach charter that such long
leases be approved by the voters.
If the voters are not allowed to make the ultimate decision
on this lease, then it is likely that future city councils will
simply extend the lease again, repeatedly, such that the property
will never revert to the city. Indeed, the existing lease calls for
the property to revert to the city in the year 2011. This new request
for a 50 year lease undoes this provision of the existing lease.
A financial analysis should be done calculating the value of
this property if the property were to revert to the city in the year
2011, as called for by the existing lease.
If no lease extension is granted and the existing lease is
allowed to terminate in 2011, the propertybelongs to Newport Beach
and the disposition of the "Great Wall of China" apartment house
can be determined by the city at that time, including removal.
If the Berlin Wall and the Iron Curtain can be dismantled in Europe
in the year 1989, then certainly Newport Beach can dismantle the
Great Wall of China in the year 2011.
The 50 year lease extension is to guarantee financing to remodel
the Balboa Bay Club, which will probably negatively impact more views
from the public park above the Bay Club on Kings Road. I hope to
show slides at the public meeting tonight, and I am submitting
photographs with this letter. Photograph No. 1 shows the Great Wall of
China completely obliterating the view of the bay from Kings Road
park. Photograph No. 2 shows the view adjacent to the apartment house,
which will probably be compromised by the remodel. Photograph No. 3
shows the view as what could ultimately be if the Great wall of China
is ultimately removed.
It is my hope that this issue will be submitted to the voters.
Thank you.
Sincerely,
Jan D. Vandersloot MD
SUBJECT: Extension of the Balboa Bay Club Lease from
25 years to 50 years by the City of Newport Beach. Phis
subject will be voted on by the City Council on October 30, 1989.
'he, the undersigned, feel that any extension of the Lease
beyond 25 years should be approved by the people of Newport
Beach according -to the original City Charter.
Phe Balboa Bay Club is a private club and should not be granted
any preferential treatment by 'he City Council.
NA — SIGNArURE ADDRESS DArE
r4llli,� JAW (>,I
Or
..... ilA�
-7
J)
0
9z
SUDJ UP: Extension of the Balboa Bay Club Lease from
25 years to 50 years by the City of Newport Beach. Phisc
lJ0%) 13.1. 11Y
subject will be voted on by the City Council on Oeteeer-30, 1989•
We, the undersigned, feel that any extension of the Lease
beyond 25 years should be approved by the people of Newport
Beach according to the original City Charter.
Phe Balboa Bay Club is a private club and should not be granted
any preferential treatment by the City Council.
NAME SIGNAPU E ADDRESS DAPE
0
SUBdLCP: Extension of the Balboa Bay Club Lease from
25 years to 50 years by the City of Newport Beach. Phis
subject will be voted on by the City Council on October 30, 1989•
Ae, the undersigned, feel that any extension of the Lease
beyond 25 years should be approved by the people of Newport
Beach according to the original City Charter.
Phe Balboa Bay Club is a private club and should not be granted
any preferential treatment by the City Council.
NAME SIGNAPURE PDDRS DAPE
If
THE VISTA GROUP
COMMERCIAL AND RESIDENTIAL DEVELOPMENT
4001 BIRCH STREET, SUITE A, NEWPORT BEACH, CA 92660
(714) 652-8595
NOV 13 1989 4
October 31, 1969 . ; .r, ,� .,, .Z. '31V . RECEIVED
NOV 3 1989
CRY CLERK
CRY OF
Newport Beach Mayor & City Council NW01 SEACH
3300 Newport Blvd.
Newport Beach, California 92663
Dear Honorable Mayor &
Honorable Members of Newport Beach City Council,
My name is Charles Knickerbocker and my residence address is 226 Ruby Ave. on
Balboa Island. I have been in business in Newport Beach for over twenty years
as the owner of Vista Development Corporation and as a founding director of
Pacific National Bank.
I would like to take this opportunity to address a decision you are about to
make regarding the 9) year lease that the Balboa Bay Club -has requested.
As all of you are aware, the Balboa Bay Club has been a significant and integral
part of our wonderful community for a number of decades. The contributions the
club has made from a social, political, financial and recreational standpoint are
immeasurable. There certainly has been no other local organization that has
opened up their hearts and check books, coupled with the efforts of the members,
to support the growth of Newport Beach.
There now appears to be a situation where the city council has not made a firm
decision whether or not to approve an extended lease. Let's take a look at a
few alternatives that present themselves. If the club is to make a oo dbrent
of tens of millions of dollars to improve the property, then there must be a
lease extension granted for many years. There is no prudent businessman that I
know of that would consider such a huge investment without proper protection
and security. Notwithstanding the preceding, there certainly would never be a
financial institution that would consider such an investment without the collateral
of a long term lease on the property.
Please consider the position that the owners of the Bay Club would possibly en-
counter should a new lease not be approved. All of you have business acumen
and can appreciatethe carplexities of managing a multi-million dollar organization
such as the Balboa Bay Club.
l _.� _ .. ........ LJ t) `\
Page 2
October 31, 1989
If it were me, the first thought that would cane to my mind would be to sell.
I would naturally think that the city council is not interested in an iirQrove-
ment that would not only enhance the beauty of our wonderful city but provide
millions of dollars to its coffers. The next item one must consider is who
would be a likely buyer for such a beautiful complex in the finest convuaity
in California. The answer to the latter is quite obvious as one would only
have to look East for a solution.
Please be aware, distinguished eouncilnrs, that the opinions addressed
here are mine and mine alone. I truly believe that each and every one of you
have a responsibility to the rnambers of our carmunity that you represent as
well as to the children and grandchildren that will be living here in the years
to cane.
In conclusion, I beg you to vote for a lease extension that will enable the
present management of the Balboa Bay Club to continue to provide a wonderful
facility to our citizens in the years to cane. Please put political motivation
aside and vote with your heart and conscience.
Sincerely yours,
Charles K. Knickerbocker
CKK/vmh
n
v
"RECEIV: AFTER AGENDA
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