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CITY OF
NEWPORT BEACH
City Council Staff Report
February 10, 2026
Agenda Item No.8
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
Seimone Jurjis, City Manager - 949-644-3001,
sjurjis@newportbeachca.gov
PREPARED BY: Lorig Yaghsezian, Management Analyst — 949-644-3028,
laghsezian@newportbeachca.gov
TITLE: Resolution No. 2026-12: Establishing the Public Lands Trust
Management Ad Hoc Committee to Review and Develop
Recommendations Regarding the California State Lands
Commission Report Regarding the City's Management of the
Tidelands
ABSTRACT:
The California State Lands Commission's report on the City's Public Trust Lands
Management (Report) identifies several policy and administrative concerns with the City
of Newport Beach's (City) mooring and residential pier programs. These concerns include
how rates are set, whether rates are fair and consistent across user groups, and whether
the City has clearly documented how discretionary decisions meet Public Trust
obligations. To ensure a coordinated, transparent and timely response to the Report's
recommendations, the resolution would create a two -member City Council Ad Hoc
Committee. The Committee will review the Report's findings, provide focused policy
directions to staff, guide stakeholder outreach, and develop recommendations for
consideration by the full City Council at a duly noticed public meeting. The Ad Hoc
Committee would be advisory and time -limited, expiring on December 31, 2026.
RECOMMENDATIONS:
a) Determine this action is exempt from the California Environmental Quality Act (CEQA)
pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because
this action will not result in a physical change to the environment, directly or indirectly;
b) Adopt Resolution No. 2026-12, A Resolution of the City Council of the City of Newport
Beach, California, Establishing the Public Lands Trust Management Ad Hoc
Committee to Review and Develop Recommendations Regarding the California State
Lands Commission Report Regarding the City's Management of the Tidelands; and
c) Appoint Mayor Pro Tern Noah Blom and Councilmember Joe Stapleton to serve on
the Public Lands Trust Management Ad Hoc Committee.
Resolution No. 2026-12: Establishing the Public Lands Trust Management Ad Hoc
Committee to Review and Develop Recommendations Regarding the California State
Lands Commission Report Regarding the City's Management of the Tidelands
February 10, 2026
Page 2
DISCUSSION:
The City holds certain tide and submerged lands in Newport Harbor in trust for the benefit
of the people of California pursuant to Chapter 74 of the State of California Statutes of
1978, as amended (commonly referred to as the "Beacon Bay Bill"). As trustee, the City
must manage granted lands consistent with the purposes and limitations of the trust,
including the California Constitution, the Public Trust Doctrine, and the City's granting
statutes.
In 2024, the City Council's consideration of updated mooring -related rates and policies
led the California State Lands Commission (Commission) to initiate a broader
management review of the City's granted lands administration related to on- and offshore
mooring permits and residential pier permits. Following Commission staff's draft
presentation in August 2025, the Commission directed staff at its December 16, 2025,
meeting to transmit the final Report on the City of Newport Beach's Public Trust Lands
Management to the City. The Report was transmitted on January 6, 2026. In that
transmittal, the Commission also directed its staff to coordinate with the City and return
to the Commission with an update regarding the City's progress within six months. The
Commission further delegated authority to its staff to recommend initiation of a formal
hearing if progress is determined to be insufficient within twelve months, and discretion
to defer a formal hearing if the City is making sufficient progress or demonstrates good -
faith efforts but requires additional time.
The Commission's Report focuses on the City's discretionary actions and related staff
reports addressing residential pier rates, mooring permit rates, comparative rate
treatment, mooring permit transfers, residential pier subleasing, and the City's mooring
license program. The report focused on the need for a legally compliant, transparent and
well -documented approach to trust management, including ensuring rates and fees reflect
fair market value, equity and public benefit across user groups, and clearly articulating
how discretionary actions satisfy the City's obligations as the State's trustee. The Report
also identifies issues for City's evaluation and response, including recommendations
related to appraising and updating residential pier rates, reviewing rate -setting
methodologies and future adjustments, assessing the transferability of moorings and
associated public -access implications, and stakeholder and community engagement
around trust -related policy choices.
Given the issues raised, staff recommend forming a two -member City Council Ad Hoc
Committee to provide guidance and oversight, coordinate review of the Commission's
findings, and develop recommendations for consideration by the full City Council in a duly
noticed public meeting. The Committee will review the Report and the City's current
management practices, evaluate rates and fees for compliance, examine mooring
transferability, and identify effective ways to engage the stakeholders. The Ad Hoc
Committee would be advisory and time -limited, expiring on December 31, 2026.
Additionally, for the City Council's consideration, are the proposed appointments of Mayor
Pro Tern Noah Blom and Councilmember Joe Stapleton to serve on the Ad Hoc
Resolution No. 2026-12: Establishing the Public Lands Trust Management Ad Hoc
Committee to Review and Develop Recommendations Regarding the California State
Lands Commission Report Regarding the City's Management of the Tidelands
February 10, 2026
Page 3
Committee. While the Ad Hoc Committee itself would not be subject to the Brown Act, its
recommendations would be presented to the full City Council for consideration at a
meeting noticed in accordance with the Brown Act.
FISCAL IMPACT:
There is no fiscal impact related to the adoption of Resolution No. 2026-XX.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENT:
Attachment A —Resolution No. 2026-12
Attachment B — State Lands Commission Report
ATTACHMENT A
RESOLUTION NO. 2026-12
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
NEWPORT BEACH, CALIFORNIA, ESTABLISHING THE
PUBLIC LANDS TRUST MANAGEMENT AD HOC
COMMITTEE TO REVIEW AND DEVELOP
RECOMMENDATIONS REGARDING THE CALIFORNIA
STATE LANDS COMMISSION REPORT REGARDING THE
CITY'S MANAGEMENT OF THE TIDELANDS
WHEREAS, the City of Newport Beach's ("City") tidelands trust, also known as
the Beacon Bay Bill (Chapter 74 of the Statutes of 1978), dedicates certain tide and
submerged lands ("Tidelands") to be held in trust by the City on behalf of the people of
California;
WHEREAS, the Beacon Bay Bill directs that the City manage these lands as
follows:
(1) For the establishment, improvement, and conduct of a public harbor and for
the construction, maintenance, and operation of wharves, docks, piers, slips, quays,
ways, and streets, and other utilities, structures, and appliances necessary or convenient
for the promotion or accommodation of commerce and navigation;
(2) For the establishment, improvement, and conduct of public bathing
beaches, public marinas, public aquatic playgrounds, and similar recreational facilities
open to the public; and for the construction, reconstruction, repair, maintenance, and
operation of all works, buildings, facilities, utilities, structures, and appliances incidental,
necessary, or convenient for the promotion and accommodation of any such uses; and
(3) For the preservation, maintenance, and enhancement of the lands in their
natural state and the re-establishment of the natural state of the lands so that they may
serve as ecological units for scientific study, as open space, and as environments which
provide food and habitat for birds and marine life, and which favorably affect the scenery
and climate of the area;
WHEREAS, in January 2024, City staff and members of the City's Harbor
Commission requested that the State Lands Commission ("Commission") staff review an
appraisal of fair market rent for the City's offshore mooring permits;
WHEREAS, in April 2024, Commission staff sent a letter that concluded that while
there were some areas that could be clarified or revised, the appraisal was generally
reasonable, and the City could rely on it for setting mooring rates;
Resolution No. 2026-
Page 2 of 4
WHEREAS, on July 9, 2024, City staff presented the new rates, based on the
City's appraisal, to the City Council as well as an alternative proposal in which current
mooring permit holders would be able to maintain their current rates but could only
transfer the permit one more time, at which time the permit would be converted to the
City's license program, which prohibits private transfers and which has rates based on
an earlier City appraisal that Commission staff had not reviewed but that provided
rates similar to the appraisal reviewed by Commission staff;
WHEREAS, at the conclusion of the hearing on July 9, 2024, the City Council
introduced the ordinance approving the alternate proposal and passed the ordinance on
to second reading for adoption on July 23, 2024;
WHEREAS, on July 22, 2024, Commission staff sent a letter asking the City to
delay the second reading of the ordinance adopting the alternate proposal so that
Commission staff could conduct a management review of the City's granted lands and
present it to the Commission;
WHEREAS, on July 23, 2024, the City Council agreed to delay the second reading
and adoption of the ordinance;
WHEREAS, on August 12, 2024, Commission staff sent a letter to the City
providing an overview of its review of the pier and mooring rental rates and requesting
information from the City;
WHEREAS, at the August 21, 2025, Commission meeting, Commission staff
presented a draft of the City of Newport Beach's Public Trust Lands Management Report
on the City of Newport Beach's Public Trust Lands Management ("Report");
WHEREAS, at the December 16, 2025, State Lands Commission meeting, the
Commission directed Commission staff to transmit the Report to the City, which was sent
to the City on January 6, 2026;
WHEREAS, the City Council desires to establish the Public Trust Lands
Management Ad Hoc Committee ("Committee") to review and develop recommendations
to the full City Council regarding a legally compliant, transparent, and strategic path
forward to ensure that the City's actions are consistent with applicable state law and public
trust principles; and
WHEREAS, the Committee's scope shall include, but not be limited to, making
recommendations on the best path forward to evaluate: (1) the Report and the City's
current management of public trust lands; (2) the rates and fees charged for the use of
public trust lands to ensure compliance with legal and fiscal requirements; (3) the
Resolution No. 2026-
Page 3 of 4
transferability of moorings; (4) the overall fairness, equity, and public benefit associated
with access to public trust resources; and (5) the most effective methods for meaningful
public and stakeholder engagement to ensure community input is incorporated into the
City's decision -making process.
NOW, THEREFORE, the City Council of the City of Newport Beach hereby
resolves as follows:
Section 1: The Public Trust Lands Management Ad Hoc Committee is hereby
established consisting of two Council Members, who shall be appointed by the Mayor and
confirmed by the City Council. The Mayor hereby appoints Mayor Pro Tern Noah Blom
and Council Member Joe Stapleton to the Committee, who are hereby confirmed by the
adoption of this resolution.
Section 2: The sole purpose and responsibility of the Committee is to review
and develop recommendations to the full City Council regarding a legally compliant,
transparent, and strategic path forward to ensure that the City's actions are consistent
with applicable state law and the public trust principals. The Committee's scope shall
include, but not be limited to, making recommendations to the entire City Council on the
best path forward to evaluate: (1) the Report and the City's current management of public
trust lands; (2) the rates and fees charged for the use of public trust lands to ensure
compliance with legal and fiscal requirements; (3) the transferability of moorings; (4) the
overall fairness, equity, and public benefit associated with access to public trust
resources; and (5) the most effective methods for meaningful public and stakeholder
engagement to ensure community input is incorporated into the City's decision -making
process.
Section 3: Unless terminated sooner by action of the City Council, the
Committee shall be advisory and shall expire on December 31, 2026, or upon making a
recommendation to the entire City Council, whichever is first.
Section 4: The Committee shall not be subject to the Brown Act; however, the
recommendations of the Committee to the City Council shall be considered at a meeting
of the entire City Council noticed in accordance with California Government Code Section
54950 et seq.
Section 5: The recitals provided in this resolution are true and correct and are
incorporated into the operative part of this resolution.
Section 6: If any section, subsection, sentence, clause or phrase of this
resolution is, for any reason, held to be invalid or unconstitutional, such decision shall not
affect the validity or constitutionality of the remaining portions of this resolution. The City
Resolution No. 2026-
Page 4 of 4
Council hereby declares that it would have passed this resolution, and each section,
subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or
more sections, subsections, sentences, clauses or phrases be declared invalid or
unconstitutional.
Section 7: The City Council finds the adoption of this resolution is not subject to
the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) (the
activity will not result in a direct or reasonably foreseeable indirect physical change in the
environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378)
of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3,
because it has no potential for resulting in physical change to the environment, directly or
indirectly.
Section 8: This resolution shall take effect immediately upon its adoption by the
City Council, and the City Clerk shall certify the vote adopting the resolution.
ADOPTED this 10th day of February, 2026.
Lauren Kleiman
Mayor
ATTEST:
Lena Shumway
City Clerk
APPROVED AS TO FORM:
CITY TTORNEY'S OF ICE
7-40 C
Aar n C. Harp
City Attorney
Attachment B
State Lands Commission Report
Y C A L I F 0 R N I A
` STATE LANDS
COMMISSION
100 Howe Avenue, Suite 100 South
Sacramento, CA 95825-8202
January 6, 2026
Sent via electronic mail and USPS
City of Newport Beach City Council
100 Civic Center Drive
Newport Beach, CA 92660
citycouncil@newportbeachca.gov
STATE OF CALIFORNIA
GAVIN NEWSOM, Governor
MATTHEW DUMLAO, PhD, Executive Officer
Reception: 916.574.1900
TTY: 711
File Ref.: G09-02
Subject: Report on the City of Newport Beach's Public Trust Lands Management
Honorable Mayor Kleiman and Councilmembers,
At the December 16, 2025 State Lands Commission meeting, the Commission directed
staff to transmit the Report on the City of Newport Beach's Public Trust Lands
Management to the City of Newport Beach (Item 105, December 16, 2025). A copy of
this report is included in this letter.
As background, at the August 21, 2025 Commission meeting, staff presented their draft
Report on the City of Newport Beach's Public Trust Lands Management (Item 66,
August 21, 2025). This report was prepared to provide information on the Commission's
jurisdiction over Newport Beach tidelands and to present a draft version of staff's
findings and recommendations regarding limited topics related to the City's mooring
permit and residential pier permit programs. The draft report was made available for
public review and comment in advance of the August 21, 2025 Commission meeting,
and staff accepted public comment on the report until December 2025, with the
official public comment period running through October 31, 2025.
At the December 16, 2025 meeting, staff presented the final version of the Report
which was completed after taking public input into account. This report is focused on
the City's discretionary actions regarding both mooring permits and residential pier
permits and how the City explained its discretionary actions, considering its legal
obligations to act as the State's trustee, or whether it did so at all. When City actions
appear to conflict with its legal obligations to the state, this report identifies the
Mayor Kleiman
January 6, 2026
Page 2
potential legal violations so that the City may review its management and provide
responses and make corrections as needed. Commission staff also provided responses
to public comments received on the Report.
At the December 16 meeting, the Commission voted to:
1. Direct staff to transmit the Report on the City of Newport Beach's Public Trust
Lands Management to the City.
2. Direct staff to coordinate with the City and provide the Commission with an
update regarding the City's progress addressing problems identified in the
report within 6 months (adjusted as needed for the Commission's meeting
schedule).
3. Delegate authority to the Executive Officer or their designee to recommend
that the Commission institute a formal hearing pursuant to Chapter 74, Statutes
of 1978, as amended, if staff determines that the City's progress in addressing its
Public Trust Lands management issues has been insufficient within 12 months.
4. Delegate authority to the Executive Officer or their designee to recommend
that such a formal hearing be deferred to a later date, or indefinitely, if the
City's progress is sufficient, or if staff determines that the City has made a good
faith effort to address its Public Trust Lands management issues but needs more
time to resolve said issues.
Please review the included Report. We appreciate the collaboration with City staff
during the Report drafting and look forward to further collaboration as the City
addresses the issues raised in the Report. Please contact Jeff Plovnick, Granted Lands
Specialist, at Jeffrey.Plovnick@slc.ca.gov, when you are ready to discuss the matter
further, or if you have any questions. As mentioned above, our Commissioners request
an update from the City as soon as possible, and no later than June 2026.
Sincerely,
luffWQb4d,15—
Mathew Dumlao, PhD
Executive Officer
State Lands Commission
Enclosure
Mayor Kleiman
January 6, 2026
Page 3
Cc:
Seth Blackmon, Chief Counsel, State Lands Commission
Jeffrey Plovnick, Granted Lands Management Specialist, State Lands Commission
Benjamin Johnson, Staff Attorney, State Lands Commission
Lauren Wooding Whitlinger, Real Property Administrator, City of Newport Beach
Report on the City of Newport Beach's
Public Trust Lands Management
Table of Contents
Introduction.................................................................................................................................... 3
Background..................................................................................................................................... 3
ResidentialPier Rates..................................................................................................................... 8
Background................................................................................................................................. 8
Analysis..................................................................................................................................... 10
Recommendation...................................................................................................................... 14
MooringPermit Rates................................................................................................................... 15
Background............................................................................................................................... 15
Analysis..................................................................................................................................... 17
Recommendation...................................................................................................................... 19
Residential Pier and Mooring Permit Comparison....................................................................... 20
Analysis..................................................................................................................................... 20
Recommendation...................................................................................................................... 22
Mooring Permit Transfers............................................................................................................. 23
Background............................................................................................................................... 23
Analysis..................................................................................................................................... 24
Recommendation...................................................................................................................... 29
Residential Pier Subleases............................................................................................................ 30
Background............................................................................................................................... 30
Analysis..................................................................................................................................... 30
Recommendation...................................................................................................................... 30
The Mooring License Program and the City's July 9, 2024 Action ................................................ 32
Analysis..................................................................................................................................... 33
Recommendation...................................................................................................................... 34
Conclusion..................................................................................................................................... 35
0)
Introduction
This report summarizes and comments on the City of Newport Beach's management of tide and
submerged lands in Newport Bay, which the Legislature granted to the City to manage on the
state's behalf. Lands granted by the Legislature in this manner are often referred to as "granted
lands." The report begins with a background of the State Lands Commission's role in overseeing
granted lands, including the legal requirements that are often implicated in granted lands
management. It then summarizes and analyzes several main topics: pier lease rates, mooring
permit rates, a comparison of pier and mooring rates, mooring permit transfers, and the City's
mooring license program.
Staff focused on these topics for the report because they are the core issues staff identified
when reviewing the City's granted lands management. There are other topics that have been
raised in public comments that are not discussed in this report, or which could be addressed
more comprehensively. However, staff believe that the analysis and recommendations in this
report will provide guidance for how the City should investigate additional issues related to its
granted lands management even if such issues are not directly or comprehensively discussed in
this report.
Additionally, this report is focused on a review of the City's actions and staff reports, and does
not go into detail regarding the public participation process connected to the City's actions,
such as Harbor Commission outreach meetings or public comments. As discussed in more detail
below, the Legislature entrusted the lands in Newport Bay to the City's discretion, and this
report focuses on whether the City is exercising its discretion within the limits created by the
California Constitution, the Public Trust Doctrine, and the City's grant statutes. This report is
also focused on whether, and how, the City explained its discretionary actions considering their
legal obligations to act as the State's trustee. When City actions appear to conflict with their
legal obligations to the state, this report identifies the potential legal violations so that the City
may review its management and either provide additional justifications or make corrections as
needed.
Background
In January 2024, City of Newport Beach staff and members of the City's Harbor Commission
requested that Commission staff review an appraisal of fair market rent for the City's offshore
mooring permits.' In April 2024, Commission staff sent a letter that concluded that while there
were some areas that could be clarified or revised, the appraisal was generally reasonable and
' Email from Lauren Wooding Whitlinger, Real Property Administrator, City of Newport Beach,
to Reid Boggiano, Granted Lands Program Manager, State Lands Commission, January 23, 2024.
the City could rely on it for setting mooring rates.2 Staff encouraged the City to phase in the
rate increases and commented that the City should review its residential pier rates as well.3
In July 2024, City staff presented the new rates, based on the City's appraisal, to the City
Counci1.4 City staff also presented an alternate proposal in which current mooring permit
holders would be able to maintain their current rates but could only transfer the permit one
more time. Upon transfer, the permit would be converted to the City's license program, which
prohibits private transfers and which has rates based on an earlier City appraisal that
Commission staff did not review, but that provided rates similar to the appraisal reviewed by
staff. The City approved staff's alternate proposal.
On July 22, 2024, Commission staff sent a letter asking the City to delay the second reading of
the ordinance with the alternate proposal so that Commission staff could conduct a
management review of the City's granted lands and present it to the Commissioners.s In the
letter, staff expressed its concern that the City was not comprehensively reviewing rates,
resulting in inequitable treatment between mooring permittees and residential pier lessees.'
Staff noted that it agreed with the City's effort to end the private transfer market for mooring
permits.' The City agreed to delay the second reading of the ordinance.
On August 12, 2024, staff sent a letter to the City providing an overview of its review of the pier
and mooring rental rates and requesting information from the City.' The letter explained that
Commission staff will "evaluate whether the City's administration of these programs adheres to
the City's obligations under its statutory trust grant, California Constitution, and the Public Trust
Doctrine. The goal is to ensure that all user groups are treated equitably and that all rates
reflect fair rental value." The letter stated that Commission staff would review:
• A history of the City's management of residential pier leases and mooring permits from
2006 to the present
• The City's mooring permit transfer policies
2 Letter from Reid Boggiano, Granted Lands Program Manager, State Lands Commission, to
Lauren Wooding Whitlinger, Real Property Administrator, City of Newport Beach, April 9, 2024.
3 Letter from Reid Boggiano, Granted Lands Program Manager, State Lands Commission, to
Lauren Wooding Whitlinger, Real Property Administrator, City of Newport Beach, April 9, 2024.
4 Agenda Item No. 13, July 9, 2024.
5 Letter from Jennifer Lucchesi, Executive Office, State Lands Commission, to Grace K. Leung,
City Manager, City of Newport Beach, July 22, 2024.
' The City refers to the residential pier leases as "permits." This report uses "leases" for clarity.
7 Letter from Reid Boggiano, Granted Lands Program Manager, State Lands Commission, to
Lauren Wooding Whitlinger, Real Property Administrator, City of Newport Beach, April 9, 2024.
8 Letter from Reid Boggiano, Granted Lands Program Manager, State Lands Commission, to
Lauren Wooding Whitlinger, Real Property Administrator, City of Newport Beach, August 12,
2024.
4
• The rates charged for the residential pier leases and mooring permits
• The frequency of rate reassessment
• The basis for rate revisions
• The current terms and conditions imposed on residential pier leases and mooring
permits
• A history of the City's modifications to these terms and conditions, including those in
response to the 2006-2007 Grand Jury Report
• A comparison between how the City manages its residential pier leases and its mooring
permits
The City manages Newport Bay on behalf of the State, and for the
benefit of all Californians.
The State of California acquired tide and submerged lands and beds of navigable waterways
when it was admitted to the Union in 1850.9 These lands are often referred to as "sovereign
lands." Under the Public Trust Doctrine, the State holds these lands as the trustee for the
people to ensure the lands are devoted to uses to which they are uniquely suited.10 These lands
must be used for statewide, as opposed to purely local purposes, and must be used for Public
Trust purposes, which include commerce, navigation, fishing, water -oriented recreation,
environmental protection, and open space, among other uses. 11 The State Lands Commission is
responsible for managing these lands.12
The Legislature can grant sovereign lands to local governments through legislation, referred to
as "grant statutes.1113 In those cases, the ownership of the sovereign land transfers to the local
government, which must use the lands under the conditions described in the grant statutes and
subject to the Public Trust Doctrine.14 These lands are often referred to as "granted lands."
When the state grants sovereign lands, those lands remain "subject to the oversight authority
of the state by and through the State Lands Commission."15 The State Lands Commission has
"[a]II jurisdiction and authority remaining in the State as to tidelands and submerged lands as to
which grants have been or may be made.""
The Legislature transferred ownership of the tidelands and submerged lands in Newport Bay to
the City, subject to the terms and conditions contained in the granting statute. The Legislature
9 City of Berkeley v. Superior Court (1980) 26 Cal.3d 515, 521.
11 National Audubon Society v. Superior Court (1983) 33 Cal.3d 419, 434.
11 Marks v. Whitney (1971) 6 Cal.3d 251, 259.
12 Cal Pub. Resources Code, § 6301.
13 City of Long Beach v. Marshall (1938) 11 Cal.2d 609, 615.
14 Pub. Resources Code, § 6009, subd. (c), City of Long Beach v. Marshall (1938) 11 Cal.2d 609,
616.
15 Cal Pub. Resources Code, § 6009, subd. (d).
16 Cal Pub. Resources Code, § 6301.
first granted these lands to the City of Newport Beach in 1919 and modified that original grant
with additional legislation a number of times. In 1978, the Legislature repealed the previous
grants and replaced them with the operative grant, and has since amended this grant several
ti mes.17
The City is responsible for managing its legislatively granted lands and has discretion to
determine how it manages the granted lands, as long as it stays within its grant statutes, the
Public Trust Doctrine, and the California Constitution.18 The City's grant contains specific
provisions authorizing State Lands Commission oversight. It directs the Commission to, "from
time to time, recommend to the Legislature such amendments as it may determine to be
necessary in the terms and conditions of this act"19 and also, "from time to time, institute a
formal inquiry to determine that the terms and conditions of this act, and amendments thereto,
have been complied with in good faith."20 If the Commission determines that any "transaction
or condition" is "in probable conflict with this act [the grant statute] or with any other provision
of law," it must report to the Legislature, which may direct the Attorney General to bring
litigation to revoke the grant or compel compliance.21 Additionally, after holding a publicly
noticed hearing "at which the city has been given an opportunity to express fully any
disagreement with the commission's findings or to describe any extenuating circumstances
causing the violation," the Commission may formally request the Attorney General to bring
litigation against the City to resolve a grant violation."
The State Lands Commission Reviews the City's Management of the
Granted Lands for Abuse of Discretion.
The State Lands Commission retains residual oversight authority to review a grantee's actions
for consistency with the Public Trust Doctrine, the California Constitution, its grant statutes, and
its fiduciary duties to the State. The City, as the State's trustee, has discretion to choose
between competing uses and set its own management policies for the granted lands, provided
that it is acting with the bounds of the law. The Commission does not have authority to impose
its own discretionary decisions on grantees.
California Constitution
Article XVI, Section 6 of the California Constitution prohibits the State and local governments
from making "any gift or authorize the making of any gift, of any public money or thing of
1' Chapter 74, Statutes of 1978, as amended [City Grant]. A list of the grant statutes is available
at the Commission's website.
18 City of Long Beach v. Morse (1947) 31 Cal.2d 254, 262.
11 City Grant, § 1(o).
20 City Grant, § 1(p).
21 City Grant, § 1(q).
22 City Grant, § 1(q).
value."23 If a local agency uses granted tidelands, or money derived from the granted tidelands,
in a manner that does not further the purposes of the grant, it is a gift of public property in
violation of California Constitution.24 If a local agency gifts the use of public property without
appropriate payment or a compensating public purpose, that is also an unconstitutional gift.
For example, a public agency leasing a building at a nominal rate and allowing the lessee to
sublease for a profit would be unconstitutional."
Public Trust Doctrine
The Public Trust Doctrine applies to the State's submerged lands, tidelands, and lands
underneath navigable rivers and lakes.26 The Public Trust Doctrine, in brief, prohibits the sale or
permanent alienation of these lands and requires they be used for the purposes to which they
are uniquely suited: navigation, fishing, waterborne commerce, scientific study, and open
space, with the caveat that these uses may change to reflect changing public needs and
values.27 It has been described as "an affirmation of the duty of the state to protect the
people's common heritage of streams, lakes, marshlands and tidelands, surrendering that right
of protection only in rare cases when the abandonment of that right is consistent with the
purposes of the trust."28 When the Legislature granted tidelands and submerged lands to the
City, the City took those lands subject to the Public Trust Doctrine.29
Grant Statute
The City's grant statute contains, among other things, a requirement that granted lands be used
"for purposes in which there is a general statewide interest," including a "public harbor" and
"recreational facilities open to the general public."30 The grant also requires that, "In the
management, conduct, operation, and control of the lands or any improvements, betterments,
or structures thereon, the city or its successors shall make no discrimination in rates, tolls, or
charges for any use or service in connection therewith.""
23 Cal. Const., art. XVI, § 6.
24 Mallon v. City of Long Beach (1955) 44 Cal.2d 199, 210.
21 See People v. City of Long Beach (1959) 51 Cal.2d 875, 883 [holding that nominal rent for a
YMCA was not a gift because the YMCA fulfilled a public purpose and gained no monetary
benefit from the lease].
21 National Audubon Society v. Superior Court (1983) 33 Cal.3d 419, 434.
21 People ex inf. Webb v. California Fish Co. (1913) 166 Cal. 576, 597, Marks v. Whitney (1971) 6
Cal.3d 251, 259-260.
21 National Audubon Society v. Superior Court (1983) 33 Cal.3d 419, 441
29 Cal Pub. Resources Code, § 6009, subd. (d), see, e.g., Zack's, Inc. v. City of Sausalito (2008)
165 Cal.App.4th 1163, 1178.
30 Ch. 74, Statutes of 1978, as amended, Section 1, subd. (a)(1), (2).
31 Ch. 74, Statutes of 1978, as amended, Section 1(d).
The City has a legal obligation to comply with the terms of the grant, which requires that they
act in the statewide best interest, "without subjugation of statewide interests, concerns, or
benefits to the inclination of local or municipal affairs, initiatives, or excises.1132
Fiduciary Duties
The City's grant also creates a trust relationship between the state and the City. "The state acts
both as the trustor and the representative of the beneficiaries, who are all of the people of this
state, with regard to public trust lands, and a grantee of public trust lands, including tidelands
and submerged lands, acts as a trustee, with the granted tidelands and submerged lands as the
corpus of the trust."33 The City, as the grantee, has fiduciary obligations as the state's trustee,
which are listed in Public Resources Code section 6009.1. The fiduciary duties include, but are
not limited to, "the duty to administer the trust solely in the interest of the beneficiaries,"34
"the duty to act impartially in managing the trust property,"35 and "the duty to not use or deal
with trust property for the trustee's own profit or for any other purpose unconnected with the
trust, and to not take part in a transaction in which the trustee has an interest adverse to the
beneficiaries.1136
Residential Pier Rates
Background
Before 2012, all residential pier leases within the City of Newport Beach's grant were charged a
flat $100 annual permit fee, which did not consider the size or location of the pier. However, at
a November 28, 2012 Special Meeting the City Council considered requiring rent for the
residential pier leases. The staff report explained that while the granting statute, referred to as
the Beacon Bay Bill, required charging fair market rent, the City had followed the State Lands
Commission's practice of not charging rent for residential piers. But the State Lands
Commission's practice changed, effective January 1, 2012, when Public Resources Code section
6305.5 was amended to require the Commission to charge fair rental value for residential piers.
City staff reasoned, "Because the City is a trustee of the State in regard to tidelands property,
the City should comport its actions to that of the State and charge fair market value rent for the
use of tidelands by residential piers." The staff report further concluded that "the City can no
32 Cal Pub. Resources Code, § 6009, subd. (d).
33 Pub. Resources Code, § 6009.1, subd. (b).
34 Pub. Resources Code, § 6009.1, subd. (c)(5).
35 Pub. Resources Code, § 6009.1, subd. (c)(6).
36 Pub. Resources Code, § 6009.1, subd. (c)(7).
LIN
longer justify an exemption for rental charges based upon the policy of the State and must now
charge fair market rent for residential piers located over City tidelands."37
The City commissioned two appraisers, Mr. Netzer and Mr. Rasmussen, to appraise the piers for
rental purposes and they arrived at rental rates of $0.55 and $0.50 per square foot,
respectively. The Committee recommended calculating rent "not over the entirely of the
tidelands outside of a residential property but to the tidelands that are both used and useable
for docks, gangways, and vessels." The Committee recommended using an average of the
appraised rental values to arrive at a rate of $0.525 per square foot for rent.38
At a December 11, 2012 Special Meeting, the City Council adopted the Committee's
recommended pier rent of $0.525 per square foot, with 2 percent CPI escalations. The City's
Municipal Code was also amended to allow residential pier owners to rent out their piers, in
which case they would pay commercial rates ($1.26 per square foot). The staff report does not
explain why the City decided to allow the private renting of residential piers, only noting that
the changes were "a result of the feedback from the Council and the public at the November
28t" 2012 Special meeting."39
The next year, at a November 12, 2013 Study Session regarding implementation of the new
charges, the City Council "looked back" over the various changes to tidelands to see if a
decision for one type of use should be modified based on decisions on other uses.40 At the
Study Session, staff recommended that the area considered for rent calculation be "(1)
Footprint of the pier, gangway and float over City tidelands; (2) Interior of the U- shaped float;
and (3) Buffer area of 10' around the float, except the backside." Rent would be reduced by 50
percent for the interior of a U-shaped pier and the 10-foot buffer area. There is extensive
documentation of the public comments received at previous workshops, but no explanation for
why staff made the recommendations it did except that they were based on comments
received.41
At the November 26, 2013 City Council meeting, the City Council considered modifications to
the pier lease program. Staff recommended that the City charge rent based on the footprint of
the pier, including the interior of a U-shaped pier, but without a perimeter or buffer area. The
staff report includes a chart comparing staff's proposed approach to the State Lands
Commission's approach, but does not explain why this recommendation was made, except to
indicate that staff was directed by the City Council at the previous Study Session after the
37 Agenda Item No. 1, November 28, 2012, at pg. 4.; when there are successive sentences
paraphrasing a City staff report, for readability, a citation will be provided at the end of the
summary or at the end of the paragraph.
38 Agenda Item No. 1, November 28, 2012,
39 Agenda Item No. 1, December 11, 2012.
40 Agenda Item SS2, November 12, 2013.
41 See Item No. SS2, staff PowerPoint; discussion in Agenda Item No. 2, November 26, 2013.
9
Council considered public comments and staff recommendations. The City Council approved
staff's recommended modifications as part of its consent calendar.42
A little over a year later, at a January 27, 2015 Study Session, City staff presented an overview
of other jurisdictions' residential pier setting methods, and asked for direction on whether the
City Council wanted staff to present changes, including whether to include the gangway or the
area in the interior of a "U" shaped dock as part of the rent calculations, and whether to adjust
rental rates. The City Council directed staff to return with a revised residential pier permit,
including a revised fair market rental fee, an adjusted pier footprint, and to contact State Lands
Commission staff regarding the proposed changes. 43
On February 10, 2015, City staff proposed reducing the rental rate to $0.50 per square foot, the
value concluded in Mr. Rasmuson's appraisal, from the $0.525 rate that was determined by
averaging Mr. Rasmuson's appraisal with Mr. Netzer's appraisal. The staff report does not
explain why this lower rate was a better reflection of fair market rent.44
The staff report also recommended that the City not charge rent for the interior space of a "U"
shaped pier, saying that the approach was consistent with the footprint for piers that did not
have a "U" shape. The staff report states that City staff contacted State Lands Commission staff,
and that Commission staff were not opposed to the $0.50 rate but noted that the Commission
included the interior of the "U" shape piers in its rental calculations because it still constituted
private use of the property. The staff report concludes that "the decision to include or exclude
the interior of the U-shape of a slip is left to the discretion of the City Council. As to whether
the SLC will deem our actions (especially relating to the water in the U) as contrary to our
responsibilities under the Tidelands Trust, that is unknown."41 At the meeting, an Assistant City
Attorney stated that the Commission "desires that the City charge for the u-shaped dock, but
the decision to charge for it is ultimately the City Council's decision." Some Council members
explained that because the water was public and the pier lease did not allow the lessee to
exclude the public from the water, they did not agree with charging rent for the pier owners to
use it. The City Council approved reducing the residential rental rate and the pier footprint.46
Analysis
Comparison to Commission Rates
The Commission leases private recreational facilities such as docks, piers, and moorings on
State sovereign tidelands and submerged lands. These facilities offer many of the same
42 Approved Minutes, November 26, 2013.
43 Agenda Item SS3, January 27, 2015, staff PowerPoint presentation ; see discussion in Agenda
Item No. 16, February 10, 2015.
44 Agenda Item No. 16, February 10, 2015,
45 Agenda Item No. 16, February 10, 2015.
46 Approved Minutes, February 10, 2015.
10
amenities as a commercial marina, such as a place for the docking and mooring of boats and
the loading and unloading of passengers and equipment. Thus, these privately owned facilities
represent a substitute for a commercial marina berth or mooring. Accordingly, the
Commission's method of estimating a fair rental value for improvements used for the docking
and mooring of boats is centered on the principle of substitution, which bases the rental rate
on what an individual would pay for a similar substitute site in a commercial marina.
To determine a rental rate for docking and mooring facilities on sovereign lands, Commission
staff surveys local marinas to determine their rental rates. Generally, marinas rent berths on a
per -linear -foot basis, based on the length of the berth or vessel. Commission staff determines
average values for both rates and berth sizes based on the data obtained from the surveyed
marinas. The average rate is then multiplied by the average berth size to determine gross
annual income. The Commission then uses a 5 percent rate of return on this annual income to
represent a comparable fair market compensation rate for the use of State sovereign land. The
subsequent value is then converted to a per -square -foot value by using data from the
Department of Boating and Waterways (DBW) publication Guidelines for Marina Berthing
Facilities. This per -square -foot rate can then be applied to the area occupied and impacted by
improvements and uses on State lands.
Using this methodology and the survey data from Newport Beach marinas collected by
Commission staff for the 2022 Southern California Benchmark update, a per -square -foot value
for Newport Beach recreational pier facilities could be determined as follows:
11
Table 1: 2022 CSLC SoCal Benchmark Data
Marina
No. of
Occupancy
Occupied
Avg. Berth
Avg. Berth
Name
Slips
Rate
Slips
Length
Rate/ft
Balboa Yacht
172
100.00%
172
36
$35.95
Basin
Bayside
Village
124
100.00%
124
28
$34.38
Marina
Lido Marina
28
100.00%
28
56
$65.86
Village
Newport
Dunes Resort
405
97.04%
393
30
$48.52
and Marina
Averages
182.25
99.26%
N/A
37.5
$46.18
Table 2: Rent Setting Calculations
Annual Gross
38(rounded avg. berth length) x $46.18 x 12 months = $21,058.08
% of Gross
$21,058.08 x 5% of gross income = $1,052.90
Per Sq. Ft. Rate
$1,052.90 / 1197.1 sq. ft. (from DBW data) _ $0.88
The above rent setting calculations can also be applied to the average monthly slip rent
determined by the City's appraisal ($50.55 per linear foot) to arrive at a per -square -foot value
for Newport Beach recreational pier facilities as follows:
Table 3: CLSC Rent Setting Calculations Using Average Slip Rate From City's Appraisal
Annual Gross
38 (rounded avg. berth length) x $50.55 x 12 months = $23,050.80
% of Gross
$23,050.80 x 5% of gross income = $1,152.54
Per Sq. Ft. Rate
$1,152.54 / 1197.1 sq. ft. (from DBW table) _ $0.96
Staff is not suggesting that the City must use the above numbers — which are only rough
calculations— or that other approaches to valuation are not reasonable. But using the
Commission's benchmark approach, it appears that the $0.58 per square foot currently charged
12
for residential piers is significantly below market rate, and fair rental value may be as much as
double the current rate.47
Lease Area
Commission staff calculates the lease area for which rent is assessed on piers and docks in a
different manner than the City. The City only assesses rent for the square footage of tidelands
occupied by a pier or dock (the "area of occupation"). In contrast, Commission staff includes an
"impact area" in addition to the area of occupation when calculating rent. The impact area is an
additional area, beyond the physical footprint of a structure, on which a lessee seeks
authorization to conduct activities. In the case of piers or docks, the impact area is generally a
nine -foot -wide area where a vessel could be expected to dock, or the area within a "slip" for
piers or docks that are "U" shaped and where vessels are docked along the interior of the "U".
The impact area is assessed rent as this area is a key component of a pier's utility and because
the pier -owner enjoys an exclusive right over the public in these areas. Because lessees
anticipate a right to access and moor their vessel at their pier at any time, without obstruction
from members of the public, they receive a preferential right to the impact area and effectively
remove it from public use. Thus, rent is charged for this area.
The City previously included impact areas (also called "buffer areas"). In 2012, it charged rent
for up to a 10 foot area if it was usable by a boat.48 In 2013, the City removed the buffer area
but still included the interior of a "U"-shaped dock, though at a lower rate .49 The 2013 staff
report does not explain why removal of the buffer area was recommended. In 2015, the City
removed the interior of the "U"-shaped docks and again did not explain why, only noting that
"whether the SLC will deem our actions (especially relating to the water in the "U") as contrary
to our responsibilities under the Tidelands Trust, that is unknown."so
According to City staff, the City's current lease area methodology (i.e. excluding the interior of
"U" shaped piers or any impact area) results in residential pier rental areas ranging from 23 to
4,025 square feet, with an average area of 1,116 square feet. Correspondingly, residential pier
annual fees range from $13.29 to $2,334.31, with an average rent of $893.02 per years"
41 City's Schedule of Rents, Fines, and Fees. Pier rent is increased by the lesser of CPI or 2%
annually per Resolution 2015-10.
48 See Agenda Item No. 1, November 28, 2012.
49 See Agenda Item No. 3, November 26, 2013.
so Approved Minutes, February 10, 2015.
51 Email from Lauren Wooding Whitlinger, Real Property Administrator, City of Newport Beach
to Jeff Plovnick, Granted Lands Specialist, State Lands Commission, October 7, 2025.
13
The low rates and lease area calculations may violate the California Constitution
Article XVI, Section 6 of the California Constitution prohibits gifts of public funds.52 Leasing
below fair market rates is an example of an unconstitutional gift.53 The low rates for residential
piers may be an unconstitutional gift of public funds. Additionally, if the City is not using an
appropriate lease area to calculate rent in order to reduce overall rental rates, that may also be
an unconstitutional gift.
The low rates and lease area calculations may violate the City's grant statute and
fiduciary duties.
The City has a legal obligation "to manage the state's tidelands and submerged lands consistent
with the terms and obligations of their grants and the public trust, without subjugation of
statewide interests, concerns, or benefits to the inclination of local or municipal affairs,
initiatives, or excises.1154 The City has the duty to administer the trust solely in the interest of
the beneficiaries55; the duty to act impartially in managing the trust property56; and the duty to
not use or deal with trust property for the trustee's own profit or for any other purpose
unconnected with the trust, and to not take part in a transaction in which the trustee has an
interest adverse to the beneficiaries.57 During the rental area reduction and rate reduction
decisions, the City did not explain how those actions were consistent with their obligations as
the State's trustee. Without that explanation, the City's approach could be interpreted as
providing benefits for City residents at the expense of the City's trust funds, which violates its
grant statute and its fiduciary duties to the state.
Recommendation
The City should immediately appraise its residential pier leases and update their rates. The City
should also reevaluate its residential pier rent area calculations to determine whether they are
adequately compensating the City, as the State's trustee, for private uses of the granted
property.
52 Cal. Const., art. XVI, § 6.
53 See People v. City of Long Beach (1959) 51 Cal.2d 875, 883 [holding that nominal rent for a
YMCA was not a gift because the YMCA fulfilled a public purpose and gained no monetary
benefit from the lease].
14 Pub. Resources Code, § 6009, subd. (d).
15 pub. Resources Code, § 6009.1, subd. (c)(5).
56 Pub. Resources Code, § 6009.1, subd. (c)(6).
57 Pub. Resources Code, § 6009.1, subd. (c)(7).
14
Mooring Permit Rates
Background
In 2007, the Orange County Grand Jury published a report highlighting issues with Newport
Beach's management of its mooring permits. In particular, the Grand Jury made the following
finding and recommendation:
• F-4. The last assessment of the fair market value of mooring permit fees took place
almost ten years ago.
• R-6. Establish a regularly scheduled independent appraisal for the fair market value of
mooring permit fees, e.g., based on a percentage of the cost of a slip.58
In response to the Grand Jury's findings, the City Council approved increased mooring rates at
its November 23, 2010 Meeting. The City Council increased mooring rates, which were to be
gradually increased until they reached an annual rate of 14 percent of the Newport Harbor
Marina Index. The staff report stated, "In the opinion of the City, the Beacon Bay Bill and the
California Constitution (Article XVI, Section 6) obligates the City to charge appropriate and non-
discriminatory rates for the use of tidelands, without conferring a benefit to private individuals
for the use of public property in violation of the California Constitution's prohibition on gifts of
public funds." The staff report stated that the mooring permit rates had not changed since
1996, and that the rates were now about 5 percent of the cost that a boater would pay for a
slip or berth. City staff recommended that the rates be increased, over a 5-year period, to
roughly 14 percent of an average of low- to moderately -priced marina berthing rates in
Newport Harbor. This 14 percent rate was based on the Newport Harbor Marina Index, which
compiled marina rates in Newport Bay and authorized staff to adjust the marinas selected. The
Staff report explained that the 14 percent rate included a downward adjustment to account for
the fact that mooring permittees in Newport Bay owned their own tackle. It also explained that
Newport had not done an appraisal of the moorings, and asserted an appraisal was not
required, contrary to the findings of the Grand Jury. 59
In January 2015, the City Council directed the Harbor Commission to study the mooring rates
and other related mooring issues and return with recommendations.60 On June 16, 2015, the
City Council considered the Harbor Commission's recommendations, which included setting a
mooring rental rate of $25 per foot, per year, with a CPI adjustment, and did not recommend
an appraisal. The $25 per -foot rate was derived by increasing the $6 per -foot rate charged in
58 2006-2007 Orange County Grand Jury, "Newport Harbor Moorings: Are They Held in the
Public Trust or for Private Profit?" Finding F-4, Recommendation R-6.
59 Agenda Item No. 19, November 23, 2010; see 2006-2007 Orange County Grand Jury,
"Newport Harbor Moorings: Are They Held in the Public Trust or for Private Profit?", Finding F-
4, Recommendation R-6.
60 Agenda Item No. 19, January 27, 2015.
15
1976 based on CPI to the present day. The City Council considered the Harbor Commission's
recommendations but directed staff to conduct an appraisal to set mooring permit rates.61
On January 26, 2016, the City Council considered new mooring rates based on an appraisal. In
the staff report, City staff described that they had spoken with State Lands Commission staff
who "expressed two recommendations regarding the City's mooring proposal: (1) the SLC
recommended the City provide, in no uncertain terms, that the mooring permits do not convey
a real property interest in the underlying tidelands; and (2) the SLC recommended the City
obtain a current appraisal to assist with the establishment of fair market value mooring rental
rates." City staff retained Netzer and Associates to conduct an appraisal, and the appraisal
concluded that fair market rent was a range of annual rent of $32.00 to $38.00 per linear foot
for offshore moorings, and $16.00 to $19.00 for onshore moorings. Staff recommended an
annual rate of $35.00 per linear foot for offshore moorings and $17.50 per linear foot for
onshore moorings, meaning a monthly rate of $2.91 and $1.46 respectively, with CPI
adjustments.62
At the meeting, State Lands Commission staff submitted a letter stating that the appraisal
"lacks important supporting discussion and analysis in a number of areas, which may affect the
determination of fair market rent," included a list of initial questions on the appraisal, and
requested that the City delay a vote so staff could perform a more detailed analysis.63 The City
included responses to the questions from Mr. Netzer, who concluded, "Overall, the questions
appear to be concerned with the amount of explanation included in the report, rather than the
analysis and the conclusions presented.... On the basis of the comments and the above, I
believe my analysis and conclusions are well supported and reliable and I see no reason to re-
think the analysis or amend my report.1164 The City did not delay the vote and adopted its staff's
recommendation.61 The City's resolution also authorized the City to conduct an appraisal to set
new rates after March 1, 2018, and every 5 years thereafter.66
In 2023, the City of Newport Beach hired Netzer & Associates to conduct an appraisal to
determine updated fair market values for mooring rates. The appraisal used several
approaches: a "Tidelands Market Rent" that was based on upland land values; a "Comparable
Rentals Approach" that surveyed other marinas that rent moorings and then adjusted the rates
based on location and utilities; a "Ratio Analysis" that surveyed marina slip rates and compared
61 Agenda Item No. 1, June 16, 2015.
62 Agenda Item No. 20, January 26, 2016.
63 See Letter from Sheri Pemberton, Chief, External Affairs Division, State Lands Commission, to
Mayor Dixen and Councilmembers, City of Newport Beach, January 25, 2016, available at
Agenda Item No. 20 Correspondence, at p. 25.
64 Letter from James B. Netzer, MAI, to Chris Miller, Harbor Manager, City of Newport Beach,
January 26, 2016, available at Agenda Item No. 20 Correspondence, at p. 31.
65 Approved Minutes, January 26, 2016.
66 Resolution 2017-16, adopted January 26, 2016.
16
them to mooring rates to arrive at a ratio, then applied that ratio to Newport Bay marina slip
rates to calculate mooring rates; and a "CPI Adjustment Approach" that applied a Consumer
Price Index adjustment to current mooring rates. The appraisal then reconciled the four
approaches by reviewing their factual and conceptual basis, ultimately placing primary
emphasis on the Comparable Rentals Approach and Ratio Analysis after concluding that the
Tidelands Market Rent approach was artificially high because of increased upland values and
the CPI Adjustment Approach did not capture long term market trends. The appraisal
concluded that a "benchmark" fair market rate for the mooring permits is $16.00 per linear foot
per month for a 40-foot mooring (the most common length mooring in the Harbor), increasing
rent for a 40-foot mooring from $134 per month to $640 per month. 67
At City staff's request, State Lands Commission staff "reviewed the appraisal at a high level to
determine whether [staff] believed the City could reasonably rely on its concluded fair market
mooring rates.1168 In a letter, staff concluded that "the City can reasonably rely on the
appraisal's fair market rates. The City could also adopt different rates if additional information
shows that the recommendations should be modified.1169
At the Harbor Commission's April 10, 2024 meeting, it recommended that the City adopt rental
rates equal to 24 percent of the Newport Harbor Marina Index, reduced from the 30 percent
ratio used in the appraisal's Ratio Analysis to account for the costs of maintaining mooring
tackle, and that these rates be phased -in over five and a half years.70 This would result in an
increase from the current rate of $3.35 per linear foot per month, to about $12.56 per linear
foot per month, increasing rent for a 40-foot mooring from $134 per month to $502 per
month.71
Analysis
Comparison to Commission rates
Commission staff's methodology for determining mooring rent on State sovereign lands is a
useful point of comparison when analyzing the City's rent setting methods. When determining
a benchmark for mooring rent, Commission staff uses the principle of substitution in a similar
manner as when setting a rental rate for piers or docks. As such, staff's method of determining
a fair rental value for moorings is based on what an individual would pay for a similar
67 Netzer and Associates, "Appraisal Report: Fair Market Rent, Offshore Moorings, Newport
Beach, California," December 26, 2023.
68 Letter from Reid Boggiano, Granted Lands Program Manager, State Lands Commission, to
Lauren Wooding Whitlinger, Real Property Administrator, City of Newport Beach April 9, 2024.
69 Letter from Reid Boggiano Granted Lands Program Manager, State Lands Commission, to
Lauren Wooding Whitlinger, Real Property Administrator, City of Newport Beach, April 9, 2024.
70 Approved Minutes, Harbor Commission, April 10, 2024.
71 See Agenda Item No. 13, July 9, 2024.
17
accommodation in a commercial marina. To derive a rental benchmark using this methodology,
staff surveys local area marinas to determine mooring rental rates and the number of moorings
rented. These moorings are generally rented on a monthly or annual basis with rents based on
the general size of a moored vessel (e.g. one rate for vessels 40 feet or less, and a different rate
for vessels over 40 feet). Staff then utilizes the collected data to calculate the average annual
gross income these marinas derive from mooring rentals. Once the average annual gross
income is calculated, staff applies a 5 percent rate of return to represent a comparable fair
market compensation rate for the use of State sovereign land. The resulting value is then used
as the annual rent for moorings on sovereign land in the subject location.
In comparison, the City's appraisal used a variety of valuation methods but ultimately placed
primary emphasis on the Comparable Rentals Approach and Ratio Analysis. The Comparable
Rentals Approach is similar to the Commission's approach, but differs in that it surveyed
marinas from locations all along the California coast instead of only local marinas. The rates
collected from the surveyed marinas were then broken down into a per -linear -foot rate and
adjusted based on the relative difference in the average monthly slip rent between Newport
Harbor and the surveyed marinas. This provided an adjusted, per -linear -foot mooring rate that
accounts for the relative difference in mooring costs between locations (similar to a cost -of -
living adjustment). Of note, the City's appraisal does not apply a 5 percent rate of return.
Instead, the appraisal uses the adjusted, per -linear -foot rate to arrive at a "benchmark" for the
City's moorings of $16 to $18 per month.
The Ratio Analysis utilized a different methodology from the Commission's approach and is
based on the premise that both moorings and slips are options available to mariners for
mooring a vessel and that their relative costs can be calculated as a ratio of one to the other.
For the Ratio Analysis, marinas from various locations along the California coast were surveyed
to determine the monthly per -linear -foot rates for both moorings and slips at each marina. This
data was then used to calculate a "ratio," or percentage, for mooring rates as compared to slip
rates. For example, if a marina charges a monthly rate of $50 per linear foot for a 40-foot slip
and $10 per linear foot for a 40-foot mooring, then the ratio for the mooring rate would be
calculated as: $10/$50 = 0.20 (i.e. the mooring rate is 20 percent of the slip rate).
The Ratio Analysis provided a ratio of mooring rates to slip rates equal to 30 percent and
concluded that a "benchmark" fair market rent could be derived by applying this 30 percent
ratio to the "average slip rate" in Newport Harbor. The appraisal then provided two options for
"average slip rates," one based on published slip fees for the Balboa Yacht Basin which is
administered by the City through a third -party management company, and the other based on
slip rates at comparable private marinas. By applying the 30 percent ratio to these "average slip
rates," the Ratio Analysis provided a "benchmark" mooring rate of $14.60 to $15.17 per -linear -
foot per month.
As the Comparable Rentals Approach and Ratio Analysis were given primary emphasis in the
appraisal, these methodologies were ultimately used to arrive at a reconciled "benchmark"
M*
monthly mooring rate of $16 per linear foot. This benchmark was used as the rate for the most
common mooring size of 40 feet, leading to an annual rate of $7,680 for a 40-foot mooring. The
$16 benchmark rate was then tiered based on the vessel size that each mooring can
accommodate. The resulting rates range from $10.50 per linear foot per month for a 25-foot
mooring, to $23.25 per linear foot per month for a 95-foot mooring.
Staff concluded that the City could rely on the appraisal without violating the law.
As discussed in the introduction section above, Staff reviewed the City's December 2023
appraisal and concluded that the City could reasonably rely on it to set mooring rates. Staff's
opinion has not changed. The Legislature granted Newport Bay to the City to manage in its
discretion, and the Commission's role is to review whether the City is exercising that discretion
within the bounds set by the Constitution, Public Trust Doctrine, and granting statute. The
Commission does not have authority to dictate how the City exercises its discretion within
those bounds. In this case, the appraisal does not violate generally accepted appraisal practices
or methodologies and, as such, provides a reasonable basis for rental rates that are reflective of
fair market value and therefore consistent with the Constitution, Public Trust Doctrine, and
grant statutes.
Recommendation
Staff recommends that the City continue using independent appraisals of fair market value,
performed at regular intervals, to determine fair market mooring rates. As stated in
Commission staff's April 9, 2024 letter to the City, the City may reasonably rely on the 2023
appraisal to set mooring permit rates. Staff understands that increasing the rates paid by
current mooring permit holders to fair market values may create hardships, and is comfortable
with the City phasing in the rate increase over time. Additionally, if the City wishes to explore
adopting a program to provide a certain amount of reduced rate permits as part of a
comprehensive program to provide equitable access to Newport Bay, staff will be happy to
work with the City to determine how to implement that program in a way that is consistent
with California Constitution and other legal requirements.
19
Residential Pier and Mooring Permit Comparison
Analysis
In broad strokes, the calculation of residential pier rates and mooring rates are both based on
appraisals that rely on comparisons to marina rates. There are differences, however, in how the
City conceptualizes the rental area calculations.
Residential pier leases use only the footprint of the pier to calculate rent; there are no impact
areas to account for the area used by boats moored to the pier, and no inclusion of water areas
made inaccessible by the pier, such as the interior portion of a "U"-shaped pier.72
Mooring permit rates are based on linear feet of the maximum vessel size the mooring can
accommodate, with different rates charged based on the maximum vessel size. So, for example,
the proposed rate for a 40-foot mooring is $16 per linear foot and the proposed rate for a 60-
foot mooring is $21 per linear foot. Thus, a mooring that can accommodate up to a 40-foot
vessel will be charged a monthly rate of $16 multiplied by 40 and a mooring that can
accommodate a 60-foot vessel will be charged a monthly rate of $21 multiplied by 60,
regardless of the actual length of the vessel associated with the mooring.
The mooring permit rate is based on the maximum length of the vessel and so is conceptually
tied to the amount of space a moored vessel could occupy. The residential pier leases, on the
other hand, are calculated only based on the physical footprint of the pier and do not include
areas that could be occupied by vessels or areas that are rendered inaccessible to the public
because of the pier, such as the interior of a "U"-shaped pier. The issues related to the
residential pier rental rates and lease area calculations are analyzed above in more detail, but
even if the methodology is supportable, there is a discrepancy when comparing pier rent
calculations to mooring permit rent calculations. One group is being charged based on the
vessel's occupation, and the other group is not.
When comparing the frequency of rate adjustments there also appears to be a difference in
how the City has addressed mooring permit rates and pier rates. For the piers, the City first
adopted rates based on an average of two different appraisals in 201273; the City then adjusted
buffer areas and rates in 201374; and in 2015 the City removed the buffer areas and reduced
the rate to the lower of the two 2012 appraisals. 75 For moorings, the City raised rates in 2010
based on a percentage of a marina rate survey (the Marina Index) 76; in 2016 increased rates
72 Agenda Item No. 16, Feb 10 2015, attachment B.
73 Agenda Item No. 1, November 28, 2012.
74 Agenda Item No. 3, November 26, 2013.
75 Agenda Item No. 16, February 10, 2015.
76 Agenda Item No. 19, November 23, 2010.
20
based on an appraisal77; and proposed raising rates in 2024 based on another new appraisal, 71
although that action has been paused.
For both the pier rates and the mooring rates, the City's resolutions contemplated new
appraisals every 5 years.79 But, while the City has generally kept to that schedule for its
mooring rates, it has been over 12 years since the City appraised its residential piers, and, as
discussed above, the current residential pier rates appear to be significantly below fair market
rates.
Viewing all this together, there appears to be a difference in how the City has managed its pier
lease rates and its mooring permit rates. The trend for mooring rates has been to have regular
appraisals to reflect market conditions; the trend for residential pier permits has been to
reduce the overall rent amount through reductions of lease area and lowering of rates without
conducting a new appraisal.
The City's discrepancy between residential pier and mooring permit rates may
violate the grant statute and the City's fiduciary duties.
The City's Grant states, "In the management, conduct, operation, and control of the lands or
any improvements, betterments, or structures thereon, the city or its successors shall make no
discrimination in rates, tolls, or charges for any use or service in connection therewith."80
Commission staff interprets this provision to prohibit charging different rates for the same use
— for example, a different mooring permit rate for residents and non-residents. Charging
different rates for different types of uses is appropriate when the City can rationally explain the
reason for the differences. In this case, it is arguable whether residential pier leases and
mooring permits are similar enough to require the same rental rate calculations by the Granting
Statute's anti -discrimination clause. On the one hand, they both have the purpose of providing
boat storage; on the other, they might reasonably use different approaches to calculating the
amount of tidelands used or the value of that use.
Nevertheless, even if the anti -discrimination clause is not violated, the City has a fiduciary duty
to act with care and impartiality, to act only in the interest of the beneficiaries — the statewide
public, and not to act for any purposes unconnected to its trustee duties.81 The City appears to
have treated its residential pier lessees, who are necessarily City residents, more favorably than
its mooring permit holders. This could be interpreted as the City providing favorable treatment
for its residents, especially when the City has not explained how its actions are consistent with
77 Agenda Item No. 20, January 26, 2016.
78Agenda Item No. 13, July 9, 2024.
79 Resolution 2016-17, adopted January 26, 2016; Resolution 2012-120, adopted December 11,
2012.
80 City Grant section 1(d).
81 California Public Resources Code section 6009.1, subds. (c)(2), (6).
21
its obligations as the State's grantee. Even if this does not fit into the technical definition of
discrimination in the City's Grant, this disparate treatment risks violating its fiduciary duties to
the State.
Recommendation
The City should comprehensively review its mooring permit conditions and residential pier
lease conditions, including rental rates, rental area, method and frequency of rent revisions,
potential for subleasing, and other terms, to ensure that both user groups are being treated
equitably. When the City updates its residential pier lease rates, it should also establish a
schedule to reappraise the residential pier rates and mooring rates at the same time, or at least
on a regular schedule with the same intervals between reappraisals. Using an independent
appraisal of fair market value, reappraised no less than every 5 years, is a reasonable, Trust -
consistent approach to ensuring rates are at fair market value. Moorings and residential piers
may use different calculation methods as long as each reflects fair market value and the
reasoning supporting each approach is documented by the City.
Phi
Mooring Permit Transfers
Background
In the City's current mooring permit system, the mooring permit authorizes the permittee to
occupy a mooring space located within the City's granted lands, and the permittee owns and is
responsible for maintaining the mooring tackle (the tackle includes the buoys, chains, and
anchors). Under this system, mooring permit holders are allowed to privately transfer their
mooring permits. The ability to privately transfer mooring permits has led to a private market
for these permits. According to the City, the prices for mooring permits within this market have
ranged from $10,000 to $60,000.82
The Orange County Grand Jury Report criticized the City of Newport Beach for allowing this
secondary market for mooring permits, making the following Finding and Recommendation:
• Finding F-1. Private profits are being made from the current procedures used in
transferring the mooring permits located on the public tidelands in Newport Harbor.
Because the mooring equipment and the vessel currently assigned to that mooring must
be sold to the same person, when a vessel on a mooring is sold, the new owner
transfers that mooring permit into his or her name, rather than vacating the mooring
and allowing the waiting list to proceed in order.
Recommendation R-1. Tighten the regulations and procedures involved with Newport
Harbor mooring permits and their transfers to ensure that all monies received which
rightly belong to the public, stay within the public arena.83
In response to the Grand Jury Report, on November 23, 2010, the City limited mooring permit
transfers to two transfers per permit before 2021. After two transfers, mooring permits would
revert to City control and be redistributed through a public waiting list, except for transfers
within families. The staff report explained, "The City took the Grand Jury's report seriously, and
embarked with the City's Harbor Commission and NMA [Newport Mooring Association] on a
plan to address transfers (but not rates).1184
But on March 28, 2017, the City reversed its phase -out of the private mooring transfers and
allowed permits to be transferred indefinitely. The City also created an internet listing of sold
moorings detailing the location, size, and sale price at the time of transfer, which staff
explained "promotes transparency, and provides a central location for the public to review
pricing trends which there assists with determining the fair market value for moorings." The
City's staff report did not discuss the Grand Jury report or the City's obligations under its grant
82 Agenda Item No. 19, November 23, 2010.
83 2006-2007 Orange County Grand Jury, "Newport Harbor Moorings: Are They Held in the
Public Trust or for Private Profit?" Finding F-1, Recommendation R-1.
84 Agenda Item No. 19, November 23, 2010.
23
statute. The only discussion and basis for the change was that "[fjeedback from the mooring
community suggests allowing transfers among private parties and rescinding the transfer -cap
date.1185
The City also abolished the wait list. The staff report explained, "Because moorings have been
privately sold to third parties and were rarely returned to the City, the wait list virtually never
moved over the decades.... Under the current policy and after 2020, the wait list, in theory,
would begin to move as permittees would no longer be allowed to sell moorings to third parties
and would instead be required to return them to the City. However, given the recommendation
in No. 1, above, to allow unlimited transfers, the wait list will once again be ineffective and be a
burden to maintain as well as providing false expectations to the public."86
Finally, the City increased the mooring transfer fee to 75 percent of annual mooring rent, up
from 50 percent so the transfer fee for a 40-foot mooring increased from $708.60 to
$1,062.90.87
Analysis
The mooring permit transfer system has been in place for decades — from a time when
moorings were not as in -demand as they are today, and a transfer system existed side by side
with a public waitlist. Now, however, the transfer system has replaced the waitlist and is the
only way to obtain a mooring permit.88 The transfer program created a private market for
permit sales, and the City reported sales ranging from $10,000 to $60,000.89 Because a transfer
is the only way to obtain a mooring, there is effectively a required up -front payment dictated by
private parties and benefiting those private parties.
The City collects a transfer fee of 75 percent of annual rent. This amount is not connected to
the sale price of the mooring permit itself. In the 2017 staff report reauthorizing transfers, the
City noted that some people sought a mooring permit through the waitlist solely to profit from
a subsequent transfer sale.90 The transfer program creates the potential for private parties to
financially benefit from a private market for use of the City's granted lands — without the City's
trust funds being fairly compensated.
Private profit from the use of granted lands is not, by itself, a legal violation. For example,
commercial businesses lease tidelands to profit from the use; local governments benefit
financially from tourism driven by waterfront uses; and residential home values increase if they
have adjacent private docks. The problem with the mooring transfer sales in Newport Bay is
85 Agenda Item No. 3, March 28, 2017.
86 Agenda Item No. 3, March 28, 2017.
87 Agenda Item No. 3, March 28, 2017.
88 Agenda Item No. 3, March 28, 2017.
89 Agenda Item No. 19, November 23, 2010.
90 Agenda Item No. 3, March 28, 2017.
1►z]
that the mooring permits have been privately commodified by restricting public access, which
allows individuals to dictate costs for access that are unrelated to the actual use of the
tidelands and unregulated by the City. Undeniably, there is a potential for private profit without
the City's tidelands fund being compensated. But even if an individual permit holder did not
profit for their sale when compared to their own purchase price, the requirement that there be
a private purchase is a barrier to access unrelated to the actual tidelands use and which does
not benefit the City's trust fund.
Therefore, the private sale of mooring permits that is allowed by the City's transfer policy could
be a violation of the City's grant statutes, fiduciary obligations to the State, and the public trust
doctrine.
The City failed to consider its role as the State's trustee when rescinding the
mooring permit transfer phase -out.
The concern with the mooring permit transfer market was brought to the City's attention in the
2006-2007 Grand Jury Report. Finding F-1 of that Report stated:
"Private profits are being made from the current procedures used in transferring the
mooring permits located on the public tidelands in Newport Harbor. Because the
mooring equipment and the vessel currently assigned to that mooring must be sold to
the some person, when a vessel on a mooring is sold, the new owner transfers that
mooring permit into his or her name, rather than vacating the mooring and allowing the
waiting list to proceed in order."
The report's recommendation R-1 was to "Tighten the regulations and procedures involved
with Newport Harbor mooring permits and their transfers to ensure that all monies received
which rightly belong to the public, stay within the public arena." 91 When the City eliminated
the transfers in 2010 (effective 2020), the City's ordinance stated that
"When there is a great demand for moorings, a value is associated with a mooring
permit well in excess of the annual permit fees. This value may be inappropriate in light
of the California Constitution's prohibition against the gifting of public funds or assets as
set forth in Article XVI, Section 6 of the state Constitution. This amendment to the
mooring permit and transferability provisions... begins to bring the City's administration
of moorings into compliance with Article XVI, Section 6. "92
While prior to the Grand Jury report the City might have been unaware of the legal implications
of the transfer program, it was demonstrability aware of them when it began to phase out the
91 2006-2007 Orange County Grand Jury, "Newport Harbor Moorings: Are They Held in the
Public Trust or for Private Profit?" Finding F-1, Recommendation R-1.
92 Ordinance No. 2010-26, adopted November 23, 2010.
25
transfers in 2010. The City should have been aware of those issues when it reversed its phase-
out of the transfer program in 2017.
But when these transfer restrictions were rescinded in 2017, the City did not make any
statements about the Grand Jury Report's conclusions, the identified conflict with Article XVI,
Section 6, of the California constitution identified in the City ordinance, or the City's obligations
under its Grant. The only reason given for the recommended changes in the staff report was
that "[f)eedback from the mooring community suggests allowing transfers among private
parties and rescinding the transfer -cap date."93 The official minutes of the meeting also do not
reflect that any Councilmember or staff person raised the issue.94
The City appears to have failed to consider its legal and fiduciary obligations as a Legislative
grantee when making the decision to revert the transfer restrictions in 2017. The City's staff
report does not contain any analysis of how the changes would, or would not, satisfy their
obligations under their grant statute, and does not mention the Gift of Public Funds issue that,
in 2010, was noted in the transfer restrictions. This failure means that the City could be
violating the California Constitution, the Public Trust Doctrine, its Legislative Grant, and the
fiduciary duties it owes to the State.
The City's transfer program may violate the California Constitution.
The City's transfer program appears to violate the Constitutional prohibition against gifts of
public property. Article XVI, Section 6 of the California Constitution prohibits the State and local
governments from making "any gift or authorize the making of any gift, of any public money or
thing of value."95 When local agencies manage tidelands under a grant from the Legislature and
use these granted tidelands, or money derived from the granted tidelands, in a manner that
does not further the purposes of the grant, it is a gift of public property in violation of the
California Constitution.96
In 2010 the City estimated that the value of privately sold moorings ranged from $10,000 to
$60,000.97 The City's mooring transfer log shows that in 2024 the average transfer price was
$35,187.50 (when excluding off -market transfers such as family transfers, additions of a second
permittee, and transfers associated with house sales). 98 The City charges a transfer fee of 75
percent of the annual mooring rent, which for a 40' mooring would result in a transfer fee of
about $1,206. According to City records, in 2024 the City received $72,678 in revenue from
mooring permit transfer fees, while $2,536,200 was paid to private parties for mooring permits
93 Agenda Item No. 3, March 28, 2017.
94 Approved Minutes, March 28, 2017.
95 Cal. Const., art. XVI, § 6.
96 Mallon v. City of Long Beach (1955) 44 Cal.2d 199, 210.
97 Agenda Item No. 19, November 23, 2010.
98 The City keeps a transfer log on its website.
26
sold on the private market. The revenue received by the City in 2024 was approximately 2.87
percent of what was paid to private parties for permit transfers.99
This transfer fee is unrelated to the mooring permit purchase price and does not adequately
compensate the City for the transfer. Therefore, the City's program allows private persons to
profit from mooring permit transfers by creating a private market for the sale of public assets
without compensation to the City. This is like a public agency leasing a building at a nominal
rate and allowing the lessee to sublease for a profit, which violates the California
Constitution.100
The transfer program may violate the Public Trust Doctrine and the City's grant
statute.
The City, as the Legislature's tidelands grantee, is bound by the Public Trust Doctrine when
managing Newport Bay.101 The Public Trust Doctrine's "dominant theme is the state's sovereign
power and duty to exercise continued supervision over the trust."102 Grantees like the City
assume that duty of continued supervision of the granted lands. Accordingly, the grant statute
imposes a term limit of 50 years for any franchise or lease.101 While the grant statute does not
mention permits, for purposes of the Commission's management, the Public Resources Code
defines "lease" as including "a permit, easement, or license.11104
In this case, not only do the mooring permits not have a time limit, but because they allow
private parties to transfer them they effectively never return to the City for distribution, and
the public now relies on private parties to obtain a mooring permit.101 The City can revoke
mooring permits for certain reasons,106 including a provision allowing the permit to be revoked
if the "space is to be devoted for a more necessary public use.11107 But this requires the City to
justify the revocation, which may be difficult when it relies on subjective determinations like
another use being "more necessary" than a mooring permit. The practical effect is that
revocation of a permit will only be for cause, similar to terminating a lease for cause. And a
91 Email from Lauren Wooding Whitlinger, Real Property Administrator, City of Newport Beach,
to Benjamin Johnson, Staff Attorney, State Lands Commission, November 18, 2025.
100 See People v. City of Long Beach (1959) 51 Cal.2d 875, 883 [holding that nominal rent for a
YMCA was not a gift because the YMCA fulfilled a public purpose and gained no monetary
benefit from the lease].
101 Pub. Resources Code, § 6009, subd. (c); Zack's, Inc. v. City of Sausalito (2008) 165
Cal.App.4th 1163, 1174.
102 National Audubon Society v. Superior Court (1983) 33 Cal.3d 419, 437.
103 City Grant, section 1(b).
104 Pub. Resources Code, § 6501.
105 Agenda Item No. 3, March 28, 2017.
106 Newport Beach Municipal Code, section 17.70.020, subds. (A)(1), (4).
107 Newport Beach Municipal Code, section 17.70.020, subds. (A)(1)(h).
10%
lease for longer than 50 years will still violate the grant statute even though it can be
terminated if the lessee fails to comply with its terms. Therefore, the City's mooring permit
transfer program could be viewed as a relinquishment of the City's control of the permits to
private parties, in violation of the Public Trust Doctrine and the City's grant statute
The City does sublease moorings when the permit holder is away for an extended period of
time, which to some degree helps address the privatization of the lands occupied by the
moorings. But this does not resolve the fundamental problem that acquiring a mooring permit
is now done at the discretion of private parties and not the City, and that the current transfer
program effectively leads to alienation of the City's granted lands.
The transfer program may violate the City's fiduciary duties to the State.
As a legislative grantee, the City must manage the granted property "without subjugation of
statewide interests, concerns, or benefits to the inclination of local or municipal affairs,
initiatives, or excises," and is bound to act as the State's fiduciary."'
Public Resource Code section 6009.1 lists fiduciary duties that legislative grantees must fulfill.
Among these duties are the following:
• The duty to administer the trust solely in the interest of the beneficiaries.101
Under both the Public Trust Doctrine and the City's grant statute, the City must manage
Newport Bay to serve the statewide public interest, and the statewide public are the
beneficiaries in the trust relationship created by the City's Grant.110 The transfer program
allows the group of current mooring permit holders to control the recipients of the mooring
permits and potentially extract value from the process. The transfer program is therefore for
the benefit of the group of current mooring permit holders and not for the general public that
wishes to acquire a permit.
• The duty to take reasonable steps under the circumstances to take and keep control of and
to preserve the trust property,"' and the duty to not delegate to others the performance of
acts that the trustee can reasonably be required to perform and to not transfer the
administration of the trust to a co -trustee. 112
The City's transfer program allows the private mooring tackle owners to control the future
users of the property, which is potentially an impermissible transfer of power over the
108 pub. Resources Code, §§ 6009, subd. (d), 6009.1, subd. (c).
109 Pub. Resources Code, § 6009.1, subd. (c)(5).
110 See Mallon v. City of Long Beach (1955) 44 Cal.2d 199, 211.
111 Pub. Resources Code, § 6009.1, subd. (c)(8).
112 Pub. Resources Code, § 6009.1, subd. (c)(13).
sovereign land. This could be a violation of the City's duty to keep control of the trust property
and not to delegate or transfer administration of the trust.
• The duty to make the trust property productive under the circumstances and in furtherance
of the purposes of the trust.113
As discussed above, private persons are selling mooring transfers and the City's transfer fee
does not appear to reflect that sale. This could violate the duty to make the property
productive — in this case, by failing to secure adequate value for the City's trust fund.
Recommendation
The City should end its program of allowing private mooring permit sales. Many current
mooring permit holders purchased their moorings with the expectation that they would have
the option to sell them in the future to recoup the purchase cost. The City could consider ways
to phase out transfers which recognizes that the current mooring permit holders were only
following the City's established rules when they purchased their moorings. Commission staff is
not taking a position on whether compensation should be provided to the current mooring
permit holders.
113 Pub. Resources Code, § 6009.1, subd. (c)(9).
29
Residential Pier Subleases
Background
At a December 11, 2012 Special Meeting, the City's Municipal Code was amended to allow
residential pier owners to rent out their piers, in which case they would pay commercial rental
rates ($1.26 per square foot). The staff report for this decision does not explain why the City
chose to allow the private renting of residential piers, only noting that the changes were "a
result of the feedback from the Council and the public at the November 28th 2012 Special
meeting."114
Staff recently reviewed Dockskipper, a website that publicly lists residential piers for sublease in
Newport Bay, and found eight docks for listed rent, ranging from $1,250 per month ($50 per
foot of vessel length per month, up to 25 feet) to $9,000 per month (or $1.50 per foot for a
maximum vessel size of 95 feet, and use of a 2-car garage).115 An average -sized residential pier
of 1,116 square feet would pay about $1,406.16 per year in rent if charged at the commercial
rate. According to City staff, there are currently 21 residential pier permittees that have notified
the City they are subleasing their dock and who are being charged commercial rental rates.
Based on the data staff reviewed from Dockskipper, even at the low end of subleasing rates a
pier permittee with an average sized pier would be able to cover nearly their entire year's rent
by subleasing their pier for one month.
Analysis
Commercial leasing is outside the scope of this Report, and staff did not review the City's rate -
setting for its commercial marinas or subleased piers. Nevertheless, if the commercial rates
charged for residential piers being subleased are too low (especially in light of the sublease
rates being charged by pier permittees), then this could be an unconstitutional gift of funds.
Recommendation
The City should investigate residential pier subleasing in Newport Bay. At a minimum, it must
ensure that all subleased piers are being charged rent at the commercial rate, consistent with
the City's Code. If there are residential pier permittees subleasing without authorization, the
City should also explore how to effectively track and enforce restrictions in the residential pier
114 Agenda Item No. 1, December 11, 2012.
115 https://www.dockskipper.com/newport-beach-boat-docks-slips-rent/ (accessed October 27,
2025). The prices were: free use of dock in exchange for use of boat; 50 per foot of vessel
length a month, up to 25 feet (maximum of $1,250); $1,750 per month (vessel up to 30 feet);
$2,900 per month (vessel up to 70 feet); $3,400 per month (vessel up to 50 feet); $3,500 per
month (vessel up to 66 feet); $7,500 per month or $1.50 per foot (vessel up to 85 feet); $9,000
per month or $1.50 per foot (vessel up to 95 feet, includes 2-car garage);
30
subleasing. The City should also evaluate whether the commercial rental rate is appropriate
considering the rates residential pier permittees are charging for subleasing.
31
The Mooring License Program and the City's July 9, 2024
Action
On November 4, 2023, the City created the mooring license program.116 The City's mooring
licenses are non -transferable licenses that provide mariners with an option to rent moorings on
a monthly basis, renewable for additional one -month terms. Fees for these licenses are based
on an appraisal prepared by Netzer and Associates in August 2023, before the appraisal that
Netzer and Associates prepared in December 2023 for the offshore moorings. Commission staff
did not review or comment on the August 2023 Netzer appraisal. The license terms included:
• Mooring Licenses are month -to -month and may be renewed, provided the licensee has
paid in full the license fee, any late fees, and is not in violation of any provision of the
license program.
• Live-aboards are prohibited.
• The City may temporarily assign a mooring that is vacant or unoccupied to another
vessel through the issuance of a mooring sub -permit.
• Mooring licenses are not transferable.
• The assigned vessel must actively occupy the mooring. Vacancy for more than 25
consecutive days is considered abandonment if it occurs without the prior approval of
the Harbormaster. However, the mooring can be vacant for up to 6 months with prior
approval from the Harbormaster.
• A single tender — a small vessel, like a dinghy or kayak, which serves as access to and
from shore to the assigned vessel — may be secured to the assigned vessel or to the
offshore mooring in the absence of the assigned vessel.
• A licensee may not allow vessels other than the assigned vessel and tender to use the
mooring.117
On July 9, 2024, the City considered the Harbor Commission's recommendation to increase
mooring permit rates. City staff also provided an alternate recommendation, where mooring
permits would be phased out in favor of the License Program. City staff's alternate
recommendation included:
• As of August 22, 2024, no new mooring permits would be issued. Instead, all new
moorings would be authorized under the License Program.
• Existing mooring permittees would continue to pay the current mooring permit rates,
with annual CPI adjustments or a 2 percent increase (whichever is less).
116 Agenda Item No. 4, November 14, 2023.
117 Resolution 2023-62, November 15, 2023.
32
• Existing mooring permittees would be allowed to privately transfer their permit one
time within four years, but no later than August 21, 2028. Following that transfer, no
further transfers would be permissible for that mooring permit.
• Mooring permits transferred during the four year "grace period" would be subject to
the 2016 rates for four years from the date of the transfer. After this additional four-
year period the permit would convert to a License.
• Mooring permittees that also held a live -aboard permit as of September 1, 2028, and
whose mooring permit has converted to a mooring license, may continue to live on the
vessel.
• Moorings and associated tackle subject to the License Program would be owned and
maintained by the City. Moorings and associated tackle subject to the Permit Program
would continue to be owned and maintained by the permittee.111
The City approved staff's alternate recommendation."' However, the City deferred a second
reading of the ordinance at State Lands Commission staff's request, meaning that it is not yet
effective.lzo
Analysis
The City concluded that the License Program rates were reflective of fair market value, and that
conclusion is supported by the August 2023 appraisal. Similar to the December 2023 appraisal,
the appraisal used for the License Program employed a "Comparable Rentals Approach" and a
"Ratio Analysis" to arrive at a recommended fair market rent. The recommended rates were
similar in both appraisals: for a 40-foot offshore mooring the August appraisal recommended
$15.00 per linear foot, and the December appraisal recommended a benchmark rate of $16.00
per linear foot.
The alternate recommendation would eventually lead to the cessation of private mooring
transfers and live-aboards, while allowing existing Mooring Permit holders to continue paying
current rates (with CPI adjustments) in exchange for the removal of the ability to transfer the
permit. As discussed above, private mooring transfers may violate the Public Trust Doctrine, the
City's fiduciary duties to the State, and the granting statute. An updated mooring program that
leads to the cessation of such transfers would match staff's recommendations regarding private
transfers. City staff's alternate recommendation would also lead to the eventual phase out of
live-aboards. Live-aboards are generally not consistent with the Public Trust Doctrine. However,
even if such use was consistent with the Public Trust Doctrine, the City has discretionary
authority to choose between competing Public Trust uses and would be within its authority to
eliminate live -aboard use in favor of other Public Trust uses.
118 Agenda Item No. 13, July 9, 2024.
119 Approved Minutes, July 9, 2024.
120 Approved Minutes, July 23, 2024.
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Recommendation
As discussed elsewhere in this report, staff supports both ensuring that rates remain at fair
market value and the implementation of a fair resolution to the issues created by the City's
current mooring program. The City should review its staff alternate proposal in light of the
discussion in this report to determine if this proposal provides a fair solution that ensures both
fair market rent and addresses the mooring program issues.
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Conclusion
When reviewing the City's management of its mooring permits and residential pier leases, a
common issue is that the City has not adequately explained — or sometimes, has not explained
at all — how its granted lands management decisions comply with the City's obligations as the
State's trustee under the granting statute.
For example, when recommending that the City remove the interior of a "U"-shaped pier from
the rental calculations in 2017, the staff report does not explain why it is making the
recommendation, only stating that "the decision to include or exclude the interior of the U-
shape of a slip is left to the discretion of the City Council."1u It is the same with the
recommendation to reduce the pier rate from an average of the two appraisals to the lower
value: the staff report just states that "the City Council has the discretion under the Beacon Bay
Bill [the grant statute] and Newport Beach Municipal Code to determine the fair market value
rent for residential piers based in part on these two appraisals."122 In the official minutes of that
meeting, there is some discussion at the City Council meeting of the City's trustee obligations,
and the reason for the reduction in the lease area, but not the rate reduction.121 From the
minutes it is unclear exactly how the City viewed its actions in relation to its trustee obligations.
This is also seen when the City reverted its mooring permit transfer policy in 2017, and staff
only explained the basis for the reversion by stating, "Feedback from the mooring community
suggests allowing transfers among private parties and rescinding the transfer -cap date.11124 The
official minutes of that meeting do not reflect any discussion of the transfer policy's compliance
with the City's trustee obligations.121
The City has discretion on how to manage its granted lands, but the City must exercise that
discretion for the benefit of the statewide public and for the purposes described in its statute
and within the bounds imposed by that statute and the Public Trust Doctrine. It might be that in
some cases the City performs the analysis of its management decisions during the meeting
when such decisions are made, but this is not always the case. And a failure to provide that
analysis in the staff report means that the public cannot review the City's reasoning prior to the
meeting.
Going forward, when the City takes any action involving its granted lands, it should explain how
that action is consistent with its trust obligations — ideally in the staff report, so that the public
can review that reasoning ahead of the meeting.
121 Agenda Item No. 16, February 10, 2015.
122 Agenda Item No. 16, February 10, 2015.
123 Approved Minutes, February 10, 2015.
124 Agenda Item No. 3, March 28, 2017.
125 Approved Minutes, March 28, 2017.
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