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HomeMy WebLinkAbout03 - Dinghy Rack Rental RateCITY OF NEWPORT BEACH City Council Staff Report January 27, 2015 Agenda Item No. 3 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: David A. Webb, Public Works Director- (949) 644 -3330, dawebb@newportbeachca.gov PREPARED BY: Shannon Levin, Harbor Analyst PHONE: (949) 644 -3041, shannon @newportbeachca.gov TITLE: Dinghy Rack Rental Rate ABSTRACT: In an effort to improve services for the public mooring permittees, the City constructed dinghy racks at the Balboa Yacht Basin for exclusive use by the public mooring permittees. Access to the offshore public moorings is only available via dinghies for most permittees, so these racks will be an improved amenity. The rack system at the Balboa Yacht Basin has approximately 15 spaces which will be assigned through a lottery system. An appraisal has been conducted according to the Beacon Bay Bill, Council Policy F -7, and Newport Beach Municipal Code Section 17.60.010. The appraised dinghy rack rental rate is $25.00 per month, so staff is therefore proposing that same rate be charged to the renters. RECOMMENDATION: Adopt Resolution 2015 -6, A Resolution of the City Council of the City of Newport Beach Setting Rent for Dinghy Rack Rental Space at Balboa Yacht Basin Located upon Tidelands, determining monthly rental rate for the dinghy racks at the Balboa Yacht Basin, and other future City dinghy rack locations such as Marina Park to be $25.00 per month. FUNDING REQUIREMENTS: No funding requirements. DISCUSSION: As part of the discussion during the recent review and adjustment of public mooring permit fees, the City Council directed staff to improve amenities to benefit the public mooring permittees including installing a limited number of dinghy racks at the Balboa Yacht Basin and the future Marina Park. The Balboa Yacht Basin is a City- owned, 172 slip marina located off Harbor Island Drive near Basin Marine Shipyard and the Galley Cafe (Attachment A). 3 -1 The Beacon Bay Bill, City Council Policy F -7, and Newport Beach Municipal Code Section 17.60.010 require the City to receive fair market value rent for use of the public tidelands. The rental rate has been calculated according to the procedures specified in Council Policy F -7 which states "whenever a lease, management contract, concession, sale or similar action regarding income property is considered by the City, an analysis shall be conducted to determine the maximum or open market value of the property. This analysis shall be conducted using appraisals or other techniques to determine the highest and best use of the property and the highest value of the property." Certified General Real Estate Appraiser Gary Rasmuson was hired by staff to conduct an appraisal (Attachment B). Mr. Rasmuson collected dinghy rack rental rate information from seven yacht clubs and marinas in Dana Point and Newport Beach. The table below references the collected rates and the average of those findings. No. Marina Rent /Mo. 1 Dana Point $25.00 2 Newport Dunes $25.00 3 Newport Harbor Yacht Club $30.00 4 Bahia Corinthian Yacht Club $21.57 5 Balboa Yacht Club $20.25 6 Lido Isle Yacht Club $12.50 7 American Legion Yacht Club $35.00 Average $24.19 Median $25.00 Staff proposes the monthly rent be set at 100% of the median appraised value which is $25.00 per month. Going forward, the rental rate will be subject to an annual adjustment according to the CPI or 2 %, whichever is less. Every five years, a market value appraisal will be conducted to ensure market consistency. The dinghy rack storage system at the Balboa Yacht Basin has been constructed (Attachment C), and is located in the southwest corner of the property with direct access to a vacant, exterior facing, side -tie that is designated for public access to the vessel pumpout station. This location was selected both for the ease of moving the dinghies from the rack to the water, and the available parking spaces at that end of the marina. Additionally, a new dinghy rack storage system is being constructed as part on the current Marina Park project set to open in the near future. With nearly 800 offshore moorings in the harbor, the fairest way to offer the limited number of rack spaces is through a lottery system. Each mooring permittee will be sent a notice explaining the procedures for the lottery system, and any interested permittee may submit their information to enter the lottery for random selection. After the lottery, all future spaces will be assigned on a first -come, first - served basis. Because the Balboa Yacht Basin racks are already built, staff can implement this program relatively soon, pending Council approval. ENVIRONMENTAL REVIEW: This action is not subject to the California Environmental Quality Act ( "CEQX) 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. 3 -2 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). ATTACHMENTS: Description Attachment A - Location Mao Attachment B - Appraisal Attachment C - Dinghy Rack Photos Attachment D - Resolution 3 -3 Dinghy I Rack I Location ATTACHMENT A t�P4 w ry CJ It0[1 isiAN NA 7 � 7 Any � r Balboa Yacht Basin 829 Harbor Island Drive I � / r IL1 CITY OF NEWPORT BEACH Public Works Department - Harbor Resources Division 01/27/2015 Rasmuson Appraisal Services 7809 Inception Way San Diego, California 92108 Ph. (858) 672 -1796 May 5, 2014 Ms. Shannon Levin Public Works Department City of Newport Beach 829 Harbor Island Drive Newport Beach, California 92660 ATTACHMENT B Gary L. Rasmuson, MAI, SRA Wendy A. Rasmuson, MBA RE: Balboa Yacht Basin Dinghy Rack Market Rent Analysis, Newport Beach, California Dear Ms. Levin: File No. 14591 At your request, I have prepared a market rent estimate for the dinghy rack located at the Balboa Yacht Basin. This report sets forth our opinion of market rent along with a summary of supporting data and reasoning which form the basis of our opinion. Scope of the analysis The scope of this analysis included the following: • physical viewing of the subject dingy rack, neighborhood, and submarket; • research comparable rent data from competing marinas; • present the results in this report Purpose of the appraisal The purpose of the appraisal is to estimate monthly market rent for an individual dinghy space. Identification of the intended use and users of appraisal The intended use of this market rent analysis is to assist my client in establishing rent rates for the dinghy racks at Balboa Yacht Basin. It was prepared for the exclusive use of the City of Newport Beach. It may not be used or relied upon by any other party. Any party who uses or relies upon any information in this report, without the preparer's written consent, does so at his own risk. Interest appraised The dingy rack does not appear to be permanently attached to the real estate and therefore is considered a fixture or personal property and no real property interest is being appraised in this report. Effective date of appraisal May 4, 2014 — Date of subject property visit and viewing 3 -5 Shannon Levin City of Newport Beach May 5, 2014 Page 2 Definition of terms Market Rent The term "market rent' or "fair market rent ", as used in this appraisal report, is defined as follows: The most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the lease agreement, including permitted uses, use restrictions, expense obligations, term, concessions, renewal and purchase options, and tenant improvements (Tls). Source: Appraisal Institute. Dictionary of Real Estate Appraisal, 5th Edition, (Chicago, 2010), p. 121 Subject Ownership The City of Newport Beach Subject Description The dinghy rack that is the subject of this market rent estimate is located near the southwest corner of the Balboa Yacht Basin, on the edge of the parking lot near the harbor. Balboa Yacht Basin is a marina owned and operated by the City of Newport Beach for public use. There are 172 slips within the marina. The city constructed the dinghy rack for exclusive use by the mooring permittees of Balboa Yacht Basin. Access to the off -shore moorings is only available via dinghies for most permittees. The spaces will be assigned through a lottery system. The dingy rack appears to be free - standing and is constructed of treated lumber with padded rails for each dinghy. The racks measures approximately 10.5 feet deep by 23 feet long and about 6 feet high. It is divided into four sections with two internal levels and a top rack. The bottom level is about 3 feet high and the upper level is about 2 feet high. It appears that this rack can accommodate 12 -15 dinghies. The rack is near the open side tie that is designated for public access to the vessel pumpout station. This location was selected for both the ease of moving the dinghy from the rack to the water, and the available parking spaces at that end of the marina. The rack appears to be of new construction and in good condition. Photos of the rack storage and a map showing the location of the rack follows Rasmuson Appraisal Services 3 -6 Shannon Levin City of Newport Beach May 5, 2014 Page 3 Map of Balboa Yacht Basin Source: Google Earth Photos 4 R _ Rasmuson Appraisal Services 3 -7 Shannon Levin City of Newport Beach May 5, 2014 Page 4 Market Rent Analysis I have researched marinas and yacht clubs located in the Newport Beach Harbor and nearby harbors to provide an indication of rents charged for dry rack dinghy storage. I was also provided with survey information for several marinas and yacht clubs by my client. A summary of this data follows. Dinghy Rack Rent Rate Survey No. Marina 1 Dana Point 2 Newport Dunes 3 Newport Harbor Yacht Club 4 Bahia Corinthian Yacht Club 5 Balboa Yacht Club 6 Lido Isle Yacht Club 7 American Legion Yacht Club Average Median Comments $25.00 Max. 6'x 10' flat bottom dinghy $25.00 Dinghy rack space $30.00 Dry rack Sabot storage only $21.57 Data provided by third party $20.25 Data provided by third party $12.50 Dry rack Sabot storage only- members only $35.00 Currently have a waiting list $24.19 $25.00 Based on this survey data, the range of rates is from $12.50 to $35.00 per slip per month. The lowest rate is from the Lido Isle Yacht Club and reflects more of a yacht club amenity rate than a market rate. I also considered rates in other marinas in Los Angeles, Marina Del Rey, San Diego and Ventura, but found insufficient data to make a comparison. Some yacht clubs do not charge for the dinghy storage. One charged $5.50 per month for members only and indicated this would not apply to a public rental. The Shelter Cove Marina in San Diego on San Diego Bay has dinghy dry rack storage at $12 per month. Slip rates in San Diego Bay are significantly lower than those found in Newport Harbor and therefore I would expect that dry rack storage rates would also be lower. I have concluded at a market rent rate for the dinghy dry rack storage space at $25.00 per space per month. CONCLUDED MARKET RENT RATE — DINGHY DRY RACK SPACE ($/SPACE/MONTH) $25.00 If you have any questions, please feel free to contact me. Respectfully submitted, RASMUSON APPRAISAL SERVICES Zry&L Ra uson, MAI, SRA Certified General Real Estate Appraiser- State of California OREA Appraiser I.D. No. 002571 Expires 2/4/2016 Rasmuson Appraisal Services Nu Shannon Levin City of Newport Beach May 5, 2014 Page 5 CERTIFICATION OF APPRAISER I certify that, to the best of my knowledge and belief, • The statements of fact contained in this report are true and correct. • The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. • 1 have no present or prospective interest in the property that is the subject of this report, and no personal interest with respect to the parties involved. • I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. • My engagement in this assignment was not contingent upon developing or reporting predetermined results. • My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. • My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Practice of the Appraisal Institute and the Uniform Standards of Professional Appraisal Practice. • The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. • As of the date of this report, Gary L. Rasmuson, MAI SRA has completed the requirements of the continuing education program of the Appraisal Institute. • 1 have made a personal inspection of the property that is the subject of this report. • No one provided significant professional assistance to the person signing this report. • I have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three -year period immediately preceding acceptance of this assignment. son, MANS A 4affietreml Real Estate Appraiser State of California OREA Appraiser I.D. No. 002571 Expiration Date: 2/4/2012 Rasmuson Appraisal Services Date: May 5, 2014 3 -9 ATTACHMENT C F r f � I f ATTACHMENT D RESOLUTION NO. 2015- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH SETTING RENT FOR DINGHY RACK RENTAL SPACE AT BALBOA YACHT BASIN LOCATED UPON TIDELANDS WHEREAS, pursuant to the 1978 Beacon Bay Bill, as amended, ( "Beacon Bay Bill ") the City of Newport Beach ( "City ") acts on behalf of the State of California as the trustee of Tidelands located within the City's limits, including Newport Harbor; WHEREAS, the Beacon Bay Bill and Chapter 17.60 of the Newport Beach Municipal Code ( "NBMC ") allow the City to authorize third parties to construct /maintain residential piers upon tidelands; WHEREAS, the Beacon Bay Bill, California Constitution Article 16, Section 6, and City Council Policy F -7(D) require the City to receive fair market value Rent from third parties using the Tidelands; WHEREAS, the City Council has the exclusive discretion to determine fair market value Rent based upon the findings of a City - selected appraiser; WHEREAS, an appraisal report by Rasmuson Appraisal Services was prepared and delivered to the City, and has been reviewed and considered by the City Council, which reports are part of the record for this matter; WHEREAS, the City Council has considered all documents and comments in the record in connection with this resolution; NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1: The Recitals provided above are true and correct and are incorporated into the substantive portion of this resolution. Section 2: The City Council finds that the Rent provisions contained in the attached Balboa Yacht Basin Dinghy Rack Market Rent Analysis, which is incorporated by reference, provide for the charging of fair market value Rent and that the rental rate (and adjustments) in the attachment constitute fair market value Rent for dinghy rack rental space located upon Tidelands, which findings are made by the City Council in its exclusive discretion but are based on the information in the appraisals of its City - selected appraiser. The City Council further finds and determines the Rent for dinghy rack rental space located upon Tidelands, operating under a rental agreement, shall be set at 100% of the Balboa Yacht Basin Dinghy Rack Market Rent Analysis. The Rent established in this resolution shall only be applicable to Permittees -1- 3-11 ATTACHMENT D with a dinghy rack space located over Tidelands. The Rent shall be set at $25.00 per month, and rental rate will be subject to an annual adjustment according to the CPI or 2 %, whichever is less. Section 3: The City Council finds the setting of Rent for dinghy rack space located upon Tidelands 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. Alternatively, the City Council finds the setting of Rent for dingy rack space located upon Tidelands is entitled to a Class 1 Categorical Exemption pursuant to CEQA Regulation Section 15301 because the Rent contemplates the continued use of existing facilities, with no expansion of the proposed use. Further, the City Council finds the setting of Rent for dinghy rack space located upon Tidelands is entitled to a Statutory Exemption pursuant to CEQA Regulation Section 15273(a)(1) because the fair market value Rent established by the City Council will be used to meet operating expenses within the Tidelands. Lastly, the City Council finds the setting of Rent for dinghy rack space located upon Tidelands is not a project under CEQA Regulation Section 15061(b)(3) because it has no potential for causing a significant effect on the environment. Section 4: 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 Council hereby declares that it would have passed this resolution, and each section, subsection, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses and phrases be declared unconstitutional. Section 5: 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 day of 12015. ATTEST: Leilani I. Brown, City Clerk Edward D. Selich, Mayor -2- 3-12 ATTACHMENT D Attachment: Rasmuson Appraisal: Balboa Yacht Basin Dinghy Rack Market Rent Analysis -3- 3-13 Rasmuson Appraisal Services 7809 Inception Way San Diego, California 92108 Ph. (858) 672 -1796 May 5, 2014 Ms. Shannon Levin Public Works Department City of Newport Beach 829 Harbor Island Drive Newport Beach, California 92660 Gary L. Rasmuson, MAI, SRA Wendy A. Rasmuson, MBA RE: Balboa Yacht Basin Dinghy Rack Market Rent Analysis, Newport Beach, California Dear Ms. Levin: File No. 14591 At your request, I have prepared a market rent estimate for the dinghy rack located at the Balboa Yacht Basin. This report sets forth our opinion of market rent along with a summary of supporting data and reasoning which form the basis of our opinion. Scope of the analysis The scope of this analysis included the following: • physical viewing of the subject dingy rack, neighborhood, and submarket; • research comparable rent data from competing marinas; • present the results in this report Purpose of the appraisal The purpose of the appraisal is to estimate monthly market rent for an individual dinghy space. Identification of the intended use and users of appraisal The intended use of this market rent analysis is to assist my client in establishing rent rates for the dinghy racks at Balboa Yacht Basin. It was prepared for the exclusive use of the City of Newport Beach. It may not be used or relied upon by any other party. Any party who uses or relies upon any information in this report, without the preparer's written consent, does so at his own risk. Interest appraised The dingy rack does not appear to be permanently attached to the real estate and therefore is considered a fixture or personal property and no real property interest is being appraised in this report. Effective date of appraisal May 4, 2014 — Date of subject property visit and viewing 3 -14 Shannon Levin City of Newport Beach May 5, 2014 Page 2 Definition of terms Market Rent The term "market rent' or "fair market rent ", as used in this appraisal report, is defined as follows: The most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the lease agreement, including permitted uses, use restrictions, expense obligations, term, concessions, renewal and purchase options, and tenant improvements (Tls). Source: Appraisal Institute. Dictionary of Real Estate Appraisal, 5th Edition, (Chicago, 2010), p. 121 Subject Ownership The City of Newport Beach Subject Description The dinghy rack that is the subject of this market rent estimate is located near the southwest corner of the Balboa Yacht Basin, on the edge of the parking lot near the harbor. Balboa Yacht Basin is a marina owned and operated by the City of Newport Beach for public use. There are 172 slips within the marina. The city constructed the dinghy rack for exclusive use by the mooring permittees of Balboa Yacht Basin. Access to the off -shore moorings is only available via dinghies for most permittees. The spaces will be assigned through a lottery system. The dingy rack appears to be free - standing and is constructed of treated lumber with padded rails for each dinghy. The racks measures approximately 10.5 feet deep by 23 feet long and about 6 feet high. It is divided into four sections with two internal levels and a top rack. The bottom level is about 3 feet high and the upper level is about 2 feet high. It appears that this rack can accommodate 12 -15 dinghies. The rack is near the open side tie that is designated for public access to the vessel pumpout station. This location was selected for both the ease of moving the dinghy from the rack to the water, and the available parking spaces at that end of the marina. The rack appears to be of new construction and in good condition. Photos of the rack storage and a map showing the location of the rack follows Rasmuson Appraisal Services 3 -15 Shannon Levin City of Newport Beach May 5, 2014 Page 3 Map of Balboa Yacht Basin Source: Google Earth Photos 4 R _ Rasmuson Appraisal Services 3 -16 Shannon Levin City of Newport Beach May 5, 2014 Page 4 Market Rent Analysis I have researched marinas and yacht clubs located in the Newport Beach Harbor and nearby harbors to provide an indication of rents charged for dry rack dinghy storage. I was also provided with survey information for several marinas and yacht clubs by my client. A summary of this data follows. Dinghy Rack Rent Rate Survey No. Marina 1 Dana Point 2 Newport Dunes 3 Newport Harbor Yacht Club 4 Bahia Corinthian Yacht Club 5 Balboa Yacht Club 6 Lido Isle Yacht Club 7 American Legion Yacht Club Average Median Comments $25.00 Max. 6'x 10' flat bottom dinghy $25.00 Dinghy rack space $30.00 Dry rack Sabot storage only $21.57 Data provided by third party $20.25 Data provided by third party $12.50 Dry rack Sabot storage only- members only $35.00 Currently have a waiting list $24.19 $25.00 Based on this survey data, the range of rates is from $12.50 to $35.00 per slip per month. The lowest rate is from the Lido Isle Yacht Club and reflects more of a yacht club amenity rate than a market rate. I also considered rates in other marinas in Los Angeles, Marina Del Rey, San Diego and Ventura, but found insufficient data to make a comparison. Some yacht clubs do not charge for the dinghy storage. One charged $5.50 per month for members only and indicated this would not apply to a public rental. The Shelter Cove Marina in San Diego on San Diego Bay has dinghy dry rack storage at $12 per month. Slip rates in San Diego Bay are significantly lower than those found in Newport Harbor and therefore I would expect that dry rack storage rates would also be lower. I have concluded at a market rent rate for the dinghy dry rack storage space at $25.00 per space per month. CONCLUDED MARKET RENT RATE — DINGHY DRY RACK SPACE ($/SPACE/MONTH) $25.00 If you have any questions, please feel free to contact me. Respectfully submitted, RASMUSON APPRAISAL SERVICES Zry&L Ra uson, MAI, SRA Certified General Real Estate Appraiser- State of California OREA Appraiser I.D. No. 002571 Expires 2/4/2016 Rasmuson Appraisal Services 3 -17 Shannon Levin City of Newport Beach May 5, 2014 Page 5 CERTIFICATION OF APPRAISER I certify that, to the best of my knowledge and belief, • The statements of fact contained in this report are true and correct. • The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. • 1 have no present or prospective interest in the property that is the subject of this report, and no personal interest with respect to the parties involved. • I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. • My engagement in this assignment was not contingent upon developing or reporting predetermined results. • My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. • My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Practice of the Appraisal Institute and the Uniform Standards of Professional Appraisal Practice. • The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. • As of the date of this report, Gary L. Rasmuson, MAI SRA has completed the requirements of the continuing education program of the Appraisal Institute. • 1 have made a personal inspection of the property that is the subject of this report. • No one provided significant professional assistance to the person signing this report. • I have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three -year period immediately preceding acceptance of this assignment. son, MANS A 4affietreml Real Estate Appraiser State of California OREA Appraiser I.D. No. 002571 Expiration Date: 2/4/2012 Rasmuson Appraisal Services Date: May 5, 2014 MU