HomeMy WebLinkAbout20 - Newport Aquatic Center (NAC)aCITY COUNCIL AGENDA ITEM 20
TO: MAYOR AND CITY COUNCILMEMBERS
FROM: Kevin J. Murphy, City Manager
DATE: August 10, 1998
RE: NEWPORT AQUATIC CENTER (NAC)
On July 13th the City Council considered the attached request by the Newport Aquatic
Center for a fee waiver. The original request and the staff report from the June 22nd
meeting are attached for information. This item was continued for thirty days to meet
with homeowners regarding their concerns related to the impacts associated with the NAC.
On July 29, 1998 a meeting took place between City representatives (Mayor Edwards,
Councilmember Noyes, the City Manager, Senior Recreation Manager and Recreation
Manager), representatives of Dover Shores (Ed Benson, Burt Ohlig, Larry Root, and Anders
Folkedal), and the Newport Aquatic Center (Billy Whitford, David Grant, Skip McKibben and
John Van Cleave). Ed Benson, representing Dover Shores, distributed the attached memo
on the issues of concern to neighbors. There was consensus that progress had been
made on issues identified on the attachment as #1 and #3. These issues ( #1 and #3) are
related to traffic and parking during the periodic special event and a good contact point for
regular and after -hours events for homeowners to reach NAC staff. Issue #2 involves
early morning (6:00 — 7:30 a.m.) noise concerns, which appear to primarily involve non -
NAC participants. NAC representatives and City staff pledged continued efforts to try and
work on early morning noise concerns.
Another issue which arose during the discussion of the parties was whether the City could
take further steps to restrict after -hour access to the leased premises controlled by the
NAC, as well as the North Star Beach area. The City's Municipal Code currently contains in
Section 11.08.030 (attached) a prohibition to nighttime use of any public bay, beach or
ocean beach between 10:00 p.m. and 6:00 a.m. The access to the NAC and North Star
Beach is off a common driveway, which is gated and signed to reflect the restrictions on
hours. The City staff will work with NAC to assure gate closure and request additional
periodic police patrol to enforce the beach closure.
Receive the updated staff report on discussions with the NAC and -Dover Shores
representatives; reconsider the request of the NAC for a waiver of their building permit
fees, building excise tax, and if appropriate direct staff to request an appeal of the NAC for
their Fair Share Fee requirement in accordance with the Newport Beach Municipal Code.
DOVER SHORES COMMUNITY RELATIONSHIP WITH THE AQUATIC CENTER
IN VW OF THE AQUATIC CENTERS LOCATION IN RELATION TO OUR COMMUNITY" OF
THE 63 CONDITIONS THAT WERE MADE OF TIM CITY'S APPROVAL OF THE AQUATIC
CENTER DEVELOPMENT" THERE ARE 3 THAT ARE OF MAJOR CONCERNS AND IMPORTANCE
TO THE DOVER SHORES COMMUNITY.
L. TRAFFIC CONGESTION AND CONTROL WITHIN OUR COMMUNITY AS A RESULT OF THE
AQUATIC CENTERS OPERATIONSm ESPECIALLY DURING THE VAJOR SVENNI'S CONDUCTED
BY THE CENTER.
29 EARLY MORNING NOISE CONTROL AND ELIMINATION DURING PART OF NORMAL
SLEEPING HOURS 6,00 TO 7130 A. M. IN ADJACENT COMMUNITY AREA WBILE
ROWING PREPARATION. AND ROWING OCCURS.
3, CONTACT POINT ( NAME AND PHONE NO. ) TO REPORT IMMEDIATELY ANY UNUSHAL''..
OR OUT OF ORDER ACTIVITIES.
WE FEEL ADHERING TO THESE REQUESTS WHICH ARE PART OF THE ORIGINAL CONDITIONS
OF DEVELOPMENT ARE NOT OVERLY DEMANDING•CONSIDERING THE FACT THAT OUR COMMUNITY
WAS HERE NDNG BEFORE THE AQUATIC CENTER WAS DEVELOPED.
DOVER SHORES
COMMUNITY ASSOCIATION
NEWPORT BEACH, CALIF. 92660
ATTENTION...
CITY OF NEWPORT BEACH
DOVER SHORES COMMUNITY ASSOCIATION
E. P. BENSONt PRESIDENT
f�PP5 �ovle-�
XXVIN MURPHY, CITY MANAGER
NEWPORT BEACH, CALIFORNIA
11.04.020
F. Play basketball on any outdoor public basket-
ball court within three hundred (300) feet of any
residentially zoned parcel, between sunset or seven
p.m., whichever is later, and eight am.;
G. Use of rollerblades, rollerskates or skate-
boards on any public tennis court (Ord. 96 -34 § 1,
1996: Ord. 96 -14 § 1, 1996: Ord. 95-44 § 1, 1995:
Ord. 92-41 § 2, 1992: Ord. 1510 § 1, 1973: Ord.
967 (part), 1961: 1949 Code § 4204.2)
11.04.030 Use of Parks at Night.
Parks shall be closed between the hours of eleven
p.m. and six am. of the following day. No person
shall remain in any park during the prohibited hours.
Parks may remain open at the discretion of the
Community Services Director. (Ord. 93 -26 § 3
(part), 1993: Ord. 92 -53 § 1, 1992)
(No -pen Beach rr-K 350
Chapter 11.08
CONDUCT ON BEACHES AND PIERS•
Sections:
11.08.020
Use of Concealing Umbrellas
Prohibited.
11.08.030
Use of Beaches at Night.
11.08.040
Sleeping in Vehicles or on
Beaches and Piers.
11.08.050
Disposal of Noncombustible
Refuse.
11.08.055
Dangerous Articles lass
Containers on Beach.
11.08.070
Removal of Beach Sand.
• Removal of infuse reVimd — See Seaion 6.04.180.
11.08.020 Use of Concealing Umbrellas
Prohibited.
No person shall erect umbrellas upon that part of
the beach or shore of the Pacific Ocean within the
City which lies southerly of the southerly line of
Ocean Avenue and Ocean Front or public streets of
the City, if the same shall have side wall attached
thereto; and shall at all times while the same are
erected, be fully exposed from all sides to the public
view. (1949 Code § 4200a)
11.08.030 Use of Beaches at Night.
A. Prohibited Hours. Except as provided in
subsection (B), no person shall be allowed or per-
mitted on any public bay, beach nor any ocean front
beach between the hours of ten p.m. and six am. of
the following day;
B. Temporary Modification The City Manager
may, when necessary to protect the safety of persons
or property, temporarily modify the beach and pier
closure hours established in this Code. In no event
shall the modification of hours continue for a period
of more than two weeks. The modification shall not
be effective until notice of the new hour, and the
effective dazes if filed with the City Clerk. (Ord.
93 -28 § 1 (pan), 1993: Ord. 93 -6 § 1, 1993: Ord.
CITY COUNCIL AGENDA ITEM 9
TO: MAYOR AND CITY COUNCILMEMBERS
FROM: Kevin J. Murphy, City Manager (��
DATE: July 13, 1998 I
RE: REQUEST FOR FEE WAIVERS FOR NEWPORT AQUATIC
CENTER (NAC) BUILDING ADDITION
In early June my office received correspondence (attached) from David Grant, President
of the Newport Aquatic Center, requesting that the City waive all fees associated with
the construction of an addition to their facility alongside the Upper Bay in Dover Shores.
You'll note in the request there is a representation that the City waived all building
permit fees when the facility was originally constructed and they are requesting the
same sort of accommodation at this time. On July 2nd a follow -up request was
received from Jonathan Van Cleave, again on behalf of the NAC. This correspondence
provided additional background on the nature and reasoning for the request and is also
attached.
Upon receipt of the initial request, I requested Community Services and Building staff
members to determine if there were any records indicating the basis upon which the
City waived the fees or if the City Council had approved such a waiver. No such records
could be found and a review of the NAC files in the City Clerk's Office reveal no such fee
waiver approval by the City Council and no reference to a fee waiver in any of the
current agreements between the City and the NAC.
The only reference to the building permit fee waiver is found on the permit itself with a
statement that... "All fees waived by the City Council" (see attached). Based on a
discussion with the City Attorney, he recalls the waiver based on the City's co-
application with the NAC for permits through the various resource agencies, including
the Coastal Commission. Records in the City's files confirm that the City was a co-
applicant with NAC at the Coastal Commission. A copy of our current lease addendum
and lease is also attached for reference.
Upon receipt of the July 2nd Van Cleave letter, staff was able to locate a Study Session
report from January 26, 1987 (attached) indicating that unless the City Council
objected, staff would waive Building Permit and Fair Share fees. It appears that there
was no City Council objection.
In this instance, the fees which would normally be charged for the construction of their
addition include City Building Code plan check, inspection and clean -up deposit fees
($6,986.51), Fair Share Traffic Fees ($35,601.00), Building Excise Tax fees ($2,096.22),
and Orange County Sanitation District fees ($4,711.50). In order for the NAC to
continue to move forward on their construction project, all City Building permit fees
were paid last week, prior to formal review of the City Council. The Newport Beach
Municipal Code makes no provision for the waiver of Building permit fees for non-
profits, or other joint or co- sponsored projects of the City. The plan check and building
permit fees are collected to offset the costs of plan review and inspection services
provided by City or contract employees.
Fair Share Fees are covered in Municipal Code Section 15.38.085 and there are
provisions for fee adjustments, waivers and exemptions in the Municipal Code. The
only category of exemption is for affordable housing projects. Exemptions generally
apply where there is no net new square footage or where the only change is from one
land use category to another where the traffic generation rates are identical. A fee
adjustment procedure is established in the Municipal Code, and it appears that the NAC
may qualify upon application and processing through the Public Works Department and
the approval of my office. Based on the cap of the total number of users of the site in
the use permit, it is not likely that additional trips will be generated from the additional
square footage. Upon City Council concurrence, we will ask that the NAC file an
application for adjustment to the Fair Share Fees.
SUMMARY AND CONCLUSION
The NAC is a worthy and important member of the community and has provided a key
access point to the Upper Bay for world and national class athletes, high school
athletes, amateur, and members of the community. The City's Community Services
Department uses the NAC as a resource to provide kayaking classes on a fee - for -class
basis and has done so since its construction. In the past, the City waived the Building
Permit fees for this organization and may wish to do so again for their expansion
program. The Municipal Code provides no means for the City staff to approve such a
waiver and such action must be approved and authorized by the City Council. Fair
Share Fees may be handled administratively in accordance with provisions of the
Municipal Code. Sanitation District Fees are outside the ability of the City to waive.
RECOMMENDATION
The City Council approve the request of the NAC for waiver of their building permit
fees, building excise tax, and direct staff to request an appeal of the NAC for their Fair
Share Fee requirement in accordance with the Newport Beach Municipal Code.
I
June 2, 1998
newport aquatic center
Mr. Kevin Murphy
City Manager
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA 92659 -1768
Re: Newport Aquatic Center final build -out.
Dear Mr. Murphy:
I am writing to you as the spokesperson for the Newport Aquatic Center (NAC), a non - profit,
youth oriented, public facility that has existed in the upper bay for over a decade.
Because this is a public facility, utilized primarily by the citizens of Newport Beach and because
it has heavy usage by the City of Newport Beach Recreation Department, for which no fee is
charged to the city, we need some assistance from you.
When the Center was developed it was built entirely by local private donations, and the city
waived the CIP Building Permit fees. The NAC has been so enormously successful that we have
raised the funds to complete the build -out that was approved 10 years ago.
As you no doubt will understand, raising over $400,000 to complete the project was no easy task.
We have done that, but every dollar is targeted for the building based upon our discussions with
the city staff, and the fact that building fees were waived for the initial phase. We very much
need the fees to be waived. We are a non - profit entity serving the community. In fact, the city
was a co- applicant for the building approvals obtained from the 18 various regulatory groups.
Additionally, the county and school district had previously agreed to waive any applicable fees.
As I will be out of town for a couple of weeks, I have requested that Mr. Bruce Ibbetson, an
Olympian, a founder of the center and currently on the Board of Directors discuss this issue
further with you. He will contact you this week or early next week, though please don't hesitate
to call him at (949) 442 -8044. I appreciate your consideration on behalf of the Newport Aq,!atic
Center.
Yours Very T
David A. Grant
President, NAC
President Emeritus
Orange Coast College
One Whitediffs Drive Newport Beach, CA 92660 714/646 -7725
LAW OFFICES OF
JONATHAN E. VAN CLEAVE
TELEPHONE SUITE 240 FAX
17141 660 -9090 S CORPORATE PARK (7141 976 -1614
IRVINE. CALIFORNIA 92606
July 2, 1998
Mr. Kevin Murphy
City Manager
City of Newport Beach
3300 Newport Blvd.
Newport Beach, Ca. 92663
RE: Newport Aquatic Center
Dear Mr. Murphy:
The Board of Directors of the
way of board members Chip McKibben
Director Bill Whitford, have req
documents and information relating
development fees for the current
NAC.
Newport Aquatic Center (NAC), by
and Bruce Ibbetson, and the NAC
uested that I provide you with
to the proposed city permit and
construction activities at the
By way of introduction, I was fortunate to have been selected
to serve as General Counsel, Secretary and Treasurer for the NAC at
it's inception and served in those capacities from the
incorporation in 1981 until July, 1987. During that time, I was
responsible for, among other things, assisting in the preparation
and execution of numerous documents pertaining to: 1) the Joint
Powers Agreement as between the City and the County regarding the
use of North Star Beach; and, 2) the Ground Lease between the City
and the NAC. I was also involved in the preparation of information
presented from time to time to the Newport Beach City Council
regarding construction plans.
Enclosed for your use are copies the following documents which
I believe will be sufficient to document the fact that the City
Council took sufficient action, actually non - action, in early 1987
which waived the fees associated with the construction of the NAC
project improvements, not only as to phase I construction which
took place in late 1987, but as to the entire project, the balance
of which is being completed now:
The Grant Deed from the County of Orange to the City of
Newport Beach, dated March 10, 1978, as to a one -half
interest in North Star Beach.
Mr. Kevin Murphy
City Manager
City of Newport Beach
July 2, 1998
page 2
2. A Memorandum from the City Attorney, Bob Burnham, to the
City Council, dated January 20, 1987, regarding, among
other related items, the construction of the NAC and fees
associated therewith.
3. The Joint Powers Agreement between the City of Newport
Beach and the County of Orange, dated March 24, 1987
wherein the County granted to the City the authority over
the use and administration of North Star Beach.
4. The Ground Lease between the City of Newport Beach and the
NAC dated March 24, 1987.
The Grant Deed from the County to the City documents that
North Star Beach is owned jointly by the City and the County and
thus the NAC has no ownership interest in the real property on
which the NAC facility is built.
The Joint Powers Agreement documents that the County agreed to
transfer to the City the power to lease or otherwise arrange for
the use of North Star Beach, thus making the City the sole entity
possessing the ability to enter into a lease with the NAC for such
use as is identified in the Ground Lease.
Recital E on page one of the Joint Powers Agreement contains
the "mission statement" of the City, County and the NAC and reads:
"E. The construction of an Aquatic Center on North Star. Beach
would constitute a significant benefit to both CITY and COUNTY in
that the facility would be available for use by members of the
general public to serve the needs of the large number of persons
who own human - powered watercraft and provide additional facilities
to serve the general public for activities such as public fishing
access."
Paragraph 9 on page 4 of the Joint Powers Agreement states
that:
" 9. All land and improvements shall remain the joint property
of CITY and COUNTY, and shall be maintained and operated for public
park and recreation purposes consistent with the terms of the grant
Mr. Kevin Murphy
City Manager
City of Newport Beach
July 2, 1998
Page 3
deed by which County conveyed a one -half interest In the property
to CITY."
These paragraphs make it clear that the County of Orange, the
City of Newport Beach, and the NAC are in "partnership" with one
another for the mutual benefit of the citizens of the City and the
County regarding the NAC facility. Moreover, it is also clear that
the City and the County not only own the Property at North Star
Beach, but also the improvements ( ie; the driveway, the parking
lot, the buildings and the fixtures inside the buildings).
Accordingly, if the City were to levy development fees or taxes on
the improvements, it would amount to a levy on itself, resulting
in, among other things, a reduction in the funds available to
construct and operate the facilities which the City and the County
own. This reasoning , discussed and considered by the City Council
in January, 1987, is the main reason that all such fees were waived
by the City Council for the entire project, regardless of when the
actual construction took place.
The Memorandum from Bob Burnham in January, 1987 discusses
some of the background of the NAC project. It also specifically
raises, and discusses, the issue of a waiver of the normal
developer fees based in part on the above logic. The Waiver of Fees
section, found on page 4, section 3, reads as follows:
3. WAIVER OF FEES:
Aquatic Center representatives have asked for a waiver of
fees typically charged to developers. The project is operated by a
non - profit corporation and is not subject to property development
tax. There is no specific provision for waiver of fair share or
plan check fees, but a waiver could be justified on the grounds
that the City property is involved. If the Council does not direct
Staff to collect fees for this project, plans will be processed
with fees waived."
I recall that no such fees were requested by the City, or paid
for by the NAC, at the time that the first phase of the project was
constructed in 1987. I also recall specifically that the
understanding was that the waive}' of fees, by way of the non - action
by the Council in 1987, applied to the "Project ", not just to one
or more of the construction phases. It was well known that the
project would be constructed in at least 3 phases, over time, when
the NAC had been successful in it's fund raising. Accordingly, the
City has good grounds to decline to charge the NAC fees related to
the construction of the current phase of construction because the
City Council has already determined not to charge such fees for the
Mr. Kevin Murphy
City Manager
City of Newport Beach
July 2, 1998
page 4
NAC "Project ", which includes the current construction.
The NAC has been, and will continue to be, a very popular and
valuable asset to the County, the City and to all those who have
had the pleasure of using the NAC. The current construction will
complete the master plan approved by the City in 1987, and launch
a new era for the NAC in that it's full potential will now be
realized.
I trust that the City will review this matter in light of the
information contained in this letter, and affirm it's 1987 decision
regarding the waiver of the project fees in question.
Thank you for the time and effort you have expended in
exploring these issues.
JEVC /jvc
cc: Chip McKibben
Bruce Ibbetson
Bill Whitford
S,
Cleave
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newp®rt aquatic center
May 20, 1998
Planning Department
City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA 92659
RE: Newport Aquatic Center
Boat House Expansion
Use Permit No. 3104
Gentlemen,
The Newport Aquatic Center agrees to comply with the conditions of approval of Use
Permit No. 3104 dated September 6, 1984.
The conditions of approval, items 1 through 63, are recognized, including condition
number 20, limiting hours of operation, and condition number 61, limiting daily trips.
Sincer ly, i
David Grant
Presid nt
(inn Rn,,I, (A Q9rrr1 11 71 d /rd(�_777F
THE CITY OF NEWPORT BEACH AND NEWPORT AQUATIC CENTER, INC.
ADDENDUM TO GROUND LEASE
WHEREAS, on March 24, 1987 a Ground Lease was entered into by and
between the CITY OF NEWPORT BEACH, ( "Lessor") and NEWPORT AQUATIC
CENTER, INC., a non profit public benefit corporation, ( "Lessee ") for a term of twenty -five
(25) years; and
WHEREAS, Lessor and Lessee desire to extend the original Ground Lease, and
WHEREAS, Lessor and Lessee agree that all other terms and conditions are to
remain unchanged:
IT IS HEREBY agreed by and between the City of Newport Beach, Lessor, and
Newport Aquatic Center, Inc., a non profit public benefit corporation, Lessee, that the term
of the Ground Lease shall be twenty -five (25) years from the first day of the first full
calendar month after each of the following conditions have been satisfied:
A. The Lease has been executed by Lessor and Lessee;
B. Lessee has submitted construction drawings for the construction of the
remainder of the floor area permitted by Use Permit number 3104 and
Coastal Development Permit 5 -84 -786;
C. Lessee has applied for a building permit for the construction of the
remaining floor area permitted by Use Permit number 3104 and Coastal
Development Permit 5 -84 -786;
D. Lessee has complied with all conditions to the approval of Use Permit
number 3104 and Coastal Development Permit number 5 -84 -786, including,
but not limited to, permits from other public agencies, and the soils
hydrology and related studies;
E. Lessee has submitted an agreement, signed by a general contractor
licensed as such by the State of California, committing the contractor to
complete the remaining floor area of the project;
F. Lessor has received a bond guaranteeing performance of the contract
required by the provisions of subparagraph E. The bond shall guarantee
performance of the contract in a timely and workmanlike manner in the
event contractor fails or refuses to perform in accordance with the contract;
G. Lessee must satisfy each of the conditions precedent to the
commencement of the term of the lease within twelve (12) months of the
date of the execution of this Addendum.
IN WITNESS WHEREOF, the Parties hereto have executed this Addendum to the
Ground Lease.
Dated: 24 Of 011
Dated:
APPROVED AS TO FORM:
By: _ �b 0
Daniel K. Ohl,
Deputy City Attorney for the
City of Newport Beach
AT-
0
LESSEE: NEWPORT AQUATIC CENTER, INC.
By: a >�
LESSOR: CITY OF NEWPORT BEACH
By:A
Debay,
� d
9ayorforthe
City of Newport Beach
LaVonne Harkless,
City Clerk for the
City of Newport Beach
F;1 caPdebbietag taquaticlnac25yr.doc
09 -15-97
Council Meeting: 04 -28 -97
Agenda No.
CITY OF NEWPORT BEACH
OFFICE OF THE CITY ATTORNEY
April 24, 1997
TO: Mayor and Members of the City Council
FROM: Daniel K. Ohl - Deputy City Attorney
RE: Newport Aquatic Center
Addendum to Ground Lease Extension
Supplemental Report
By way of background, the City of Newport Beach, in conjunction with Newport
Aquatic Center, applied for and received a permit from the California Coastal Commission
for the development of North Star Beach in the Dover Shores residential area. The
permit allowed for construction of a 18,228 square foot aquatic training and recreational
facility which occupies approximately one -fourth of the 12 acre beach. A deed restriction
limits development to this degree and thus the property does not produce income. The
facility is situated such that the portion of the beach left undeveloped is adjacent to the
public road. The center is quasi - public in nature in that the primary users are various boat
clubs, youth day camps, sports camps, civic organizations and elite athletes through
memberships. The Coastal Commission Permit notes that recreational boating use of
coastal waters shall be encouraged. The boat launching facilities, public restrooms and
public parking must be made available to the general public during the hours of operation
of the facility.
In connection with the California Coastal Commission Permit, the City has issued a
Conditional Use Permit with 63 conditions in conjunction with a 25 -year Ground Lease
executed in March of 1987. The Lease is attached as an exhibit. The City added the
various conditions largely as a result of the concerns expressed by the Dover Shores
Residential Community since the only overland access to the facility is through their
community. The most notable condition includes a reservation of 20% of the maximal
allowable daily use of 250 persons for general public walk -in use of the boat launching
facility. The center is to provide a minimum of 63 parking spaces, and allow limited
outdoor boat storage to seasonal storage of outrigger canoes. Further, the center is
required to have a weekly clean -up program on the site. The hours of operation are
limited to 6:00 a.m. to 10:00 p.m. daily, with no outdoor programs offered after 7:00 p.m.
Only advanced training activities are permitted between 6:00 and 7:00 a.m.
The Conditional Use Permit restrictions were also embodied into a facility
management plan approved by the City Council on January 25, 1988. The document
reflects the Conditional Use Permit restrictions, Coastal Commission requirements, and
input of both the Aquatic Center Board and Dover Shores Community Association.
Since the center officially opened in January of 1988, it has become a beacon for
water enthusiasts. Several world class athletes routinely train there, a large number of
recreational activities and programs are offered to the public, and consistent with its
charge from the California Coastal Commission, increase use of coastal waters has not
only been encouraged, but achieved. Current management at the Aquatic Center has
done an excellent job of communicating with local homeowners concerning activities at
the center and have been able to iron out any issues which have arisen.
The proposed and previously approved build out, which is mainly to increase
storage, will cause the plans and specifications to be re- examined by the Building
Department to make sure all applicable issues are addressed. The maximum daily use
restrictions will not change, while parking will be increased.
The Harbors, Beaches, and Parks Committee considered and approved the
addendum to the Ground Lease at its meeting of April 24, 1997.
Recommendation:
It is recommended that the addendum to the Ground Lease, granting the
requested extension, be approved.
DANIEL K. OHL
Deputy City Attorney
DKO:kh
F: 1catldebbielccmemolnac- perm.doc
THE CITY OF NEWPORT BEACH
AND
NEWPORT AQUATIC CENTER, INC.
GROUND LEAS2
THIS GROUND LEASE, entered into this a day of C
�
198 , by and between THE CITY OF NEWPORT BEACH, ( "Lessor" and
NEWPORT AQUATIC CENTER, INC., a Non - profit Public Benefit
Corporation, organized and existing under and by virtue of the
laws of the State of California. (referred to as "Lessee ") is made
with reference to the following facts, the materiality and
existence of which is stipulated and agreed by the parties:
A. Lessor is the owner, subject to a public trust, of
approximately 12 acres of tidelands located in the City of
Newport Beach and commonly known as N_.th Star Beach.
B. In November, 1982, the qualified electors of the
City of Newport Beach approved a Measure which granted the City
Council the authority to lease property on North Star Beach for
the construction of facilities to promote sports involving human -
powered watercraft.
C. The property which is the subject of this lease
has been identified as that portion of North Star Beach best
suited for the construction of facilities to promote sports
involving human- powered watercraft.
D. On September 6,' 1984, the Planning Commission of
the City of Newport Beach approved Lessee's application for a use
permit (No. 3104, attached 'as ExhLuit "C ") authorizing the
construction of an 18,228 square foot structure that would
provide facilities for human- powered watercraft, and their
owners, including boat storage, and multi - purpose area and
meeting room, a weight training room, small offices for the
conduct and operation of facility, Docker rooms, and such other
facilities as may be incidental to sports involving human- powered
watercraft. In addition, permittee proposed to construct a
bulkhead along a portion of the beach frontage, build low lying
docks to serve only human- powered craft, landscape the property,
and provide appropriate public parking, restroom facilities, and
access to the beach.
E. On February 14, 19859 the California Coastal
Commission approved Lessee's application for a Coastal
Development Permit authorizing the construction of the Aquatic
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Center. (See Coastal Development Permit No. 5 -84 -786- Exhibit
"D. ")
F. The property is subject to restrictions,
including, but not limited to, limitations specified in Chapter
415, Statutes of 1975 the Grant Deed from the County of Orange to
the City of Newport Beach and (conveying an undivided one -half
interest in the property) and the limitations commonly imposed on
public tidelands. Lessor has determined that the proposed
Aquatic Center, and the uses to which it will be put, are
consistent with the limitations and restrictions imposed on the
property;
G. The residents of Newport Beach and the County of
Orange will derive substantial benefit from the construction of
the Aquatic Center in that:
1. Newport Harbor has ideal water c::.ditions for
the'training and development of world -class rowers, canoers, and
kayakers, but no facility currently exists to accommodate these
athletes and there is currently no organized public program for
these specific water sports outside collegiate programs.
2. Construction of the Aquatic Center will
provide a facility for world -class athletes, as well as encourage
and provide for public participation in human- powered aquatic
sports at all levels of ability;
3. A portion of the Aquatic Center will be
available for use by members of the general public on a daily
basis and also will be available for use by the City of Newport
Beach.
H. The County of Orange, pursuant to a joint powers
agreement, has given the City of Newport Beach the power to
execute this lease on its behalf.
NOW, THEREFORE, the parties hereto agree as follows:
1. LEASED PREMISES
Lessor hereby leases to Lessee, subject to the
terms of this Agreement, the 3.9 +/- acre parcel legally described
on Zxhibit "A," and depicted on the -zp attached as Exhibit "B"
(the "property ").
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2. TERM
The term of this Lease shall be twenty -five (25)
years, unless sooner terminated as provided herein. The term of
the lease shall commence on the first day of the first full
calendar month after each of the following conditions has been
satisfied:
A. The Lease has been executed by Lessor and
Lessee;
B. Lessee. has applied for a building permit for
the construction of at least 35% of the floor area permitted by
Use Permit No. 3104 and for construction of any and all
improvements or facilities relating to the construction of phase
I (as defined in Paragraph S.A. and required as conditions to Use
Permit No. 3104 and conditions 2 -6 of Coastal Development Permit
5 -84 -786;
C. Lessee has complied with all conditions to
the approval of Use Permit No. 3104 and Coastal Development
Permit No. 5 -84 -786, including, but not limited to, permits from
other public agencies, and the soils, hydrology and related
studies;
D. Lessee has submitted an Agreement, signed by
a general contractor licensed as such by the State of California,
committing the contractor to complete at least Phase I of the
project on or before March 1, 1988.
E. Lessor ha's received a bond guaranteeing
performance of the contract required by the provisions of
subparagraph D. The bond guaranteeing performance of the
contract in a timely and workmanlike manner in the event
contractor fails or refuses to perform in accordance with the
contract.
Lessee must satisfy each of the conditions
precedent to the commencement of the term of the lease within
twelve months of the date of execution.
3. USE RESTRICTIONS /CONDITIONS
This Lease is subject to all of the conditions,
covenants, restri.,�ions and limi.ations of the following:
A. City of Newport Beach Use Permit No. 3104;
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B. Coastal Commission Development Permit No. 5-
84 -786;
C. The Grant Deed from the County of Orange
conveying to the City of Newport Beach an undivided one -half
interest in the property and recorded March 13, 1978 in Book
12594, Page 990, Official Records of the County of Orange.
D.- The provisions of any and all Statutes of the
California Legislature granting any portion of the property to
the City of Newport Beach or County of Orange.
E. The Joint Powers Agreement between the City
of Newport Beach and County of Orange (attached as Exhibit "E. ")
F. Lessee shall permit, and provide for, public
access for activities permitted under the Tideland Grants,
including fishing, to the extent those activities do not
interfere with the activities and programs conducted by Lessee.
4. CONSIDERATION
The consideration for this Agreement shall be the
construction of an aquatic center by Lessee, at no cost to
Lessor, the continued maintenance and operation of this facility
for the term of the Lease at no cost to Lessor, the commitment of
Lessee to utilize the facility as an aquatic center for the
advancement of marine - oriented athletic and recreational programs
and activities, and the right of Lessor to utilize the facility.
5. CONSTRUCTION BY LESSEE
A. Project:
Lessee shall have the right, at Lessee's sole
cost and expense, to construct a facility consisting of no more
than 18,228 square feet, inclusive of boat storage areas, weight
training rooms, men's and women's locker rooms, multi - purpose
assembly room, facility and public restrooms, and other uses, all
as shown on the plans and specifications submitted by Lessee to
the City of Newport Beach and California Coastal Commission in
conjunction with the approval of Use Permit No. 3104 and Coastal
Development Permit No. 5 -84 -786. Lessee shall construct, at
Lessee's sole cost and expense, at least 83 parking spaces, an
access road, and other improvements as are shown on the plans for
Phase I attached to this lease as Exhibit "F." Lessee may also
construct, at Lessee's sole cost and expense, a staging area,
dock and bulkhead, to the extent permitted by Use Permit No.
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31049 subject to whatever restrictions may be imposed by any
agency having jurisdiction over such construction.
B. Phasing /Phase I:
The project may be constructed in no more
than three phases. Phase I shall consist of 8,107 square feet of
building area, 64 parking spaces, staging area, ramp, dock and
accesss road all as described in, shown on, the plans and
specifications attached as Exhibit "F."
Construction of subsequent phases shall not
commence until Lessor has, with respect to each phase, complied
with the provisions of subparagraphs 2.C. through 2.E.
C. Construction Schedule:
Construction of phase I shall commence within
ninety (90) days from the effective date of the lease and shall
be diligently pursued to completion in accordance with the
schedule submitted by lessee or lessee's contractor, and approved
by the Building Director of the City of Newport Beach. The time
for completion of any phase of construction may be extended in
the event of strikes, acts of God, or other events beyond the
control of lessee, but shall not be extended due to financial
problems. Failure to timely conmence construction, or failure to
diligently pursue completion of any phase shall be considered a
material breach.
D. Permits and Approvals:
Lessee shall be required to obtain, prior to
commencing any phase of Zons!truction, all permits, licenses or
approvals that may be required in connection with that particular
phase, including, but not limited to, approvals and Permits from
the following agencies:
(1) The City of Newport Beach;
(2) The County of Orange;
(3) The California Department of Fish do
Game;
(4) '!'he California Coastal Commission;
(5) The California Regional Water Quality
Control Boards;
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(6) The Army Corps of Engineers;
(7) The United States Department of Fish do
Wildlife;
(8) The United States Bureau of Sports
Fisheries.
E. Completion Bond /Letter of Credit:
In the event the contract performance bond
provided pursuant to the provisions of paragraph 2.E. of this
lease becomes invalid, or unenforceable, for any reason, Lessee
shall provide Lessor with a substitute letter of credit or
completion bond within five (5) days from the date on which
Lessee becomes aware of the invalidity or unenforceability or the
bond or letter of credit or, .written notice from Lessor,
whichever first occurs. Any substitute bond or letter of credit
must comply with. the standards specified in paragraph 2.E. of
this lease.
F. Prior Written Approval:
No structure or improvement of any kind shall
be erected or maintained on the property unless and until plans,
specifications, and proposed location of the structure or
improvement have been approved, in writing, by Lessor.
G. Notice of Non - Responsibility:
Lessor shall have the right, at any time, to
post and maintain on the premises, ar-' record, as required by
law, any notice or notices of non - responsibility provided for the
Mechanics' Lien laws of the State of California.
H. Licensed Contractors:
All work required in the construction of any
phase of the Aquatic Center, including site preparation, work,
landscaping, utility installation and similar work shall be
performed only by competent contractors duly licensed as such
under the laws of the State of California and pursuant to written
contract between the contractor and Lessee. Unless otherwise
specified by the Buildino Director and Public Works Director of
the City of Newport Beach, each contract with a general
contractor shall provide that the final payment under the
contract shall be in an amount equalling at least 10% of the full
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:
amount payable and shall not be paid to contractor until the
following, whichever last occurs:
(1) The expiration of 35 days from the
notice of recording by Lessee of a notice of completion of the
building, with Lessee agreeing to record the notice promptly
within the time specified by law; or
(2) The settlement and discharge of all
liens of record claimed by persons who supplied other labor or
materials for the construction of the project.
6. CONSTRUCTION /ALTERATION BY LESSEE
(1) Lessor's Consent:
No structures, improvements, or facilities
other than as provide' in phase I, shall be constructed or
altered by Lessee without the prior written consent of the
Building Director of the City of Newport Beach. Any conditions
relating to the manner, method, design and construction of the
structures, improvements or facilities imposed by Lessor shall be
considered conditions of this Agreement as though originally
stated herein. In the event that any construction or alteration
of facilities, structures or improvements requires any
discretionary approval of any Board or Commission of the City of
Newport Beach, any conditions Imposed by such Board or Commission
relating to the manner, method, design and construction of the
structures, improvements or facilities shall also be conditions
of this Lease.
(2) Strict Compliance:
All improvements constructed by Lessee on the
property shall be constructed`in strict compliance with the plans
and specifications approved by the Building Director of the City
of Newport Beach.
(3) Mechanics Liens or Stop Notices:
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Lessee
shall, at all
times, indemnify and
hold Lessor
harmless from
any and all
claims for labor or
materials
in connection
with the
construction, repair,
alteration,
or installation
of the structures,
improvements,
equipment or facilities on
the property,
and from the c - -ts of
defending against such claims,
including
reasonable attorney's
fees. In
the event any
lien or stop
notice is imposed or
recorded on
the property as
a result of the
construction, repair,
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alteration of the facility, installation of any equipment, Lessee
shall, within thirty (30) days from the filing of the lien or
stop notice:
i. Record a valid release of lien or stop
notice;
ii. Deposit sufficient cash with Lessor to
cover the amount of the claim or lien or
stop notice in question and authorize
payment to the extent of said deposit to
any person or entity that obtains any
judgme.nt with respect to said claim or
lien or stop notice; or
iii. Procure and record a Bond in accordance
with the provisions of Section 3143 CCP,
which frees the property from the claim
of lien or stop notice and from any
action brought f,) foreclose the lien or
stop notice.
Lessee's failure to comply with the
provisions of this paragraph, shall be considered to be a
material breach, and this Lease shall be subject to immediate
termination, pursuant to the provisions of Section 23 of this
Lease.
OWNERSHIP OF IMPROVEMENTS:
All buildings, improvements and facilities, exclu-
sive of trade fixtures, constructed or placed on the property by
Lessee must, upon completion of construction or installation, be
free and clear of all liens, claims or liability for labor or
material, and shall become property of Lessor and the County of
Orange at the expiration of this Lease, or earlier termination
thereof. Lessor retains the right to require Lessee, at Lessee's
cost, to remove all improvements, placed on the property by
Lessee, at the expiration or termination of this Lease subject to
the provisions of paragraph 13 of this Lease.
8. UTII:ITIES
Lessee shall be responsible for and pay, prior to
the delinquency date, all charges for utilities supplied to the
property and structures or improvements thereon.
9. MAINTENANCE OBLIGATIONS OF LESSEE
Lessee agrees to maintain the
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property and all
improvements constructed thereon in good order and repair, and to
keep said premises in a neat, clean, orderly, safe, and sanitary
condition. This includes, but is not limited to, the prevention
of accumulation of any refuse or waste materials which might
constitute a fire hazard or a public or private nuisance.
Failure of Lessee to p:operly maintain and repair the property
and improvements shall constitute a material breach of the terms
of this Lease.
10. DAMAGE TO OR DESTRUCTION OF IMPROVEMENTS
In the event of damage to or destruction' of
Lessee's buildings, facilities, or improvements located on the
property or in the event buildings, facilities, or improvements
located on the property are declared unsafe or unfit for use or
occupancy by a public entity with the authority to make and
enforce such declaration, Lessee shall, within 120 days, commence
and deligently pursue "- completion the repair, replacement, or
reconstruction of the structure or improvements necessary to per-
mit full use and occupancy of the property for the purposes
required by this Lease. Repair, replacement, or reconstruction
of improvements within the property shall be accomplished in a
manner and according to plans approved by Lessor.
11. INSURANCE
Lessee shall maintain insurance, acceptable to
Lessor, in full force and effect throughout the term of this
Lease. The policy or policies of insurance maintained by Lessee
shall provide the following limits and coverages:
A. Liability Insurance:
Coverage
1,::.3,000 Bodily injury - property damage
combined single limit, which insurance shall be in force on the
first day of the term of this Lease.
B. Fire do Extended Coverage:
Not less than 90% of the cost of replacement
of all Insurable improvements within the property. Water damage
and debris cleanup 'provisions shall be included.
C. Insurance shall be in force the first day of
the term of this Lease.
D. Each insurance policy required by thi: Lease
shall contain the following three clauses:
1. "This insurance shall not be cancelled,
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limited in scope of coverage or nonrenewed until
after 30 days' written notice has been given to
the City Manager of the City of Newport Beach, c/o
City Attorney's Office, 3300 Newport Blvd.,
Newport Beach, California 92663"
2. "It is agreed that any insurance
maintained by the County of Orange or the City of
Newport Beach will apply in excess of, and not
contribute with, insurance provided by this
policy."
3. "The County of Orange and the City of
Newport Beach are added as additional insureds
with respect to all operations or activities of
the named insured at or from the property,"
provided, however; this' language shall not be
required as _a part of a -- insurance policy carried
by a contractor for fire and extended coverage
during construction of any phase.
E. Lessor shall retain the right, at any time,
to review the coverage, form, and amount of the insurance
required hereby. If, in the opinion of Lessor, the insurance
provisions in this Lease do not provide reasonably adequate
protection for Lessor, based upon loss experience and /or the kind
and extent of the risks which then exist, Lessor may require
Lessee to obtain additional insurance in such amount as
necessary.
F. Lessor shall notify Lessee, in writing, of
changes in the insurance requirements, and if Lessee does not
deposit copies of acceptable insurer.::, policies with Lessor,
incorporating such changes within thirty days of receipt of such
notice, Lessee shall be in default.
G. Any and all fire, extended coverage or other
insurance proceeds that become payable at any time during the
term of this lease because of damage to, or destruction of, any
building or improvement on the property, shall be paid to Lessee
and applied by Lessee towards cost of repairing and restoring the
damage or destroyed buildings or improvements as provided in
paragraph 10 of this lease.
H. The procuring of -uch required policy or
policies of insurance shall not be construed to limit Lessee's
liability hereunder nor to fulfill the indemnification provisions
and requirements of this Lease.
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12. ASSIGNING. SUBLETTING AND ENCUMBERING PROHIBITED
Lessee shall not mortgage, pledge, hypothecate,
encumber, transfer, sublease or assign its interest in this
lease, the property, or. any structure located on the property.
The reasons for the prohibitions specified in this paragraph
include, but are not necessarily limited to, the following:
A. The property consists of tidelands subject to
a public trust for specified purposes, and may not be transferred
or conveyed by LESSOR. The assignment or transfer of the Aquatic
Center's interest in this lease could violate the restriction or
transfer.
B. Lessor's power to enter into this Lease has
been granted by vote of the people and the Joint Powers
Agreement, (attached as Exhibit-"E"), and Lessor's power to lease
the property is limited to non- profit corporations involved in
promoting sports involving human - powered watercraft. Any
assignment of the Lease or encumbrance of the property could be
inconsistent with the authority conveyed by the electorate;
C. Lessor, given the purposes for which Lessee
was formed, and limitations on its power as specified in its
articles of incorporation, has greater assurance that Lessee will
comply with the terms and conditions of this Lease and related
approvals, than any other entity or organization.
13. EMINENT DOMAIN
In the event the whole or part of the property or
improvements is condemned by,a public entity in the lawful exer-
cise of the power of eminent domain, this Lease shall cease.as to
the part condemned upon the date possession of that part is taken
by the public entity.
If only a part is condemned and the taking of that
part does not substantially impair the capacity of the remainder
to be used for the purposes required in this Lease, Lessee shall
continue to be bound by the terms, covenants and conditions of
this Lease.
If only a part is condemned and the taking of that
part substantially impairs the capacity of the remainder to be
used for the purposes required in this Lease, Lessee shall have
the election of:
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(1) Terminating this Lease and being absolved of
obligations hereunder which have not accrued
at the date possession is taken by the public
entity; or
(2) Conti.nuing to occupy the remainder of the
property and remaining bounds by the terms,
covenants and conditions of this Lease.
Lessee shall give notice in writing of his
election hereunder, within 30 days of the date possession of the
part is taken by the public entity.
Lessor shall be entitled to receive and shall
receive all compensation for the condemnation of all or any por-
tion of the property by exercise of eminent domain.
Lessee shall be entitled to receive and shall
receive all compensation fvr. the condemnation of all or any
portion of the improvements constructed by Lessee on the leased
premises by the exercise of eminent domain.
14. FACILITY MANAGEMENT PLAN
The purpose of Lessor for entering into this Lease
is to promote the development of sports involving human- powered
watercraft, as well as facilities, programs and services related
thereto, all to satisfy the needs of the general public. In
furtherance of that purpose and to ensure that the operation of
the facility is in accordance with the intent of the Lessor,
Lessee shall submit a Facility Management Plan (FMP) to the
Director of Parks, Beaches do Recreation for the City of Newport
Beach for approval. The ;facilities shall be operated and
administered in accordance with the approved FMP. The FMP shall,
at a minimum, include the following:
A. The programs, services and activities to be
offered to members of the general public by the facility;
B.
to which any dues
C.
D.
able for use by
,programs, togethe
be available;
_The nature of any membership program pursuant
or fees are charged by Lessee;
The hours of operation of the facility;
The portions of the facility that are avail -
Lessor for the conduct of public recreation
r with the days and times that such space will
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E. Such other provisions as the Parks, Beaches do
Recreation Director considers necessary to ensure that the
facility is operated and maintained in accordance with the
purpose of this Agreement.
F. The right of City to modify the FMP in the
event of operation of the Aquatic Center is inconsistent with
this lease, Use Permit No. 3104, Coastal Development Permit No.
5 -84 -786 and other applicable law, rule or regulation.
Lessee shall sumbit the proposed FMP to Lessor
within 120 days after the effective date of this lease. Lessee
is prohibited from using, or permitting others to use, the
facility in any manner which is not authorized by, or
inconsistent with, the approved FMP. The failure of Lessee to
comply with the provisions of this paragraph after written notice
by Lessor shall be considered a material breach of this lease.
15. UNLAWFUL USE:
Lessee agrees that no improvement shall be
erected, constructed or operated on the property, nor any
business conducted on the property in violation of the terms of
this Lease, or of any regulation, order, law, statute, bylaw,
charter provision or ordinance of any Governmental agency having
jurisdiction. Lessee shall not construct, maintain, or allow any
sign upon the property, or improvements thereon, except as
approved by Lessor, and further, such sign must be in compliance
with the provisions of Chapter 20.02 of the Newport Beach
Municipal Code. Lessee shall not discriminate against any person
or class of persons by reason of sex, color, race, creed,
national origin or age. Lessee shall make all of its services,
programs ana facilities available to the public on fair and
reasonable terms.
16. INDE&TIFICATION
Lessee hereby hereby waives and claims and
recourse against Lessor, including the right of contribution, for
any loss or damage of or to persons or property in any way
related to this agreement and Lessee's activities hereunder,
except claims or liability arising from concurrent, active, or
sole negligence of Lessor, or its officers, agents, employees or
representatives. Neither party shall request a iury
apportionment.
Lessee agrees to indemnify and hold harmless and
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defend Lessor, its officers, agents, employees and
representatives, from and against any and all claims, demands,
losses, damages, costs, legal and investigation expenses, or
liability of any kind or nature which Lessor or its officers,
agents and employees may sustain or incur or which may be imposed
upon them or any of them for injury to or death of persons, or
damage to property as a result of, arising out of, or in any
manner related to this Lease, or with the occupancy and use of
the property or improvements thereon by Lessee, or any of
Lessee's activities at or from the property, or its officers,
agents, employees, subtenants, licensees, patrons or visitors,
except liability arising out of the concurrent, active, or sole
negligence or wilful misconduct of Lessor or its officers,
agents, or employees.
17. TAXES AND ASSESSMENTS
This Lease may create a possessory interest which
is subject to the paymrait of taxes levied on such interest. It
is understood and agreed that all taxes and assessments, includ-
ing but not limited to said possessory interest tax, which become
due and payable upon the property or improvements thereon or upon
fixtures, equipment or other property installed or constructed
thereon shall be the full responsibility of Lessee, and Lessee
shall cause said taxes and assessments to be paid promptly.
18. INSPECTION
Lessor or its authorized representative shall have
the right at all reasonable times to inspect the property to
determine if Lessee is in compliance withthe terms and conditions
of this Lease and Use Permit No. 3104.
19. SUCCESSORS -IN- INTEREST
Unless otherwise provided in this Lease, the
terms, covenants and conditions contained herein shall apply to
and bind the heirs, successors, executors, administrators and
assigns of all the parties hereto, 'all of whom shall be jointly
and severally liable hereunder.
20. CIRCUMSTANCES WHICH EXCUSE PERFORMANCE
If either party hereto shall be delayed or
prevented from the performance of any act required hereunder by
reason of acts of God, restrictive Governmental laws or regula-
tions, or other cause without fault and beyond the control of the
party obligated (financial inability excepted), performance of
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c.
such act shall be excused for the period of the delay and the
period for the performance of any such act shall be extended for
a period equivalent to the period of such delay.
21. PARTIAL INVALIDITY
If any term, covenant, condition or provision of
this Lease is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the provisions
hereof shall remain in full force and effect and shall, in no
way, be affected, impaired or invalidated thereby.
22. WAIVER OF RIGHTS
The failure of Lessee or Lessor to insist upon
strict performance of any of the terms, covenants or conditions
of this Lease shall not be deemed a waiver of any right or remedy
that Lessee or Lessee may have, and shall not be deemed a waiver
of the eight to require strict performance of all of tue terms,
covenants and conditions of the Lease thereafter, nor a waiver of
any remedy for the subsequent breach or default of any term,
covenant or condition of the Lease.
23. DEFAULT IN TERMS OF LEASE BY LESSEE
Should Lessee default in the performance of any
material covenant., condition or agreement contained in this
Lease, and such default is not corrected within a reasonable time
(as determined by Lessor) after Lessee receives written Notice of
Default from Lessor, Lessor may:
(A) Terminate this Lease. All rights of Lessee
and those who claim under Lessee, stemming from this Lease shall
end at the time of such termination; or
(B) At Lessor's sole option, cure any such
default by performance of any act, reasonably necessary to cure
such default.
24. COSTS OF •SUSTAINING AN ACTION FOR BREACH OR
DEFAULT
In the event either Lessor or Lessee conmences
legal action against the other, claiming a breach or default of
this Lease, the prevailing party in such litigation shall be
entitlea to recover from the other costs of sustaining such
'action, including reasonable attorney's fees as may be determined
by the Court.
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25. RESERVATIONS TO LESSOR
The property is accepted as is and where at by
Lessee, subject to any and all existing easements and
encumbrances. Lessor reserves the right to install, lay, con-
struct, maintain, repair and operate such sanitary sewers,
drains, storm water sewers, pipelines, manholes and connections;
water, oil and gas pipelines; telephone and telegraph power
lines and the appliances and appurtenances necessary or
convenient in connection therewith in, over, upon, through,
across and along the property or any part thereof, and to enter
the property for any and all such purposes. Lessor also reserves
the right to grant franchises, easements, rights -of -way and per-
mits in, over, upon, through, across and along any and all por-
tions of the property. No right reserved by Lessor in this
clause shall be so exercised as to interfere unreasonably with
Lessee's operations hereunder or to impair the security of any
secured creditor of ..cssee.
26. gUITCLAIM OF LESSEE'S INTEREST UPON TERMINATION
Upon termination of this Lease, including but not
limited to, termination because of default by Lessee, Lessee
shall execute, acknowledge and deliver to Lessor, within 30 days
after receipt of written demand therefor, a good and sufficient
Deed, whereby all right, title and interest of Lessor in the
property is quitclaimed to Lessor. Should Lessee fail or refuse
to deliver the required Deed to Lessor, Lessor may prepare and
record a Notice, reciting the failure of Lessee to execute,
acknowledge and deliver such Deed and said Notice shall be
conclusive evidence of the termination of this Lease and of all
right of Lessee or those claiming under Lessee in and to the
property.
27. LESSOR'S RIGHT TO REENTER
Lessee agrees to yield and peaceably deliver
possession of the property to Lessor on the date of termination
of this Lease,.wha_tsoever the reason for such termination.
Upon giving written notice of termination to
Lessee, Lessor shall have the right to reenter and take posses-
sion of the property on the date such termination becomes effec-
tive without further notice of any kind and without institution
of sumnary or regular legal proceedings. Termination of the
:Lease and reentry of the property by Lessor shall, in no way,
alter or diminish any obligation of Lessee under the Lease terms,
and shall not constitute an acceptance or surrender.
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28. NOTICES
All notices required by this lease shall be deemed
to have been given when deposited in the United States mail,
first class,_postage prepaid, and addressed as follows:
LESSOR
City Manager
City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA 92663
LESSEE
Newport Beach Aquatic Center
200 Newport Center Drive
Suite 301
Newport Beach, CA 92660 s
IN WITNESS WHEREOF, the parties hereto have executed
this Ground Lease, the day and year first above written.
F
0
LESSEE
NEWPORT AQUATIC CENTER, INC.
LESSO
AT /TEST
L '1 1-
Wanda Raggio /
City Clerk
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Study Session Agenda Item No. 6
1c9c7t VNIS M
OFFICE OF THE CITY ATTORNEY
January 20, 1987
TO: Honorable Mayor and Members of the City Council
FROM: Robert H. Burnham, City Attorney
RE: Aquatic Center
Background:
In November, 1982, the voters approved a Measure
authorizing the City Council to lease a portion of North Star
Beach to permit construction of a facility for human - powered
watercraft and related activities (Aquatic Center). On January
10, 1985 the City Council approved a use permit authorizing the
construction of the Aquatic Center, but limiting its size to
18,000 + /- square feet and imposing other conditions to protect
nearby residents from undue noise and traffic. Subsequent to
Council approval, the City and Aquatic Center, as co- applicants,
sought Coastal Commission approval of the project. The
Commission approved the project, but imposed a number of
conditions, including one which required implementation of a
beach improvement plan. The co- applicants were given the choice
of converting the dredge spoil to a sandy beach or constructing a
public fishing dock, cleaning facilities, picnic tables and
shaded viewing areas. Construction of the improvements is
required to commence four years after the Aquatic Center begins
operation and must be complete within five years.
The Aquatic Center has experienced some difficulty in
raising the money necessary to complete construction of 40% of
the project. They are proposing construction of the facility in
three phases, the first to consist of approximately 8,000 square
feet, including a multi - purpose room and boat bays. The Coastal
Permit expires in approximately 30 days, and the Aquatic Center
Honorable Mayor and
Members of the City Council
Page 2
January 20, 1987
intends to submit a proposed lease of the project site to the
Council for its approval on February 9th. However, there are
certain issues that we believe should be presented to, and
discussed with, the City Council prior to its approval of the
lease and prior to transmittal of a commitment to comply with
conditions imposed by the Coastal Commission. These issues and
staff's recommendations are as follows:
1. COASTAL COMMISSION REQUIREMENT
The Coastal Commission approval of the project is
subject to submittal, by the City and Aquatic Center, of a
written agreement corcmitt1ng to the implementation of a beach
improvement program. As* indicated above, this means either the
conversion of dredge spoil to sandy beach or the construction of
certain improvements. This condition is the result of language
in the LCP to the effect that it is "desirable that the site
(North Star Beach) be improved to provide a higher quality
beach."*
Residents in the area have generally been supportive of
the Aquatic Center after imposition of conditions restricting its
size and usage. The beach will never be able to compete with
ocean and bay beaches, but the requirement to improve the beach,
which is linked to the Aquatic Center, could mean a few more
people will come to the site. Moreover, some Dover Shores
residents believe the beach improvement plan to be inconsistent
with provisions of the Recreation and Open Space Element which
call for no development of the beach other than the Aquatic
Center. Finally, the Aquatic Center will, in all probability, be
operating with a tight budget and may not have the funds to make
the improvements when required to do so.
Subject to Council approval, it is proposed that the
Mayor and Chairman of the Aquatic Center Board of Directors send
the letter attached to this Memo as Exhibit "A" as compliance
with the Coastal Commission condition. This letter is an effort
to reserve the right of the City to request deletion of this
condition if future events, such as an amendment to the LCP or
' Coastal staff advised the Commission the City.had 1p ans
to make North Star a high- quality beach.
'Honorable Mayor and
Members of the City Council
Page S
January 20, 1987
increased tidal flows resulting from the Upper Bay sedimentation
removal plan, make it infeasible to comply with the conditions.
2. TERMS OF LEASE /POTENTIAL PROBLEMS IN FUNDING
CONSTRUCTION AND OPERATION:
This office has prepared a proposed Lease to be
submitted to the City Council for approval on February 9, 1987.
(See Exhibit "B. ") The Lease attempts to address a number of
problems, including the following:
A. Lack of Funding Prior to Construction:
The lease is structured so that it will not
become effective until the Aquatic Center provides proof of the
financial ability to proceed with construction of at least Phase
I of the project. Currently the requirement is a letter of
credit issued by an institution approved by the Finance Director
in a sum equal to 110% of estimated cost of construction. To
avoid any City involvement in the construction process, this
provision probably should be revised to insure the letter of
credit obligates the financial institution to complete
construction within a given time. However, this type of letter
of credit or completion bond may be difficult to obtain and the
Council may have to accept lesser assurance or reject the
project;
B. Prompt Completion of Phase I:
It is virtually impossible to obtain and /or
enforce absolute commitments to complete construction of a
building. The terms of the lease require the Aquatic Center to
complete construction of all phases of the facility within the
time frames specified in the contractor's bid. Failure to do so
constitutes a material breach which would entitle the City
declare a default and terminate the lease. However, termination
of the lease simply puts the City back in control of the site and
does not resolve problems associated with a half -built structure;
C. Operating Revenues:
The Aquatic Center proponents believe there is
sufficient demand in the harbor to generate revenues adequate to
pay the bills when the facility is in operation. However, this
Honorable Mayor and
Members of the City Council
Page 4
January 20, 1987
opinion is based upon experience of Aquatic Center board members
familiar with the rowing activities in the Lower Bay and not on a
feasibility study prepared by professionals. There is the
possibility that demand for rowing facilities and boat storage
has been overestimated and, in such event, the City may
eventually be required to terminate the lease and take over the
facility. Ron Whitley, P,B&R Director, believes the City can
operate the facility at no cost assuming some flexibility in the
type of recreational programs offered.
3. WAIVER OF FEES:
Aquatic Center representatives have asked for a
waiver of fees typically charged to developers. The project is
operated by a non - profit corporation and is not subject to
property development tax. There is no specific provision for
waiver of fair share or plan check fees, but a waiver could be
justified on the grounds that the City property is involved. If
the Council does not direct Staff to collect fees for this
project, plans will be processed with fees waived.
4. CITY /COUNTY JOINT POWERS AGREEMENT:
The County of Orange and City of Newport Beach each
own an undivided one -half interest in North Star Beach. In the
past, the County has expressed an interest in allowing the City
to take the lead role in pressing the project. The County
transmitted a preliminary draft of a Joint Powers Agreement (JPA)
granting the City this responsibility. However, in my opinion,
the proposed JPA imposed too much responsibility on the City.
For example, the City was required to assume full responsibility
for completion or operation of the facility in the event problems
occurred during construction or operation. The City was also
required to hold the County harmless from and against any loss or
liability in carrying out the terms of the JPA.
This office has made revisions to the preliminary
draft of the JPA and a copy is attached to this Memo as Exhibit
"C." If the Council has no objection, the revised draft will be
forwarded to appropriate County personnel for their review and
comment.
Robert H. Burnham
City Attorney
RHB /jc
Attachments
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