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Home My WebLink About33 - Tidelands Administration IssuesNewport Beach City Council AGENDA ITEM 33 December 14, 1998 Council Meeting TO: MAYOR AND CITY COUNCIL FROM: TIM RILEY, FIRE AND MARINE CHIEF TONY MELUM, DEPUTY FIRE AND MARINE CHIEF /' DAVE KIFF, ASSISTANT TO THE CITY MANAGER k* SUBJECT: TIDELANDS ADMINISTRATION ISSUES RECOMMENDED ACTION: (1) Receive and file this report; and (2) Set January 25, 1999 as the date for a City Council Study Session on this matter. (3) Offer additional direction to staff as to information to be provided for the City Council prior to the February study session. SUMMARY: The State of California became the owner of tidelands on admission to the union in 1850. Tidelands are those lands that were or are below the line of mean high tide and they are subject to a public trust for navigation, commerce and fishing. Beginning in 1919, the State granted certain tidelands to the City (tideland grants). The tideland grants covered only tidelands within our corporate limits so City tidelands are, with few exceptions, limited to Lower Newport Bay. The tideland boundaries in Lower Newport Bay were, for the most part, established by judgments issued in a number of Superior Court lawsuits filed in the late 1920's and early 1930's. Tidelands may be used for any purposes consistent with the trust and, in cases such as Beacon Bay and the Balboa Bay Club property, may be used for residential purposes subject to certain conditions including a requirement that revenue be used for tideland purposes. The City has administered the tidelands through ordinances, leases and permits, including: • Tidelands Leases • Commercial Harbor Permits • Residential Pier Permits • Onshore /Offshore Mooring Permits Tidelands administration has been a priority of the City Council for many years. The City has, in response to increasing demands and pressures on the Upper Bay and Lower Bay, adopted ordinances and policies regulating charter boats, liveaboards, and marine sanitation. While this regulatory system has proven successful, the City is facing new environmental and regulatory challenges. In fact, several pending or proposed projects Newport Beach City Council Agenda Item 33 Page 2 — from maintenance dredging to new regulations on pathogens in the Bay — may cause significant additional expense for the City. One issue to be resolved is the extent to which tidelands properties should fund costs incurred by the City in complying with new rules or implementing new programs. These and other questions caused the City Council to set a tidelands administration review as one of its goals for calendar year 1997. The City is not the only agency facing these questions. Several other jurisdictions in California also hold tidelands trust properties (like Long Beach and the County of Orange) and also face the challenge of deciding how to administer and fund new environmental programs. To assist the City Council with some of the issues facing the City's tidelands trust, this Agenda Item examines the manner in which the City and other agencies administer tidelands properties. It provides background on tidelands, filled tidelands, and adjacent properties along with summaries of several of the current leases and permit systems operated by the City. ATTACHMENTS: A — Tidelands Primer B — Pending Environmental Projects C — Issues for Council Consideration D — Summary of Existing Tidelands Leases Agenda Item 33 Paoe 3 Attachment A Tidelands Primer The City administers tidelands pursuant to grants from the State. Tidelands are subject to a "public trust" and must be used for trust purposes unless there is legislation removing or modifying the limitations. The City has the power to regulate the use of tidelands through leases, permits, policies and ordinances that are consistent with the trust and /or relevant legislation. This "primer" on tidelands and related properties helps explain how the City and other entities manage the tidelands properties. The primer is presented in the following five sections: I — Trust Definitions //—Acceptable Uses of Trust Properties ill — City Administration of Trust Properties IV — Tidelands Revenues and Expenses V — How Other Agencies Administer Tidelands and Marinas I — Trust Definitions TIDELANDS within the City of Newport Beach are the tide and submerged lands owned by the State of California and subject to a public trust. The tidelands consist primarily of the land bayward of the bulkhead and portions of bay beaches in the Lower Bay (coastward of the Upper Bay Bridge). Newport Beach tidelands also include large portions of our ocean beaches and land covered by the Pacific Ocean from the shoreline three miles out to sea. Some areas of tidelands have been filled in development. These FILLED TIDELANDS are also subject to the public trust and include the Balboa Bay Club parcel and Beacon Bay. In addition, land purchased with tidelands revenue becomes "trust property" as was the case with the "Westbay Park Site ". Finally, the City is required to add some upland property to the tidelands trust to satisfy our obligations pursuant to SB 573. Another category of property associated with the water is known as UPLANDS. Uplands are city -owned parcels of land that abut tidelands or filled tidelands. Land designated as uplands includes a portion of Beacon Bay, the street ends on Lido Isle and other parcels. To some extent, City staff relies on a document known as the "Patterson Map," in deciding whether certain property is uplands or tidelands. R.L. Patterson, a former City Engineer, prepared the Patterson Map. The Patterson Map depicts tideland boundaries adjudicated by the Courts as well as the line of mean high tide as reflected in old surveys conducted prior to incorporation. The tidelands boundary has been established throughout most, but not all, of Newport Harbor. Agenda Item 33 Page 4 II —Acceptable Uses of Trust Properties As noted above, the City administers tidelands on behalf of the State of California. The State agency that administers tidelands is called the State Lands Commission. After January 4, 1999, the three - member Commission will consist of: - -- Membership of the State Lands Commission - -- • Lt. Governor Cruz M. Bustamante (D) • State Controller Kathleen Connell (D) • Governor Gray Davis' Director of Finance Pursuant to legislation known as the "Beacon Bay Bill ", which was adopted in 1978, the Commission requires the City use granted tide and submerged lands for the following purposes: • Public Harbor — the City may establish, improve, and operate a public harbor on the tide and submerged lands; • Docks, Wharves, and More — the City may construct, maintain, and operate wharves, docks, piers, slips, quays, ways, and streets or other utilities necessary to promote commerce, fishing or navigation over the tide and submerged lands; • Beaches and Marinas — the City may establish, improve, and operate bathing beaches, public marinas, public aquatic playgrounds, and similar recreational facilities open to the public on the tidelands; and • Reserves and Open Space — the City may preserve, maintain, and enhance tidelands in their natural state and to re- establish the natural state of developed tidelands so that they may be used for scientific study, open space, and wildlife habitat. The Beacon Bay Bill also required the City to set up "separate tidelands trust fund or funds" and mandated that the City deposit all moneys received from the tidelands into the funds. The Commission oversees the City's administration of tidelands trust properties and the expenditure of the tidelands revenue. Ill — City Administration of Tidelands Properties The State Legislature has adopted many statutes that relate to our administration of tidelands and, in some respects, the City is required to treats tidelands (and related revenue) differently than it treats other City income property. The City uses a system of leases and permits to manage tidelands and trust properties. The Commission is required to approve the form and content of all tideland leases. Recently, the Commission approved the new Balboa Bay Club lease and, before that, the residential leases for Beacon Bay parcels. The Commission generally requires the Trustee to negotiate leases on the basis of the current market value of the parcel. Failure of a trustee to receive consideration approximating the fair market value of leased tidelands could, under certain circumstances, be considered a violation of Section 6 of Article XVI of the State Constitution (the prohibition of gifts of public funds to private entities). Agenda Item 33 Page 5 The following is a summary of some of the State laws that may be applicable to our administration of tidelands and related provisions of the City Charter, Municipal Code, and Council Policies that govern the City's management of tidelands: State and City Regulations Regarding Tidelands Operations Chapter 74, City may lease tidelands for up to 50 years. Statutes of 1978 "...the city or its successors may grant franchises ... for a period not exceeding 50 years for wharves and other public uses and purposes and may lease the lands, or any part thereof, for terms not exceeding 50 }ears for purposes consistent with the trust..." City Charter §1402 City cannot sell waterfront property except to State or County. The City Council shall not sell or convey any waterfront or beach property, excepting to the State or County for use as a public beach or park.... the City shall have the authority to lease City -owned property, including tide and submerged lands so long as the lease is limited to the term permitted by state law." NBMC §17.22.020 Moorings require permits. "No person shall place, erect, construct, or maintain moorings or buoys in the waters of Newport harbor over City -owned or controlled tidelands without first having obtained a permit therefor from the City Manager upon written application signed by the registered owner of the vessel to be moored, or by an agent so authorized in writing." NBMC §17.24.010 Any construction or maintenance of a structure in the Bay requires a Harbor Permit and and the payment of a fee to maintain the permit. Council Policy H -1 "No person or agency shall build, maintain, extend or make structural alterations on any (Section 3A) building, pier, piling, bulkhead, sea wall, reef, breakwater, or other structure in, upon or over the waters of Newport Harbor or the Pacific Ocean or any other water where the tide ebbs and flows within the City, or do any filling, excavating or dredging in said waters or ocean, without first obtaining a written 'Harbor Permit' to do so from the City. NBMC §17.33.030 All pier owners must pay an annual fee "Every owner of permit holder who maintains a pier, any part of which extends into the waters or Newport Harbor, including any pier located on private property, on a dedicated channel, or County tide and submerged lands, shall pay to the City an annual pier registration fee based upon a schedule established by resolution of the City Council." Council Policy The City must maximize the income potential of all City -held property. F -7 "in managing ifs property, the City will continually evaluate the potential of all City owned property to produce revenue. This may include leasing unused land, renting vacant space, establishing concessions in recreation areas or other similar techniques." Council Policy H -1 The City cannot extend pier use fee to residential properties unless directed to do (Section 4J) so by the State. "The imposing of tidelands rental, of use, fees shall not be extended to include private residential pier and slips, constructed and used solely by the abutting uplands owner for recreational purposes, unless otherwise directed by State mandate. Agenda Item 33 Paae 6 In accordance with the above regulations, here is a summary of the City's lease, permit, and fee system: City's Methods of Administering Tidelands Tidelands The City currently leases tidelands and other properties to business entities Leases and individuals on a case -by -case basis. Generally, the City will not enter into a tidelands lease with anyone but the upland property owner (see a summary of these leases in Attachment D). The leases have varied terms and rental payment requirements. The Fire and Marine Department (10 leases) and the City Manager's office (11 leases) co- administer tidelands leases. Commercial In 1979, the City began to issue permits to commercial entities that use Harbor Permits tidelands. The permit fee, renewed annually, is applied to any tidelands bayward of commercial property that is not covered by a lease. The permit fee (established by appraisal in 1979 and 1989) is based upon the square footage of tidelands available to the upland owner times a cost per square foot per year (currently $.28 per square foot per year). There are 66 harbor permits with the commercial designation. The Fire and Marine Department administers all commercial harbor permits. Residential The City requires bayfront residential dock owners to pay a non - commercial Pier Fees pier fee annually on March 1. While Council Policy H -1 (Section 4J) precludes the City from charging tidelands rental or use fees, NBMC §17.33.030 allows the City to charge an annual registration fee (currently $75 per year) for these permits. There are 1200 residential harbor permits. The Fire and Marine Department administers all residential harbor permits. Onshore /Offshore Prior to 1975, the City used mooring permits to cover the annual Mooring Permits administrative cost associated with monitoring the 1200 or so moorings in Harbor waterways. The mooring fee at that time was $1.20 per lineal foot per year. In 1975, a State Lands Commission audit determined that the City's rate was artificially low — as a result, the rate now $20 /If per year (offshore moorings) and $10 /If per year (onshore moorings). Both the Orange County Harbor Patrol and the NB Fire and Marine Department Administer mooring permits. There are 714 offshore mooring permits and 484 onshore mooring permits. !V- Tidelands Revenues and Expenses The Beacon Bay Bill requires the City to "establish a separate tidelands trust fund or funds in such a manner as may be approved by the State Lands Commission, and the city shall deposit in the fund or funds all money received directly from ... the granted tidelands in the city." According to the Bill, the City "may use revenues accruing from or out of the use of the granted tidelands ... for any or all of the purposes set forth in this act on public trust lands within the City of Newport Beach." The City has historically considered income from the following properties to be tidelands revenue: A. Tidelands Revenues SOURCE OF INCOME Agenda Item 33 Pape 7 EUDGETED REVENUES TIDELANDS LEASES $ 3,120 • Bait Barge (Grayshocks') $ 2,700 • Balboa Bay Club 1,380,000 • Balboa Island Ferry (J.A. Beek) 55,000 • Balboa Yacht Basin $ 1.225.000 Apartments (3) 63,322 Garages (34) 40,800 Marina Slip Rental 1,095,000 Limited Term Rental of Slips 10,000 Restaurant (Galley Cafe) 28,000 Shipyard /Repair Facilities (Basin Marine Shipyard)( 75,250 Yacht Sales (Heritage) 16,200 • Beacon Bay Residential Leases (QTY) 525,000 • City/County Dock (at Arches) 50,000 • Coin Telescopes (W.J. Carden) 2,000 • Pier Concession — Balboa (Ruby's) 70,000 • Pier Concession — Newport (Newport Seafood) $ 55.000 Subtotal (Leases) $ 3,468,272 PERMITS AND USE FEES • Annual Permits for Live - Aboards $ 3,120 • Annual Fees for Piers, Marinas 446,745 • Annual Fees for Moorings 700,000 • One -Time Pier/Harbor ?ermits 40,000 • Fees for Parking at Balboa Pier Lot $ 1.225.000 Subtotal (Permits/Use Fees) $ 2,414,865 OTHER REVENUE • Payment from Orange County for Lifeguard Services $ 21,554 • Charges for Services 25,000 • Electricity 7,000 • Revenue Not Otherwise Classified 1,500 • Petroleum Sales 675,000 • Natural Gas Sales 70,000 • Interest Income $ 55,000 Subtotal (Other) $ 855,054 Total Tidelands Revenues $ 6.738.191 B. Tidelands Expenditures The City budgets its Tidelands expenses by considering the costs of various City operations that relate to tidelands. Typically, the costs associated with tidelands operations exceed the amount of revenue collected from tidelands. The costs include: • Fire and Marine. The Marine Division of the Fire and Marine Department is funded with tidelands revenues and general fund revenues. The Marine Division's operations include ocean and beach safety (lifeguards), harbor permit and tidelands administration, beach parking, and other regulation of marine uses. • General Services. The General Services Department cleans and maintains the beaches and beach restrooms and collects refuse from tidelands - related concessions. • Police. The Police Department estimates that 15% of its calls and enforcement activities are related to tide and submerged lands. . Agenda Item 33 Page 8 . Public Works. The Public Works Department's engineering and transportation services division designs and manages the construction of improvements on tide and submerged lands. • Other City operations. A portion of the City's capital improvement, administrative services, city management, liability insurance and other functions also involve activities relating to tidelands administration. Quantifying appropriate tideland expenses is challenging and there is statute or court case that provides guidance. The Commission staff regularly reviews the City's tideland expenditures. During a recent local review of expenses, City staff identified more than $12 million in expenditures that could be considered appropriate tidelands expenses. V— How Other Agencies Administer Tidelands and Marinas The best resource for determining how Newport Beach's leasing and permitting operations compare with other agencies is a 1997 study of rates and practices at 120 commercial marina conducted by the State Lands Commission as directed by Senate Bill 326 (Leslie, 1996). This Commercial Marina Report, still in draft form, shows that the majority of agencies have their commercial marinas under lease (with Newport Beach being the only exception known at this time). Here are some other information items from the Report and other studies' cited in the Report: ,Average occupancy in a marina facility is 83% Average revenue per slip is $3,124 (1996) • 35% of all marinas have waiting lists • Average number of parties on waiting list = 79 • Average slip turnover rate is 4 years • Public marinas "consistently" had the lowest average dock rates for all boat lengths, but also had the least amount of total amenities. • Average monthly dock rate per lineal foot for the Pacific Region was $6.5Mf in 1996. The Report notes that the value of most leases is set by appraisal and that terms vary from 20 to 66 years. Rent is typically set at from 20 to 32 percent of gross receipts. However, these rental rates are generally for tidelands that abut upland property owned by the public entity. For example, the Balboa Bay Club lease requires thirty-one percent (31 %) of gross income from marina operations to be paid to the City. The following are examples of key provisions of other public entity tidelands leases: Leasing Rent Lease Improvement Agency Calculation Term Owner at End City of Alameda Flat Rent 25 years Lessor Port of Los Angeles 25% of Gross Receipts 20 years Lessor Monterey County to 7% of Gross Receipts 20 years Lessee City of Oceanside 30% of Gross Receipts 25 -30 years Lessor City of San Diego 20 -25% of Gross Receipts 25 -31 years Lessor San Francisco CRA 5% of Gross Receipts 66 years Lessor ' Most information from the International Marina Institute (IMI) 1996 Financial Operations Benchmark Study. Agenda Item 33 Page 9 Attachment B Pending Environmental Projects In the coming months and years, a number of significant Bay - related activities will impact the City and its residents. These include: - - -- Bay Environmental Projects - - -- Eelgrass Restoration Eelgrass (zostera marina) is a kelp -like plant that grows in salt water at depths Plan of between —1' and —8' below sea level. When it exists in a waterway, biologists believe that it both indicates a healthy ecosystem and contributes to the diverse biology. For example, the small foraging fish that live in the eelgrass serve as a food source for the California Least Tern and the California Brown Pelican. The US Army Corps of Engineers has prepared an Eelgrass Restoration Plan for the Bay. The Plan (now in draft form) proposes to transplant "bundles" of eelgrass from existing sites to about 5 to 15 acres in the Harbor. USACE expects implementation of the Plan by June of 2000. Estimated one -time cost will be $902,000 if 15 acres are restored. Based on current cost sharing allocations for USACE projects (65% Federal - 35% Local), the City (and possibly the County) will be obligated to fund 35% of this project. One Time Costs = $315,000 (est) Ongoing Costs = $20,000 test) Maintenance Dredging The current $7.2 million dredging project (the "Unit III Project ") is a once -in -a- decade attempt to remove about 1 million cubic yards of sediment from the Upper Bay. The focus of the Unit III project is on the sediment built up near where Jamboree Road crosses the San Diego Creek and the tip of Upper Bay (the "Unit III Basin "). Earlier in the project, the dredging crew removed sediment from the channel leading up to the Basin. City, County and State officials agree that all entities involved in the Upper Newport Bay need to develop a more comprehensive and ongoing approach to what they call maintenance dredging of the Bay. Maintenance dredging would occur every year or every other year and help avoid the need for a multi - million dollar 10- year dredging effort. Costs are uncertain pending the recommendations of the USACE studies. One Time Costs = to be determined Ongoing Costs = to be determined Army Corps Studies In the past, local, State, and Federal officials have argued for a comprehensive plan that would provide a blueprint for the long -term restoration and preservation of the Bay. Two studies (both coordinated by the US Army Corps of Engineers) are underway today that would contribute to that blueprint. The Upper Newport Bay Feasibility Study (now in _ phase) and the San Diego Creek Watershed Study (this Study's "Project Study Plan" is now under review by the Corps) will both require significant City contributions of both staff time and resources. One Time Costs = to be determined Ongoing Costs = to be determined TMDLs The Santa Ana Regional Water Quality Control Board ( "Regional Board ") is in the process of adopting a series of measurements called "Total Maximum Daily Loads or "TMDLs" that would set limits on the amounts of nutrients (like nitrogen and phosphates), sediment, and pathogens (like fecal coliform bacteria and other toxic materials) that can enter the Bay. The Regional Board has already set TMDLs for nutrients and sediment — it expects to set TMDLs for pathogens by late spring 1999. The pathogen TMDLs may dramatically change the way the City operates its storm drain system and other operations. Costs are uncertain pending finalization of TMDLs. One Time Costs = to be determined Ongoing Costs = to be determined Agenda Item 33 Paae fO Toxic Hot Spots Established in 1989, the State's Bay Protection and Toxic Clean -up Program ( "BPTCP") directs regional water quality control boards to develop "Regional Hot Spot Toxic Clean -Up Plans." The Program defines toxic hot spots as areas where the sediment and/or the marine life contain high contamination of toxic substances like mercury, arsenic, copper, lead, zinc, PCPs, and other chemicals. In the Santa Ana Regional Board's draft Plan, the Board identified at least two areas of Lower Newport Bay — the Rhine Channel and a location near Channel Place Park near Newport Island — as "toxic hot spots." The Plan, as yet in draft form, suggests extensive (and expensive) remediation to the Rhine Channel given the Board's identification of the Rhine as the Board's "high" priority for repair. The Board estimates cleanup for the Rhine —where contractors dredge about 23,000 cubic yards of sediment and dispose of it "upland " — to be $10.5 million. The Board estimates that additional "site characterization" of the Rhine and producing the expected environmental documentation to complete the removal will cost $900,000 and $500,000 respectively, with only 1 -10% of the cost recoverable from potential dischargers. One Time Cost = up to $10.5 million Replenishment Sand replenishment remains a costly activity for both the City and its residents. of Sand The City spends approximately $35,0001year for beach replenishment on bay beaches and street ends. This goes to replace lost sand on beaches — particularly on Balboa Island — that typically see natural removal of sand. The City's source of renewable sand is limited, so it replenishes areas with existing material found bayward of the public beaches. City staff believes that the City could more appropriately meet replenishment needs two to three times that current allocation. Ongoing Costs = $35,0004140,000 L Agenda Item 33 Pape 11 Attachment C Issues for Council Consideration Goals of this Review • What does the Council want to achieve with its review of the City's Tidelands Administration? ✓ More control over tidelands activities? ✓ Equity between various uses —like moorings and residential piers? ✓ Recovery of additional tidelands costs? ✓ More streamlined management of tidelands? Leases vs. Permits • Should the City join other cities and counties across the state in moving towards a system that emphasizes leases over permits? if so, at what date should this be accomplished? • Should there be a "boilerplate' lease that the City follows for each leased property, or should each be developed on a case -by -case basis? • Should the City's informal policy of not leasing tidelands to persons other than the uplands property owner be adopted formally as a Council policy? Monitoring and • What type of review should the City conduct to assure lease or permit Inspections compliance — an annual inspection? A semi - annual inspection? • Is the City property organized to monitor its tidelands properties? Administrative and . In an attempt to complete the Patterson Map, should the City hire an expert in Legal Issues surveying (such as "Boundaries Unlimited) to research and opine on the boundaries of the City's tidelands and uplands properties? Budget Issues • How should the City determine what a tidelands- related expense might be? Should the City adopt a uniform policy describing the characteristics of such expenses? • Whether or not the City moves towards more leases, should the City begin recouping more of the environmental projects' costs from leases or permits? ✓ If so, how should the City recoup one -time versus ongoing maintenance expenses? ✓ If not, what sources of revenues should the City use to pay for the environmental projects? llq 50 IJ (j) cc 0 0 s9: u9 ZR az u. A oat lVSO, au xa 8m 9b E S S4 44,1. is eD fig V PSI . . .... .. 9E- Fe J W V/ U d ' r U i y F £m �k Fe3 $ a 3 rc ca� 3 s" _ 5 rc n a� � S e �c 4E tt E i 4 9 L ' I' Y 5 a a fi 9 see ' 5 :5 -p os �a s sr a.�v UP UN e � w € U 3 z 3 a w g k ba �� ° I n_ iw. 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