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HomeMy WebLinkAbout0 - Additional CorrespondenceMcDonald, Cristal From: City Clerk's Office Sent: Tuesday, October 23, 2012 5:12 PM To: McDonald, Cristal Subject: FW: City Dock Tax From: Chandler, Dean @ NewportlSMTP:DEAN.CHANDLER(c CBRE.COM] Sent: Tuesday, October 23, 2012 5:11:24 PM To: City Clerk's Office Subject: FW: City Dock Tax Auto forwarded by a Rule "RECEIVED A ER AGENDA PR PffED rr �j SzCI6.( IU�e�7� iJ I want to express my concern and position against the proposed dock tax increase . I feel the additional tax is exorbitant and will cause a significant strain to all commercial boating businesses and ultimately to residential boat owners . Thank you Clean Chandler I Senior Vice President i, License 00833627 CB Richard Ellis I Broker Lic. 00409987 1 Brokerage Services 3501 Jamboree Road, Su`te 100 ; Newport Becch, CA 92660 T 949 725 851,510 7,14 747 7717 1 F 949 725 5488 dean.chandlerCc_Dcbre.com I www.cbre.com Please consider the environment before printing this email. This email may contain information tha! is confidential or a!tomey- cl:snt onvteged and may cens!itu!e inside Information. The contenls of this email are intended only for the recipients) ireted above. If you are not the intended recip en!, you are directed no! to read, disclose, distribute or otherwise use this transmission. If you have received !his email 6i error, please nottry the sender ;mmedlataiy and deiete the transmissicn. Delivery of this message is not intended to vveive any appiica:.4e privileges. +ne -•.1 p'1q e.I1'�n�cnC I' "s {#1 ATTACHMENT2 ID- �3—Ie? S�eCtU� hteC ittY Commercial Marina Permit (1) Commercial Marina Permittee: This Permit is issued on to ( "Permittee ") to operate a commercial marina located upon City of Newport Beach ( "City') tidelands, as more particularly described in Attachment 1 and depicted in Attachment 2 ( "Premises'). Both Attachment 1 and Attachment 2 are incorporated by reference into this Permit. By acceptance of this Permit, the Permittee agrees to be bound by the terms contained in this Permit. (2) Term: This Permit shall be valid for a period of twelve (12) calendar months beginning on March 1, 20_ and expiring on February _, 20_, unless terminated earlier as provided herein. (3) Rent: Rent shall be calculated pursuant to Resolution No. 2012 - , or any successor /amended resolution. Resolution No. 2012 -_ and any successor /amended resolution are automatically incorporated by reference into this Permit, without any further action by the parties, when adopted by the Newport Beach City Council. (A) Periodic Payment of Rent: One - twelfth (1/12) of annual rent for a particular year shall be payable on the first (1st) day of each month during the term. (B) Place for Payment of Rent: All payments of rent shall be made in lawful money of the United States of America and shall be paid to City in person or by United States' mail, or overnight mail service, at the Cashier's Office located at 3300 Newport Boulevard, Newport Beach, CA 92658, or to such other address as City may from time to time designate in writing to the Permittee. If requested by City, the Permittee shall make payments electronically (at www.newportbeachca.gov) or by wire transfer (at the Permittee's cost). The Permittee assumes all risk of loss and responsibility for late charges and delinquency rates if payments are not timely received by the City regardless of the method of transmittal. (C) Late Charges: A ten percent (10 %) late charge, or the maximum rate allowable under State law, shall be added to all payments due but not received by City with fifteen (15) calendar days following the due date. In addition, all unpaid amounts shall accrue at a delinquency rate of one and a half percent (11/2%) per month or any portion of a month until paid in full. (4) Utilities and Taxes: The Permittee is solely responsible for obtaining all utilities and paying all taxes, fees and assessments for the Premises or improvements located thereon. (5) Possessory Interest Tax Notice: The City hereby gives notice to the Permittee, pursuant to Revenue and Tax Code Section 107.6 that this Permit may create a possessory interest that is the subject of property taxes levied on such interest, the payment of which taxes shall be the sole obligation of the Permittee. The Permittee 55 shall advise in writing any sublessee, licensee, concessionaire or third party using the Premises of the requirements of Section 107.6. (6) Compliance With Applicable Laws: The Permittee is required at its sole expense to comply with all applicable City, County, State and Federal laws and regulations. (7) Maintenance: The Permittee assumes full responsibility for operation and maintenance and repair of the Premises and associated improvements throughout the term of this Permit at its sole cost, and without expense to the City. (8) Transfer /Assignment: This Permit may not be transferred or assigned by the Permittee without the City's prior written consent. Transfer /assignment without the City's prior written consent is null and void. (9) Termination: This Permit may be terminated for cause (e.g., failure to abide by the terms of this Permit, etc.) by the City with no less than seven (7) calendar days prior written notice to the Permittee. In the event of termination under this section, the City shall owe no compensation to the Permittee and the Permittee shall remove all improvements from the Premises within ninety (90) calendar days. The Permittee shall continue to pay rent to the City during the period in which the improvements are removed. Alternatively, the Permittee, with the City's prior written consent, may quitclaim all fixtures, equipment, and improvements on the Premises to the City. Notwithstanding any other provision of this Permit as permitted by California Public Resources Code Section 6312, or any successor statute, the parties agree that upon expiration or earlier termination of this Permit the City shall have no liability or obligation to pay compensation for any improvements made to the Premises. (10) Inspection: Upon seventy -two (72) hours notice, the City may enter the Premises, and all improvements thereon, including a right of reasonable access to the Premises across the Permittee's owned or occupied lands adjacent to the Premises, to inspect the Premises for compliance with the terms of this Permit. (11) Indemnification: To the fullest extent permitted by law, Permittee shall indemnify, defend (with counsel selected by the City) and hold harmless the City, its elected officials, officers, employees, agents, attorneys, volunteers and representatives from and against any and all claims, demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses of every kind and nature whatsoever (individually, a "Claim" or collectively, "Claims "), which may arise from or in any manner relate (directly or indirectly) to this Permit including, but not limited to, Permittee's occupancy and use, or Permittee's guests, invitees, sublessees, or licensees occupancy and use, of the Premises, or improvements including, but not limited to, any use involving petroleum based products, hazardous materials, hazardous waste and /or other hazardous substances as defined by City, County, State or Federal laws and regulations. The Permittee's obligations in this section shall not extend to the degree any Claim is proximately caused by the sole negligence or willful misconduct of the City, subject to any immunities which may apply to the City with respect to such 2 56 Claims. This indemnification provision and any other indemnification provided elsewhere in this Permit shall survive the termination of this Permit and shall survive for the entire time that any third party can make a Claim. (12) Insurance: The Permittee shall maintain insurance for the Premises during the term of this Permit, issued by a company authorized to transact business in California with a rating of A- (or higher) and Financial Size Category Class VII (or larger), in at least the following amounts: (i) workers' compensation insurance providing statutory benefits and employer's liability insurance in an amount not less the $1 million; (ii) commercial general liability insurance in an amount not less than $2 million per occurrence and. $4 million general aggregate for bodily injury, personal injury, and property damag; (iii) contractor's pollution liability insurance, in an amount of no less than $3 million, for contractors or subcontractors performing construction work providing coverage for liability arising out of a sudden, accidental and gradual pollution; and (iv) Pollution legal liability, of no less than $1 million, applicable to bodily injury; property damage, including loss of use of damaged property or of property that has not been physically injured or destroyed; cleanup costs; and defense, including costs and expenses incurred in the investigation, defense, or settlement of claims; all in connection with any loss arising from the Premises. The City (i.e., its elected or appointed officers, officials, employees, agents and volunteers) shall be named as an additional insured on all insurance policies required by this section. (13) No Damages: The Permittee acknowledges the City would not have issued this Permit if it were to be liable for damages under, or relating to, this Permit. The parties agree that declaratory relief, injunctive relief, mandate and specific performance shall be the Permittee's sole and exclusive judicial remedies. (1 4) Uplands Support: The location of the parking spaces serving the Premises as required by NBMC Section 20.40.040, or any successor statute, shall be depicted on Attachment 2. 3 57 Attachment 1 Description of Premises 4 58 Attachment 2 Depiction of Premises & Uplands Support 5 59 "RECEIVED AFTER AGEIIDA McDonald, Cristal PnilniEL "2! From: Brett Hemphill [brethemphill @me.com] L ✓ — 1' 1 2'0'�Z Sent: Friday, October 19, 2012 4:30 PM SJOLC f /3'L, t-n-//V4 To: mhenn @newportbeachca.mac.com; Rosansky, Steven; Hill, Rush; Daigle, Leslie; ngardnery @newportbeachca.gov; Curry, Keith Cc: Kiff, Dave; City Clerk's Office Subject: Proposed lease fees for Tidelands The proposed Tideland fee increases are excessive and wrong. The fees will destroy the economics of Newport Harbor. We already loose business to Dana Point and Long Beach harbors due to high in the water storage fees (aka slip rentals) - The Irvine Company seen to that with increases on a yearly basis. Additional taxes and fees are certain to reduce the amount of boaters in the harbor. Our yacht club (BYC) is already experiencing vacancies in the marina and our membership is facing an annual assessment to cover the deficit that we have with a master marina lease with the Irvine Company - there will be an exodus with a 20% increase..... the rates are already too high. Furthermore, there is NO waiting list at our yacht club for moorings. I cannot recall at time in the past few decades where there has not been a long list for mooring cans. In fact, there are currently vacancies. A desolate harbor will have a negative effect on the tourism base for Newport Beach. I think you would see a very ho mum Christmas Boat parade that might be in jeopardy in the long term. I would expect vacancies in commercial waterfront properties. Our Newport Harbor is not just for the boaters in Newport Beach - it is an attraction that generates tax dollars for our city from tourism, property taxes, sales taxes, fuel taxes, etc. I don't think that you, as a City Council of Newport Beach, want a legacy of making one of the biggest wrong decisions in the history of this great city that we live in. Brett Hemphill Hemphill's Rugs & Carpets 949 - 722 -7224 Shop for rugs online at www.HemphilIsRugs.com Website: www.RuasAndCarpets.com Blog: www.hemphillbrett.wordpress.com Need a Vacation? www.BeachAndGolfGetaway.com McDonald, Cristal From: Sally Huzyak [capnette @sbcglobal.net] Sent: Friday, October 19, 2012 4:50 PM To: City Clerk's Office Subject: Marina Tidelands Fee Dear City Clerk, I went before the Harbor Commission to present a case for allowing a Captain to "live aboard" a 100'yacht: I appealed the decision and was still turned down. As a result, we left Newport Harbor and have berthed our 100' yacht in San Diego ever since, that's a loss of $420,000 in slip fees for the area over the past 7 years. Live aboard Captains are not an issue and more importantly our slip fees are 40% less! Newport Harbor is designated as a Safe Harbor, yet the City has done nothing to take advantage of this designation. Transients yachts skip Newport because there is no place for them to go and proposed Marina Tideland fees are just one more nail in the Newport Harbor coffin. With excessive fees, more boats will leave. The fee appears to be an increase just to meet the City's need for more revenue. The Tidelands fee needs to be supported by independent data, not a flat arbitrary 20% of commercial revenue. The overall economics of Newport Harbor consists of more than tideland fees. Consider the local maritime jobs, businesses and economy that will be impacted when boats leave the area because they no longer can afford to be here. Please reconsider the Committees recommendations and create an independent process to establish fair market value for these fees. Regards, Sally B. Huzyak Capnette@sbcgloba1.net 775- 843 -5629 McDonald, Cristal From: James Martin [rigtyme @cox.net] Sent: Friday, October 19, 2012 9:00 PM To: City Clerk's Office Subject: Tidelands Lease Fee Increase Dear City Clerk and all interested staff: I have boated in Newport Harbor for many years and am quite concerned with the City's efforts to increase the Tidelands Lease Fees to as much as 20% of the lessees' revenues. The cost of boating in Newport Harbor is already significantly more than other nearby harbors. Further increases in the cost of boating services will undoubtedly chill family boating activity in the harbor. There are certainly many expensive yachts in Newport Harbor, but there are also a significant number of smaller boats used by families who have chosen boating as their primary recreational activity. Substantial increases in the Tidelands Lease Fees will drive many of these families to other harbors, or out of boating entirely. I also suspect that such fee increases will drive some of the boating businesses out of the city. If the boat dealers go to other cities, won't the sales taxes generated by those dealers go to other cities? This would not seem to be in the best interests of the city or its residents. I obviously don't know what fair lease fees should be, but I urge you to take a reasonable, fair and thoughtful approach to determining how the lease valuations should be determined. I realize this is a difficult and complex issue. You may wish to consider the following: Some types of businesses maybe able to pay more because of their profit margin than other types of businesses with a different profit margins. The existing use of a business may not justify, or support, a valuation based on a theoretical "highest and best use ". Perhaps each leasehold and use should be looked at to determine the appropriate lease rate. Thank you for your consideration of these matters. James Martin McDonald, Cristal From: MEAndrews9 @aol.com Sent: Saturday, October 20, 2012 10:47 AM To: Selich, Edward Cc: Kiff, Dave; City Clerk's Office Subject: Proposed Tideland Fees October 20.2012 Dear Mayor Gardner and City Council Members, The increasing number of vacant moorings in Newport Harbor are a direct result of the excessive increase in mooring fees imposed by the City Council two years ago. Many boat owners can no longer afford to keep their boats in Newport Harbor and are moving them to Huntington Harbor, Long Beach Harbor, and Dana Point Harbor.. Instead of increasing revenue for the city this is a loss situation Now the City Council is considering another excessive rental fee for all Marinas, private docks and piers. This proposed increase will destroy the marine industry and marinas and will impose an unfair economic hardship on all users of the tidelands which include the Yacht Clubs' front docks, and many private home pier owners. This is an unfair increase. I encourage the City Council to step back and create a public independent process for determining the true fair market value and a much lower rate. It is important that the City consider the overall economic of the Harbor not just their tax coffers. My family spent our summer vacations in Newport Beach and my. husband I moved here in 1961 and have been a home owner and local sailor ever since. I want to be able to continue sailing my "Antares" and keep her moored in Newport Harbor. Yours truly, Betty Andrews (Mrs. Alan V. Andrews) 1620 Lincoln Lane Newport Beach, CA92660 RECEIVED 10- 21 -2 -12 2012 OCT 22 AM 9, 59 City Clerk: CF I am a resident of Little Balboa Island. I have a small boafnear may house on an onshore mooring that is registered to me. I have another smalFboat on a slip that I rent. My onshore mooring fees have already begun to go up because of the City Council's mandated mooring fee increase 2 years ago. Where will this stop? The Tidelands Sub - committee has recommended a 20% increase in fees, or tax on commercial marinas and individual boat owners. This is absolutely ridiculous! I would encourage the City to utilize an independent fair market and appraisal process to determine a fair fee increase at a much lower rate. I don't think that the City understands the impact this large tax increase will have on Yacht Clubs, individual boat owners and the commercial marinas. I am sure the City is aware of the empty slips and moorings that are available in our harbor. If this tax is implemented, my guess is that boat owners will continue to vacate the harbor for other less expensive marinas, ie Long Beach and Dana Point. Or, they may give up boating altogether and purchase an RV. To me, the proposed increase in fees really sounds like a 'tax' and, should therefore be put on a ballot to let those involved vote on the issue. Also, if this 'tax' is implemented, what benefits will myself or fellow boat owners receive: probably nothing. Thank you for reading my concerns regarding this unfair tax that will have negative consequences for private boaters like me and many others drive here and spend their boating dollars. Sincerely, Richard Mays 206 Crystal Ave Newport Beach, CA McDonald, Cristal From: Martha Macnab [fshrldy @mac.comj Sent: Sunday, October 21, 2012 8:44 PM To: Henn, Michael; Rosansky, Steven; Hill, Rush; Daigle, Leslie; Selich, Edward; Gardner, Nancy; Curry, Keith; Kiff, Dave; City Clerk's Office Subject: Proposed tidelands fee increase The proposed increase for use of Tidelands in Newport Beach is unconscionable If the city increases the fees for Marinas, the fees will be passed down to the boat owners and they will leave for less expensive moorings. Newport Beach is already the most expensive place to keep and maintain a boat in the western coast. Increase the fees and boat owners will move to Ensenada, San Diego, Huntington Harbor, wherever. The entire marine support industry in Newport will suffer and ultimately the City will suffer with loss of overall revenues. This is just the first step to taxing residential property owners who are paying substantial taxes and not receiving benefits from the City. It is impossible to even dredge our own property as the City has no dredging permit. This "Fee" is clearly a "Tax" and needs to be voted on. What benefits will the City provide for these fees? Maintenance of the sea walls, docks, dredging, parking, eel -grass mitigation ? ?? Nothing I suppose. You should consider the what other harbors are doing to encourage boating by revitalizing amenities with new docks, new launch ramps, waterfront walkways and increased public access. Most importantly, many waterfront communities are decreasing fees and trying to attract boaters. This proposal is a direct assalt on the boating industry. It will not ultimately benefit the City and will have serious consequences to the entire boating community. I have lived and worked in Newport Beach, grew up sailing and boating in the harbor and have never seen the City attack the boating community in this manner. Please reconsider your support of this plan. It is ill conceived and will have serious negative consequences. Martha Macnab 219 East Bayfront Balboa Island, Ca 92662 I McDonald, Cristal From: Doreen Chandler [sdchandler @roadrunner.com] Sent: Monday, October 22, 2012 7:57 AM To: City Clerk's Office Subject: "Dock Tax" Dear City Clerk, I am a current resident of Corona del Mar. We own a boat which is kept in the Newport Harbor Area. Currently our slip fee is nearly $500. Boats are very expensive to maintain and as you know are a "luxury" item that can be easily be dispensed with if there is less benefit over cost. When we are out on our boat we frequent restaurants that are located on or near the water. We tie up on docks and frequent Lido Village shops, Balboa Island shops as well as the shops near the ferry. We often bring friends out with us and they do the same. I am afraid that there will be a trickle down effect to the tax you will be levying on Marinas and any commercial docks. As a business person I am all too familiar with where that price increase will eventually fall....on the boat owners. Please reconsider your stance on this new tax. Should the new "Dock Tax" remain I know that I can expect and increase in my rent, which will force me to sell my boat. The tax the city is enjoying from my patronage to restaurants and stores etc. will cease to exist when I can no longer afford my dock fee and have to sell my boat. As my elected official I would hope that you would represent the general feeling of this community and not impose ANY new taxes at a time when the economy is struggling already. Please help preserve our way of life in Newport Beach by voiding this unfair tax that will harm the life style of our harbor that is enjoyed by so many who are already paying exorbitant taxes to begin with. As an aside, we do not live "on the water ", however most of my neighbors join my feelings and are VERY upset about this new tax and the way the city is handling this situation. Please make things right and reconsider. Thank you for your consideration, Doreen Chandler 2000 Altura Dr Corona del Mar CA 92625 1 HK\6i�R11C HART, KING & COLDREN 101% C T 22 Ail 10: 19 October 22, 2012 HAND DELIVERED Hon. Nancy Gardner, Mayor Hon. Michael F. Henn, City Councilmember Hon. Steven Rosansky, City Councilmember Hon. Rush N. Hill, II, City Councilmember Hon. Leslie Daigle, City Councilmember Hon. Edward D. Selich, City Councilmember Hon. Keith D. Curry, City Councilmember Ms. Leilani I. Brown, City Clerk City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92663 William R. Hart whart@hkclaw.com Our File Number: 28441.003/4846- 0564- 6353v.1 PERSONAL AND CONFIDENTIAL Re: Opposition of Duffield Marine, Inc. and Duffy Boats to the City of Newport Beach's Proposed "Harbor Charges" Project, Including its Proposal for Increased Rental Rates and Long -Term Leases for Commercial Marinas That Use City - Managed Tidelands Dear Mayor, Councilmembers, and Ms. Brown: This law firm represents Duffield Marine, Inc. and Duffy Boats. This letter follows up on previous communications made by Bob McCaffrey, Ted Robinson and Jim Parker and others regarding the City of Newport Beach's proceeding with its proposed "Harbor Charges" project (or more accurately the City's harbor -long- term -lease -and - rent - increase project), and this letter is specifically meant as further objections to that project. In particular, as outlined in this objection letter, by proceeding with this proposed "Harbor Charges" project in the manner it is, the City is violating the California Environmental Quality Act and other laws. Background In 2010, the City Council formed the "Ad Hoc Committee on Harbor Charges." According to a September 12, 2012, City Council Staff Report, this committee was charged with reviewing harbor rents, including "mooring rates — onshore and offshore "; "Balboa Yacht Basin charges — slips, garages, and apartments'; and "rental rates for commercial permit holders." Since formation, that Committee has recommended to the City Council that the City dramatically increase the rent charged by the City to Newport Harbor users. And the City Council has begun to act on those recommendations, including previously implementing a large increase in mooring fees charged in Newport Harbor. Most recently, at a September 12, 2012, City Council meeting, the City Council took an initial step towards setting dramatically higher rates for A Professional Law Corporation 200 Sandpointe, Fourth Floor, Santa Ana, California 92707 Ph 714.432.8700 1 www.hkclaw.com I Fx 714.546.7457 HK�& C WART, K11,10 6 DULDREN October 22, 2012 Page 2 commercial marinas with the ultimate intent of entering into long -term leases in place of the 65 or so commercial pier permits that have been issued to the existing marina owners and other commercial operators in Newport Harbor. The next step, per the City staff report, is to bring back a proposed new commercial marina lease template with higher rates for Council consideration and possible approval at a later date. The City then plans to move to increasing rents and entering into leases for other types of harbor users. The City is proposing to do all of this without an effort to comply with the California Environmental Quality Act. In fact, under the heading "Environmental Review" in the City Council Staff Report for the City Council's September 12, 2012, meeting, the staff recommends that the Council make the following finding: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQA") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. No such finding was made by the Council at its September 12 meeting. That is entirely appropriate because, as explained below, this recommendation from City staff about the applicability of CEQA is legally and factually incorrect. All of the Council's proposed actions, individually and collectively, that relate to approving a new long -term lease template with increased rents for use of tidelands in Newport Harbor qualify as a "project" and are subject to CEQA. And by proceeding without CEQA compliance, the City would apparently be violating the law. The City's Proposal to Approve a New Long- Term -Lease Template With Increased Rental Charges for City Managed Tidelands Qualifies as a "Project" Under CEQA As the California Supreme Court has held, the determination of whether an activity is a "project" under CEQA "is a categorical question respecting whether the activity is of a general kind with which CEQA is concerned ...." (Muzzi Ranch Co. v. Solano County Airport Land Use Commission (2007) 41 CalAth 372, 381.) And the CEQA Guidelines define a "project" as the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, and that is any of the following:... (yjj (3) An activity involving the issuance to a person of a lease, ep rmit, license, certificate, or other entitlement for use by one or more public agencies. (CEQA Guidelines, § 15378(a), emphasis added.) 28441.003/4846- 0564- 6353v.1 H(ARIi KIPIG r:ulD k'�rd October 22, 2012 Page 3 Since the City is proposing, among other things, to approve a new long -term lease template and permit template with a significant rent increase, the City's actions unquestionably qualify as a "project" under the plain language of the CEQA Guidelines. Moreover, courts have recognized that the renewal of a lease of tidelands is a project subject to CEQA. (See Citizens for East Shore Parks v. State Lands Commission (2011) 202 Cal.App.4`" 549.) And both the courts and the California Attorney General have concluded that government- directed rate or fare increases constitute a "project" under CEQA. (See, e.g., Shawn v. Golden Gate Bridge, etc. District (1976) 60 Cal.App.3d 699, 701 -704; 58 Ops.Atty.Gen. 708 (1975).) Tellingly, the City itself has admitted that its proposed "Harbor Charges" program is a "project ": the City even created a separate "project" webpage for the program on the portion of the City's website identifying the City's "Projects & Issues." (See www .newportbeachca.gov /index.aspx ?paqe= 2166.) In sum, the City's staff recommendation that the City treat its proposed long- term - lease -and- rent - increase project as if it "is not a project as defined in Section 15387" is incorrect. And this misguided recommendation has the City on the path to violate CEQA. Before the Council actually approves this project by adopting the forthcoming new proposed lease template with rental rate increases, it must comply with CEQA. Under CEQA, the term "project" refers to the whole of an action and to the underlying activity being approved, not to each governmental approval. (CEQA Guidelines, § 15378(a), (c) -(d); Association for a Cleaner Environment v. Yosemite Community College Dist. (2004) 116 Cal.App.4th 629, 637.) Thus, a public agency may not divide a single project into smaller, individual subprojects to avoid responsibility for considering the environmental impact of the project as a whole. (Orinda Assn. v. Board of Supervisors (1986) 182 Cal.App.3d 1145, 1171.) In other words, CEQA "'cannot be avoided by chopping up proposed projects into bite -sized pieces' which, when taken individually, may have no significant adverse effect on the environment." (Tuolumne County Citizens for Responsible Growth v. City of Sonora (2007) 155 Cal.App.4th 1214, 1223.) Again as the City recognizes on its own website, the City's proposed "Harbor Charges" project includes adopting a new, long -term lease template and increasing the rents across all of Newport Harbor, including commercial marinas, fuel docks, boatyards, and residential docks. Accordingly, under CEQA the City must analyze the cumulative environmental effects of this entire project; the City cannot chop it up by type of facility and pretend the environmental effects of the rent increases for each separate facility will not be significant. Nonetheless, the City has been incorrectly trying to piecemeal its proposed "Harbor Charges" project. For example, at the September 12, 2012, City Council meeting, both the City's staff and members of the City Council made a point of emphasizing to the audience that the meeting was only about commercial marinas and that the City was excluding from consideration proposed lease template changes and rent increases for fuel docks, boatyards, residential docks, and other users. 28441.003/4846- 0564- 6353v,1 F-- i K .- 11 C 14 ART. K114 C. & c i. DRCN October 22, 2012 Page 4 The City's Proposed Long- Term - Lease - Template -with- Increased - Rental - Charges Proiect Will Result in Both Direct and Reasonably Foreseeable Indirect Physical Changes in the Environment The scope of review under CEQA is not confined to immediate, direct effects; it also extends to reasonably foreseeable indirect physical changes to the environment. (CEQA Guidelines, § 15378(a).) As a result, a public agency's approval that starts in motion a chain of events that will result in foreseeable impacts on the physical environment qualifies as an approval of a project subject to CEQA. (See Fullerton Joint Union High School Dist. v. State Board of Education (1982) 32 Cal.3d 779, 796.) The key distinction is between a "governmental approval which constitutes an essential step culminating in an action which may effect the environment" and an approval "which portends no particular action affecting the environment." (Ibid.) As noted, the courts have recognized that increasing rates and fares can begin a chain reaction that results in both direct and indirect physical changes to the environment. (See, e.g., Shawn v. Golden Gate Bridge, etc. District, supra, 60 Cal.App.3d at pp. 701 -704.) And here the City's existing public record is filled with the many ways in which the City's increase in harbor rents will trigger both direct and indirect changes to the physical environment of Newport Harbor and marinas throughout Southern California. Enclosed as Exhibit A is a copy of the CEQA Guidelines' suggested form of "Initial Study." (CEQA Guidelines, Appendix G.) Walking through the checklist of categories from this form — as the City must do prior to approving the forthcoming proposed long -term lease template with significant rental rate increases, or taking any other formal actions to implement its proposed project — provides quick conformation that the City's proposed project requires CEQA compliance: G "AESTHETICS ": "Would the project ... [h]ave a substantial adverse effect on a scenic vista .. . [or] [s]ubstantially degrade the existing visual character or quality of the site and its surroundings ?" Yes. Obviously, one of the outstanding features of Newport Beach is Newport Harbor and the scenic vistas in and around the harbor. As discussed further below, many owners of businesses within the harbor, including the operators of marinas, boat rental facilities, fuel docks, and boatyards have testified before the City Council and otherwise provided evidence to the City that the dramatic rent increases the City is proposing will drive them out of business. Naturally, since each of these businesses sits prominently on the waterfront in Newport Harbor, any changes to the their physical facilities will have visual effects. At a minimum, the high rents will divert moneys away from maintenance and upgrades to these 28441.003!4846- 0564- 6353v.1 H K C HART. KING r COLDRLN October 22, 2012 Page 5 facilities, which will cause them to deteriorate both functionally and visually. And if the rent increases force these operations out of business, the facilities will sit vacant or be replaced with different uses. All of which will change the basic scenery of Newport Harbor, altering its scenic values. Further, by increasing mooring and slip rents, the City will divert moneys that recreational boaters have available to maintain their boats. This will lead to an increased number of boat owners not properly maintaining their vessels, allowing them to become dilapidated eyesores. It will also naturally lead to an increase in boat abandonments. As the California Legislature has recognized, boat abandonments are a substantial problem in California. (See Harb. & Nay. Code, §§ 526 et seq. [recent legislation establishing programs to address the abandoned - boat problem].) And in the current recessionary environment, boat abandonments are becoming an increasing problem. (See, e.g., www.foxnews.com /us /2011/08/08/ abandoned- boats - become- unofficial- economic - indicator /; a printout is enclosed as Exhibit B.) G "GREENHOUSE GAS EMISSIONS ": ➢ "Would the project ... [g]enerate greenhouse gas emissions, either directly or indirectly, that have a significant impact on the environment ?" o Yes. At the September 12, 2012, City Council meeting, for example, operators of fuel docks and boatyards explained that Newport Harbor has already gone from having seven fuel docks to now having just three fuel docks, and from nine boatyards to just six boatyards. And they explained that these limits on available services are already forcing boats to leave and travel as far away as San Pedro and even San Diego to obtain fuel and repairs. These Newport Harbor operators went on to testify that the City's rent increases are likely to drive them out of business, adding to the need for boats to travel to other harbors for fuel and services. Boats, of course, consume substantial amounts of gasoline and diesel, releasing greenhouse gases. And thus if they are forced to travel farther distances in order to obtain fuel and repairs, they will be contributing greater amounts of greenhouse gasses. This increase will be directly attributable to the City's proposed action of driving the fuel docks and boatyards out of Newport Harbor. Further, boatyards are also being driven out of business in other Southern California marinas. (See, e.g., www. the log. co m /Article/ Last - Small- Boatva rd -i n -LA -H arbor- Gets -Evi ction- Notice; a copy of which is enclosed at Exhibit C.) This means that the City's proposed action is likely to add to the actions of other marinas to drive boat owners to have to go to ever farther locations to obtain repair services. 28441.003/4846- 0564- 6353v.1 H Kc-t C HART. KING L COLGREN October 22, 2012 Page 6 "HAZARDOUS AND HAZARDOUS MATERIALS ": > "Would the project ... [c]reate a significant hazard to the public or the environment through the routine transport, use, or disposal of hazardous materials ?" e Yes. Again, by driving fueling and boat repair out of Newport Harbor, the City will be driving boat traffic to other marinas, and boats carry gasoline, cooling fluids, batteries, and other hazardous materials. Additionally, as noted, the City's rent increases are likely to result in increased abandonment of boats. As the Coastal Commission states on its website: Abandoned vessels in our waterways are a major problem as they create navigation and environmental hazards. Consider the pollution that comes from one abandoned boat that sinks — oil, fuel, anti - freeze and many synthetic and often toxic materials the boat itself is made of. Not only do these harmful substances destroy fish habitat and our drinking water, but the blight and dangers that come from sunken boats put boaters at greater safety risks. (See www. coastal. ca. gov /ccbn /abandoned_vessels.htmi; a printout is enclosed as Exhibit D.) a "HYDROLOGY AND WATER QUALITY ": > "Would the project ... [¶] ... substantially degrade water quality ?" v Yes. Again, by increasing the risk of abandoned vessels, the City's proposed project will increase the risk that hazardous materials will degrade water quality. Likewise, the expected changes in waterfront land uses, as described below, will result in new construction on the waterfront, which, in turn, will create the potential to further degrade water quality in Newport Harbor. C "LAND USE AND PLANNING ": > "Would the project ... [c]onflict with any applicable land use plan, policy, or regulation of an agency with jurisdiction over the project (including, but not limited to the general plan, specific plan, or proposed program, or zoning ordinance) adopted for the purpose of avoiding or mitigating an environmental effect ?" 28441.003/4846- 0564- 6353v.1 HART. KING £. CLILORLN October 22, 2012 Page 7 Yes. The City's own Coastal Land Use Plan, in sections 3.32 and 3.3.3, contains detailed policies promoting boat berthing and harbor support facilities, like fueling and repair. In fact, the Plan states that harbor support facilities "are considered essential to maintaining a working harbor." Notably, the Plan's policies call on the City to "[p]rotect, and where feasible, expand and enhance" harbor support facilities. But, as noted, the City's proposed project will do the opposite; it will drive many marine operations out of business, or at least out of Newport Harbor. According to the testimony offered at the September 12, 2012, City Council meeting, the businesses at risk include boatyards, fuel docks, and boat rental businesses. Moreover, the City's proposed project will result in numerous land -use changes. For example, when the City forces marine operators out of business, those properties are likely to be redeveloped to some different use. Likewise, the City's proposed rent increases can be expected to prompt some current tideland users who own the adjacent uplands property to conclude that their best alternative financially is to abandon the tideland use (e.g.. boat slips) and redevelop their upland property to a use that does not depend on the tidelands (e.g., offices and restaurants). Not only will this mean that the City's proposed rent increases will have driven land -use changes on the uplands, it will also necessarily mean that the proposed rent increases will drive land -use changes on the tidelands. Specifically, most of the City's tidelands have no access from the land; they are landlocked. Thus, without being combined with the uplands, those tidelands cannot be used for boat slips or any other use that requires access to land. So what use will be left? Mooring fields. C "RECREATION ": "Would the project increase the use of existing ... recreational facilities such that substantial physical deterioration of the facility would occur or be accelerated ?" Yes. As noted, the City's proposed rent increases will drive boaters out of Newport Harbor to seek services in other recreational marinas. This will add to the use, and thus wear and tear, of those other recreational facilities. Likewise, the City received extensive testimony that the proposed rent increases will drive increases in slip fees, which, in turn, will drive boats to other recreational marinas. This will naturally increase the impacts to those marinas. The City's Approach for Setting Its Rent Increases Violates the Legal Requirements for Establishing Fair Market Rent Multiple parties have previously lodged objections with the City, related to legal, procedural, factual, and math errors in the City's appraisal /rent- setting process. We incorporate those 28441.003/4846- 0564.6353v.1 Y Y Y \ f, C HART, KiWG 6, COLDRCN October 22, 2012 Page 8 objections here by this reference. However, we also want to emphasize certain specific errors in that appraisal /rent- setting process. To begin, the City has treated all of the tidelands properties it manages as if they were interchangeable from a valuation standpoint. Thus, the City is working on creating a "generic" valuation that it will apply to the rental of all of those properties. This violates real estate funda- mentals and California law. Basic real estate economics, as well as the old adage "location, location, location," teach that each parcel of real estate is unique, and its location and other attributes are key characters that must be considered to determine its value. And California law requires that these unique characteristics be considered in determining the fair market value of property. (Evid. Code, § 816.) But the City seems to have no intention of determining the fair market rent of each property to be leased. Numerous marine owners have requested that the City conduct individual property analyses to establish fair market value. Mr. Henn and Mr. Selich have stated that property specific valuations are cumbersome and an administrative burden. They have both stated publicly that the generic review of properties was easier for the City and took less time and they wanted to not delay the Committee. The City cannot disregard proper process only because it is easier and faster to do so. The City is proposing to increase rents by 500 percent in an economic downturn, despite evidence of two experts that such rates are significantly overstated. Therefore, it is not proper, fair, or reasonable for the City to do "what is easy or less of a burden" when the consequences of the actions are materially adverse to marine serving business. Since the City is not determining the fair market rent for the specific properties it intends to lease, the City is violating the mandate of its own Municipal Code to do so. Next, in making its recommendations, the City's Harbor Charges Committee therefore did not properly value the water parcels as standalone parcels without land access. Private investment has built the parking, restrooms, docks, seawalls, ramps, guardrails, and utilities. In addition, private water parcels, in many cases, abut the privately owned land parcel. Thus, the water parcels have no direct land access. The highest and best use of the water parcels, as independent sites, is severely restricted by this lack of access to the uplands for support of any commercial use. The water parcels could potentially be used for offshore moorings; however, lack of uplands parking, restrooms, and dingy launching facilities would present problems of approval from local citizens' groups and certain regulatory agencies. Therefore, as independent sites, the water parcels have limited economic value. Yet, the Committee has valued the water parcels as having 80 percent of the total value of a marina project that is fully integrated into the upland parcels. Moreover, the recommendations of the City's Harbor Charges Committee are not based on the legally required definition of "fair market value." California law, specifically Code of Civil Procedure section 1263.320, subdivision (a), defines fair market value as: [T]he highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge 28441.003/4846- 0564- 6353v.1 Y R Y \v\ C IIART. K11JG C. IL.ORr1'4 October 22, 2012 Page 9 of all the uses and purposes for which the property is reasonably adaptable and available. But for the Committee to come up with its recommendation that rent be set at 20 percent of gross revenues, it had to rely on purported "comparables" that are non - arm's - length transactions between the County and existing, captive marina operators. These are not open market transactions. These were forced transactions where the captive marina operators were under "a particular necessity" to protect their investment in their marina improvements. This is a classic bilateral monopoly as has been stated several times on the record. Further, the Committee ignored the need for comparable sales to be made "within a reasonable time before or after the date of valuation." (Evid. Code, § 815.) In fact, the Committee failed to recognize that establishing the dates on which the various water parcels are to be valued is a key aspect of determining the fair market value. (See Code Civ. Proc., § 1263.320, subd. (a) [ "fair market value ... is the highest price on the date of valuation ... " (emphasis added)].) lm sum, since the City's mandate is ultimately to set fair market rent for the tidelands it manages, and since the City has failed to follow the legal requirements for establishing fair market value of the water parcels, the City's proposed rent increases would therefore violate the law. The City's Proposed Rent increases violate the City's Own Coastal Land Use Plan As noted above, the City's own Coastal Land Use Plan, in sections 3.3.2 and 3.3.3, contains detailed policies promoting boat berthing and harbor support facilities, like fueling and repair. And the Plan's detailed policies call on the City to "[p]rotect, and where feasible, expand and enhance" harbor support facilities. But, again, the City's proposed rent increases will do the opposite; they will drive many marine operations out of business, or at least out of Newport Harbor. Thus, the City is violating the law by ignoring its own planning rules. Conclusion To summarize, the City has failed to understand that it must comply with CEQA before approving its proposed "Harbor Charges" project. And because of this, the City has failed to take any steps toward analyzing the environmental impacts that will flow from a dramatic increase in rents throughout Newport Harbor. But the City is still in the midst of reviewing that project, so before it adopts any forthcoming new long- term -lease template with new rental rates, the City must comply with CEQA. Accordingly, Duffield Marine, Inc. and Duffy Boats request that the City not take any final action on its proposed "Harbor Charges" project until it fully evaluates all of these impacts. And while the City is doing the necessary environmental study, they request that (1) the City also take the proper steps to determine the true fair market rents for the specific properties and (2) the City ensure it is taking steps to protect and enhance marine facilities, as the City's Coastal Land Use Plan requires, rather than drive them out of business. 28441.003/4846- 0564- 6353v.1 HK C HART. K;NG & COL OPL N October 22, 2012 Page 10 We respectfully request that this letter be made a part of the administrative record for the City's proposed "Harbor Charges" project. Thank you for the opportunity to provide these comments. Very truly yours, HART, KING & COLDREN William R. Hart WRH /gb Enclosures cc: Aaron C. Harp, Esq., City Attorney 28441.003/4846- 0564- 6353v.1 Exhibit A Appendix G Environmental Checklist Form 1. Project title: 2. Lead agency name and address: 3. Contact person and phone number: 4. Project location: 5. Project sponsor's name and address 6. General plan designation: 7. Zoning: 8. Description of project: (Describe the whole action involved, including but not limited to later phases of the project, and any secondary, support, or off -site features necessary for its implementation. Attach additional sheets if necessary.) 9. Surrounding land uses and setting: Briefly describe the project's surroundings: 10. Other public agencies whose approval is required (e.g., permits, financing approval, or participation agreement.) ENVIRONMENTAL FACTORS POTENTIALLY AFFECTED: The environmental factors checked below would be potentially affected by this project, involving at least one impact that is a "Potentially Significant Impact" as indicated by the checklist on the following pages. ® Aesthetics ® Agriculture Resources ® Air Quality ® Biological Resources ® Cultural Resources ® Geology /Soils ® Hazards & ® Hydrology/Water ® Land Use /Planning Hazardous Materials Quality ® Mineral Resources ® Noise ® Population /Housing ® Public Services Recreation ® Transportation/Traffic ® Utilities /Service ® Mandatory Findings of Significance Systems DETERMINATION: (To be completed by the Lead Agency) On the basis of this initial evaluation: ® I find that the proposed project COULD NOT have a significant effect on the environment, and a NEGATIVE DECLARATION will be prepared. ® I find that although the proposed project could have a significant effect on the environment, there will not be a.significant effect in this case because revisions in the project have been made by or agreed to by the project proponent. A MITIGATED NEGATIVE DECLARATION will be prepared. ® I find that the proposed project MAY have a significant effect on the environment, and an ENVIRONMENTAL IMPACT REPORT is required. ® I find that the proposed project MAY have a "potentially significant impact" or 'potentially significant unless mitigated" impact on the environment, but at least one effect 1) has been adequately analyzed in an earlier document pursuant to applicable legal standards, and 2) has been addressed by mitigation measures based on the earlier analysis as described on attached sheets. An ENVIRONMENTAL IMPACT REPORT is required, but it must analyze only the effects that remain to be addressed. CJ I find that although the proposed project could have a significant effect on the environment, because all potentially significant effects (a) have been analyzed adequately in an earlier EIR or NEGATIVE DECLARATION pursuant to applicable standards, and (b) have been avoided or mitigated pursuant to that earlier EIR or NEGATIVE DECLARATION, including revisions or mitigation measures that are imposed upon the proposed project, nothing further is required. Signature Date Printed Name For EVALUATION OF ENVIRONMENTAL IMPACTS: 1) A brief explanation is required for all answers except "No Impact" answers that are adequately supported by the information sources a lead agency cites in the parentheses following each question. A "No Impact" answer is adequately supported if the referenced information sources show that the impact simply does not apply to projects like the one involved (e.g., the project falls outside a fault rupture zone). A "No Impact" answer should be explained where it is based on project - specific factors as well as general standards (e.g.. the project will not expose sensitive receptors to pollutants, based on a project - specific screening analysis). 2) All answers must take account of the whole action involved, including off -site as well as on -site, cumulative as well as project - level, indirect as well as direct, and construction as well as operational impacts. 3) Once the lead agency has determined that a particular physical impact may occur, then the checklist answers must indicate whether the impact is potentially significant, less than significant with mitigation, or less than significant. "Potentially Significant Impact" is appropriate if there is substantial evidence that an effect may be significant. If there are one or more "Potentially Significant Impact" entries when the determination is made, an EIR is required. 4) "Negative Declaration: Less Than Significant With Mitigation Incorporated" applies where the incorporation of mitigation measures has reduced an effect from "Potentially Significant Impact" to a "Less Than Significant Impact." The lead agency must describe the mitigation measures, and briefly explain how they reduce the effect to a less than significant level (mitigation measures from "Earlier Analyses," as described in (5) below, may be cross - referenced). 5) Earlier analyses may be used where, pursuant to the tiering, program EIR, or other CEQA process, an effect has been adequately analyzed in an earlier EIR or negative declaration. Section 15063(c)(3)(D). In this case, a brief discussion should identify the following: a) Earlier Analysis Used. Identify and state where they are available for review. b) Impacts Adequately Addressed. Identify which effects from the above checklist were within the scope of and adequately analyzed In an earlier document pursuant to applicable legal standards, and state whether such effects were addressed by mitigation measures based on the earlier analysis. C) Mitigation Measures. For effects that are "Less than Significant with Mitigation Measures Incorporated," describe the mitigation measures which were incorporated or refined from the earlier document and the extent to which they address site - specific conditions for the project. 6) Lead agencies are encouraged to incorporate into the checklist references to information sources for potential impacts (e.g., general plans, zoning ordinances). Reference to a previously prepared or outside document should, where appropriate, include a reference to the page or pages where the statement is substantiated. 7) Supporting Information Sources: A source list should be attached, and other sources used or individuals contacted should be cited in the discussion. 8) This is only a suggested form, and lead agencies are free to use different formats; however, lead agencies should normally address the questions from this checklist that are relevant to a project's environmental effects in whatever format is selected. 9) The explanation of each issue should identify: a) the significance criteria or threshold, if any, used to evaluate each question; and b) the mitigation measure identified, if any, to reduce the impact to less than significance SAMPLE QUESTION Issues: I. AESTHETICS —Would the project a) Have a substantial adverse effect on a scenic vista? b) Substantially damage scenic resources, including, but not limited to, trees, rock outcroppings, and historic buildings within a state scenic highway? c) Substantially degrade the existing visual character or quality of the site and its surroundings? d) Create a new source of substantial light or glare which would adversely affect day or nighttime views in the area? II. AGRICULTURE RESOURCES: In determining whether impacts to agricultural resources are significant environmental effects, lead agencies may refer to the California Agricultural Land Evaluation and Site Assessment Model (1997) prepared by the California Dept. of Conservation as an optional model to use in assessing impacts on agriculture and farmland. Would the project: a) Convert Prime Farmland, Unique Farmland, or Farmland of Statewide Importance (Farmland), as shown on the maps prepared pursuant to the Farmland Mapping and Monitoring Program of the California Resources Agency, to non- agricultural use? b) Conflict with existing zoning for agricultural use, or a Williamson Act contract? c) Involve other changes in the existing environment which, due to their location or nature, could result in conversion of Farmland, to non - agricultural use? El 13 13 13 Less Than Significant Potentially with Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact El 13 13 13 b) Have a substantial adverse effect on any riparian habitat or other sensitive natural community identified in local or regional . plans, policies, regulations or by the California Department of Fish and Game or US Fish and Wildlife Service? c) Have a substantial adverse effect on federally protected wetlands as defined by Section 404 of the Clean Water Act (including, but not limited to, marsh, vernal pool, coastal, etc.) through direct removal, Less Than Significant Potentially with Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact III. AIR QUALITY -- Where available, the signiflcance criteria established by the applicable air quality management or air pollution control district may be relied upon to make the following determinations. Would the project:' a) Conflict with or obstruct implementation of the applicable air quality plan? b) Violate any air quality standard or contribute substantially to an existing or projected air quality violation? c) Result in a cumulatively considerable net increase of any criteria pollutant for which the project region is non - attainment under an applicable federal or state ambient air quality standard (including releasing emissions which exceed quantitative thresholds for ozone precursors)? d) Expose sensitive receptors to substantial pollutant concentrations? e) Create objectionable odors affecting a substantial number of people? IV. BIOLOGICAL RESOURCES -- Would the project: a) Have a substantial adverse effect, either directly or through habitat modifications, on any-species identified as a candidate, sensitive, or special status species in local or regional plans, policies, or regulations, or by the California Department of Fish and Game or U.S. Fish and Wildlife Service? b) Have a substantial adverse effect on any riparian habitat or other sensitive natural community identified in local or regional . plans, policies, regulations or by the California Department of Fish and Game or US Fish and Wildlife Service? c) Have a substantial adverse effect on federally protected wetlands as defined by Section 404 of the Clean Water Act (including, but not limited to, marsh, vernal pool, coastal, etc.) through direct removal, filling, hydrological interruption, or other means? d) Interfere substantially with the movement of any native resident or migratory fish or wildlife species or with established native resident or migratory wildlife corridors, or impede the use of native wildlife nursery sites? e) Conflict with any local policies or ordinances protecting biological resources, such as a tree preservation policy or ordinance? 0 Conflict with the provisions of an adopted Habitat Conservation Plan, Natural Community Conservation Plan, or other approved local, regional, or state habitat conservation plan? V. CULTURAL RESOURCES — Would the project: a) Cause a substantial adverse change in the significance of a historical resource as defined in § 15064.5? b) Cause a substantial adverse change in the significance of an archaeological resource pursuant to § 15064.5? c) Directly or indirectly destroy a unique paleontologidal resource or site or unique geologic feature? d) Disturb any human remains, including those Interred outside of formal cemeteries? VI. GEOLOGY AND SOILS -- Would the project: a) Expose people or structures to potential substantial adverse effects, including the risk of loss, injury, or death involving: i) Rupture of a known earthquake fault, as delineated on the most recent Alquist - Priolo Earthquake Fault Zoning Map issued by the State Geologist for the area or based on other substantial evidence of a known fault? Refer to Division of Mines and Geology Special Publication 42. Less Than Significant Potentially with Significant Mitigation Impact Incorporated Less Than Significant No Impact Impact 13 13 13 L L ■ ■r o li) Strong seismic ground shaking? iii) Seismic - related ground failure, including liquefaction? iv) Landslides? b) Result in substantial soil erosion or the loss of topsoil? c) Be located on a geologic unit or soil that is unstable, or that would become unstable as a result of the project, and potentially result in on- or off -site landslide, lateral spreading, subsidence, liquefaction or collapse? d) Be located on expansive soil, as defined in Table 18 -1 -B of the Uniform Building Code (1994), creating substantial risks to life or property? e) Have soils incapable of adequately supporting the use of septic tanks or alternative waste water disposal systems where sewers are not available for the disposal of waste water? VII. HAZARDS AND HAZARDOUS MATERIALS — Would the project: a) Create a significant hazard to the public or the environment through the routine transpdrt, use, or disposal of hazardous materials? b) Create a significant hazard to the public or the environment through reasonably foreseeable upset and accident conditions involving the release of hazardous materials into the environment? c) Emit hazardous emissions or handle hazardous or acutely hazardous materials, substances, or waste within one - quarter mile of an existing or proposed school? 0 Less Than 0 11 13 Significant 0 13 Potentially with Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact 0 11 0 11 13 0 0 13 8 ® 8 VIII. HYDROLOGY AND WATER QUALITY- - Would the project: a) Violate any water quality standards or Less Than waste discharge requirements? Significant Potentially with Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact d) Be located on a site which Is included on a list of hazardous materials sites compiled be a net deficit in aquifer volume or a pursuant to Government Code Section lowering of the local groundwater table level 65962.5 arid, as a result, would it create a (e.g., the production rate of pre- existing significant hazard to the public or the environment? e) For a project located within an airport land which would not support existing land uses or use plan or, where such a plan has not been planned uses for which permits have been adopted, within two miles of a public airport granted)? or public use airport, would the project result in a safety hazard for people residing or working in the project area? pattern of the site or area, including through f) For a project within the vicinity of a private the alteration of the course of a stream or airstrip, would the project result in a safety hazard for people residing or working in the project area? g) Impair implementation of or physically interfere with an adopted emergency response plan or emergency evacuation plan? h) Expose people or structures to a significant risk of loss, injury or death involving wildland fires, including where wildlands are adjacent to urbanized areas or where residences are intermixed with wildlands? VIII. HYDROLOGY AND WATER QUALITY- - Would the project: a) Violate any water quality standards or waste discharge requirements? b) Substantially deplete groundwater supplies or Interfere substantially with groundwater recharge such that there would be a net deficit in aquifer volume or a lowering of the local groundwater table level (e.g., the production rate of pre- existing nearby wells would drop to a level which would not support existing land uses or planned uses for which permits have been granted)? c) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or IX. LAND USE AND PLANNING - Would the project: a) Physically divide an established Less Than community? Significant b) Conflict with any applicable land use plan, Potentially with Less Than policy, or regulation of an agency with Significant Mitigation Significant No jurisdiction over the project (including, but not Impact Incorporated Impact Impact river, in a manner which would result in substantial erosion or siltation on- or off -site? d) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or river, or substantially increase the rate or amount of surface runoff in a manner which would result in flooding on- or off -site? e) Create or contribute runoff water which would exceed the capacity of existing or planned stormwater drainage systems or provide substantial additional sources of polluted runoff? f) Otherwise substantially degrade water quality? g) Place housing within a 100 -year flood hazard area as mapped on a federal Flood Hazard Boundary or Flood Insurance Rate Map or other flood hazard delineation map? h) Place within a 100 -year flood hazard area structures which would impede or redirect flood flows? i) Expose people or structures to a significant risk of loss, injury or death involving flooding, including flooding as a result of the failure of a levee or dam? j) Inundation by seiche, tsunami, or mudflow? IX. LAND USE AND PLANNING - Would the project: a) Physically divide an established community? b) Conflict with any applicable land use plan, policy, or regulation of an agency with jurisdiction over the project (including, but not limited to the general plan, specific plan, local coastal program, or zoning ordinance) adopted for the purpose of avoiding or mitigating an environmental effect? c) Conflict with any applicable habitat conservation plan or natural community conservation plan? Less Than Potentially Significant with Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact X. MINERAL RESOURCES --Would the project: a) Result in the loss of availability of a known mineral resource that would be of value to the region and the residents of the state? b) Result in the loss of availability of a locally - important mineral resource recovery site delineated on a local general plan, specific plan or other land use plan? XI. NOISE -- Would the project result in: a) Exposure of persons to or generation of noise levels in excess of standards established in the local general plan or noise ordinance, or applicable standards of other agencies? b) Exposure of persons to or generation of excessive groundborne vibration or groundborne noise levels? c) A substantial permanent increase in ambient noise levels in the project vicinity above levels existing without the project? d) A substantial temporary or periodic increase in ambient noise levels in the project vicinity above levels existing without the project? e) For a project located within an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport or public use airport, would the project expose people residing or working in the project area to excessive noise levels? f) For a project within the vicinity of a private airstrip, would the project expose people residing or working in the project area to excessive noise levels? XII. POPULATION AND HOUSING —Would the project: a) Induce substantial population growth in an area, either directly (for example, by proposing new homes and businesses) or indirectly (for example, through extension of roads or other infrastructure)? b) Displace substantial numbers of existing housing, necessitating the construction of replacement housing elsewhere? c) Displace substantial numbers of people, necessitating the construction of replacement housing elsewhere? a) Would the project result in substantial adverse physical impacts associated with the provision of new or physically altered governmental facilities, need for new or physically altered governmental facilities, the construction of which could cause significant environmental impacts, in order to maintain acceptable service ratios, response times or other performance objectives for any of the public services: Fire protection? Police protection? Schools? Parks? Other public facilities? XIV. RECREATION a) Would the project increase the use of existing neighborhood and regional parks or other recreational facilities such that substantial physical deterioration of the facility would occur or be accelerated? 13 Less Than 11 Significant 13 Potentially with Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact 13 11 11 0 13 b) Does the project include recreational facilities or require the construction or expansion of recreational facilities which might have an adverse physical effect on the environment? XV. TRANSPORTATION/TRAFFIC --Would the project: a) Cause an increase in traffic which is substantial in relation to the existing traffic load and capacity of the street system (i.e., result in a substantial increase in either the number of vehicle trips, the volume to capacity ratio on roads, or congestion at intersections)? b) Exceed, either individually or cumulatively, a level of service standard established by the county congestion management agency for designated roads or highways? c) Result in a change in air traffic patterns, including either an increase in traffic levels or a change in location that results in substantial safety risks? d) Substantially increase hazards due to a design feature (e.g., sharp curves or dangerous intersections) or incompatible uses (e.g., farm equipment)? e) Result in inadequate emergency access? I) Result in inadequate parking capacity? g) Conflict with adopted policies, plans, or programs supporting alternative transportation (e.g., bus turnouts, bicycle racks)? XVI. UTILITIES AND SERVICE SYSTEMS — Would the project: a) Exceed wastewater treatment requirements of the applicable Regional Water Quality Control Board? 13 13 13 0 Less Than 13 Significant 13 11 Potentially with Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact 0 0 13 13 13 13 13 0 13 13 13 0 13 13 13 11 13 13 13 0 XVII. MANDATORY FINDINGS OF SIGNIFICANCE a) Does the project have the potential to degrade the quality of the environment, substantially reduce the habitat of a fish or wildlife species, cause a fish or wildlife population to drop below self- sustaining levels, threaten to eliminate a plant or animal community, reduce the number or restrict the range of a rare or endangered plant or animal or eliminate important examples of the major periods of California history or prehistory? b) Does the project have Impacts that are individually limited, but cumulatively considerable? ( "Cumulatively considerable" means that the incremental Less Than Significant Potentially with Less Than Signifcant Mitigation Significant No Impact Incorporated Impact Impact b) Require or result in the construction of new water or wastewater treatment facilities or expanslon of existing facilities, the construction of which could cause significant environmental effects? c) Require or result in the construction of new storm water drainage facilities or expansion of existing facilities, the construction of which could cause significant environmental effects? d) Have sufficient water supplies available to serve the project from existing entitlements and resources, or are new or expanded entitlements needed? e) Result in a determination by the wastewater treatment provider which serves or may serve the project that it has adequate capacity to serve the project's projected demand in addition to the provider's existing commitments? f) Be served by a landfill with sufficient permitted capacity to accommodate the project's solid waste disposal needs? g) Comply with federal, state, and local �o u statutes and regulations related to solid waste? XVII. MANDATORY FINDINGS OF SIGNIFICANCE a) Does the project have the potential to degrade the quality of the environment, substantially reduce the habitat of a fish or wildlife species, cause a fish or wildlife population to drop below self- sustaining levels, threaten to eliminate a plant or animal community, reduce the number or restrict the range of a rare or endangered plant or animal or eliminate important examples of the major periods of California history or prehistory? b) Does the project have Impacts that are individually limited, but cumulatively considerable? ( "Cumulatively considerable" means that the incremental Note: Authority cited: Sections 21083 and 21087, Public Resources Code. Reference: Sections 21080(c), 21080.1, 21080.3, 21082.1, 21083, 21083.3, 21093, 21094, 21151, Public Resources Code; Sundstrom v. County of Mendocino, 202 Cal.App.3d 296 (1988); Leonoff v. Monterey Board of Supervisors, 222 Cal.App.3d 1337 (1990). Less Than Significant Potentially with Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact effects of a project are considerable when viewed in connection with the effects of past projects, the effects.of other current projects, and the effects of probable future projects)? c) Does the project have environmental effects which will cause substantial adverse effects on human beings, either directly or indirectly? Note: Authority cited: Sections 21083 and 21087, Public Resources Code. Reference: Sections 21080(c), 21080.1, 21080.3, 21082.1, 21083, 21083.3, 21093, 21094, 21151, Public Resources Code; Sundstrom v. County of Mendocino, 202 Cal.App.3d 296 (1988); Leonoff v. Monterey Board of Supervisors, 222 Cal.App.3d 1337 (1990). Exhibit B a Page 1 of 6 .I Fox News I Fox Business I uReport I Fox News Radio I Fox News Latino I Fox Nation I F ON AIR NOW � ' I Search 1.� het Happening Now Jon Scott and Jenne Lee Fair 8 Baianoed Home I Video I Politics U.S. I Opinion I Entertainment I Tech I Science I Health I Travel U.S. HOME Crime Economy. Immigration. Disasters National Interest Terror Military Religion Educe SPACE SHUTTLE ENDEAVOUR DEPARTS EDWARDS AIR FORCE BASE Abandoned Boats Become Unofficial Economic Indicator By Jonathan Seale Published August 06, 2011 FoxNews.com http: / /www.fmmews.com/usl 2011 /08/08 /abandoned- boats - become - unofficial- economic -in... 9/21/2012 Page 2 of 6 Print Email Share Like j 185 I -TWe X67 Share1 7 RELATEDIMAGES Abandoned boat at Folly Beach near Charleston, SC. SHARE THIS ARTICLE ALSO ON THE WEB • Man's Body Discovered in Azusa Canyon • Glendora, CA Patch (Patch - Glendora, CA) • 'Teen Sends Eerie Message the Day Before She Is Murdered (Cafe Mom) • 4 Most Common Kitchen Remodeling Mistakes (Cultivate) • Parents Beware: 11 Dangerous Teenage Trends All Parents Should Know About (Parent Society) • Dog Mourns Loss of Navy SEAL (Petslde) • 10 Shot at The Empire State Building this Morning (ELLS) (What's This?) http: / /www.foxnews. oom/us /2011 /08/0 8/ abandoned - boats- become - unofficial- economic -in... 9/21/2012 Page 3 of 6 CHARLESTON, s.c.- Abandoned vessels may have become an unofficial indicator of the tough economy. While no exact national figures exist, authorities in most states with a coast or large body of water have reported increasing numbers of boat owners abandoning ship in recent years. "Certainly the economic downturn did seem to increase the number of boats that were being reported as derelict," said Dan Burger, director of communication for the Ocean and Coastal Resource Management division of the South Carolina Department of Health and Environmental Control (DHEC). There are a host of reasons why people abandon boats, including those who can't keep up on the loan payments, maintenance, or the high cost of fuel. DHEC is overseeing the removal of scores of abandoned boats from coastal waterways. During a recent tour of Charleston's Ashley River, DHEC Coastal Projects Manager Curtis Joyner pointed to a saltwater marsh where his agency had supervised the removal of multiple boats. "There were seven vessels ... consisting of a metal barge, a shrimp boat and several sail boats," Joyner said. "I think Its one of our really good success stories in restoring the environment." In addition to being eyesores, abandoned vessels often leak fuel and other hazardous chemicals and usually lack any lights to warn approaching boats at night. Joyner pointed to an abandoned vessel anchored close to a major channel used by commercial and recreational boaters. Overtime, anchor lines wear out and boats break free, eventually sinking or colliding with other watercraft. "When the vessel breaks loose, then we have to dealt with it," said David Rogers, harbormaster at the Charleston City Marina. "Normally they're, of course, abandoned and do not have Insurance." http : / /www.foxnews.com/usl 2011 /08/08/ abandoned - boats- become - unofficial- economic -in.., 9/21/2012 Page 4 of 6 South Carolina is among dozens of state and local governments that have recently increased penalties against owners of abandoned vessels. But with boats frequently changing hands and owners often scratching off serial numbers, tracking them can be difficult. That sticks taxpayers with removal fees ranging from $3,000 to $20,000, depending on the size of the boat. The same market conditions affecting boat owners are also affecting the government agencies -in charge of removing abandoned vessels. So, increasingly, they're relying on help from the private sector. "A local car dealer chipped in to help us get a big shrimp boat out recently," said Robbie Freeman, managing partner of the Charleston City Marina. "Just people who care about clean watet." Freeman said he advises financially troubled boaters to seek help from local businesses and government authorities before their vessels take on water. According to Freeman, once a boat sinks, disposal fees can quadruple, making a public hazard all the more costly. http: / /www. foxnews. com/us /2011 /08/08 /abandoned -b oats- become -uno fficial- economic -in... 9/21/2012 RECOMMENDED STORIES • New Jersey boy, 6, killed saving sister in attack, police say • Nevada man dies with $200 in bank, $7M in gold hidden inside home • Protester dies after inhaling fumes from burning American flag • Tau penalty to hit nearly 6M uninsured people, under ObamaCare • 10 -part report raises questions about narrative of Obama's early life • The verdict on the Apple Whone 5 .... .. ... ..._.._� ...... .... _ _....� 185 67 i 4 i Like Tvfeet t� , Page 5 of 6 NEWSLETTER SIGNUP Sign up for free e-mail news alerts from �,.r'• FoxNews.com and FoxBusiness.com. Enter Your Email Address ' Sponsored Links W 'VA Loan Refinance 2.25% RATEp/'�2013 VA Loan Guldelines As Seen On Military Channel I All Loan Amounts .25 70F www .Veterant-oanAdministratlon.com Credit Company Breach q Life Lock UltimateTvprotects your identity from the effects of data breach. Lifel-ock.com �.. Business Solutions out the latest solutions for your business from Verizon Wireless. ALSO ON THE WEB B� Spain Bailout To Be Unveiled Next Week: FT Fed's Bullard: U.S. Fits Slow Post - crisis Pattern Fed's Pianalto Says OE3 Should Support Housing Fed's Kocharlakota Proposes Exit Strategy Household Debt Posts Biggest Gain Since 2000 f, i I'. O o __J Slgn Up Buy a link here 'WHO - KILLED MET: New Billboards Seek To Solve Murders Cop Accused Of Assaulting Woman In Wheelchair, 4 -Year- t Old I Only Kooks See UFOs, Head U.K, Astronomer Says I Mom Helps Tweens Vandalize Neighbor's Home With Raw ' Chicken, Tampons: Cope r Haunted House Burned Down By Employees, Cops Say http: / /www,foxnews.comlus /2011 /O8 /08/ abandoned - boats - become - unofficial- economic -in... 9/21/2012 Exhibit C The Log Newspaper I California Boating & Fishing News - Last - Small- Boatyard- in- LA -... Page 1 of 2 Friday, September 21, 2012 BoatMart Classifieds Subscription e � I i NEWS & DEPARTMENTS CLASSIFIEDS I MARINAS I Local State/National/World Harbor Blotter Ask the Attorney > -J Fr SHOWS & EVENTS I PHOTOS I VIDI Opinion Obituaries Catalina El Last Small Boatyard in Port of LEA to Be Evicted posted: 9/12/2012 By: Taylor Hill WILMINGTON — The 63- year -old Wilmington Marine Services boatyard on South Fries Avenue appears to be following in the footsteps of the recently closed Colonial Yacht Anchorage and boatyard. It has received an eviction notice from the Port of Los Angeles. The marine service facility — also known as Dinko'$ Boat Repair, after its owner Dominic "Dinko" Bilicich — Is the last boatyard in the Port of Los Angeles catering to smaller vessels. The move appears to be part of a trend to de- emphasize recreational boating at the port, which is currently focusing on container shipping terminal expansion. Last February, as the boatyard's profits decreased and discussions of a . long -term lease for the yard came to.a halt, the company stopped paying rent to the port, which led to the recent eviction process. Read Comments (3) Print P; Before an eviction date can be set, the port must first obtain a judgment for possession in an unlawful data! and then the court will set an eviction date. Once the eviction date Is set, port spokesman Phillip Sanfield who currently have their vessels on the boatyard site will need to make plans to remove their boats. "The port will make every effort to Identify the owners of the boats and provide as much notice as possible is complete," Sanfield said. "Boats remaining on the premises after the eviction is complete may be subject In the meantime, Bilicich has maintained the yard in working order, and he continues to hold out for a mirat "This Is the only boatyard left here besides Larson's (Al Larson's Boat Shop) — and they work on the great Colonial Yachts went out of business," Bilicich said. "So boaters here have to go all of the way down to Lor http : / /www.thelog.com/Arti6lelLast- Small- Boatyard- in -LA- Harbor- Gets - Eviction -Notice 9/21/2012 The Log Newspaper I California Boating & Fishing News - Last - Small- Boatyard- in- LA -... Page 2 of 2 Ventura to get work done. The boaters here need to put in the word that they need a boatyard here." Since 1951, Billcich has worked at the full - service yard. He started in the business at a young age and worl boatyards throughout Southern California, gaining experience in custom fiberglass work, wooden boats, joi range of shipwright skills. When he was asked to partner with the yard's previous owners, Bilicich jumped at the chance. Over the ye: bought out each partner until the yard was his. Throughout his years of ownership, Bilicich said the yard has never had more than a five -year lease. That I 1971, and he has operated on a month -to -month basis ever since. The agreement with port officials worked well until the 1990s, when Bilicich said the construction of the nee Waterfront Park began, and the street leading to his boatyard was obstructed. "They destroyed this place when they started constructing that park," Bilicich said. Lines of trucks and equil would park on the street and block access to his yard, he said, deterring customers from coming to -the yari extended waits. On top of that, Bilicich said rent has more than doubled on his 2.5 -acre lot in the last five years, making ren increasingly difficult to make. With the situation worsening, Bilicich said he has been looking for a buyer to purchase the yard — but wltho lease in hand, the site's'value is diminished. With business still on the decline, Bilicich said he hasn't been paid himself for the past three years. Accordl Bilicich owes more than $100,000 to the harbor department in rent payments he did not make when the roa to the park construction. "When the road was messed up and they locked me out, that's when I didn't pay," Bilicich said. "They just rebuilt all of those slips at Cabrillo Way, and there's about 3,000 boats in this area that need a bi hope they see the value in us and understand there is a service to the public being done here." Bilicich has been in talks with the Port of Los Angeles regarding finding a boatyard operator to take over th, area's recreational boaters would be severely inconvenienced by losing the yard. So far, no solution has be if no buyer is found; an impending eviction could mark the end of the boatyard. "I really want to find there remains a yard in the area," Bilicich said. "But without a lease, it is very hard." Show Comments (3) http : / /www.thelog.comlArdelefLast- Small - Boatyard- in -LA- Harbor -Gets- Eviction - Notice 9/21/2012 Exhibit D Abandoned Vessel Information for Boaters, Clean Boating Program (California Coastal C... Page 1 of 1 C A L I F O R N I A COASTAL C O M M I S S 1 0 N Abandoned Vessel Information for Boaters .............. ................................................................ ................. . .......................................... I................... Abandoned vessels in our waterways are a major problem as they create.navigation and environmental hazards. Consider the pollution that comes from one abandoned boat that sinks -oil, fuel, antifreeze and many synthetic and often toxic materials the boat Itself is made of. Not only do these harmful substances destroy fish habitat and our drinking water, but the blight and dangers that come from sunken boats put boaters at great safety risks. Legal penalties are substantial for those caught abandoning a boat Including stiff fines, liens on your property and possiblyjafl. See information from the California Department of Boating and Waterways about disposing of an unwanted vessel. IN THE WATER ACTION TO DEAL WITH ABANDONED VESSELS IN CALIFORNIA WATERWAYS Report Abandoned or Sinking Vessels to your Local Marine Patrol and the US Coast Guard. Check the resources below to identify your Local Marine Patrol and the US Coast Guard contacts in your area. US Coast Guard Sector Humboldt Bay (707) 269 -2550 (from the Mendocino - Sonoma County line north to the California - Oregon border) Sector San Francisco Bay (415) 399 -3530 (All ocean waters and Islands in an area bounded on the North by a line bearing 270 degrees true from the Sonoma- Mendocino county line on the coast at 38-45. 5N; on the West by the outermost extent of the U. S, Exclusive Economic Zone (EEZ); and on the South by a line bearing 240 degrees true from the Monterey -San Luis Obispo county line at the coast at 35137. 5N. Inland units include The California Counties of San Mateo, San Francisco, Marin, Sonoma, Napa, Yolo, Sutter, Yuba, Sierra, Nevada, Placer, El Dorado, Sacramento, Solano, Contra Costa, Alameda, Santa Clara, Stanislaus, San Joaquin, Tuolumne, Calaveras, Amador, Alpine, Monterey, Santa Cruz, San Benito, Merced, Mariposa, Madera, Fresno, and Mono; all Nevada counties except Clark county; all Utah counties except Washington, Kane, Garfield, and San Juan counties; and Sweetwater county, Wyoming,) The Central California patrol area, managed by Coast Guard Group San Francisco, includes the ocean area bounded by the Gualela River (Sonoma /Mendocino County line) to the north, Monterey /San Luis Obispo County line to the south, 200 nautical miles out to sea to the west, and includes the waters of San Francisco Bay. Sector Los Angeles (310) 521- 3600 (Covers an area from the Monterey County line south to San Diego County line and out 200 nautical miles for a total of 64,000 square miles.) Sector San Diego (619) 278 -7033 (From San Mateo point to the Mexico border.) CALIFORNIA MARINE PATROLS http://www.coastal.ca.gov/ccbn/abandoned—vessels.htm] 9/21/2012 McDonald, Cristal From: Wallace Cook (cook @royalwelding.coml Sent: Monday, October 22, 2012 11:00 AM To: City Clerk's Office Subject: NEWPORT HARBOR TAX Dear Ciry Clerk, As you know, our City Council is engaged in a lengthy process to dramatically increase the lease fees for use of the Tidelands in Newport Beach. What they have proposed would likely substantially increase the costs in our marina, as well as every other commercial marina in Newport Harbor. It would fundamentally change the economics of the water front by increasing the costs of boat ownership in our harbor. This drive by the Council to increase the costs in marinas follows closely the substantial increase the City mandated in the moorings in the past two years. One has to be concerned that further increases are likely for all private users of the tidelands which include the Yacht Clubs' front docks, and of course, many private home pier owners. There are two very important issues that we must tell the City Council we are not in agreement with: Independent Fair Market Value and the appraisal Process The appraisal process that has been used to date has many unanswered questions in methodology and did not result in a meeting of the minds on independent fair market value We encourage the City to step back and truly create a public independent process. The information exists and the steps are known but so far the Council has chosen to ignore an independent due process for appraisal. Target Cost Increases Far in Excess of Reasonable From the beginning the Tidelands Sub - Committee of the City Council has been singularly focused on reaching a Tidelands fee that would give the City 20% of the revenues generated within the Tidelands. They have talked about it in varying ways and methodologies, but so far they have stuck to the principle that the City is entitled to I fees equivalent to a new tax of 20% of the revenue each commercial marina in the harbor generates within the Tidelands. This multifold increase is NOT reasonable and is not supported by independent data - the City needs to back up and use an independent and due process to determine a fair, and much lower rate. The City needs to consider the overall economics of the Harbor not just their tax coffers. It is important that the City Council hear from all of you as individuals - before the Council meets on Tuesday night, October 23rd. Discussions are ongoing and at a critical stage. The Council is due to have a very important meeting on this subject next Tuesday. We urge you to write all the Council members and voice your concerns. In drafting your own message, it would be very helpful if you could include any insights you have about people leaving our or other marinas in Newport Beach for other less expensive locations, e.g., Dana Point and Long Beach. Please point out the difference in existing rental rates that are in place now. Make sure that they know that if a boat leaves, then so will the tax revenue that comes from the boaters doing business in local restaurants, boat yards, marine stores, etc. Tell them in your own words that the economic shock to the boat owners is bad for all of us, bad for the Yacht Club and bad for Newport Beach. Please express your own stories so they understand that a new tax is unwarranted and will have negative consequences. Sincerely, Wallace Cook, Professional Eng.- Calif. Royal Welding & Fabricating 1000 E. Elm Ave. Fullerton, CA 92831 714 680 -6669 F 714 680 -6646 2 McDonald, Cristal From: City Clerk's Office Sent: Monday, October 22, 2012 4:17 PM To: McDonald, Cristal Subject: FW: Newport Beach Future From: Ryan Long [SMTP:RYANALOISLONGOGMAIL.COM] Sent: Monday, October 22, 2012 4:16:56 PM To: Henn, Michael; Rosansky, Steven; Hill, Rush; Daigle, Leslie; Selich, Edward; Gardner, Nancy; Curry, Keith; Kiff, Dave; City Clerk's Office Subject: Newport Beach Future Auto forwarded by a Rule Good Day, I am writing to you all to express my concern regarding the possible increase to the Tidelands. This is not the answer the city needs. An increase would ruin what Newport is built on. There are other ways to grow revenue. This should be offered to the citizens to vote on. Please let the people decide as they are the ones affected by the outcorne. Thank you, Ryan Long Citizen of Newport Beach Rieff, Kim From: City Clerk's Office Sent: Tuesday, October 23, 2012 6:19 AM To: Rieff, Kim Subject: FW: Commercial Marinas Located Upon City- Managed Tidelands - City Council Meetin 10123 From: Kelly Pierceaa)ea.eoson.comISMTP:KELLY PIERCE(d).EA.EPSON.COMI Sent: Tuesday, October 23, 2012 6:19:17 AM To: City Clerk's Office Subject: Commercial Marinas Located Upon City- Managed Tidelands - City Council Meetin 10123 Auto forwarded by a Rule As a 42 -year resident of Newport Beach, I am greatly concerned with the proposed increase in fees at Newport harbor's commercial marinas. This fee increase will certainly put several going concerns out of business immediately; others will pass these increases along in the form of higher slip fees and higher service and rental prices. It appears that none of the fee increases will go directly to help the harbor, rather they will go into the general fund for discretional spending by the council, for example to shore up the deficit created by the new $160 million city hall project. I and many other residents, businesses, and boating associations think that this increase will, among other things, 1) drastically decrease the options for casual boat rentals, 2) reduce the availability of marine services, 3) diminish the quality of tourism in the harbor, and 4) negatively impact the unique residential qualities of the harbor (as bigger boats will move to less expensive residential docks). I'd like to maintain the high quality of Newport Harbor and am concerned with fiscally responsible government. Please do not increase these fees for my friends, family and neighbors- our boating community is one of Newport's unique and most treasured assets. Thank you. Kelly J. Pierce 306 Encina Newport Beach, CA 92660 (213) 447 -3128 Rieff, Kim From: City Clerk's Office Sent: Monday, October 22, 2012 5:53 PM To: Rieff, Kim Subject: FW: Agenda Item October 23, 2012 From: matt CLABAUGH(SMTP:MCLABAUGHI a(i7ME.COM1 Sent: Monday, October 22, 2012 5:52:23 PM To: City Clerk's Office Subject: Agenda Item October 23, 2012 Auto forwarded by a Rule Regarding: Commercial Marinas Located Upon City - Managed Tidelands Dear City Council: Please do not increase Commercial Marina Fees to the extent supported by city staff. It will have devastating unintended consequences for our local businesses and the quality of life in Newport Beach. I have been a resident of Newport Beach for 38 years, and I have a good deal of experience with local government leases to concessionaires. Too often city staff members see a pot of gold in an easily reachable location, and they have a need to fill some void in the city coffers. Staff are good at finding such politically feasible revenues, and it is tempting to climb the beanstalk and steal the golden goose. But staff are not social economists, nor do they have a realistic grasp of the complex consequences that ensue from such radical changes to a local business climate. I have seen municipal golf courses fail due to increased lease rates that were far less than those envisioned in this city's proposal. Here are some comments I've heard... "Sure, the appraisal said the golf course was worth $X million, so it must be worth that, right ?" "Hey, other courses in Southern California get X % lease rate, why shouldn't we ?" "Those guys make a lot of money, they'll just pass it along to their customers, and the customers will pay." These are the same arguments made by proponents of this massive Marina Lease Fee increase. Of course you know what happened to the city golf courses I've just described. Those city's started with a decent golf course that the public enjoyed and was an asset to the community. What they wound up with were constant complaints from residents & golfers, a blight in the community, and NO REVENUE because the course simply had to shut down. This is where i fear you are headed if you pass such a draconian lease fee increase. I do not own a commercial marina, am not an operator, nor do I lease any slip from any marina. I have no dog in this race. But I do see the quality of my hometown in jeopardy with this single swing of a fiscal bat to the head of Newport's local business owners. Matt Clabaugh The Valencia Group, Inc. 240 Newport Center Drive, #201 Newport Beach, CA 92660 Rieff, Kim From: City Clerk's Office Sent: Friday, October 19, 2012 3:07 PM To: Rieff, Kim Subject: FW: Tidelands Fee ------------------------------------------- From: Paul Siconolfi [SMTP:BITCOPAUL(a1GMAIL.COM] Sent: Friday, October 19, 2012 3:06:45 PM To: Henn, Michael Cc: Kiff, Dave; City Clerk's Office Subject: Tidelands Fee Auto forwarded by a Rule Dear Council Member Henn - Just a short note from someone who has lived and /or worked in Newport Beach for over 40 years. I urge the Council to significantly scale back its intentions with respect to collecting Tidelands Fees in our harbor. Amounts that would result in anywhere near a 20% tax on revenue collected by marinas in the harbor would not only be unreasonable and exorbitant but also very damaging to the local boating community and related businesses. Slip fees are already painfully high in Newport Beach compared to Dana Point, Long Beach, San Diego, etc. Families are already stretching to keep their boats here. I believe that establishing a Tidelands Fee of the magnitude that the City is contemplating would drive many to move their boats out of our harbor or leave boating altogether, neither of which would be good for Newport Beach. Thank you for your consideration of this request. Paul Siconolfi Corona del Mar Rieff, Kim From: City Clerk's Office Sent: Tuesday, October 23, 2012 1:34 PM [J To: Rieff, Kim ?O12 OCi 23 FM 1= 13 Subject: FW: City Tidelands proposed tax increase From: FVCDML19( o) aol .comrsMTP:FVCDML19(o)AOL.COM1 Sent: Tuesday, October 23, 2012 1:33:01 PM To: Henn, Michael; Rosansky, Steven; Hill, Rush; LeslieiDaigleCd )NewportBeachCA.goV; City Clerk's Office; Curry, Keith Subject: Re: City Tidelands proposed tax increase Auto forwarded by a Rule Dear Mayor Nancy, I am shocked at the attitude of our City Council and it's plans to substantially increase fees (or taxes) on our already overburdened boating community. I moved my boat to the Balboa Yacht Basin last spring because of the ever increasing slip fees at the Balboa Yacht Club, who's marina is owned by the Irvine Company, and subject to it's regular annual fee increases. Our normally full BYC marina had a waiting list. It now has a number of un- rented slips. The three rate increases at the Balboa Yacht Basin Marina caused a large number of slip renters there, to move to other harbors, and the heretofore the long waiting list to disappear. There are still quite a number of slips vacant in the Balboa Yacht Basin City Marina to this date. When I got into boating almost forty years ago it was almost impossible to rent a slip in Newport Harbor. There now are signs all over our city offering boat slips for rent, and vacant moorings too. Marina owners and marine related business are hurting. Just one boat leaving the harbor, to say nothing of the many who have already left, causes loss of revenue to the marine support industry. Additional fees on slip renters will only exacerbate this problem and the 20% tax on businesses will no doubt force some to close and the others will pass the increase on to the boat owners causing many to rethink boat ownership. My wife and I own a modest boat which we have kept in Newport Harbor since 1987. Our family has enjoyed the use of our boat in Newport Harbor and have spent considerable dollars in Newport Beach as a result. Our three of children, who grew up boating, have purchased boats of their own, two of which are kept in the harbor. My one son -in -law stated this weekend: "If our fees are increased I am moving my boat to Dana Point or perhaps San Diego, leaving Balboa Yacht Club, and joining San Diego Yacht Club." I myself will probably put our boat on the market in the Pacific Northwest where my type of boat is most desirable. We are just two of the many with such plans. Again, do the math and contemplate the trickle down loss of revenue to the Newport Harbor boating community and related businesses and related revenue to the City. It is a bad plan, a particularly bad time, given our overall economy and the present state of boating i in Newport Harbor. Remember what the Federal Luxury Taxdid to our boat manufacturing industry in Orange county some years ago? Please pass this correspondence on to the other members of the City Council, and, I implore you to reconsider this draconian tax increase to on already hurting Newport Harbor boating community. Sincerely, Frank Franklin E. Vranicar 214 Heliotrope Avenue Corona del Mar. CA 92625 2 Special Meeting October 23, 2012 Agenda Item No. 1 RESOLUTION NO. 2012 -91 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH APPROVING A MODEL LEASE TEMPLATE AND MODEL PERMIT FOR LARGE COMMERCIAL MARINAS LOCATED UPON TIDELANDS WHEREAS, pursuant to the 1978 Beacon Bay Bill, as amended, ( ",Beacon Bay Bill ") the City of Newport Beach ( "City ") acts on behalf of the State "of California as the trustee of tidelands located within the City's limits, including Newpdrt. Hai rbor . WHEREAS, Section 1(b) of the Beacon Bay Bill and Section 17.60.060 of the Newport Beach Municipal Code ( "NBMC ") allow the City to authorize third parties to use tidelands for commercial purposes for a term not to exceed fifty (50) years; WHEREAS, the City desires to allow marinaS-as that term -is defined in Newport Beach Municipal Code ( "NBMC ") Section 17.01.030(J)(3), to operate upon the tidelands under either a permit or a lease; WHEREAS, this resolution shall only be applicable to'marinas that occupy three thousand square feet (3,000 sf) or more of tidelands and private waterways ( "Large Commercial Marinas "); WHEREAS, the Beacon Bay Bill, California Constitution Article 16, Section 6, NBMC Section 17.60.060(D), NBMC Section 17.60.020(E), and City Council Policy F- 7(D) require the City to receive fair, market rent when allowing third parties to use tidelands; WHEREAS, NBMC Section 17.060.060(D) vests the City Council with the exclusive discretion to determine fair market rent based upon the findings of a City - selected appraiser; WHEREAS, on July 27, 2010 the City Council formed the Council Ad Hoc Committee,. on Harbor Charges ( "Committee ") and tasked the Committee with performing a comprehensive review of tidelands uses to consider the conversion of existing permits to leases and to assist the City Council in developing a template tideland lease /permit form and determining fair market value rent; WHEREAS, the Committee and members of the Committee held public outreach meetings commercial marina operators to solicit their input and participation in the tidelands review process and these meetings afforded the public the opportunity to comment on this matter as well as provided the public information relating to this matter; WHEREAS, the City Council held several study sessions where public input and testimony was taken, including meetings on March 13, 2012 and September 12, 2012; WHEREAS, the City Council has considered all documents and comments in the record in connection with this resolution; and WHEREAS, after considering all public input, the Committee recommends adoption of a model Large Commercial Marina lease and model permit to allow Large Commercial Marina operators flexibility to determine the option that best suits their needs. NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1: The Recitals provided above are true and correct and are incorporated into the substantive portion of this resolution. Section 2: The City Council finds that the model lease template for Large Commercial Marinas attached to this resolution, and incorporated by this reference, satisfies the requirement of NBMC Section 17.60.060(A) covering the conversion of existing permits to leases. The City Council further finds that the Large Commercial Marinas subject to the attached model lease template are not subject to the open bid process found in City Council Policy F -7 because redevelopment /reuse of the tidelands by a third party would require excessive time, resources and costs which would outweigh other financial benefits. Section 3: The City Council further finds that the model Large Commercial Marina permit attached to this resolution, and incorporated by this reference, may be used by Large Commercial Marina operators as an alternative to the model lease template for Large Commercial Marinas. The City Council further finds that the Large Commercial Marinas subject to the attached model permit are not subject to the open bid process found in City Council Policy F -7 because redevelopment/reuse of the tidelands by a third party would require excessive time, resources and costs which would outweigh other financial benefits. Section d: The City Council determines, even though it has discretion to make determinations regarding the form of template lease /permit and rental provisions therein, that the evidence in the record constitutes substantial evidence to support the actions taken and the findings made in this resolution, that the facts stated in this resolution are supported by substantial evidence in the record, including, without limit, testimony received at public hearings, the Staff presentations and Staff reports made in connection with this matter, all materials in project files, and the Netzer and Rasmuson appraisal reports. The City Council expressly declares that it considered all evidence presented and reached these findings after due consideration of all evidence presented to it and determines that evidence presented that was contrary to the findings made in this resolution was not sufficient or substantial enough to outweigh the evidence supporting this resolution. -2- Section 5: Pursuant to NBMC Section 17.60.060(A) and its power under the Beacon Bay Bill, the City Council approves the attached model lease template for Large Commercial Marinas and the attached model permit for Large Commercial Marinas. Notwithstanding City Council Policy F -7, the City Council authorizes the City Manager or his /her designee to enter into the attached lease /permit, in a form that is substantially similar to the attached model lease template and model permit, with Large Commercial Marinas. At his /her discretion, the City Manager may refer any Large Commercial Marina lease /permit to the City Council for consideration. Section 6: The City Council find this action is not subject . to the California Environmental Quality Act ( °CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical , change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 1.4, Chapter 3, because it has no potential for resulting in physical change, to the environment, directly or indirectly. Section 7: This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certifyIhe vote :adopting the resolution. ADOPTED this day of _, 2012. Nancy Gardner, Mayor ATTEST: Leilani I. Brown; City Clerk Attachments: (1) Model Lease Template for Large Commercial Marinas (2) Model Permit for Large Commercial Marinas 119E Special Meeting October 23, 2012 Agenda Item No. 1 RESOLUTION NO. 2012 -92 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH SETTING RENT FOR LARGE COMMERCIAL MARINAS LOCATED UPON TIDELANDS WHEREAS, pursuant to the 1978 Beacon Bay Bill, as amended, ( "Beacon Bay Bill ") the City of Newport Beach ( "City ") acts on behalf of the State of California as the trustee of tidelands located within the City's limits, including Newport Harbor; WHEREAS, Section 1(b) of the Beacon Bay Bill authorizes the City to, allow third - parties to use the tidelands for commercial purposes for a term not to exceed fifty (50) years; WHEREAS, the City allows marinas, as that term is `defined in Newport Beach Municipal Code ( "NBMC ") Section 17.01.030(J)(3), to operate upon the tidelands under either a permit or a lease; WHEREAS, this resolution shall only be applicable to marinas that occupy three thousand square feet (3,000 sf) or more of tidelands and private waterways ( "Large Commercial Marinas" ); &_ \ WHEREAS, The Beacon Bay /BiII,�California Constitution Article 16, Section 6, NBMC Section 17.60.060(D), NBMC Section' 17.60.020(E), and City Council Policy F- 7(D) require the City to receive fair rnarkety�ent from third parties using the tidelands; WHEREAS 17.060.060(D) vests the City Council with the exclusive discretion to- det\emin.e_fair market rent based upon the findings of a City - selected appraiser\ \\ WHEREAS, a'n appraisal report by Rasmuson Appraisal Services, dated August 8, 201'�ertiled-�A�SUN mary Appraisal of Newport Harbor Commercial Tidelands Fair Market Ron Study,, Newport Beach CA" and an appraisal report by Netzer & Assoc., dated August 102012, entitled "Appraisal Report, Commercial Tidelands, Newport Harbor, Newport Beach, California" were prepared and delivered to the City and have been reviewed and considered by the City Council, which reports are part of the record for this matter; WHEREAS, the Rasmuson and Netzer reports concluded that the current fair market gross revenue percentage rent for tidelands in Newport Harbor is between 17% - 25% for marina slip uses, depending on certain variables; WHEREAS, other existing agreements for use of tidelands in the Newport Harbor have percentage rent rates for marina slip uses ranging between 9% and 40 %, including two County tideland leases with marina rental rates of 20 %; WHEREAS, the Committee and members of the Committee held public outreach meetings with Commercial Marina Operators to solicit their input and participation in the tidelands review process and these meetings afforded the public the opportunity to comment on this matter as well as provided the public information relating to this matter; WHEREAS, the City Council held several study sessions where public input and testimony was taken, including meetings on March 13, 2012 and September 12; 2012; WHEREAS, the City Council has considered all documents and comments in the record in connection with this resolution; WHEREAS, on November 23, 2010 the City Council adopted Resolution No. 2010 -132 implementing a new phased in rent program for the City's on -shore and off- shore moorings and directed that planned rent increases scheduled to occur in 2013 shall only incur upon the City's completion of the tidelands review process; WHEREAS, the City Council on September 12, 2012, following input from the public and upon consideration of ,all matters in the record relating to this matter, exercised its exclusive discretion pursuant to NBMC Section 17.60.060(D) to recommend a fair market value rent based upon the findings of a City - selected appraiser that the fair market rent for commercial marina tidelands users was to be (in summary) 20% of slip revenue, based upon an index of commercial marinas, converted into a square footage dollar amount; and WHEREAS, all previous resolutions and actions regarding the fair market rent for commercial marinas that are in conflict with the rent established by the City Council in this resolution are hereby repealed. NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1: The Recitals provided above are true and correct and are incorporated into the substantive portion of this resolution. Section 2: The City Council finds pursuant to NBMC Section 17.60.060(D) that the rent provisions contained in the attached Commercial Marina Rent calculations, which are incorporated by reference, provide for the charging of fair market rent and that the rental rate (and adjustments) in the attachments constitute fair market rent for Large Commercial Marinas, which findings are made by the City Council in its exclusive discretion but are based on the information in the appraisals of its City - selected appraisers and, in addition, on other testimony and documents in the record for this -2- matter. The City Council further finds and determines the rent for Large Commercial Marinas located upon City managed tidelands, operating under an annual permit or a lease, shall be set in accordance with the attached Commercial Marina Rent calculations. Section 3: The City Council affirms that the price adjustments set to occur in 2013 for the City's on -shore and off -shore moorings pursuant to Resolution No. 2010- 132 shall be held in abeyance until the City Council completes its .open and public review and analysis of commercial piers not already on leases, and residential piers, including rentals of residential piers. Once the City Council's open and public review and analysis are completed, the price adjustments may take effect without further action by the City Council Section 4: The City Council find this action is not subject to the California Environmental Quality Act (" CEQX) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. Section 5: This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting the resolution. ADOPTED this day of 2012. Nancy Gardner, Mayor ATTEST: Leilani I. Brown, City Clerk Attachments: Large Commercial Marina Rent Large Commercial Marina Rent Alternative -3- Large Commercial Marina Rent A. Beginning on the date a lease or permit is first effective (i.e., the date a lease is executed by all parties or a permit is issued by the City), a Commercial Marina Operator shall pay to the City, on a monthly basis, Rent (as defined below). 1. Rent: Rent shall be calculated on an annual basis as follows: First, the City shall determine the "Target Indexed Rate" as follows: the "Aggregate 18.5% Equivalent Rent" shall be determined, which is comprised of Gross Revenue for Slip Rentals for the preceding calendar year of all marinas included within the Marina Index multiplied by point one eight five (0.185) (i.e;, if aggregate Gross Revenue for Slip Rentals is $14,730,000, multiply $14,730,000 by 0.185 to yield an Aggregate 18.5% Equivalent Rent of $2,725,000). If a Commercial Marina Operator of a marina included in the Marina Index fails to provide Gross Revenue 'for Slip Rentals for any calendar year the City shall use the Commercial Marina Operator's immediate prior Gross Revenue for Slip Rentals as adjusted by the Consumer Price Index ( "CPI "). The Aggregate 18.5% Equivalent Rent shall then be divided by the aggregate Premises' square footage for all marinas included: in the Marina Index to determine the Target Indexed Rate for the succeeding twelve (12) months of Rent beginning on March 1 (i.e., if the Aggregate 18.5% Equivalent Rent is $2,725,000 and the aggregate square footage for all waters of marinas in the Marina Index is 1,385,000 square feet, the Target Index Rate would be $1.97 a square foot [$2,725,000 divided by 1,385,000 square feet]). The Premises for the individual Marina Index marinas will be based on known amounts determined by reference to existing City or County permits or leases. The Target Index Rate shall be calculated annually by the City in accordance with this paragraph as soon as practicable after December 31 of each calendar year. For a term year beginning March 1, 2018, and thereafter, monthly Rent shall equal the then applicable Target Index Rate, rounded to the nearest cent, times the Premises square footage as set forth in this resolution (i.e., if the Target Index Rate is $1.97 and the Premises is 10,000 square feet the annual Rent would be $19,700). Through March 1, 2018, Rent will be set in accordance with a six - period phase -in procedure as follows: From the effective date, Rent shall be calculated annually each March 1 by reference to the following methodology: Target Index Rate minus the prior calendar year square footage rate divided by the number of years remaining within the six (6) period phase -in plus the prior calendar year M square footage rate. An example of the Rent calculation is provided below in Table #1. Assumed Target Prlarina Index Ra'.e 5 1.57 5 2.00 5 2.05 5 2.05 $ 2.07 $ 2.08 5 214 Previous Year's Tidelands Rental Rate $ 0.36 5 0.63 $ 0.90 $ 1.191$ Balboa Yacht Basin 1.49 $ 1.78 Difference (A) $ 1.61 $ 1.37 $ 1.15 $ 0.90 $ 0.58 $ 0.30 tl74 -At Periods Left :o Fuiiv- Indexed Rate (3) 6 5 4 3 2 1 W II Index Increase for that Year (A!8) $ 0.27 $ 0.27 $ 0.29 $ 0.30 $ 0.19 $ 0.30 Rate Vote; Italicized text denotes assumptions. Assumed scenario for TargetMarina Index rate 2013 -200 suggest slow Increase, a decrease, etc. In Table #1, the example assumes that the Targeted Index Rate in 2013 is one dollar and ninety - seven cents ($1.97) per square foot. In the actual calculation and subsequent years, the Targeted Index Rate will be adjusted annually, as set forth above, and may increase or decrease. This increase or decrease shall be reflected in the subsequent calculations using the same methodology as shown above. 2. Marina Index Composition: The Marina Index shall be comprised of the following marinas: 1) Ardell 2) Bayshores Marina 3) Bayside Marina 4) Lido Yacht Anchorage 5) Harbor Towers Marina 6) Newport Dunes Marina 7) Newport Marina 8) Bahia Corinthian Yacht Club 9) Balboa Yacht Basin The square footage weighting in the Marina Index will be based on the Tidelands square footage used by the Commercial Marina. To be included within the Marina Index, a Commercial Marina Operator must agree to the terms provided in this resolution. The marinas included in the Marina Index may be revised by the City Council at a regular or special meeting in the event that an index marina ceases operation, fails to comply with the terms provided in this resolution, or in the reasonable discretion of the City Council W ceases to be meaningful for use in the Marina Index. In that event, the City Council shall strive to select a new marina whose operating characteristics, revenue, and Tidelands square footage is similar to the marina to be replaced. B. Fair Market Adjustment of Rent and Other Fees and Charges: At the Market Adjustment Date, the Rent shall be adjusted to reflect the then - current fair market value, as such value shall be determined by appraisal. Specifically, the City shall retain one (1) independent MAI appraiser to conduct a harbor-wide appraisal of commercial uses. Within thirty (30) calendar days of the City's selection of an appraiser the Commercial Marina Operators included in the Marina Index, may retain one (1) independent MAI appraiser to conduct a harbor -wide appraisal of commercial uses. Each party shall pay the costs of their selected appraiser. The City shall not participate in the selection of the Commercial Marina Operators' appraiser. If the Commercial Marina Operators are unable or unwilling to select and retain an appraiser within thirty (30) calendar days of the City's selection of an appraiser, the City may in its sole and absolute discretion select and retain an independent MAI appraiser on behalf of the Commercial Marina Operators to conduct a harbor -wide appraisal of commercial uses. If the two (2) appraisals return with a fair market value that is within five percent (5 %) of each other the two (2) appraisal fair market values shall be averaged to produce the then - current fair market value. For clarity, if one (1) appraiser concludes thirteen percent (13 %) and one (1) appraiser concludes fifteen percent (15 %) the difference in their conclusions is thirteen and 333/1,OOOths percent (13.333 %) and therefore a third appraisal would be needed. If the two (2) appraisers should fail to agree on the fair market value, and the difference between the two (2) appraisals exceeds five percent (5 %), then the two (2) appraisers thus :appointed shall mutually appoint a third MAI designated appraiser, and in case of their failure to agree on a third appraiser within thirty (30) calendar days after their individual determination of the fair market value, either party may apply to the Presiding Judge of the Superior Court for Orange County, requesting said Judge to appoint the third MAI designated appraiser. The costs of the third appraiser, if any, shall be split equally between the Lessor and the Lessees included in the Marina Index. The third appraiser so appointed shall meet and confer with the two (2) other appraisers and then conduct its own analysis to determine the then - current fair market value within sixty (60) calendar days of their appointment and the average of the fair market value per square foot as set forth in the appraisals of the two (2) closest appraisers shall be used as the then - current fair market value. All MAI appraisers appointed or selected pursuant to this subsection shall have at least ten (10) years experience appraising Tidelands in the Southern California area and shall be free of conflicts (i.e., no appraisers shall rent a boat slip or office space from Lessor or Lessees, etc.). C. To be included within the Marina Index, a Commercial Marina Operator must agree to be bound by the following terms: (1) Slip Rental Documentation: By February 1, 2013, a Commercial Marina Operator shall provide City with Gross Revenue for Slip Rentals and the slip rental rate schedule for the most recent calendar year and the two (2) preceding calendar years. For every subsequent calendar year, a Commercial Marina Operator shall provide the City its Gross Revenue for Slip Rentals and the slip rental rate schedule for the prior calendar year by February 1st of every year. The Gross Revenue for Slip Rentals shall be certified by the Commercial Marina Operator and its external auditor to be true and accurate to the City for purposes of calculation of the Marina Index. At the Commercial Marina Operator's option, the Gross Revenue for Slip Rentals may be provided directly to the City or to the City's designated certified public accountant ( "CPA ") for such purposes. The City's designated CPA shall exercise independent professional judgment and shall not be used by the City for any other purposes. The City shall use its best efforts to maintain such Gross Revenue for Slip Rentals information confidential. (2) Audit: If Gross Revenue for Slip Rental is submitted to City, City may, or if Gross Revenue for Slip Rentals is submitted to City's designated CPA, the CPA may, in its sole and absolute discretion, at any and all reasonable times, examine and audit Books and Records, financial statements, and documentation, without restriction, for the purpose of determining the accuracy of the Gross Revenue for Slip Rentals for the Premises reported to the City or the City's designated CPA for the prior year, and the accuracy of the Rent paid to City. If the Commercial Marina Operator's business operations conducted within or from the Premises are part of a larger business operation of the Commercial Marina Operator, and any part of the Books and Records, financial statements and documentation is prepared only for the larger operation, and not solely for the business operations of the Premises, then the City shall also have the right to examine and audit that part of the Books and Records, financial statements, and documentation of the larger business operation. In the event the Commercial Marina Operator does not make available the original Books and Records, financial statements, and documentation at the Premises or within the limits of Orange County, Commercial Marina Operator shall pay all necessary travel expenses incurred by City ,(including, without limit, the cost of City's agent's time) in conducting an audit at the location where Books and Records are maintained. If the audit reveals a discrepancy in the Gross Revenue for Slip Rentals reported to City of ten percent (10 %) or less, City shall pay the cost of the audit. If the audit reveals a discrepancy in the Gross Revenue for Slip Rentals reported to City of greater than ten percent (10 %) the Commercial Marina Operator shall pay the cost of the audit. -7- D. For the purposes of this rent methodology the following terms have the following meanings: (1) Books and Records means full, complete, accurate and proper books, records and accounts of all business, use or occupation, or any combination thereof, transacted, arranged or performed, in whole or in part, on, from or for goods, services or events from or related to the Premises, whether by the Lessee or by a sublessee, licensee, . concessionaire or other party, consistently applied, which shall include equipment to record all sales at the time of transactions and shall also include, without limit, income, sales and property tax returns and on a cash basis method of accounting information. (2) City means the City of Newport Beach. (3) Commercial Marina Operator(s) means a person or entity that rents Tidelands from the City under either a permit or a lease for the operation of a Large Commercial Marina. (4) Gross Revenue for Slip Rentals means all receipts of every kind and nature, whether for cash, credit or barter, received /due for the rental or use of a slip, dock, or pier on the Premises. Without limiting the breadth of the prior sentence, Gross Revenue for Slip Rentals shall include, without limitation, receipts of every kind and nature derived from any promotion, package deal, service, or other item that is associated in any way with the rental or use of a slip, dock, or pier on the Premises, excluding pass - through of direct third -party charges (e.g., electricity, cable TV, etc.) without markup by the Commercial Marina Operator. For purposes of determining Gross Revenue for Slip Rentals any fixed, annual, monthly and /or recurring charge that a person or entity is required to pay shall be counted as part of the Gross Revenue for Slip Rentals. Gross Revenue for Slip Rentals shall not be offset or reduced for any reason, including, but not limited to, the payment of taxes, fees, repairs, maintenance, construction, or inability or failure to collect any cash, credit, or barter due for the use of a slip, dock, or pier on the Premises. (5) Large Commercial Marina means a "marina" as defined in Newport Beach Municipal Code Section 17.01.030(J)(3), which occupies three thousand square feet (3,000 sf) or more of Tidelands and Private Waterways. (6) Market Adjustment Date means March 1, 2023 and every tenth (10th) anniversary year thereafter. (7) Premises means those Tidelands which are subject to the applicable permit /lease and are more particularly described and depicted in the applicable permit /lease, excluding any Private Waterways and improvements. (8) Private Waterways means privately held submerged lands. (9) Tidelands means certain tidelands and submerged land (whether filled or unfilled), located in the City of Newport Beach, County of Orange, State of California granted to the City of Newport Beach, as trustee, by the State of California pursuant to the Tidelands Grant. (10) Tidelands Grant means uncodified legislation related to the State of California's grant of certain rights in the Tidelands to the City of Newport Beach, including, without limitation, the Beacon Bay Bill (Chapter 74 of the Statutes of 1978, as amended [citations omitted]). In Large Commercial Marina Rent Alternative A. Alternative Rent: As an alternative rent methodology, beginning on the date a lease or permit is first effective (i.e., the date a lease is executed by all parties or a permit is issued by the City), a Commercial Marina Operator shall pay to the City, on a monthly basis, the greater of Base Rent or Percentage Rent (as defined below). (1) Base Rent Phasing: "Base Rent" shall be charged on a per square foot basis of the Premises and shall be phased in as follows: Example of 2012 $ 0.36 How $ Target 2 0 V3 0.54 $ Indox 2014 0.73 $ / 0.92 $ B. 1.13 $ .. May 2017 1.35 I $ Work 2018 1.60 0 Assumed Index Rate Previous Year's Rent Difference (A) Periods Remaining (B) Increase for Year (A /B) 18.5096 18.50% 18.50% 18.50% 18.50% 18.50% 3.40 °% 5.92% 8.43% 1 10.95% 13.47% 15.98 °% N /A - At Full 18,5% S 1.45 $ 1.48 $ 1.51 $ 1.54 $ 1.57 $ 1.60 $ 1.61 $ 0.36 $ 0.54 $ 0.73 $ 0.92 $ 1.13 $ 1.35 N /A - At Full Index Rate $ 1.09 $ 0.94 $ 0.78 $ 0.61 $ 0.44 $ 0.25 6 5 4 3 2 1 $ 0.18 $ 0.19 $ 0.191$ 0.20 (2) Percentage Rent Phasing: "Percentage Rent" shall be phased in as follows and shall equal eighteen and half percent (18.5 %) of annual Gross Revenue for Slip Rentals: Exatriple 2012 3.40% of • 2013 14 5.92% 8.43% 2015 10.95% Period 2-016 13.47% 2017 15.98% 2,018 1 18.50% 18.50% Target Rate Previous Year's Rate Difference (A) Periods Remaining (B) Increase for Year (A /e) 18.50% 18.5096 18.50% 18.50% 18.50% 18.50% 18.50% 3.40 °% 5.92% 8.43% 1 10.95% 13.47% 15.98 °% N /A - At Full 18,5% 15.10% $ 0.13 $ 0.101$ 0.08 $ 0.05 $ 0.03 6 5 4 3 2 1 2.52% 2.52 % B. Periodic Adjustments of Base Rent: From 2013 through 2018, Base Rent shall increase annually by the U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers (CPI -U), Los Angeles- Riverside- Orange County region. Beginning on March 1, 2019, Base Rent shall be increased or -10- decreased annually to a sum equaling seventy -five percent (75 %) of the Large Commercial Marina Index rate. C. Fair Market Adjustment of Percentage Rent: At the Market Adjustment Date, the Percentage Rent shall be adjusted to reflect the then - current fair market value, as such value shall be determined by appraisal. To avoid duplication and unnecessary expense, the appraisal performed for the Marina Index at the Market Adjustment Date shall be used for this fair market adjustment appraisal requirement. D. Reconciliation of Rent: At the end of every calendar year, City shall perform a reconciliation of the Rent paid by the Commercial Marina Operator to City to ensure the correct Rent was paid. The City shall credit the amount by which Rent actually received exceeds the amount of Rent determined to have been due and payable for such calendar year. A credit, if applicable, shall be made to the next installment of Rent due. However, nothing in this section shall require the City to provide a credit that would cause the Commercial Marina Operator to pay less than Base Rent for the calendar year being reconciled and, in. such case, no credit will be due or applied. If the amount of Rent due for a calendar year is more than the Rent paid by the Commercial Marina Operator prior to reconciliation, then the Commercial Marina Operator shall pay the difference to City. The Commercial Marina Operator shall pay City, within five (5) days following such determination, the full amount of Rent determined to have been due for such calendar year: E. Reporting Requirements: To use this alternative rent methodology, a Commercial Marina Operator must agree to be bound by the following terms: (1) Slip Rental Documentation: By February 1, 2013, a Commercial Marina Operator shall provide the City with Gross Revenue for Slip Rentals and the slip rental rate schedule for the most recent calendar year and the two (2) preceding calendar years. For every subsequent calendar year, a Commercial Marina Operator shall provide the City its Gross Revenue for Slip Rentals and the slip rental rate schedule for the prior calendar year by February 1st of every year. The Gross Revenue for Slip Rentals shall be certified by the Commercial Marina Operator and its external auditor to be true and accurate to the City. The City shall use its best efforts to maintain such Gross Revenue for Slip Rentals information confidential. (2) Audit: The City may in its sole and absolute discretion, at any and all reasonable times, examine and audit Books and Records, financial statements, and documentation, without restriction, for the purpose of determining the accuracy of the Gross Revenue for Slip Rentals for the Premises reported to the City for the prior year, and the accuracy of the Rent paid to City. If the Commercial Marina Operator's business operations conducted within or from the Premises are part of a larger business operation of the Commercial Marina Operator, and any part of -11- the Books and Records, financial statements and documentation is prepared only for the larger operation, and not solely for the business operations of the Premises, then the City shall also have the right to examine and audit that part of the Books and Records, financial statements, and documentation of the larger business operation. In the event the Commercial Marina Operator does not make available the original Books and Records, financial statements, and documentation at the Premises or within the limits of Orange County, Commercial Marina Operator shall pay all necessary travel expenses incurred by City (including, without limit, the cost of City's agent's time) in conducting an audit at the location where Books and Records are maintained. If the audit reveals a discrepancy in the Gross Revenue for Slip Rentals reported to City of ten percent (10 %) or less, City shall pay the cost of the audit. If the audit reveals a discrepancy in the Gross Revenue for Slip Rentals reported to City of greater than ten percent (10 %) the Commercial Marina Operator shall pay the cost of the audit. F. For the purposes of this alternative rent methodology the following terms have the following meanings: (1) Books and Records means full, complete, accurate and proper books, records and accounts of all business, use or occupation, or any combination thereof, transacted, arranged or performed, in whole or in part, on, from or for goods, services or events from or related to the Premises, whether by the Commercial Marina Operator or by a sublessee, licensee, concessionaire or other party, consistently applied, which shall include equipment to record all sales at the time of transactions and shall also include, without limit, income, sales and property tax returns and on a cash basis method of accounting information. (2) City means the City of Newport Beach. (3) Commercial Marina Operator(s) means a person or entity that rents Tidelands from the City under either a permit or a lease for the operation of a Large Commercial Marina. (4) Gross Revenue for Slip Rentals means all receipts of every kind and nature, whether for cash, credit or barter, received /due for the rental or use of a slip, dock, or pier on the Premises. Without limiting the breadth of the prior sentence, Gross Revenue for Slip Rentals shall include, without limitation, receipts of every kind and nature derived from any promotion, package deal, service, or other item that is associated in any way with the rental or use of a slip, dock, or pier on the Premises, excluding pass - through of direct third -party charges (e.g., electricity, cable TV, etc.) without markup by the Commercial Marina Operator. For purposes of -12- determining Gross Revenue for Slip Rentals any fixed, annual, monthly and /or recurring charge that a person or entity is required to pay shall be counted as part of the Gross Revenue for Slip Rentals. Gross Revenue for Slip Rentals shall not be offset or reduced for any reason, including, but not limited to, the payment of taxes, fees, repairs, maintenance, construction, or inability or failure to collect any cash, credit, or barter due for the use of a slip, dock, or pier on the Premises. (5) Large Commercial Marina means a "marina" as defined in Newport Beach Municipal Code Section 17.01.030(J)(3), which occupies three thousand square feet (3,000 sf) or more of Tidelands and Private Waterways. (6) Market Adjustment Date means March 1, 2023 and every tenth (10th) anniversary year thereafter. (7) Premises means those Tidelands which are subject to the applicable permit/lease and are more particularly described and depicted in the applicable permit /lease, excluding any Private Waterways and improvements. (8) Private Waterways means privately held submerged lands (9) Rent means both Base Rent and Percentage Rent. (10) Tidelands means certain tidelands and submerged land (whether filled or unfilled), located in the City of Newport Beach, County of Orange, State of California granted to the City of Newport Beach, as trustee, by the State of California pursuant to the Tidelands Grant. (11) Tidelands Grant means uncodified legislation related to the State of California's grant of certain rights in the Tidelands to the City of Newport Beach, including, without limitation, the Beacon Bay Bill (Chapter 74 of the Statutes of 1978, as amended [citations omitted]). -13-