City Council OKs Increase in Marina Rent Rates

Large commercial marina operators will have to pay more money for rent beginning in 2015, the Newport Beach City Council decided Tuesday.

At a special meeting the council voted 4 to 3 vote with Mayor Nancy Gardner, Councilwoman Leslie Daigle and Mayor Pro Tem Mayor Keith Curry voting no, to approve new rates for commercial marinas. Marina operators can choose between a one year annual permit or a long-term lease. The rent will be set at 18.5 percent of gross slip revenues, which is about $1.97 a square foot. The hikes will be phased in starting in 2015.

Boaters and lessees filled council chambers Tuesday afternoon to voice their opposition. Bill Hart, representing Duffy Boats and Duffield Marine, argued marinas in the harbor can not be appraised like houses on a street.

"In the harbor we have marinas of different sizes and locations," Hart said. "Every commercial marina will be assessed on the same basis which we think is illogical."

The council approved Councilman Rush Hill's motion that there be no rental rate increase in the first two years with the hikes being phased in over a six year period, rather than the original plan of implementing the rate in 2013 and phasing it over a six year period.

"I want to salute the committee; they have spent a great many hours on it and have worked with other groups to come up with a compromise," Gardner said. "Should we have an increase in our rents, yes, but I cannot support the increase that is currently being proposed."

Many called the city's implementation method a piecemeal effort that will affect all areas in the harbor and cause irreparable harm to the harbor and slip holders. Others urged the council to reign in the fees and hold off on voting on the rates.

"The combination of the new tax on the slips and gross on inland shipyard operations will probably close the shipyard,"  said resident Ted Robinson, the majority owner of Larsons Shipyard.

"The tidelands issues is a tremendously large issue and it encompasses more than just the harbor," Marshall Duffield added. "To have a subcommittee of three looking at this huge issues does not seem like enough. I just wish that the entire council would have taken upon looking at all the tidelands and its effect on all of us as a whole."

The Council Ad Hoc Committee on Harbor Charges initially proposed a rent rate of 20 percent of gross slip revenues. After the City Council’s Sept. 12 meeting where several residents addressed the topic, the Council Ad Hoc Committee on Harbor Charges modified its recommendations.

The model lease template for commercial marinas and marina index will result in transitioning commercial marinas located on city administered tidelands from annual permits to multi-year leases.

"Just looking at all the input we have received," said Councilman Mike Henn, "I think there is a large number of misconception of what is being proposed and the impact of what is being proposed."

The proposal made by the city’s Ad Hoc Committee on Harbor Charges
recommended a new commercial marina fair market rental rate based on the marina index to transition current commercial marina permittees to longer term leases.

Large commercial marinas can choose from the marina index rate, which is currently $1.97 per square foot or actual submission of 18.5 percent of their gross slip revenues. Minimum rate in this case will be $1.45 a square foot, explained City Manager Dave Kiff.

Rent will be recalculated every year by staff to ensure it’s reflective of an
increase of decrease within the marina index. There is also an appraisal-based adjustment after 15 years to ensure the rate is reflective of the fair market value.

"This harbor is very large, diverse and complicated and it's taken a long time to understand it to the level we have needed to," Henn said. "So I don’t feel this is a rush to judgement here in any respect and I do believe that the proposal that was outlined in the city mangers presentation is a good one that obtains very substantial compromises."