Newport Commercial Marina Lease and Fee Discussion Coming Oct. 16

Byline: Taylor Hill

NEWPORT BEACH — After further review, the Newport Beach City Council has delayed a decision on the proposed lease format and plans for commercial marina dock operators in Newport Harbor, scheduling a special meeting on the topic for Oct. 16.

City officials and marina operators have been in talks for the past few months regarding the proposed fee hikes — which were tentatively agreed upon by city council members at a Sept. 12 meeting — and a new lease format planned to replace the year-to-year leases and with five- to 25-year leases.

Marina owners have protested the city’s decision to move to a percentage-based rent charge at 20 percent of gross revenue, which would increase current fees from $.36 per square foot of dock space up to an average of  $2.52 per square foot — roughly seven times the current rate.

Another issue to be discussed at the Oct. 16 meeting will be the proposed “Marina Index” developed by the ad hoc committee of council members Ed Selich, Mike Henn and Steve Rosansky, tasked with investigating harbor fees. With two marina appraisals as their reference point, the committee cited a need for the 20 percent rate to meet the “fair market value” the city is legally responsible to receive for use of state lands, in order to avoid a “gifting of public funds” situation, prohibited by California’s constitution.

Marina owners are concerned that changing from a fee-based structure to a percentage-based plan means the city will need to have access to the books of the privately held companies. The Marina Index has been created to address that, by grouping seven commercial marinas in the harbor, calculating an average 20 percent of gross revenue from those marinas, and using that number to create a square footage price for all commercial marinas in the harbor.

Exactly which marinas are chosen for the index remains a concern of marina owners, as the size, quality and current revenue rates of those marinas will determine the rates charged for the entire harbor.

“Aspects of this item continue to be negotiated with a number of marina operators,” City Manager Dave Kiff wrote in his weekly newsletter. “Talks are progressing, but more details need to be ironed out about the proposed ‘Marina Index’ as well as some of the terms of the draft lease.”

Once finalized, the commercial marina rate increase is scheduled to be phased in over a seven-year period beginning in 2014.

A 66-page lease template was reviewed at the city council’s Sept. 25 meeting, where multiple members of the public complained about its complexity and cited multiple issues with the wording of the document.

A revised lease agreement was released Oct. 1, and it will be discussed at the meeting, as well.