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Tidelands Users Group Concerns with the Harbor Fees Study

Statement of Concerns With the Economic Analysis of Financing
Improvements to Tideland Services in the City of Newport Beach
August 15, 2008

Prepared by
Newport Beach Tidelands User Group
Presented by Bill Moses, December 16, 2008
at the
Newport Beach City Council Finance Committee Meeting

          The Newport Beach Tidelands Users Group (TUG) has reviewed Professors De Shazo and Hanemann’s Economic Analysis.  This final component of the Harbor Fees Study was two years in the making and has now been public for only 12 days.

          According to statements made in the Economic Analysis, the professors critically evaluated and integrated the findings of the Maximus Cost of Services Report and the Netzer Appraisal to generate their recommendations which could result in substantial increases to fees associated with Tidelands permits and activities.

          TUG believes that in addition to incorporating dated and inappropriate appraisals, there are serious flaws with the Fees Study as it applies to the nexus between fees and the allocation of costs.  It appears that overstatements of costs are coupled with an understatement of direct, and indirect, revenues attributable to the tidelands.  These inaccuracies yield the misconception that the Greater Newport area tidelands are a liability rather than a self-sustaining asset used by thousands annually.

          Along with reviewing the Maximus, Netzer, and Professors’ reports, we studied the California Tidelands Grant which provided a clear statement of the city’s duties under the grant, in particular:

(i) "The city shall establish a separate tidelands trust fund or funds in such a manner as may be approved by the State Lands Commission, and the city shall deposit in the fund or funds all money received directly from, or indirectly attributable to, the granted tidelands in the city."

With that quote in mind, TUG believes the following concerns should be considered by City Staff, as well as elected officials, as they evaluate the Harbor Fees Study and its usefulness in establishing fee adjustments.  The following is a summary of our concerns – we are prepared to discuss each of these in more detail at a later meeting:

To conclude, the Harbor Fees Study, in its present form, fails three tests:

It is not accurate, it is not reasonable, and it is not fair.

For the reasons stated above we would like to see considerably more time and effort given towards this study to bring more accuracy and equity to any future adjustments to harbor fees and permits.