Harbor Commission Recommendation April 2015

Attending the meeting: Harbor Commission Chairman Brad Avery, Commissioners Duncan McIntosh, Joe Stapleton, and David Girling, City’s Harbor Resources Manager Chris Miller and Analyst Shannon Levin. More than 100 interested people filled the City Council Community Room, some standing in the back.

Harbor Commission (HC) Chairman Brad Avery opened meeting with pledge of allegiance.
Motion to approve minutes of 3/23 approved.
Non-agenda items, none.
Current business: moorings review.
Michael Torres, Assistant City Attorney (ACA), present for first time in these meetings

Chair Avery invites NMA to present results of its research and outreach. Patricia Newton, speaking for NMA, presents the PowerPoint presentation she prepared (or view below).

Brad Avery commends NMA for efforts and contributions. Mentions the HC’s desire to provide a forum for everyone with reasonable, relevant comments to make. Also describes that Brown Act prohibits Commissioners from gathering and discussing these topics together out of public, so as they review and discuss, understand this will be the first time they have all collaborated on these decisions. Reinforces that the HC can only make a recommendation to City Council (CC). City Council will probably pick up the discussion itself, may come to its own decision, possibly completely independent of HC recommendation.

Public Comments

Chairman Avery opens the floor to public comments, asking speakers to limit time to three minutes and speak only once.

Waiting List

First to the podium is Ross McElfresh (J-0097) who asks that wait list be preserved. He’s been on it for almost 40 years. Ross says he is one of 214 on the waiting list [even though he has a mooring –ed]. He believed the system had potential to be effective. He says lack of rigorous enforcement was one reason waiting list did not work well. For example, he says these findings could have delivered moorings to those on waiting list:

  • If a vessel had been found unseaworthy
  • If live aboard w/o permit
  • If rented to third party by permit holder himself
  • If fees remained unpaid for 90 days
  • If 90 days vacant

He notes that there are many vacant moorings in H & J fields. He claims waiting list effectiveness depends on management. GJ noted profiteering by handful of people because rules not enforced. Comments on fee rise of 300%, but nobody interested in representing wait listers. He says waiting list people have been loyal, optimistic, patient. He asks that 90 day vacant rule be reinstated to compel active use. He says use HP or volunteers to enforce. He says remove derelicts with State Grant help. All of these would lead to calls to those on wait list. No effort at problem solving of wait list. Claims they deserve consideration.

Lower Transfer Fee

John White (?) Says he’s new to community, just purchased mooring and shocked at fees. Thinks NMA suggestions are big improvement but transfer fee is too high, thinks should only cost $200 for transfer, a flat fee.

Ameliorate Past Overcharging

Don Beatty, resident since 1938, supports NMA recommendations. Notes now in fifth year of too-high rates, suggests backing rate way off to $22 since we got overcharged for some years. Asks that pricing policy be set to tie future permit fee increases to tideland needs.

Can I Get Parking With That?

Doug Ward, 18 months in Newport, notes lack of amenities, asks what is he to do with dinghy, where to store? He also notes challenge of parking car for a week or two while using boat…how to solve?

Charge Same Fee Mooring as Dock

Brian Ouzounian comments on fees, says has had mooring for 40 years. Was involved with (Stop the) Dock Tax issue. Notes that there is no formula set by any authority; this leaves wide latitude to do whatever we want as long as reasonable. He proposes $.50 / sq.ft. be charged on only the shadow of boat and cans. E.g. $200 / year. He estimates permit fee of $3 to $5/ft/yr using this method compared to NMA recommendation of $25/ft. Ignore curve of boat’s topsides, just compute Area using Length times maximum Width for simplicity. Points to private docks charges as source of the rate. Suggests further discounting the rate by the amount gained by mooring rental income.

Need for More Dinghy Storage

Richard Dorn, mooring C-086 and liveaboard, notes that the mooring liveaboard permit fee was supposed to correspond to cost of providing the permit; this fee has risen from $35 to $350. Says many liveaboards and rentals makes C field public dinghy dock access tough. Says very little time limit enforcement on dinghy tie ups. Brad Avery notes HC is aware of challenges and urges people to continue to come to HC meetings and pick up effort to improve mooring usability, access, etc.

$25, Not $25 to $30

Nigel Bailey, H-310, likes NMA proposal. Says he is concerned that the $25 should not be a starting point (on the way to $30) for instance.

Proposition 218 Relevant or Not?

Tom O’Keefe, 116 Ruby, holds several moorings, 40 year resident. Says discussion has been about fairness and reasonableness. His opinion is that Proposition 218 does apply to mooring fees. Either must have vote of people or must justify fee by cost of rendering the service being charged for. He says the cost of rendering the permit is nominal. He feels nobody has answered question of what is the actual cost of rendering the service; he has brought the Proposition 218 point to the discussion in three separate meetings.

Michael Torres Replies on Proposition 218

ACA Michael Torres says Proposition 218 is not applicable when charging rent. He says paying mooring permit fee is paying rent. City owns and rents property. Draws distinction between rent and providing a service.

Brad Avery notes he recommends calling annual permit fees rent instead of lease.

Make Necessary Adjustments When Considering Comparables

Scott Karlin, who wrote Fair Use Fees report, remarks about American Legion dinghy racks at $45/mo, further increasing cost of using Newport mooring over San Diego which has free dinghy storage. He points out the reports all arrive at $25 as a maximum, with support for range of $21 to $25. Reinforces concept that permit holders not asking for a free ride, says amount should be based on fair value.

Call A Spade A Spade

Mike Glenn addresses use of the word rent for mooring permit fee. He asserts that there are three ways governments raise money; these being tax, fee, or fine. Mr. Glenn says a fee is an amount charged to cover the cost of providing a service. He says any charge beyond that is a tax. A City may call it rent, but monies collected by a City nevertheless fall one of the three categories he cites. If charging a fee, Cities typically justify amounts charged by means of a fees study. If charging higher than its cost to provide the service, that higher amount is plainly a tax, and all taxes must be approved by voters. This is not a free market, this is a government collecting money to serve citizens. [Applause –ed]

Why Not Tidelands Fee Parity, Dock to Mooring?

Jim Mahoney asks why is the fee for mooring permit not exactly the same as for a homeowner with dock? He notes both use the same tidelands in the same way. Commissioner Avery replies the City does not consider the tidelands same, by house, as around mooring.

Unidentified speaker says he’ll put a dinghy on his mooring to forestall rentals.

Jack Suddarth thanks NMA, asks for stability regarding transfers.

Another Tidelands Valuation Method Comes in Below $25

Leonard Grech, K-021, says likes to pay own way, proposes formula. Says he has to pay $165/mo for dinghy tie up on someone’s private dock. Describes his formula which multiplies area used, width by length, by same rate pier permit holders have to pay, says he comes out at about half the cost of the CPI method. Leonard speaks to support the $25, not as a baseline, but as an absolute maximum, but supports point there are lots of methods to come up with lower reasonable fees.

Scott Karlin describes how the value method he proposed accounts for greater blockage of tidelands than by a private dock.

Move Toward Fairness in Rates, Tolls, and Charges

Brad Avery recognizes he allowed Scott Karlin speak twice so he gives Brian Ouzounian equal opportunity. Brian points out the disparity between private dock fees (his dock $150) and his mooring fees ($2000). Brian owns both a dock and an offshore mooring so he raises the inequity to mooring permit holders.

Dan Gribble asks for a moratorium on changing all of this once settled, doesn’t want to go through this again in five years.

Shore Moorings Charged Half

Mr. Zaun (sp?) asks is his shore mooring also proposed to be $25/ft? No, shore moorings proposed to be half (as current).

Commissioner Duncan McIntosh asked for clarification on a point from Patricia’s slides, about mooring permit holders paying more than other tidelands users. Patricia Newton referred to her slide #8 to explain (from PowerPoint linked up this page, excerpt shown below):

screen capture of PowerPoint slide show comparing Newport Harbor sources of Tidelands Funds

Estimated annual tidelands income with mooring fee at $25/ft/yr

ACA Michael Torres mentions that municipal code says City to receive FMV for rent, assisted by an appraisal. Says City can commission another appraisal, base rates on residential rates, or use previous appraisal. Brian Ouzounian suggests HC could recommend using previous appraisal (2012) used in private dock rate determination.

HC Recommendations

Chris Miller shows his PowerPoint presentation with options for Harbor Commissioners to vote on.

Transfers

Commissioner Avery mentions he is aware, from discussions in previous meetings, that the Commissioners are in favor of transferability. Regarding other decisions they will make tonight, if HC can’t agree on a given point, it may offer to CC a range, or choice of options.

Transfer Frequency

Unanimous support for once / year. This is done to check mooring speculation and brokering.

General Discussion of Transfer Fees, Annual Permit Fee

Transfer fee now 50% of annual fee, but, if HC will be dropping the annual fee, Commissioner Stapleton suggests raising transfer fee to 100% of annual fee. For example, 40 foot mooring – assume $25/ft/year annual fee x 40′ Length = $1000 annual fee, 100% of $1000 is $1000, therefore $1000 transfer fee, instead of $500, which would be half of (new, lower) annual permit fee.

Returning to discussion of transfer fee. Commissioner Avery asks, charge fixed percentage, as Avalon? Or fixed amount? Mention fixed amount might be unfair because of varied value of moorings. Charge a percentage of profit? Or split profit?

Brad Avery supports transfer fee of one year’s permit fee if rate is $25/ft. Duncan in favor of market rate when selling mooring, prefers percentage of sale price. If sell mooring for $10k, then 5% would be low ($500). Stapleton says there is real challenge trying to keep tabs on actual sales price, just ask for one year’s permit fee on transfer.

Duncan McIntosh suggests get rid of waiting list, supports even $22 to $25 range for annual permit fee adjusted periodically (not necessarily every year, but every few years) by CPI.

Duncan asks for parking permits for mooring permit holders. [This may need permit holders’ continued vocal support to gain traction -ed]

Commissioner Avery returns to idea that the buyer and seller should attest to the transfer price of a mooring, could then use that to determine transfer fee as percentage of sale. Brad notes that, more important than the income, is transparency. Says fees should return to Harbor Tidelands Fund and absolutely not be incorporated into the General Fund.

Commissioner Avery points to the challenge of attributing sale price to mooring when a boat is sold with mooring as a package. Apportioning cost is extremely awkward. Commissioner Avery recognizes that it is straightforward to set transfer fee as percentage (100%) of annual fee to sidestep the problem of splitting of value from boat versus mooring.

Commissioner Stapleton concurs on suggestion of using 100% of annual permit as transfer fee.

Transfer Fee Recommendation

Girling points out that, in lieu of consensus on one option, a couple of options can be recommended. The Harbor Commission decides to recommend to CC its choice of:

  • Transfer fee shall be equal to one year’s permit fee (100%)
  • Transfer fee shall be be a percentage of sale, e.g. 5%

Trust & Interfamily Transfer Fee

  • Stapleton suggests zero fee for trust / interfamily transfer, same as current, no fee.

This is consensus, leave it alone, make no change.

Brad notes currently about $20k to acquire 40 foot mooring now, speaker says actually, it’s less.

Dual Name or Single Name on Permit

Dual name on permit? Currently one name only, central point of contact. [Not much effort was put into support for this initiative and Commissioners did not seem to have strong opinion on it -ed]

  • Commissioner Stapleton says keep it the same, Commissioner Girling agrees; one name only on permit

Central Listing

To promote transparency, Commissioner Avery asks City to create informational web page listing with moorings for sale, closed sales, buyer and seller must attest. Not transactional, merely informational with regard to availability and asking price, and closed sale price when available. Seller can market his mooring wherever, however he wants to. But the web page would provide a single place to help general public seeking good information.

  • Can advertise mooring however you wish, the listings web page just provides reference material

Number of Permits Held by Individual

  • Consensus, two…shore mooring and offshore…grandfather those with more

Annual Permit Fee

Commissioner Avery says he thinks $25 is low–based on seat of pants–he has no rationale. But he supports $25. Commissioner Girling also supports it. He acknowledges problematic access, inadequate number and size of dinghy docks, problematic parking, etc. He notes $55/ft/yr is way out of line. Commissioner Girling asks what does retroactive mean?

Patricia Newton responds that, as we are agreed the fees imposed were not fair, we would like for the new fee to be retroactive to 2011, when the overcharging started. [In an earlier meeting the HC said this issue was a matter for the Council to decide. Patricia put into the record that mooring permit holders would appreciate the new fee be set retroactively. -ed]

Commissioner Stapleton notes fee income will drop, worried about people sitting on moorings, incentive will be to hold and speculate. He wants to support $25 but he is concerned that this fair price will not disincentivize holding mooring.

Duncan says he supports $25 with CPI increases every five years.

  • Consensus support at $25 with CPI increase

Commissioner Avery says people sell when they need to sell, he doubts masses of people are just squatting on moorings for speculation.

Billing Frequency

Could offer bi-monthly billing as an option, as for City residents who are billed for mooring on their utility bill. Commissioner Stapleton asks whether this will be administrative challenge. Chris Miller says he typically asks in June about 5 to 8 permit holders who haven’t paid bill. Chris Miller says periodic billing is probably a solvable challenge.

  • Staff will take the issue under study

Mooring Rentals

Brad supports status quo but recognizes rates are too high, suggests return to this aspect later.

Likes idea that money stay in Harbor Fund, says come to Harbor Commission and advocate for services and amenities. Stapleton knows moorings close to harbor mouth get used heavily for rental, but willing to support status quo. Girling willing to go with status quo although he did like the dividend concept for fairness. Duncan repeats need to make mooring owner whole when and if tackle is damaged, destroyed, stolen, by City’s renter.

  • Leave as is, City receives income

Rental Fees

Seasonal, daily/weekly/monthly

(resolved to consider apart from tonight’s discussion)

Waiting List

  • Abandon

Stapleton says go to market, waiting list is a thing of the past, hasn’t worked. Ross McElfresh says if you get waiting list mooring, can’t sell. ACA Torres confirms no legal requirement to have waiting list.

Revocations

Chris Miller explains how mooring revocation process works. When mooring permit is revoked, permit goes to City, City reimburses permittee for cost of tackle as estimated by mooring contractor. Let’s assume $1500 value of tackle, City buys that property for $1500 and passes cost to next permit holder on waiting list. Ross McElfresh points out that City has revoked (a few) moorings but not all the moorings offered to waiting list have been picked up… Very few moorings actually get revoked, only 1 or 2, although more hearings might take place. Once revoked, permit would go to list of moorings for sale, it would get auctioned or sold by City.

Insurance

  • Same as current

Girling makes motion to incorporate recommendations and fwd to CC.

Meeting adjourned.

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