Finance Committee hears Fee Study concerns
Quick link to Winter 2009 Newsletter (*.pdf-894 KB)
Quick link to 2010 latest mooring fees news.
Tuesday, December 16th, 2008, the Newport Beach City Council Finance Committee held a study session on the Harbor Fees Study in City Council chambers. The Fees Study consists of three City-commissioned documents: an appraisal (*.pdf-562 KB) by Netzer and Associates, a Harbor Cost of Services study (*.pdf-2.37 MB) by Maximus, Inc. (with appendices A through P) (*.pdf-185 KB) , and an economic study (*.pdf-3.82 MB) by two University of California professors. The study session focused on the just-released professors' report; none of the authors was present, so the public was not able to question the authors--including Mr. Netzer, the appraisal author--on their conclusions.
Mayor Pro Tem Curry, Councilmembers Daigle and Henn, City Manager Homer Bludau, Revenue Manager Glen Everroad, and other City staff, as well as interested citizens, heard a presentation by Assistant City Manager Dave Kiff on Harbor Fee Study status (*.pdf-1.77 MB) [or click to the meeting minutes (*.pdf-90 KB) ]. Dave framed his presentation by noting that the state grant of public tidelands to the City of Newport Beach requires periodic evaluation of market rates for private and commercial uses of this public asset. The last evaluation was about ten years ago.
The professors' economic report, just released, attempts to integrate findings of the appraisal and cost of services study into an initiative to close the gap on tidelands costs in excess of attributed tidelands revenues. The state tidelands grant requires that revenues, directly or indirectly attributable to the tidelands, return to management of the tidelands, not for instance, to the City's General Fund. In public comments, following Council discussion of Dave's presentation, a number of citizens raised concerns.
Bill Moses, speaking on behalf of a citizens' committee, the Tidelands Users Group, ("TUG"), presented concerns. Click to Bill's remarks (Microsoft Word 2003--36 KB) or view as webpage.
A local dredging contractor, Mark Sites, also spoke. Click to Mark Sites' remarks (Microsoft Word 2003--28.5 KB) or view as webpage.
Read The Log's coverage of the Finance committee meeting,
Read Gus Chabre's letter to City Council Finance Committtee.
Read Gary Reasoner's letter to Harbor Commissioner Lawrenz
Read Art Smith's letter to Council member Nancy Gardner, City Manager Homer Bludau, and Assistant City Manager Dave Kiff.
Read independent certified appraiser's critique of Netzer mooring appraisal methodology (Adobe Acrobat--320 KB) .
Others who spoke, or who have written the City on this topic,
are welcome to forward their comments for posting here.
What do other local harbors charge for moorings?
(Microsoft Word 2003--50 KB) or view as webpage. (Posted 2009-01-12)
Contact the Tidelands Users Group: firstname.lastname@example.org
With ten years of inflation, growth in City staff and departments, and recent annexations of Newport Coast and Santa Ana Heights, City expenditures have risen significantly, in particular for public safety (fire, police). A now outdated Cost Allocation Plan, which long preceeded the annexations, specifies a percentage of a now much larger City budget is expensed to the Tidelands. But tidelands size and use has not kept pace with growth elsewhere in the City. So costs allocated to the tidelands appear to be overstated. Unfortunately, the recent Harbor Cost of Services study was based on this outdated Cost Allocation Plan. Revenue Manager Everroad committed to restating the Cost of Services study using the updated Cost Allocation Plan.
Also questioned of the Cost of Services study was the application of a 92% overhead rate for the Lifeguards Department, which effectively doubles these costs allocated against tidelands revenues. The City will look into this. The City also expressed willingness to look further into income which may not currently be attributed to tidelands, though it should be. Examples of such income are unsecured vessel property tax paid to the County of Orange Assessor, of which the City receives back from the County 15 to 17%; also sales tax from businesses and activities located on the tidelands, bed tax from hotels on tidelands property, income from the Junior Lifeguards program, etc.
One suggestion of the economic study is to ask, of private pier homeowners, 20% of gross rentals for private dock rental to third parties. This conflicts with the current City ordinance which states that only piers bayward of commercial zones may be rented, but the potential dollars could motivate rewording. The tidelands are a public asset, even though one's private pier stands there. Individual mooring permit holders have long been prohibited from renting their moorings; only the City may do so. At least the City is not considering renting unused private docks to the general public! The economic study also suggests that the current $97 annual pier permit fee should be revised upward, since a typical 40-foot mooring permit is currently $800 ($20/ft/yr). The professors recommended $18/ft/yr for private pier permits.
Councilmembers Henn and Daigle agreed that increases in fee revenue should be legally or contractually bound to be deposited into the Tidelands Fund so citizens could be assured these dollars would benefit the tidelands. The State Lands Commission would certainly support that initiative.
A marine fuels provider noted that he had run a fuel dock in Channel Islands Harbor when the City of Oxnard impressed a percentage-of-gross assessment on the business. Within several months, he handed the keys to the business back to the City; the business no longer made financial sense. He also noted that in the other cities which charge a percentage of gross from tidelands businesses, the upland real property is owned by those cities. In Newport Harbor, the fuel docks are not on City-owned property. The proprietor owns the upland real property himself. The City agreed to reexamine these comparisons and the percentage-of-gross recommendation.
Councilman Henn noted that the Fees Study also had failed to incorporate benefits, to the public at large, of adjacency to the tidelands. He did not concur with the narrow scope of the professors' "beneficiary pays" principle. He did not think that the reported $13 million shortfall, in tidelands revenue versus expenses, constituted a subsidy of waterfront homeowners by the general public. People throughout Orange County benefit from adjacency to this world-class small boat harbor, not just homeowners with waterfront private docks. Mayor Curry mentioned the legal principle of equity with regard to proposed onerous assessments on Newport's Dory Fisherman Fleet, for instance. They have long filled an interesting and vital corner by McFadden Wharf, and especially in these trying economic times, could hardly be seen as taking and not giving back to the community by continuing their enterprise.
The council agreed to evaluate all proposed fees with a common sense test. Councilman Henn noted tremendous financial challenges from various current and planned projects such as harbor-wide dredging, possible disposal of contaminated Rhine Channel sediments in a confined aquatic disposal site, mitigation of pyrethroid (pesticide) and metal (copper, mercury, lead) contamination, eelgrass management, and the planned Marina Park project. No matter what shortfall may exist in tidelands revenues net of expenses, the City is going to have to commit to supporting the harbor wherever tidelands user fees end up. There is no way to levy fees from harbor users to cover what he estimated could total nearly $100 million dollars to resolve management and capital improvement issues. He acknowledged the harbor and ocean-front tidelands' importance to the City of Newport Beach.
The Tidelands Fund is currently set up as a special revenue fund, and one citizen asked whether it might be better organized as an enterprise fund, which would provide greater financial transparency. City staff agreed to look into this. What's next?
City staff has some work to do before the Fees Study will come back to a
By the way, with 2011 around the corner, and all this talk of fees, it's as good a time as any to renew your NMA membership! We can do more with your support. Note the Newport Mooring Association Annual Meeting, March 4, 2009, at 6PM in City Council Chambers.
As of January 2010, a new harbor fees initiative was forming, with updated Cost of Fees Study and a hopefully more informed appraisal being commissioned. The NMA was to be included in a review with City Staff of problems with the previous appraisal and even a RFQ solicited to help select the most qualified appraiser. We hope the new appraisal will get closer to a fair estimate of value for the City.
In an abrupt about-face, the City declined to solicit the appraisal and instead decided to boost fees using a seat-of-pants approach. Newport Beach City Council, on Tuesday, July 27th, heard a proposal to create an ad-hoc commission of City Council members to work with stakeholders, and other interested parties, on harbor fees. You can learn about the proposed ad-hoc committee. The ad-hoc committee asked three members of the NMA Board to hear its first proposal and asked NMA to propose alternatives for a subsequent meeting. The NMA did not concur that pricing moorings relative to slips was the most equitable approach because remote offshore moorings have no linkage to the mostly privately owned tidal uplands for which high slip rates are charged. The NMA has not been successful with alternative valuations based on other harbor comparisons, square foot, or CPI approaches.
UPDATE: 2010-11-07 To learn more about the NMA's thoughts and proposals, and latest turn of events click to the following link. As of November 2010 the ad-hoc committee has reached a mooring fees proposal that it will share with the full council.