Newport Beach City Council considered commercial marina rates during a study session Tuesday, providing feedback and direction so city staff can return with recommendations for the Council to vote at a later date.
It is following up on an effort to lower the increase approved in 2012.
The study session item was meant to “update the council on a possible path to assign a fair market value to commercial marinas on city tidelands,” explained City Manager Dave Kiff in his “Insider’s Guide” newsletter.
Harbor Resources Manager Chris Miller and Community Development Deputy Director Seimone Jurjis summarized the history of the rates and a recent appraisal that would adjust rental rates for Newport Harbor’s commercial marinas on city-controlled tidelands.
According to a 2012 City Council action, the rates per square foot would be at $1.68 for large marinas and $1.26 for small marinas this time next year. But after some criticism from some affected by the change and gathering comments from marina operators, the rates were “frozen” in 2015 until staff gathered more information.
They were paused in the first phase of implementation of the 2012 action, Miller said, at 35 cents per square foot for the large commercial marinas and 26 cents for the smaller marinas.
“We kind of paused our rate adjustments until we had some more clarity and some recommendations and direction from the City Council,” Jurjis explained.
The city hired an independent firm to conduct an appraisal of the tidelands in 2016, Miller explained.
To be at fair market value, the rates would increase from what they are currently frozen at, but end up lower than what the 2012 Council approved.
“So what’s being recommended here is a reduction,” Councilman Will O’Neill pointed out.
City staff proposes to take a phased approach to raise the rent.
The new appraised rate is proposed at $1.17 per square foot per year for large marinas (no longer indexed), Jurjis explained.
For large commercial marinas, bigger than 55,000 square feet: Immediately raise it to 76 cents per square foot next month and one year later, in April 2018, increase it to the final $1.17 rate.
They also propose to establish a new size category for “medium sized” marinas between 54,999 to 15,001 square feet. Marinas of that size would be charged at a rate of 62 cents per square foot, starting next month, and then reach 88 cents at the “fully phased” point in April next year.
Small marinas, less than 15,000 square feet, would start immediately on the rate of 53 cents per square foot, and then up to 70 cents within that same timeline.
Going forward with the rate adjustments, Jurjis recommends to adjust the Consumer Price Index annually and re-appraise the marinas every 10 years.
For 2019 and 2020, adjusting the rates based on the CPI, city staff made an assumption of two percent and anticipate the rates may go up by about 2 cents each from their 2018 numbers.
Staff hopes to return with recommendations for the Council to vote on at the March 28 meeting.
Overall, the council members seemed interested and supportive of the idea. There was a lot of discussion between council members and staff to help clarify the details.
This is a more appropriate appraisal, Mayor Kevin Muldoon said. Nobody wants to be unfair, he added.
It’s public water being rented, Councilman Brad Avery pointed out, and the funds go back into the tidelands to help improve and manage the harbor, which benefit all the users, including the marinas themselves.
“It’s an important revenue source for the city,” Avery said. “Obviously over the years we’ve really struggled with this. There are two sides to this. We want to support the businesses and we want marinas to thrive…. and at the same time we have a responsibility to get what we believe to be market value.”