What’s A Fair Market Rate For Newport Harbor Residential Piers?

Next Tuesday, the Newport Beach City Council meets again about assessing fair market rental rates on residential docks. But what’s the fair market rate for space over pubic waters that’s unlikely to be rented to anyone but the adjacent property owner? That’s a key question I’ve had in the current debate over proposed increases. Newport Beach spokesperson Tara Finnigan has sent me some answers, in conjunction with talking with city manager Dave Kiff.

I contacted Finnigan this week with several questions via email. She spoke with Kiff and provided the responses below.

Question

Has the state suggested to the city that it is somehow not charging appropriately for residential pier permits?

Answer

No, but we think it’s risky to wait until they do. Dave suggested a couple of examples. The first, is the State Auditor’s report to the State Lands Commission chastising the Commission (the City’s landlord) on how the Commission has administered its own properties (August 2010) [I believe this is the report]. The next is SB 152 (Pavley) [see here and here for more about this].

We’re also sensitive to the fact that we have a supermajority in the State Legislature, as well as a Governor of the same party, – all representing a State in need of revenue – that could look to the tidelands trust properties. Our concern is that the State could ask us to make up for past “short falls” or give up the tidelands to the State so they can collect the revenue.

Question

If not [if the state hasn't asked the city to charge more], why is the city changing the fees so dramatically?

Answer

See above. The increase will be phased in over five years. It’s actually less than what the appraisers themselves thought was FMV [fair market value] (because it only applies to the docks + dockable space). By 2017, most will see fees at $500 – $1,000/year. Not $10,000 and certainly not the $30,000 figure that some have suggested.

Question

I get that the Beacon Bay Bill has this whole thing about recovering cost of services for “fair market rental value” though it also says, “where appropriate,” if this is the right text of the bill. But nothing in it says that residential charges aren’t appropriate.

The only real challenge the city seems to have had was over the offshore moorings as part of the Grand Jury report about harbor moorings. That report doesn’t seem to be critical of residential moorings. The only mention I find of those is that it doesn’t seem to even know how they got offered in the first place. It doesn’t suggest there’s any type of gift of public funds going on.

Answer

The Beacon Bay bill shouldn’t be looked at in isolation.  The Gift of Public Funds clause of the CA Constitution has even greater weight.

The Grand Jury has never looked at anything but moorings – that’s all that was in their scope.

Again, the Grand Jury didn’t look at residential piers.

Question

What’s the city’s position if people give up their piers? The city can’t do onshore moorings, since it can’t anchor to private sea walls. Are there any restrictions to whether it can make use of those public waters for any type of public mooring?

Answer

It depends on where the pier is. Technically, all of the private piers along Balboa Island could be removed and the same space assigned to someone else – fairly easily. (The Bay Front Walk divides the Balboa Island homes from the piers.)

For piers along the Peninsula or Bayside, the City or a new permittee would have to install a mooring device that did not touch private property, including private sea walls.

Offshore moorings could do this, so could piers extended out from street ends – but the latter is highly unlikely.

It is more likely that if someone did not want to pay the fee, they would abandon and remove the dock and that space would either be vacant or have an onshore mooring placed there with no connection to the adjacent private property.

Thanks to Finnigan and Kiff for the responses. I’m expecting to do one further post before the coming city council meeting, putting them in perspective alongside some other issues.

The Daily Pilot also has a Q&A that it posted this week on some of the issues involved. In terms what I’ve covered above, this is an relevant section of that:

According to Sheri Pemberton, the State Lands Commission external affairs division chief, if the city doesn’t comply, the commission can let city officials know they are in violation of the regulations and possibly work it out. Depending on the city’s response, the commission could pursue legal action.

She said the commission periodically reviews jurisdictions’ income and expenditures to ensure that “the revenues are being used in a manner that’s consistent with the grant.”

For those seeking background on the issue, please see my previous post, The Dock Tax: Why The Newport Beach Boat Parade Is Being Boycotted.

Remember, the meeting will be held at 4pm Tuesday, December 11 in the old council chambers on the Balboa Peninsula, not in the new chambers at Fashion Island as was originally the plan.

Postscript: See my follow-up post, SB 152 Doesn’t Apply To Newport Beach Residential Piers