Transcript Slide 1

Presentation to City Council
Regarding Newport Harbor
Mooring Fees and
Transferability
November 23, 2010
Decision Parameters
• FAIR outcome for all tidelands users
• Based on the relevant facts & market
information
• Consistent with tidelands grant
requirements
• Sensibly address Grand Jury concerns
• Capable of providing sufficient funds to
maintain and protect the tidelands
environment
Harbor Mooring Fees
• Review Staff proposed rate increase
from $20/ft. to approx. $55-$60/ft.
• CPI based adjustment would be
$29/ft. compared to current $20/ft.
Comparison of 40’ Mooring Fees
Newport vs Other Harbors – Current & Proposed
$2,449
$2,028
$1,238
$720
$894
$511
$644
$1,200
$800
$408
$250
$350
$784
It Is NOT Fair To Include These Marinas
In The Newport Harbor Berth Index
Comparison - Annual Cost for 40' Berth
$18,960
$18,000 $18,240
$12,720
$8,640
$6,960
$3,938 $3,768 $4,157
$5,280
$8,400
City Now Includes The Highest Priced Marinas In The
Newport Harbor Index. This Is Not A Reasonable Basis
For Determining Fair Market Value.
Variations in Cost for 40' boat
Newport Harbor Berth Index
$2,113.51
$2,144.80
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4
$1,604.40
$1,243.20
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2
Low to high index of Marinas included in the the Newport Harbor Berth Index
Comparison of Projected Cash Surplus/Deficit
– Bottom blue line - the City financial forecast Nov 9 shows $19mm deficit
– Red line - our forecast adding omitted revenues and the City proposed
increase for mooring fees
– Purple line - our forecast with no changes to fees and everyone pays
– Green line - our forecast if everyone pays and the increase is CPI indexed
– Turquoise is projected capital expenditures
City Proposal will impose financial hardship.
Only a few benefited. Most will lose.
1997
Year of
Sale
1997
2003
2004
2006
2009
Profit/Loss forTransferring 40' Mooring Permit
Cost of Permit
2003
2004
2006
2009
2015
$9,000 $18,000 $21,000 $40,000
$2,400 $4,300 $21,100
$1,900 $18,700
$16,800
$32,000
$9,800
$7,400
$7,100
($11,300)
$2,000
($40,872)
($31,272)
($33,172)
($46,672)
($33,023)
2021
$2,000
($64,141)
($59,341)
($61,241)
($78,041)
($66,741)
• Calculation = Price received minus (original cost + permit fees +
maintenance for the period held).
• For years 2015 and 2021 the assumption is the Council has reduced
the value to $2,000 for the cost of the mooring tackle alone.
• For most people this policy guarantees a significant loss and not a
profit.
• THIS OUTCOME DOES NOT SERVE THE PUBLIC!
Trend is moving downward 3 year average is
55 per year
Mooring transfers per year
(Harbor Resources Dept.)
96
74
82
82
58
67
46
2003
2004
2005
2006
2007
2008
2009
54
2010
Transferability
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City has facilitated mooring transfers for 50
years; custom and practice in Newport Harbor.
Staff Proposal causes significant financial harm
There are other proven solutions from other
cities
A legal response, which addresses Grand Jury
concerns, preserves transferability
June 2010 the City and County Board of
Supervisors formalized transfers on page 13 of
the mooring administration contract with the
Harbor Patrol.
City Facilitated Selling Permits
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Mooring transfers per se are not illegal…but value
must be given back to the public.
The City of Newport Beach has itself sold moorings as
recently as 2004
City of Newport has followed the same practice as
other ports such as Avalon, Morro Bay, Port San Luis
and Pillar Point.
No City or County ordinance requires ANY waiting list
for moorings.
“No transfer” policies don’t work - case studies
Santa Barbara, City of Monterey & Santa Cruz
• The City of Monterey Harbor and City of Santa Cruz Port District
grappled with the administration and enforcement of a no-transfer
policy for slips for approximately 20 years.
• Santa Cruz still maintains a no-slip-transfer policy. But over 1,200
individuals remain on a wait list for approximately 1,000 slips.
Waiting lists don’t work; they get “gamed.”
– Enforcement difficult, “underground” transfers, unrecorded vessel
ownership documents, phony receipts and exchanged checkbooks for
slip payments.
• Permits have inherent value. Monterey, in 1997, adopted a policy
similar to Santa Barbara’s, which benefits the Tidelands by
increasing revenues to Tidelands Fund. SIGNIFICANT
TRANSFER FEE RETURNS VALUE to the public.
• Free market serves public better than waiting list.
A Pragmatic Solution:
Santa Barbara City Council’s Reply to the Grand Jury
2001 Santa Barbara Grand Jury Recommendation 1a:
The Waterfront Department rules should be changed to eliminate the ability of a
permit holder for a slip to transfer that slip along with the sale of a boat.
City Council Reply:
The City does not intend to eliminate the slip transfer policy but instead will
continue to assess and pursue a substantial transfer fee for the privilege of
transferring slip permits…
Mooring People-Who Are They?
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Major contributors to Tidelands Fund - $700,000
Many are Newport Residents
Most patronize and support Newport businesses
Local business people, including marine related
business owners
Members of local work force
Retired people, some live aboard residents
Many long time Newport and OC families
Yacht Club members
People from all walks of life with varied resources
People depending on Elected Officials to govern well
This is Poor Public Policy
• Staff proposed fee increase is neither justified nor
reasonable
• Newport Harbor Berth Index is flawed as a basis for
adjusting mooring fees
• Most permit holders will be hurt financially if transfer
rights are eliminated
• Harming many to stop a very few is a poor cure.
Transfers are not widespread, only 55 transfers
happening per year, half of which are within families
• An imposed value should not be a policy objective
• Discriminatory pricing is bad public policy – piers and
moorings should be treated equally
• Voting without adequate consideration of all the facts is
premature and ill advised
This is Good Public Policy
• Adopt a CPI adjusted index – It is a better index as it
represents actual prices paid - not published prices.
• Adopt Original Transfer Document – It solves
speculation issue and generates income.
• Learn from others – Waiting lists haven’t worked
elsewhere, no reason to think they will work in
Newport. These cities have systems that return value
to the public with transfers: slips in Santa Barbara and
Monterey, moorings in Avalon, and Morro Bay.
• Preserve Market Driven Process - An imposed value
should not be a policy objective.
• End Discrimination Against Mooring Holders - We
need a fair resolution to end an era of discrimination.
• Create Comprehensive Pricing Structure – All users
sharing expenses solves the Cash Flow Problem.