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Newport approves marina rent hike for commercial users

Operators can choose to pay per square foot or a percentage of their gross revenue.

October 23, 2012|By Jill Cowan

Large commercial marina owners operating on public tidelands will pay more rent, the Newport Beach City Council decided Tuesday at a special meeting — but they won't see the changes until 2015.

After months of back-and-forth with harbor stakeholders, the council voted 4 to 3 to adopt a set of proposed changes to the way commercial marina rents are calculated, as laid out in presentations by City Manager Dave Kiff and Councilman Michael Henn.

Harbor business owners who operate large commercial marinas will eventually pay about 18.5% of their gross slip revenue, or an amount that would translate to about $1.97 per square foot right now. That increase will be phased in at a rate of about 2.5% of gross slip revenue per year, from 2015 to 2020.

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Operators will be able to choose between two rent calculation methods. One will allow them to pay the flat 18.5% with periodic audits. Or they can avoid the audits and pay a dollar amount per square foot based on a marina index rate that is calculated based on rents charged by commercial marinas not on public tidelands. The differences between the two calculations would be relatively small.

Currently, marina operators pay about 36 cents per square foot, or about 3.4% of gross slip revenue under an annual permitting system. The adopted changes — unlike earlier iterations of the proposals — allow marina owners to choose between a longer-term lease or continue with an annual permit. Both options are subject to rent increases.

The increases are one aspect of Newport's ongoing effort to update decades-old fees for various city-administered public tideland uses, though Kiff stressed that Tuesday's vote affects only large commercial marinas. The city, he said, is legally bound to charge rent in line with fair market values. The city tripled mooring fees in 2010, and at Tuesday's meeting, laid out some possible rent structures for yacht clubs, shipyards, fuel docks and other harbor users to be discussed at future meetings.

Critics have said the increases are money grabs by the city and addressing different harbor uses separately is an unfair "divide-and-conquer" tactic.

"We've had a very significant amount of public input, and we've made very substantial changes, including to the lease template," Henn said, perhaps in anticipation of the onslaught of public comment against the proposal. "I think there's a number of very large misconceptions about what's being proposed and the impacts of what's being proposed."

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