By Jill Cowan
8:23 PM PST, December 5, 2012
With the City Council poised to vote Tuesday on another round of fee increases for use of the harbor's public tidelands, a group opposing the increases, Stop the Dock Tax, has threatened to boycott Newport's Christmas Boat Parade, an annual tradition that goes back more than a century.
The boycott has escalated already heated rhetoric about the issue at city forums. While residents affected by these increases have labeled them money grabs and unjustly levied taxes, city officials have stressed that the fees are essentially a form of paying rent to use a public asset.
Throughout discussions, many questions have been asked and answered, but several seem to keep coming up. Here are answers to some of them.
Q: Where do things stand now? What will the council be voting on at its next meeting?
A: The council in 2010 tripled mooring fees, and last month, after contentious debate, voted to increase rents for harbor users operating businesses on public tidelands.
Next up are residential pier rents.
After adjourning a special meeting on that matter last week during which council members and residents discussed the proposal at length, the council is slated to vote on the fee increase for residential docks on public tidelands at a special meeting at 4 p.m. Tuesday.
If the council votes to adopt the proposed changes, residential dock owners will pay 52.5 cents per square foot of dockable space, which, for most affected homeowners, will end up costing between $700 and $1,000 per year. Currently, they pay a flat $100 annual permit fee.
Under the most recent proposal, a dock's square footage includes the area of the dock and float itself, plus the waters of an internal slip and up to 10 feet around the structure, excluding the backside of a pier or any undockable portions.
The increases, under the current proposal, will be phased in over five years, to 2017.
Not all residential dock owners will be affected. Some are located along county-administered tidelands or privately owned waterways. City staff will work with individual pier owners to determine their rents and whether their docks are on public waterways.
In general, areas including Dover Shores, Linda Isle, Promontory Bay and Harbor Island will not be affected.
About 970 residential pier owners on the harbor will be affected, staff reports have said. Another 200 or so will not be.
Initially, the proposal had included a provision mandating an insurance policy that would essentially hold the city harmless, potentially forcing homeowners to carry separate insurance policies for their docks. But after a public outcry, the council recognized that as an overstep. City legal staff is working to develop more workable insurance solutions
Council members and residents were split on whether to allow residential pier owners to rent out their docks. It happens now, but it's not legal, according to the municipal code.
Based on a straw poll taken toward the end of last week's meeting, a final proposal will likely allow rentals, but dock owners who do rent their docks out will have to pay a small commercial marina rate, which is about $1.26 per square foot.
Q: Why is the city increasing rents? What gives the city authority to charge rent over harbor waterways in the first place?
A: The city is responsible for administering state-owned public tidelands, which comprise much of Newport Harbor. Those lands were assigned to the city through the state's Beacon Bay Bill in 1978.
But how the city takes care of those areas is subject to state regulation. Those rules require the city to charge "fair market" rents for use of public assets.
The city chose two appraisers to assess a fair market rent based on factors including rents for similar properties in the private sector. The city split the difference between the two appraisals to come up with 52.5 cents per square foot.
Rent increase opponents have suggested the city or the council challenge these state mandates or set its own, lower version of fair market rates because there doesn't seem to be any real impetus to increase the rent now.
But council members have said the proposed increases are steep because past councils have shied away from taking on the updates.
Furthermore, the city could land in hot water if it doesn't play by the rules.
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."
The city has cited a 2011 California State Auditor report that found that because the commission has not managed public lands effectively, "the state has lost millions in revenue for the general fund," as a reason for changing harbor use rents now — as opposed to years ago, or in the future after the economy has recovered more.
Beyond its responsibility to the state, the city has said it will use the money from the increases on harbor infrastructure improvements.
Already, staff reports have said, the city has dipped into its general fund to pay for large capital projects, like lower bay dredging.
Critics counter that the dock owners are also paying for some coastal beach-related costs, which means beachgoers and visitors are benefiting on their dime.
In response, the council's Tidelands Management Committee has recommended that the council create a sequestered capital improvement fund so that the money raised by the rent increases will be used only for the benefit of the harbor — not coastal beaches.
An ordinance to create the fund will likely go before the full council next year.
Q: So what does all this have to do with the Christmas Boat Parade?
A: A lot.
Stop the Dock Tax representatives have said they've been left no choice but to boycott the parade, and that regardless of public input, the increases will move forward.
"Every year we joyfully spend thousands of dollars to decorate our homes and boats for over 1 million visitors to enjoy," group Chairman Bob McCaffrey wrote in an email newsletter. "We voluntarily spend this money so that children and adults alike can experience this special city that we cherish."
But, he continued, the parade "doesn't happen" if harbor homeowners "turn off the switch."
Parade Chairman David Beek, who agrees that the increases are a "money grab," said a boycott won't hurt the city — it'll hurt residents. The parade is not run by the city, but by the Newport Beach Chamber of Commerce.
"Honestly … the whole thing kind of caught us off guard," he said last week. "I completely understand their frustration, but to boycott the boat parade? Really?
"The average Joe is going to go, 'You've got these really rich people on the bay with their docks, they're going to throw a temper tantrum, they're going to hurt everybody with their inconvenience.'"
But McCaffrey said that the group doesn't have plans to back down.
"We thoroughly understand the ramifications of this boycott on our business community, residents and visiting tourists. This is not a cavalier decision — we realize it will have an economic impact," he wrote. "This is a decision borne out of frustration with our city government that has chosen to treat its residents in a high-handed manner."