Agenda Item   

AGENDA STAFF REPORT

 

                                                                                                                        ASR Control  21-000889

 

MEETING DATE:

12/07/21

legal entity taking action:

Board of Supervisors

board of supervisors district(s):

2

SUBMITTING Agency/Department:

County Executive Office   (Approved)

Department contact person(s):

Thomas A. Miller (714) 834-6019 

 

 

Dylan Wright (714) 480-2788

 

 

Subject:  Channel Reef Community Association Lease Agreement

 

      ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

Approved Agreement to Form

Discussion

 

 

3 Votes Board Majority

 

 

 

    Budgeted: Yes

Current Year Cost: N/A

Annual Cost: N/A

 

 

 

    Staffing Impact:

No

# of Positions:

Sole Source: N/A

    Current Fiscal Year Revenue: $9,000

  Funding Source: Other: 100% (Lease Rents)

County Audit in last 3 years: No

 

 

    Prior Board Action: 12/8/2009 #13, 12/12/1989 #47

 

RECOMMENDED ACTION(S):

 

 

1.

Find that the proposed project is Categorically Exempt (Class 1) from provisions of CEQA pursuant to Section 15301 of the CEQA Guidelines.

 

2.

Approve the Lease Agreement with Channel Reef Community Association commencing on January 1, 2022, with a term of thirty years.

 

3.

Authorize the Chief Real Estate Officer or designee to execute subsequent lease amendments that make non-monetary and/or monetary changes that do not increase County costs by more than $50,000 per year under the lease.

 

 

 

 

 

 

SUMMARY:

 

Approval of the new Lease Agreement will allow for the Channel Reef Community Association’s continued operation and maintenance of a boat marina on County tidelands located at 2525 Ocean Boulevard in Corona del Mar.

 

 

 

BACKGROUND INFORMATION:

 

Since the early 1960s, the County of Orange (County) has leased to the Channel Reef Community Association (Channel Reef), located in Corona Del Mar in the City of Newport Beach (City), the subject tidelands under a variety of leases. The boat marina is located on tidelands under the control of the County under the Tideland Grant Chapter 415. The tidelands being used by Channel Reef are landlocked in that it is not accessible to the general public unless one passes through the gated private property of Channel Reef. On December 12, 1989, the Board of Supervisors (Board) approved a lease agreement with Channel Reef for use of County tidelands to operate and maintain a boat marina for use by Channel Reef residents (Prior Lease).

 

On December 8, 2009, the Board approved a first amendment to the Prior Lease, extending the term of the lease to December 31, 2019.

 

In mid-2019, the County approached Channel Reef to begin lease renewal negotiations. When negotiations began, Channel Reef was experiencing major sand accumulation in its marina as sand migrated from China Cove, the adjacent City beach. By end of the third quarter of 2019, the marina was completely inundated with sand, causing the boat slips to buckle. Channel Reef requested that the County enter into a short-term license prior to renewing the lease, which would enable them to dredge the sand and make repairs to the marina.

 

On October 7, 2019, the County and Channel Reef entered into a one-year license with an option to extend the license for one additional year. The first year of the license was rent free, allowing Channel Reef to apply for and obtain all permits to dredge the marina. The monthly rent for the extension option period was $1,150. The license was executed by the Chief Real Estate Officer under Delegated Authority. The marina was subsequently dredged, repaired and it is now fully functional. The cost of dredging and repairs was fully paid for by Channel Reef, and Channel Reef is currently paying a monthly rent of $1,150. The license, including the extension option expires December 31, 2021.

 

County Executive Office (CEO) Real Estate and OC Community Resources/OC Parks have now negotiated a new lease with Channel Reef (Proposed Lease). The marina and premises consist of eight slips for boats up to 36 feet and a U-dock for Duffy electric boats.  The marina has a private gangway with a security gate at the top. Since the property is landlocked by Channel Reef’s property, it is unmarketable to anyone but Channel Reef and, based on that, a competitive bidding process was not utilized (Meakins v. Steveland, Inc., 68 Cal.App.3d 490, 498 (1977)).

 

A proposed Lease has been prepared for a term of 30 years at fair market value rents. CEO Real Estate staff did a rent survey for public marina slips throughout greater Newport Bay. The subject marina is a private marina and boat slips are not rented to the public. After CEO Real Estate staff compiled the rent survey, it was sent to the County’s Chief Real Estate Appraiser who reviewed the survey and consulted with a real estate appraisal and consulting firm. The consulting firm concurred with the annual rental rate of $18,000 or a monthly rental rate of $1,500 and reappraisal every 15 years. Under the Proposed Lease, the rent will adjust every three years based off the proportionate change in the Consumer Price Index for the Los Angeles-Long Beach-Anaheim Metropolitan Statistical Area. For the 15-year reappraisal, the County and Channel Reef will hire its own appraiser, at its own cost. The revised rent will be the average of the two appraisals.

 

Additionally, the Proposed Lease states that Channel Reef will dredge the marina at its sole cost to maintain a minimum depth of seven feet below the Mean Lower Low Water level (a standard measure used for measuring ocean water depth for dredging purposes). The Proposed Lease also requires Channel Reef to retain the services of a marine surveyor once every 10 years to evaluate the marina for the purpose of providing a report consisting of, but not limited to, inspection details of all structural elements such as docks, ramps, pilings and floats to ensure proper floatation of docks and Americans with Disabilities Act compliance.

 

Channel Reef is also required to keep and maintain the marina in good condition and state of repair. The County's standard insurance clause is used in the Proposed Lease and has been reviewed by CEO/Risk Management for appropriate coverage and limitations.

 

Compliance with CEQA: The proposed project is  Categorically Exempt (Class 1) from provisions of CEQA pursuant to Section 15301 of the CEQA Guidelines, because the Lease pertains to the ongoing operation and maintenance of an existing marina involving negligible or no expansion of the existing use.

 

 

 

FINANCIAL IMPACT:

 

Approval of the Proposed Lease will result in continued revenue to the County of $18,000 annually for the first three years. The rent will be adjusted every three years based on the proportionate change in the Consumer Price Index.  Revenue from the Proposed Lease will be deposited into Fund 106 and will be included in the budget for future fiscal years.

 

 

 

 

STAFFING IMPACT:

 

N/A

 

REVIEWING AGENCIES:

 

OC Community Resources/OC Parks

 

ATTACHMENT(S):

 

Attachment A - Location Map
Attachment B - Lease
Attachment C - Summary of Lease
Attachment D - Conveyance Questionnaire