Newport Beach City Council
July 9, 2024

such as Duffy Boats, as well as the occasional use by the owner of a vessel using a tender to access an individual mooring.

Our analysis is of the tidelands used by the individual moorings within the mooring fields. Actual fees or fair market rent would vary from mooring to mooring. For example, a mooring on the perimeter of a moorings field would have superior unobstructed views, easier access, and/or mooring fields are closer to the harbor entrance, etc. This, however, is offset by a generally inferior mooring which may be very far from the harbor entrance, have difficult or crowded access, be located near a gas dock or a "louder" area in the harbor, etc. Accordingly, for this assignment, and in order to provide as balanced and equitable an analysis of the tidelands in a harbor -wide context as possible, we based the valuation of market rent for the subject tidelands upon a "typical" mooring.

Based on the analysis contained in the following report, and certain assumptions based on the typical area of tidelands used by a vessel on a mooring, and the lack of additional services or areas of tidelands available to mooring holders to access these moorings, the market value of the subject is concluded as follows:

TIDELANDS FAIR USE FEES / FAIR MARKET RENT
Annual Rent per 40'
Mooring Based on
Market Rent / Lineal Foot 1,326SF of Tidelands
YR for Tidelands used for individual
Appraisal Premise Date of Value ($3.36 LF per mo) mooring As Is January 15, 2024 $41.00 $1,640
Compiled by CBRE
Summary Table — Various Size Moorings
Mooring Size
Sq Ft with
AnnualFee
AnnualFee
AnnualFee
Max Swing
Per Lineal
Based on Sq
Per Lineal Foot
Factor
Foot
Ft Tidelands
(rounded to full
(rounded to
(without
dollar)
full dollar)
Rounding)
30 843
$35
$1,045.32
$1,050
40 1,326
$41
$1,644.24
$1,640
50 1,857
$46
$2,302.68
$2,300
60 2,322
$48
$2,879.28
$2,880
70 2,840
$50
$3,521.60
$3,500
If the City was to provide additional services to provide access to the moorings (such as shore boat service) or set aside areas of the tidelands for reasonable access to the moorings (such as in water motorized dinghy/tender boat dockage), an adjustment in the value may be appropriate, F, ZIml=
(9 2024 CBRE, Inc.

Mr. L. Scott Karlin
February 12, 2024

depending on the nature and extent of such additional services or additional tideland used for such access.

The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter.

The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), and the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

The intended use and user of our report are specifically identified in our report as agreed upon in our contract for services and/or reliance language found in the report. As a condition to being granted the status of an intended user, any intended user who has not entered into a written agreement with CBRE in connection with its use of our report agrees to be bound by the terms and conditions of the agreement between CBRE and the client who ordered the report. No other use or user of the report is permitted by any other party for any other purpose. Dissemination of this report by any party to any non -intended users does not extend reliance to any such party, and CBRE will not be responsible for any unauthorized use of or reliance upon the report, its conclusions or contents (or any portion thereof).

It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE can be of further service, please contact us.

Respectfully submitted,

CBRE - VALUATION & ADVISORY SERVICES
Robert Jacobson, MAI
Executive Vice President
California State Certification No. AG035731
Expiration Date: July 7, 2025
r ZIml=
(9 2024 CBRE, Inc.

Certification
Certification
We certify to the best of our knowledge and belief:
1 . The statements of fact contained in this report are true and correct.

2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, impartial and unbiased professional analyses, opinions, and conclusions.

3. We have no present or prospective interest in or bias with respect to the property that is the subject of this report and have no personal interest in or bias with respect to the parties involved with this assignment.

4. Our engagement in this assignment was not contingent upon developing or reporting predetermined results.

5. Our compensation for completing this assignment Is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

6. This appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan.

7. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the 2024 Uniform Standards of Professional Appraisal Practice, as well as the requirements of the State of California.

8. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

9. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

10. As of the date of this report, Robert Z. Jacobson, MAI has completed the continuing education program for Designated Members of the Appraisal Institute.

11. Robert Z. Jacobson, MAI has made a personal inspection of the property that is the subject of this report.

12. No one provided significant real property appraisal assistance to the persons signing this report.

13. Valuation & Advisory Services operates as an independent economic entity within CBRE, Inc.

Although employees of other CBRE, Inc. divisions may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy were maintained at all times with regard to this assignment without conflict of interest.

14. Robert Z. Jacobson, MAI has not provided any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.

Robert Jacobson, MAI
California State Certification No. AG03573
(9 2024 CBRE, Inc. I CBRE

Harbor Map
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MAP OF NEWPORT HARBOR AND MOORING FIELDS
City of Newport Beach
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Newport Harbor is a No -Wake Harbor!
The Sp"d Lmt is 5 mph
Upp�r and Lower Newport Bay am No Discharge Zones.

L) umpOng tma ted and un treated boar sewage. 1� N�ega; Warningi Vndarwafar submat9ed ;Ines -
Do n-1 �ros-� fh,q.-qt) Mooring am,as.

Harbor Related Contact Informatlom
NORTH
STAR
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NEWPORT
1) U N ES
CYA
A A
BAtROA BALBOA DE
C�ry of Newport Saach Harbor Mastar, S49-270-8159 Emergoncy: Ga or VH F Radio Channel I 9A
Orange County Sheriff Harbor Fialrol� 949-T23-1002 orVHF Radio Cti 16 Hoag Hospital; G40-7e4-4e24 W F.

R port Beach Lifequardz 949-604-3047 Sea Tow: 562-592-2800 or VHF Ch. 16 .I.W.port Beach Fire Department- q4q-644-�511 pi-911 Tow8cal US! 949-278-3207orVHF Ch. 10 + U'S d - 310-521-BCIDO or VHF Radic,Ohahnel 16 off st—a 24 Hr_ Crime Tip Hot Line: 800-550-6273 THE C.—t G—r WEDGE M
ON I C h—ic .1 and S.W. 9 � Spil I Newport Beach Weather, 949-675-GS03 Call Buth N . mloem W116e
Califorkiia Office of Emergency Responae� (800) OILS911 (645-7911) 1 mh - 1.382 r� Nationa I Response Center: (800) 424-8&02
Newport Dunts Launch Ramp Info: http:il www.dbw.ca.goylBoatinqFacilitiesIDeta[ 15�997 9 2024 CBRE, Inc. I CBRE
SIG
CORONA

Moorina Field A from west
Mooring Field C from west
Moorinq Field B from west
Moorina Field A from east
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Mooring Field C from east
Moorinq Field G from north
=11=

Executive Summary
Executive Summary
Property Name
Location
Client
Highest and Best Use
As If Vacant
As Improved
Property Rights Appraised
Date of Report
Date of Inspection
Submerged Tidelands Area
Mooring Fields
Moorings
Utilized Average Mooring Size
Concluded Tidelands SF / Lineal Boat Mooring Size
Tidelands Attributable / 40' Boat

VALUATION
Newport Harbor Offshore Mooring Fields - Tidelands
Fair Use Fees
Newport Harbor, Newport Beach, Orange County, CA
92662
Newport Mooring Association, Inc.

Offshore Mooring Use
Offshore Mooring Use
Leased Fee Interest
January 31, 2024
January 15, 2024

81.583 AC
9 579
40'
33 SF
1,326 SF
Rent Per Year
Market Rent As Is On January 15, 2024
California State Tidelands Commission Methodology $1,613 Inflation Methodology Based on City's Prior Benchmark $1,670 Ratio Method $1,920
3,553,765 SF

TIDELANDS FAIR USE FEES / FAIR MARKET RENT
Market Rent / Lineal Annual Rent per 40'
Foot / YR for Mooring Based on 1,326SF
Tidelands of Tidelands used for
Appraisal Premise Date of Value ($3.36 LF per mo) individual mooring As Is January 15, 2024 $41.00 $1,640
Compiled by CBRE
(�) 2024 CBRE, Inc. III CBRE

Executive Summary
Market Rates for Moorings - Other Sizes
Based on Methodologies Used in This Report the Value per Square Foot is $1.24 per Square Foot of Tidelands Used Per Annum. The square foot valuation would not change in relation to the size of mooring, only the square foot used and resulting adjustment to the total rate would change.

Sq Ft of Tidelands Used — No Swing Facto
Boat Size
+
Lines + Buoys*
x
Beam
Total Sq Ft
30 +
24 x
12 648
40 +
28 x
15 1,020
50 +
34 x
17 1,428
60 +
34 X
19 1,786
70 +
34 x
21 2,184
Rates without a Swing Factor
Boat Size
Sq Ft with
Lines etc
x
Total Sq Ft
Fee Per Year
at $1.24 sq ft
Fee Per Year
Per Lineal Foot
30 648
X
648
$803.52
$26.79
40 1,020
X
1,020
$1,264.80
$31.62
50 1,428
X
1,428
$1,770.72
$35.42
60 1 1,786
1 X
1,786
$2,214.64
$36.91
70 1 2,184
1 x
2,184
$2,708.16
$38.69
Add Swinq Factor at 20%
Boat Size
Sq Ft with
Lines etc
x
20%
Total Sq Ft
with Swing
Fee Per Year
at $1.24 sq ft
Fee Per Year
Per Lineal Foot
30 648
x
778
$964.72
$32.16
40 1,020
x
1,224
$1,517.76
$37.95
50 1,428
x
1,714
$2,125.36
$42.51
60 1,786
x
2,144
$2,658.56
$44.31
70 2,184
X
2,621
$3,250.04
$46.43
Add Swina Factor at 25%
Boat Size
Sq Ft with
Lines etc
x
25%
Tota I
with Swing
Fee Per Year
at $1.24 sq ft
Fee Per Year
Per Lineal Foot
30 648
x
810
$1,004.40
$33.48
40 1020
X
1,275
$1,581.00
$39.53
50 1428
x
1,785
$2,213.40
$44.27
60 1 1786
1 X
2,233
$2,768.92
$46.15
70 1 2184
1 x
2,730
$3,385.20
$48.36
(9 2024 CBRE, Inc. iv CBRE

Executive Summary
Add Swina Factor at 30%
Boat Size
Sq Ft with
Lines etc
x
30%
Tota I
with Swing
Fee Per Year
at $1.24 sq ft
Fee Per Year
Per Lineal Foot
30 648
X
843
$1,045.32
$34.85
40 1,020
X
1,326
$1,644.24
$41.11
50 1,428
X
1,857
$2,302.68
$46.06
60 1,786
X
2,322
$2,879.28
$47.99
70 2,184
X
2,840
$3,521.60
$50.31
* Variations with Summary results from rounding square foot calculations. @ 2024 CBRE, Inc. CBRE

Executive Summary

MARKET VOLATILITY
We draw your attention to a combination of inflationary pressures (leading to higher interest rates) and recent failures/stress in banking systems which have significantly increased the potential for constrained credit markets, negative capital value movements and enhanced volatility in property markets over the short -to -medium term.

Experience has shown that consumer and investor behavior can quickly change during periods of such heightened volatility. Lending or investment decisions should reflect this heightened level of volatility and the potential for deteriorating market conditions.

It is important to note that the conclusions set out in this report are valid as at the valuation date only. Where appropriate, we recommend that the valuation is closely monitored, as we continue to track how markets respond to evolving events.

CURRENT ECONOMIC CONDITIONS
At its December 2023 meeting, the Federal Reserve held the federal funds rate at a range of

5.25% to 5.50% and indicated it will continue reducing its balance sheet by $95 billion per month. The Fed reaffirmed its commitment to lowering inflation to its 2.00% target, while also acknowledging that risks (inflation vs. growth) have become more balanced.

Despite headline inflation remaining above the Fed's 2.00% target, core inflation, which excludes food and energy prices, has steadily decreased over the past 12 months. The recent run-up in the 1 0-year Treasury yield has further tightened financial conditions, which will continue to suppress economic growth and inflation. Commercial real estate investment activity is unlikely to improve until capital sources are confident that interest rates have stabilized, and pricing has fully adjusted.

While opinions vary on future economic issues, the general market consensus at the time of this appraisal is the anticipation of moderating inflation as higher interest rates cool demand. Tighter lending conditions and a weakening economy will keep capital markets activity subdued and reduce leasing demand in the short to medium term. Amid this uncertain and dynamic environment, investment market performance will be uneven across property types.

Local Impact
Note that while Newport Beach Harbor and its users are somewhat uniquely more insulated from broader changes in prevailing economic conditions due to the level of affluence surrounding the area and harbor, current economics and market fundamentals of harbor -related operations were artificially turbocharged due to the COVID-1 9 lockdowns and restrictions set forth by government throughout California. The lockdowns spurred boat usage and harbor demand in dramatic fashion during 2020 and 2021. As will be illustrated in the market analysis section, this artificial demand has waned with the COVID- 19 pandemic, lockdowns, and operation restrictions behind (9 2024 CBRE, Inc. Vi CBRE

Executive Summary
us, there is market evidence of a contraction in the boating market. In addition, we are currently facing unprecedented economic headwinds with the Fed raising rates over 500 basis points since April 2022, which historically has never been seen. This is intended and is anticipated to U unwind" much of the (again artificially imposed) COVID-19 pandemic era inflationary gains (increases in market rent and compression of rates of return).

EXTRAORDINARY ASSUMPTIONS
An extraordinary assumption is defined as "an assignment -specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser's opinions or conclusions." '
0 We have utilized the number of moorings, intended / assigned lineal foot capacity per mooring, and the amount of tidelands attributable to each mooring field based on multiple sources, the primary of which was the Newport Harbor Department mooring summary sheet.

This summary sheet was provided by the Harbor Department but was unsourced. Although requested, a full detailed comprehensive list of this information including actual surveyed tidelands areas was not provided / available. Also of importance but which was not available is the intended lineal boat capacity for each mooring. The appraiser is not a licensed surveyor. It 'is recommended that a professional tidelands survey be performed by a certified licensed surveyor and reliable source for all / average lineal foot mooring capacity for the mooring fields in question prior to making a business decision. The appraiser has made his best effort to accurately estimate these figures as relied upon in the following analysis. We reserve the right to amend our opinion of fair market rent if actual encumbered tidelands areas and lineal boat capacities vary from those figures utilized in the appraisal.

The use of extraordinary assumptions might have affected assignment results.

HYPOTHETICAL CONDITIONS
A hypothetical condition is defined as "a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purposes of analysis." ' 0 None noted

OWNERSHIP AND PROPERTY HISTORY
Title to the subject tidelands is currently vested in the State of California, in Trust to the City of Newport Beach.

To the best of our knowledge, there has been no ownership transfer of the property during the previous three years, nor any other marketing activity of unsolicited offers, and the subject is not currently listed for or pending sale.
1 The Appraisal Foundation, USPAP, 2024
2 The Appraisal Foundation, USPAP, 2024
(9 2024 CBRE, Inc. Vii CBRE

Table of Contents
Table of Contents
Certification......................................................................................................................... i ExecutiveSummary ............................................................................................................. iii
Tableof Contents .............................................................................................................. viii
Scopeof Work ..................................................................................................................... 1 NeighborhoodAnalysis ....................................................................................................... 9 SubjectAnalysis ................................................................................................................ 10 Zoning.............................................................................................................................. 13 MarketAnalysis ................................................................................................................. 14 Highestand Best Use ........................................................................................................ 16 Fair Market Rent Analysis .................................................................................................. 17 Reconciliation of Market Rent ............................................................................................ 31 Assumptions and Limiting Conditions ................................................................................ 33 ADDENDA
A General Data
B Appraiser License
(9 2024 CBRE, Inc. Viii CBRE

Scope of Work
Scope of Work
This Appraisal Report is intended to comply with the reporting requirements set forth under Standards Rule 2 of USPAP. The scope of the assignment relates to the extent and manner in which research is conducted, data are gathered, and analysis is applied.

INTENDED USE OF REPORT
This appraisal is to be used for internal purposes related to discussions with the governing authority regarding increasing fees payable by mooring owners, and no other use is permitted.

CLIENT
The client is Newport Mooring Association, Inc.

INTENDED USER OF REPORT
This appraisal Is to be used by Newport Mooring Association, Inc., and no other user may rely on our report unless as specifically indicated in the report.

Intended Users - the intended user is the person (or entity) who the appraiser intends will use the results of the appraisal. The client may provide the appraiser with information about other potential users of the appraisal, but the appraiser ultimately determines who the appropriate users are given the appraisal problem to be solved.

Identifying the intended users is necessary so that the appraiser can report the opinions and conclusions developed in the appraisal in a manner that is clear and understandable to the intended users. Parties who receive or might receive a copy of the appraisal are not necessarily intended users. The appraiser's responsibility is to the intended users identified in the report, not to all readers of the appraisal report. '

PURPOSE OF THE APPRAISAL
The purpose of this appraisal is to estimate fair use fees / fair market rent for the subject property.

DEFINITION OF VALUE
There is no specific definition of Fair Market Rent. However, Market Rent is considered to be synonymous with Fair Market Rent for the purpose of this appraisal. Fair Market Rent is defined in the Sixth Edition (2015) of The Dictionary of Real Estate Appraisal as: "The most probable rent that a property should bring in a competitive and open market reflecting the conditions and restrictions of a specified lease agreement, including the rental adjustment and revaluation, permitted uses, use restrictions, expense obligations, term, concessions, renewal and purchase options, and tenant improvements (Tls)."
3 Appraisal Institute, The Appraisal of Real Estate, I 4th ed. (Chicago: Appraisal Institute, 2013), 50. (9 2024 CBRE, Inc. I CBRE

Scope of Work

INTEREST APPRAISED
The value estimated represents fair market rent, not an ownership interest such as fee simple or leased fee. Therefore, the concept of ownership interest is not applicable in this assignment.

Extent to Which the Property is Identified
The property is identified through the following sources:
• various mapping software and records
• physical inspection
Extent to Which the Property is Inspected
We inspected the subject property as well as the surrounding environs on the effective date of the appraisal. The inspection included various aerial and mapping resources, as well as a physical inspection around and throughout the harbor.

Type and Extent of the Data Researched
CBRE reviewed the following:
• various public resources
• comparable data
previous market studies and appraisals
Type and Extent of Analysis Applied
CBRE, Inc. analyzed the data gathered through the use of appropriate and accepted appraisal methodology to arrive at a probable value indication via each applicable approach to value. The steps required to complete each approach are discussed in the methodology section. (9 2024 CBRE, Inc. CBRE

Scope of Work
Data Resources Utilized in the Analysis

DATA SOURCES
Item: Source(s):

Subject Encumbered Tidelands Area Information Provided by Newport Harbor Department, LanclVision Aerial Measuring Tool
Number of Moorings Information Provided by Newport Harbor Department (indicates 6 more moorings than the mooring field harbor maps)
Mooring Capacity / Lineal Boat Feet Public Record Mooring Transfer Logs June 2017 thru October 2022, per Mooring Field LanclVision Aerial Measuring Tool
Compiled by CBRE

APPRAISAL METHODOLOGY
In appraisal practice, an approach to value is included or omitted based on its applicability to the property type being valued and the quality and quantity of information available.

METHODOLOGY APPLICABLE TO THE SUBJECT
In performing our market rental analysis, we have performed a rent comparable or paired rent analysis for available harbors in California that offer both slip and mooring options for boaters.

These harbors are in San Diego, Morro Bay, Monterey Bay/Santa Cruz, and Half Moon Bay. We have incorporated this methodology into the market standard State of California employed methodology described below.

The Benchmark analysis is employed consistently throughout California by the California State Lands Commission. This is a common practice utilizing benchmarks which are used to establish uniform rental rates in specific geographic regions with large concentrations of similar facilities, mostly private recreational improvements within the Commission's jurisdiction. (Cal. Code Regs., tit. 2, § 2003, subd. (a)(5).) Within this analysis, it will be necessary to determine what income can typically be generated by a commercial marina / typical boat slip; the area occupied by a mooring in a well -designed harbor; what the rental charge would be for a typical sized boat; and the rate of return the state should receive for the use of its land. The "Commission typically charges 5% to 6% of gross income for boat berthing for sites leased to commercial marina operators, with most of the leases set at 5% of gross income." (Tamales Bay Berths and Buoys benchmark rates Staff Report 28). We note that the City of Newport Beach has used rates as high as 8.5% of rents received by Newport Harbor marinas to establish the fair rental value of the tidelands in relation to the largest marinas in Newport Harbor and less in relation to smaller marinas and other uses. This is set forth in the comprehensive Appraisal Report of the valuation of fees to be charged for use of tideland for all uses of the tidelands in Newport Harbor adopted by the City of Newport Beach and published in 2016 and 2017 in two separate reports b George Hamiton Jones report which can be found at:
(9 2024 CBRE, Inc. 3 CBRE

Scope of Work
https:Harchive.newportbeachIibrary.org/NBPL/DocView.aspx?id= 1263772 &dbid=O&repo=CNl3&cr= 1
The Phase 1 report of George Hamiton Jones concerned a particular marina, and the Phase 2 report, which incorporated the methodology of the prior report concerned all commercial uses as well as other uses. It is noteworthy that some offshore moorings are used for approved commercial uses and as such fall under the George Hamiton Jones appraisal under other uses, and offshore moorings used for recreations use would also fall under "other uses", using a reasonable interpretation of the George Hamiton Jones appraisal. The rates in the George Hamiton Jones report were adopted by the City of Newport Beach, and then published and updated annually with increases. The current published rates can be found at the following link:
https://www.newportbeachca.gov/government/departments/harbor/harbor- cha rges/com mercia I -tidela nds- permits -a nd -leases The City's published rates for, in effect, all uses except for homeowner docks, but which includes HOA (homeowner association docks when rented out by the HOA) shown in the link above are as follows:

The following rates are effective March 1, 2022 through February 29, 2024:
(9 2024 CBRE, Inc. 4 CBRE

Scope of Work
Annual Rental Rate Annual Rental Rate
Commercial Use Category* (Per SF) (Per SF)
3/1/22 - 2/28/23 3/1/23 - 2/29/24
Large Commercial Marinas
$1.34
$1.42
Medium Commercial Marinas
$1.02
$1.08
Small Commercial Marinas
$0.88
$0.93
Shipyards
$0.42
$0.45
HOA Marinas/Docks for Non-
members' Use
> 30,000 SF
$1.34
$1.42
13,000 SF to 30,000 SF
$1.02
$1.08
< 13,000 SF
$0.88
$0.93
Yacht Club Guest Slips
$0.42
$0.45
Vessel Rental Facility (Boat Rentals)
$0.88
$0.93
Sport Fishing Charters
$0.88
$0.93
Restaurants' Guest Slips
$0.42
$0.45
Vessel Charters
$0.88
$0.93
Fuel Docks
$0.88
$0.93
All Others
$0.88
$0.93
* The Annual Rental Rate for commercial tidelands being used as Fuel Docks can be calculated one of three ways, per City Council Resolution No. 2018-09. The table above reflects the base rent only calculation option.

Beginning on March 1, 2019, annual rental rates may be adlusted on the first day of March each Permit/Lease year to reflect an Increase in the cost of living, as indicated by the Consumer Price Index. Additional information regarding rental rates can be found in City Council Resolution No. 2017-49 and No. 2018-09.

As discussed below, the estimated square foot of tidelands used by a 40-foot offshore mooring Is 1,326 square feet. That is the same for a commercial offshore mooring as well as a recreational (9 2024 CBRE, Inc. 5 CBRE

Scope of Work
offshore mooring. Using the "Other Uses" published by the City and based on the square feet of tidelands used, the rate would be $0.93 per annum, which is $1,233 per year.

While this rate Is materially lower than the rate found in this report, it does show that the current rates charged for offshore moorings is, and has been significantly higher than what the City is charging and has been charging for almost all other uses of the tidelands, namely $1.16 per square foot of tidelands used per annum based on an estimated 1,326 square feet of tidelands used for a 40 foot vessel.

We have also estimated current fair market rent for the subject by utilizing various measures of inflation and applying an appropriate level of inflation to the City's previously adopted Fair Use Fee / Market Rent on which today's fees are based. The City's adopted rate of $35 per lineal foot in 2016 with annual CPI adjustments subject to a cap, was based on an appraisal by Netzer and Associates as hired by the City. The City's appraiser Mr. Netzer concluded a range from $32 to $38 per lineal foot and the City adopted $35 per lineal foot per year. As such, it is concluded that Netzer's 2015/2016 appraisal was reflective of market as adopted by the City, and again as hired by the City of Newport Beach.

Presumably, the City were aware of the George Hamiton Jones report of the same year, which is also taken into account when adjusting the base values to information available regarding market conditions.

Of material consideration throughout the report and analysis, in contrast to all other surveyed facilities in the appraisal, marinas with slips and / or moorings, which all provide ready access, such as extensive permanent dinghy docks where a motorized dinghy/tender is available 24/7 by to provide access to the moorings, Newport Harbor has exceedingly poor / grossly inadequate public accessibility (harbor proximate dinghy storage or comparable) and amenities that serve the mooring fields. The additional cost to obtain similar motorized in water dinghy/tender dock space in Newport Beach is a malor and necessary adjustment which needs to be taken into account. Put simply, a mooring without easy access has greatly diminished value. This will be discussed in detail throughout the report. Mooring access is a free City -provided service in the harbors of San Diego, Morro Bay, and Monterey and other Harbors that have off -shore moorings.

What follows is a Table of Rates (Implied Subject mooring / tidelands market Rates) that are based on rates published by the City for 2024, using the Small Marina and Other Use Sq Ft rate of $0.93 per annurn per Sq Ft.
(9 2024 CBRE, Inc. 6 CBRE

Scope of Work
Rates Per Annum
Using City's 2024 Small Marina and Other Use Rates Based on Sq Ft of Tidelands Tidelands Used without Swing Factor
Boat Size
+
Lines + Buoys*
x
Beam
Total Scl Ft
30 +
24 x
12 648
40 +
28 x
15 1,020
50 +
34 x
17 1,428
60 +
34 x
19 1,786
70 34
x
21 2,184
Rates Based on Tidelands Used with No Swing Factor
Small Marina
/Other Use
Rate
Boat Size
Total Sq Ft with lines etc
Fee Per Year
at $.93 sq ft
$0.93
30 648
$602.64
$0.93
40 1,020
$948.60
$0.93
50 1,428
$1,328.04
$0.93
60 1,786
$1,660.98
$0.93
70 2,184
$2,031.12
Rates Adding a Swing Factor of 20%
Boat Size
Scl Ft with
Lines etc
x
20%
Tota I Sq Ft
with Swing
Fee Per Year
at $0.93 sq ft
30 648
x
778
$723.54
40 1,020
x
1,224
$1,138.32
50 1,428
x
1,714
$1,594.02
60 1,786
x
2,144
$1,993.92
70 2,184
x
2,621
$2,437.53
Rates Adding a Swing Factor of 25%
Boat Size
Scl Ft with
Lines etc
x
25%
Tota I
with Swing
Fee Per Year
at $0.93 sq ft
30 648
x
810
$744.93
40 1,020
x
1,275
$1,185.75
50 1,428
x
1,785
$1,660.05
60 1,786
x
2,233
$2,076.69
70 2,184
x
2,730
$2,538.90
C) 2024 CBRE, Inc. CBRE

Scope of Work
Rates Addina a Swina Factor of 30%
Boat Size
Sq Ft with
Lines etc
x
30%
Tota I
with Swing
Fee Per Year
at $0.93 sq ft
30 648
x
843
$783.99
40 1,020
x
1,326
$1,233.18
50 1,428
x
1,857
$1,727.01
60 1,786
x
2,322
$2,159.46
70 2,184 -
xT
2,840
$2,641.20
9 2024 CBRE, Inc. 8 CBRE

Neighborhood Analysis
Neighborhood Analysis
'_eo �3
Rd
&ewport Slay
N.ewport NEWPORT
Beach
CENTER
BALB04

ISLANPI
Gmapbox 1 1 �1 I ;ID
The center of recreation in the city is Newport Harbor, which is the largest small boat harbor in the United States. Boating facilities include marinas, docks, slips, moorings, fuel docks and repair and maintenance yards. Also having prominent waterfront locations are many dinner house type restaurants, the exclusive Balboa Bay Club, and many yacht clubs.

Newport Harbor is a premier destination -oriented location where population swells in the summertime with tourism and people with second homes around the harbor. (9 2024 CBRE, Inc. 9 CBRE

Subject Analysis
Subject Analysis
The following chart summarizes the salient characteristics of the subject site.

HARBOR MOORING FIELDS SUMMARY AND ANALYSIS
Physical Description
Tidelands Area

81.583 Acres
3,553,765 Sq. Ft.

Moorings
579
Mooring Field A
133

22.148 Acres
964,786 Sq. Ft.

Mooring Field B
61 8.430 Acres
367,221 Sq. Ft.

Mooring Field C
54 8.857 Acres
385,811 Sq. Ft.

Mooring Field D
56 7.329 Acres
319,247 Sq. Ft.

Mooring Field F
22 3.326 Acres
144,881 Sq. Ft.

Mooring Field G
18 2.345 Acres
102,130 Sq. Ft.

Mooring Field H
91 10.531 Acres
458,738 Sq. Ft.

Mooring Field J
122

15.44 Acres
672,686 Sq. Ft.

Mooring Field K
22 3.17 Acres
138,265 Sq. Ft.

Source: Various sources compiled by CBRE

DEFINITIONS
Mooring — The term "mooring" shall mean a device consisting of a floating buoy or other object that is secured to the harbor bottom by an anchor system for purposes of securing a vessel and includes any apparatus used to secure a vessel in Newport Harbor which is not carried aboard such vessel as regular equipment when under way. (City of Newport Beach, Harbor Code, Chapter 1 7.01.030.J.7.) Mooring Area — The term "mooring area" shall mean an area designated for a group of moorings. (City of Newport Beach, harbor Code, Chapter I 7.01.030.J.8.) Offshore Mooring — The term "offshore mooring" shall mean a mooring that is located bayward of the pierhead line and comprises a single or double buoy, the weight and chain installed for the purpose of berthing a vessel, as provided by Chapter 17.25. (City of Newport Beach, Harbor Code, Chapter

17.01.0 3 0. L. I .)
Tidelands — The term "tidelands" or "public tidelands" shall mean all lands that were granted to the City by the State of California, including, but not limited to, submerged lands and/or lands that are located between the lines of mean high tide and mean low tide. (City of Newport Beach, Harbor Code, Chapter 17.01.030.P.1.)
Tidelands Utilizedby a Mooring— shall mean that area within a Mooring Area (mooring field) utilized by an individual mooring for the exclusive use of the mooring holder for a vessel which is or could be located on the mooring.
0 2024 CBRE, Inc. ic CBRE

Subject Analysis
TIDELAND SQUARE FOOTAGE ATTRIBUTABLE TO A 40 LINEAL FOOT BOAT MOORING Each mooring holder has the exclusive right to use a certain area of the tidelands and the mooring holder places its own equipment, weights, chain and lines within the small area. For example, a 40 foot mooring would use 40 feet plus 12 feet of line to the front and back buoy on a two buoy mooring, plus 2 feet for each buoy, with a 15 foot beam, plus allowing for a 30% swing factor = 1,326 square feet of tidelands used.

In this example, 33.15 square feet of tidelands would be used per 1 lineal foot of mooring size (1,326SF / 40LF = 33.1 5SF).

Tideland square footage other sizes and swing factor
The added square footage for a "swing factor" is the maximum adjustment for a mooring using two buoys, one off the bow and one off the stern. This has been used as a consideration in establishing rates in other harbors. However, it should be noted that when a boat moves or swings in one direction it opens up tidelands in the place from where it moved / swung from and opens up those tidelands for use by the public, thus the swing factor could reasonably be concluded to be "zero" due to these offsetting factors.

What follows is a Table Square Footage Used for various size boats with and without a swing factor.

Sq Ft of Tidelands Used — No Swing Facto
Boat Size
+
Lines + Buoys*
x
Beam
Total Sq Ft
30 +
24 x
12 648
40 +
28 x
15 1,020
50 +
34 x
17 1,428
60 +
34 x
19 1,786
70 +
34 x
i 21
2,184
Add Swing Factor at 20%
Boat Size
Sq Ft with
Lines etc
x
20%
Total Sq Ft
with Swing
30 648
x
778
40 1,020
x
1,224
50 1,428
x
1,714
60 1,786
x
2,144
70 2,184
x
2,621
0 2024 CBRE, Inc. 11 CBRE

Subject Analysis
Add Swina Factor at 25%
Boat Size
Sq Ft with
Lines etc
x
25%
Tota I
with Swing
30 648
x
810
40 1 020
x
1275
50 1,428
x
1785
60 1,786
x
2,233
70 2,184
x
2730
Add Swina Factor at 30%
Boat Size
Sq Ft with
Lines etc
x
30%
Tota I
with Swing
30 648
x
843
40 1,020
x
1,326
50 1,428
x
1,857
60 1,786
x
2,32
70 2,184
x
2,840
0 2024 CBRE, Inc. 12 CBRE

Market Analysis
Zoning
The subject tidelands are under the regulatory supervision of several entities in addition to the City of Newport Beach. These include the State of California Division of Boating and Waterways, the California Coastal Commission, as well as oversight by the Army Corps of Engineers, the California Department of Fish and Wildlife and others.

Note that City development standards are largely inapplicable to the subject mooring field encumbered tidelands due to the fact that there is no existing or possible *joincler, or operation/utilization of the tidelands in tandem with an uplands property as virtually all other commercial uses along the harbor currently operate.

Given the lack of access, the only way to truly utilize the subject tidelands is for offshore moorings.
0 2024 CBRE, Inc. 13 CBRE

Market Analysis
Market Analysis
With the onset of the COVID-19 pandernic and subsequent lockdowns and restrictions on businesses — shopping, dining, etc., there was a surge in demand for alternative recreational or leisure activities. Notable surges included RVIng and Boating. New boat sales reportedly increased 40% during the pandemic. However, note that 95% of recreational boats are lake boats under 26', which are not truly applicable or relevant to the analysis of the moorings within the subject saltwater harbor.

That being said, the surge in demand for boating resulted in an Increase in demand for slips and moorings. Consequently, prices and rents also increased given the relatively fixed supply of marina space. It is difficult to quantify the increase In slip fees year over year; however, as an important distinction marinas owned over the long term with inactive management have been acquired by active competent managers and operators which are able to increase rents by a factor of two or more over the short term. The distinction is that this is not a linear market trend, but instead a realization of mark -to -market rents with short-term rental agreements.

However, it is important to recognize the release of pressure or easing of demand for boating as the COVID-19 pandernic is behind us and people have returned to activities that were not available to them during the pandernic in 2020 and 2021. In addition to this, we are currently facing severe economic headwinds and uncertainty due to the unprecedented Fed rate hikes of more than 500 basis points since April of 2022. The already apparent result of this and its economic consequences are detailed in the following:

According to Recreational Boating Statistics published by the NMMA (National Marine Manufactures Association) 2022 report:
o Powerboat sales normalized in 2022, down an estimated 15% to 18% from 2021 to pre -pandemic levels
o 2022 sales and 2023 projections highlight segments driving growth as entry level personal watercraft, freshwater fishing boats, and pontoon boats under 26' These are not market segments that contribute to Newport Harbor, thus indicating a sharper decline in demand for vessels found in Newport Harbor
In summary, a significant easing of demand was widely apparent through 2022 and into 2023.

With all of this being said, despite substantial anticipated headwinds, Newport Harbor remains a highly sought after location, noting that there is increased availability in 2023 and rents have stabilized.

CRC Marinas operates four marinas in Newport Harbor: Balboa Marina, Bayside Marina, Villa Cove Marina, and Bayshore Marina. When surveyed in 2022 they had only five avallabilities. 0 2024 CBRE, Inc. 14 CBRE

Market Analysis
CRC Marinas currently has 11 available slip spaces throughout their Balboa and Bayside Marinas.

CONCLUSION
Overall, the market is in a period of "returning to normalcy" with rents stabilizing and availability increasing. The end of the COVID- 19 pandernic and resultant declining demand for personal recreational watercraft in the face of extreme uncertainty In the current economic climate with materially unsettled / disrupted financial markets is anticipated to at least partially unwind the upward pressure on slip rates observed during 2020 and 2021.

Also, a notable distinction Is that per our review of the mooring transfer logs in Newport Harbor from 2017 through 2022, appreciation in pricing of moorings is negligible compared to the increase in the far more rare and highly desirable marina slip rental rates. As such, the increase in slip rents versus the Increase In mooring rent Is less than 1 : I . 0 2024 CBRE, Inc. 1 E CBRE

Fair Market Rent Analysis
Highest and Best Use
Per the terms of the assignment, the appraiser is to provide a fair market rent analysis for the subject in its current condition. Determination of highest and best use is beyond the scope of this assignment. That said, given the lack / absence of accessibility to the sublect mooring fields other than by boat, the subject is assumed to be operating to its highest and best use, as mooring fields.
0 2024 CBRE, Inc. 16 CBRE

Fair Market Rent Analysis
Fair Market Rent Analysis

METHODOLOGIES
We have employed multiple methodologies in our analyses. All are based on market data relating to a typical mooring or slip intended to accommodate a boat measuring 40 lineal feet.

CALIFORNIA STATE LANDS COMMISSION — BENCHMARK TIDELANDS RENT The first methodology employed is consistent with multiple recent Benchmark Tidelands Rental adjustments reports with the following methodology:

In order to determine the value of the leased area (of a pier, buoy, mooring pole, etc.), It will be necessary to determine: what income can typically be generated by a commercial marina; the area occupied by a marina slip in a well -designed marina; what the rental charge would be for a typical sized boat; and the rate of return the State should receive for the use of its land.

We have three recent reports referencing / employing this methodology:
• Southern California Benchmark Memo date May 6, 2022
• San Francisco Bay Area Benchmark Memo date January 18, 2022 • Tornales Bay Benchmark Memo date October 7, 2020
• We also note that the City of Newport Beach has used 8.5% when assessing rates to be charged to companies operating the largest marinas in Newport Harbor but substantially less for smaller marinas and other commercial uses, and have taken that into account as a local benchmark.

This is shown in the 2016 and 2017 George Hamiton Jones Reports utilized by the City for all uses of the tidelands as well as in the City's published rate (link provided above).

As a reference to California State Lands Commission Tornales Bay report PDF page 11:
"The Commission typically charges 5% to 6% of gross income for boat berthing for sites leased to commercial marina operators, with most of the leases set at 5% of gross income."
A rate of return on the income applicable to the Tidelands utilized in each of the three above referenced reports was 5%. We have concluded to the higher rate of 6% given the recent / current inflationary pressures that have resulted in notable rate hikes which are anticipated to remain elevated in the near -term. However, noting that the Fed controls only short-term rates, only a slight adjustment upward from 5% Is appropriate for a long-term normalized rate of return. The complete analysis Is contained on the following pages.
0 2024 CBRE, Inc. 17 CBRE

Fair Market Rent Analysis
The following contains a comprehensive rental survey of various marinas throughout Newport Harbor:

NEWPORT BEACH SLIP RENTALS
Average $/ft
Adjusted for
Location
Boat / Slip Length
Average $/ft
Amenities
Average $/month
Lido Yacht Anchorage
40'
$52
$52
$2,080
Balboa Yacht Basin Marina (no amenities)
40'
$50
$63
$2,500
Bayside Village Marina
40'
$41
$41
$1,640
Port Calypso
40'
$44
$44
$1,760
Lido Park Place Marina (no amenities)
40'
$45
$56
$2,250
Marina Park (Based on $88 Nightly Rate)
40'
$66
$66
$2,640
Newport Dunes Resort Marina
40'
$76
$76
$3,040
Mean $52.22 $55.66 $2,226
Median $50.00 $56.25 $2,250
Market Rent Estimate
6% Return Appliable to the tidelands $56 x 0.06 $3.36 AnnualRent 6% of Gross Income Attributable to State Owned Tidelands Annual Fair Rental x 40' boat / slip $134 $1,613 Return = 3.36 per lineal foot per month x 40 x 12 months = $1,613 per year Compiled by CBRE
In the above analysis we did not use the 8.5% used by the City when establishing rates uses per the George Homiton Jones Report for the largest marinas, since the other rates published by the City and adopted by the George Hamilton Jones report for smaller marinas and "other uses" was approximately 1/3 lower, which would result in a rate of approximately 5.67% of the gross revenues charged by marinas, which is a rate very closely aligned with the State Lands Benchmarks.

We have concluded market rent consistent with the mean and median rents indicated by the aggregated survey data at $56/LF for a boat in a slip with all the benefits which include parking, restrooms, electricity, security, nighttime lighting, easy access and walk-on walk -off, and use of the marina docks and gangways. We then calculated the annual rent allocation to the tidelands based on the rate of return typically used by State Lands, and not on the higher rate used by Newport Beach of 6%, which is above the typical 5% rate utilized in the three referenced reports, but which is appropriate due to the current interest rate environment while still within the long-term "5% to 6% of gross income" range as advised in the reports.

CONSIDERATION OF ADJUSTMENT FACTORS
Slip Versus Mooring
The first consideration of adjustment factor is actual tidelands encumbered by the 40' boat which differs for a slip versus a mooring.

According to the California State Lands Commission reports, the "Layout and Design Guidelines for Marina Berthing Facilities" publication (last updated July 2005) from the State Department of Boating and Waterways is used to determine the amount of submerged land area necessary to accommodate a given mooring size. The results are in the following chart:
0 2024 CBRE, Inc. I E CBRE

Fair Market Rent Analysis

TIDELANDS UTILIZED PER BOAT SIZE
Tidelands SF
Tidelands
Allocation per
Report
Boat Length
Allocation
Lineal Boat Foot
Tamales Bay Benchmark
31'
865
28 San Francisco Benchmark
38'
1,197
32 Southern California Benchmark
37'
1,153
31 Subject Estimate
40'
1,326

33.15 Compiled by CBRE
As previously determined, the Tidelands square footage required to accommodate a similar size mooring is somewhat greater than that of a slip, even when the docks, gangways and related features are added to the area associated with a slip. This is mainly due to the added square footage associated with lines from the vessel to the buoys vs the areas of dock space in front of and on either side of a slip, While we added significant extra square footage to each mooring to account for the area from a vessel to the buoys at the full beam of the vessel (which is an area greater than the distance used by lines to the buoys) we did not add any area for the swing of the boat since as a boat on a double mooring moves slightly in one direction it opens up tidelands in the other direction which can be used by the public for kayaking, paddle boarding and other recreational use.

Access and Amenities
The second consideration of adlustment factor is the difference in convenience and functional utility between a slip in a typical marina versus a typical mooring. Items include dedicated shore facilities such as restrooms and showers, actual utility to boat operation such as electricity and water, security, fencing, nighttime lighting, and most importantly use of docks and gangways for easy access, compared to a boat on a mooring that has none of these amenities. All other harbors with any significant sized mooring fields provide much less favorable access by way of dinghy docks available for docking dinghies and tenders for 24/7 access, but Newport Beach moorings unlike the moorings in other harbors, do not even have this access.

Clearly with a marina or slip rental, a renter can physically walk with all of their supplies to their vessel.

With a moored vessel, a dinghy or other boat is required to travel from the shore to the mooring.

Further impacting the subject Newport Harbor is the lack of access by way of an in -water motorized dinghy/tender for access to a Newport Beach mooring.

We have reviewed multiple harbors with both slips and off -shore moorings in San Diego, Morro Bay, Monterey, and Half Moon Bay Harbors, all of which provide docks where mooring renters and/or permit holders can have a tender for 24/7 access at no charge, with the exception of Half Moon Bay, which may charge a nominal $64 per month, and Monterey which changes $89 per quarter or $30 per month. San Diego's moorings have access to dinghy docks, but in some cases the dinghy dock may be more remote to some mooring fields. We have noted that data from these other harbors show that mooring rates are really a combination of not just the use of an area of the tidelands, but a combination of the area of tidelands used plus the use of dinghy/tender docks for fullfirne access to the 0 2024 CBRE, Inc. 15 CBRE

Fair Market Rent Analysis
moorings 24/7, and in the case of San Diego, having the maintenance of the mooring (estimated at $120 per month) included in the fees.

Note that we have focused our research on public versus private ownership mooring versus slip fee rentals as the private institutions. For example, in Newport Harbor various yacht clubs offer shore boat service for a nominal fee which is less easily quantified. The yacht clubs total charges, including shore boat service, for moorings mostly on the larger size, would need to adiusted not only for the cost of a slip for a dinghy/tender in Newport Harbor, but also for the cost of purchasing a seaworthy tender with motor, maintaining the tender and engine, as well as other amenities the yacht club provides to its mooring holders.
0 2024 CBRE, Inc. 2C CBRE

Fair Market Rent Analysis
Approximate Mooring to Slip Fee Ratio
In reviewing the slip to mooring fee ratios, this is a very imprecise "derivative" method and is difficult to rely on. Some of the reasons why it is unreliable and should not be used are discussed here. One malor factor is that similar assets are not being compared. As the old saying goes, it's like comparing apples to oranges. Another factor would be the extent to which an increase in slip fees does not necessarily track the supply and demand for moorings, especially larger slips that only a small group of people demand and can afford.

Another important factor that cannot be underestimated is that the comparison with other harbors is a comparison of Moorings plus Dinghy Docks to Local Slips. In the case of Newport Beach, it would be comparing Mooring without Dinghy Docks to Local Slips with full access. Whereas any Itratio" at other harbors would compare the area used by a mooring plus full access to a dinghy/tender dock for access to the mooring to rates charged for a slip of the same size as the maximum size of the mooring. This makes such a method even more derivative, since once an initial valuation is made using a ratio from other harbors, the suggested fee would need to be reduced by the cost of obtaining a slip for a motorized dinghy/tender available 24/7 without restriction.

As mentioned, the data regarding fees charged for moorings with dinghy dock access vs slip rates in other harbors and the resulting ratios are not sufficiently reliable and can be seen using a few examples. One example is the rates for moorings in San Diego have not risen in many years and may be due for an increase. If and when the lease would take off some of the caps on rates charged for moorings (plus use of dinghy docks, plus servicing the mooring equipment). If rates are increased, it will take years to ascertain if the public will continue to rent the moorings at the new rate and if vacancies will occur. So, while the manager of the San Diego moorings, like any other manager of any other rental property may "wish" to increase the rates, it is a wish, which is not a reliable source to be considered until and after it has been in place for many years and the response to the increase is known. Any owner of real estate may "wish" to increase his or her rental rates, but without doing so and assessing how the market will respond with move outs and resulting vacancies often will take years to assess. In the case of a boat on a mooring, it would likely take even longer since moving a boat off a mooring would require an alternative place to store the boat. A large sailboat with a keel cannot be put on a trailer, and the boat owner may be forced to pay above market rent until he or she can move or sell the boat. Again, it would take years to assess such a "wished for" increase.

The manager of the San Diego moorings has estimated that the cost to inspect and maintain the moorings Is in excess of $120 per month per mooring. Even after market rent was established, as mentioned, the "ratio" that may eventually be established in San Diego would need to be adjusted because the ratios in San Diego would not be for moorings versus slips, but for moorings with full maintenance, inspections, and full dinghy dock access, as compared to a slip.

Such a ratio, once established years from now, would not apply to Newport Harbor, where the 0 2024 CBRE, Inc. 21 CBRE

Fair Market Rent Analysis
mooring holder pays for its own maintenance, inspects, makes periodic replacement of weights and chain, and where the City is not providing access by way of dinghy docks made reasonably available to all offshore moorings with 24/7 for access to the moorings.

To complicate the situation even more is the fact that while the manager of the San Diego moorings may "wish" to test increases in mooring rates, the manager has not obtained formal approval to do so at this time, nor has the State Lands Commission been consulted on any proposed increase.

In the case of Morro Bay, as mentioned, the rates charged for slips for the commercial fishing fleet and other commercial uses may be subsidized and would be difficult to measure. On the other hand, the rates charged for moorings plus ample dinghy docks is currently $110 per month for a mooring that can be used for a 50-foot vessel, which is approximately $2.00 per lineal foot per month. On the other hand, the City of Morro Bay charges approximately $26 per foot for slips as shown on page 32 of the Netzer appraisal report. That would indicate a ratio of over 1/10 and that is for moorings with docks for dinghy/tenders to allow access to the moorings 24/7.

It Is also worthy of note that the City of Morro Bay also has City -owned moorings and the City charges approximate 3 times more for renting City -owned moorings versus individual -owned moorings because the city installs and maintains the mooring hardware, likely has insurance to cover these activities, and makes necessary adiustments from time to time, whereas a Morro Bay mooring owner is responsible for all of these costs.

Monterey Bay data is also difficult to ascertain. One of the marinas where there is not a long wait time sits at the base of a power plant with many complaints about dirt and grime on vessels in the marina. It is unclear what the wait time is for other nearby marinas. Nearby Santa Cruz Harbor marinas do not suffer from these issues. A 45-foot slip in Santa Cruz would cost approximately $16 to $30 per foot per month depending on the location of the slip, with an average of $23 per foot, or $1,035 per month, compared to $187 per month for a "east harbor mooring" or $100 per month (if paid annually) for an "out harbor mooring," for an average of $144 for a mooring in Monterey Bay that also comes with dinghy dock access (at a cost of $89 per quarter = $30 per month) for a total of $174 per month for a mooring and a dock for a dinghy/tender to access the mooring. This would result in a ratio of 1/6, but again this is for a mooring with use of a dinghy/tender dock.

Half Moon Bay is also problematic for similar reasons. Slip fees for a 50-foot boat are on average $540 per month. Mooring rates are $1.92 per month per lineal foot, which is $96 per month for a 50-foot boat and add a possible $64 per month for use of the dinghy docks, for a total of $160 per month. But we do not know if there is a long wait list for slips or if the slip rate reflects market rates for slips. This would be 29.6% but again only as a combination of use of a mooring plus use of a dinghy dock.
0 2024 CBRE, Inc. 22 CBRE

Fair Market Rent Analysis
For all of the above reasons, the ratio derivative method derived from other harbors cannot be used.

Ironically, without looking to other harbors, the only ratio where moorings without din hy I --,g docks
to slips has been derived from appraisals conducted and accepted by the City of Newport Beach was approximately 2016. In that year, market rates for slips were shown in the George Hamilton Jones appraisal which showed the average slip rate in Newport Beach for a 40-foot slip to be $1,640 per month per month = $41 per lineal foot per month / $492 per lineal foot per year.

At the same time, Mr. Netzer appraised the market rate for Newport Moorings to be $32 to $38 per year, and the City established the rate to be $35 per lineal foot per year. The result was that that the ratio of mooring fees without din hy docks and without reasonable access to slips fees in Newport Harbor for a 40-foot mooring was 35/492 = 1/14 = approximately 7%. There is no reason to suggest that ratio would have changed. Again, this "derivative" approach is not a generally accepted appraisal approach and using this approach does not yield a much different result (when the lack of access is factored in) as compared to traditional established methods.

However, if used and applied to Newport Harbor based on the two formal and accepted appraisals done at that time, it would result in rates lower than the opinion of rates shown in this report.

As noted above, this "derivative" approach is the least reliable of all other methods and is included to show the various factors that are at play and change from time to time and are affected by different variables, such as favoring a type of use or a subsidized type of use, or popularity of one type of use over another as we have seen during the Covid years with people becoming interested in a condo on the water In a marina with electricity and easy access. For this reason, this ratio approach was not used.
0 2024 CBRE, Inc. 23 CBRE

Fair Market Rent Analysis
Proi)osed Rates for Citv-Owned Moorinas
The City is in the process of renting moorings under a license arrangement. Under the license the licensee is free to leave on 30 days' notice and has no capital commitment to the use of the mooring. The number of these moorings is limited, and each size is limited even more. As in the case of the possible future rate increases in San Diego, any data from such rental would take years to assess. First, these would need to be rented, then over the next few years the length of time a person rents such a mooring would need to be determined. Third, how the limited number of persons obtain access would need to be ascertained. For example, if the licensee has access by way of a home dock, a shore mooring, use of a boat that he or she was already using for their purposes, or use of a friends dock space, this would only demonstrate value, utility, or rent for that particular person where access was not an issue. However, that fact that a particular person may pay what is otherwise over market for the general public, thus does not establish market rent.

In addition, it should be noted that the City has created its own scarcity of rentable moorings. At any given time, the harbor master has observed that there are over 100 vacant moorings. At the same time the City does not allow mooring holders to rent these out. As such, the City has created its own scarcity of moorings for rent, and with only a handful available, this artificially and significantly decreases the supply thus artificially increasing competition and the amount of equilibrium or fair market rent indicated by the market, again which is entirely artificial in nature.

Of note also is the fact that the City will need to maintain, inspect, and periodically replace mooring equipment, buoys, anchors and chain, which is estimated by the operator of the San Diego Mooring Company to be over $120 per month.

For the above reasons, the future rental of this handful of moorings cannot be used in any comparative or other analysis.

As a final note, other harbors that have both privately -owned and City -owned moorings and have considered the difference in each, have established rates much lower for privately -owned moorings. For example, Morro Bay charges $110 per month for private moorings (and provides access to dinghy docks) but charges $330 per month when it rents out City -owned moorings on a long-term basis. Half Moon Bay charges $1.92 per month per foot for privately -owned moorings, but charges $5.08 per foot per month for City -owned moorings.

OTHER METHODOLOGIES NOT USED AND DEEMED UNRELIABLE
Comparison of Tideland Use in Connection with Adjacent Properties Should Not Be Used Attempting to separate component parts and considerations that make up a property value is an extremely unreliable methodology and if ever used as a consideration is done only when there are no other established methods. As shown in this report there are other established methods, and this approach should not be considered.
0 2024 CBRE, Inc. 24 CBRE

Fair Market Rent Analysis
A few examples might illustrate the issue with such a methodology. Consider a view home on a bluff that sells for $40 million dollars, and the identical home that is across the street from the view home and sells for $15 million dollars less. One might think the "view" component, by itself, has a value of $15 million dollars. That would mean that if there were an unbuilclable lot next to the view home it should have a value of $15 million dollars. However, it is likely the unbuilclable lot has little or no value. The extra value is completely integrated into the value of the home and cannot be separated from the location, characteristics, amenities, and established value of the home.

Another example would be rental of home docks within Newport Harbor. If a home with a dock has a value of $60 million dollars and rents out its 40 foot slip the slip rate should be four times higher than a $15 million dollar home that rents out its 40-foot slip. However, slip rates for home docks do not seem to vary much from marina slip rates and do not appear to correlate to the value of the adiacent home.

These examples are used only to illustrate why considering the value of adjacent real property cannot be used in extrapolating rates for moorings in Newport Harbor.

Attempting to Extrapolate Rates from Reported Mooring Sales is an Unreliable Method and Should Not be Considered
A handful of offshore moorings is sold and transferred each year. However, the data and circumstances are typically not fully known, and the number of sales is insufficient to establish a reliable database of sales where a buyer and a seller with full knowledge of the property in question established a value. Unlike real estate transactions typically handled by licensed real estate brokers, moorings are typically sold by individuals privately without help from brokers. In a brokered transaction, there are multiple disclosure forms required and used so the buyer has full knowledge of all of the risks and hazards that are known to be related to the property. As discussed elsewhere in this report, the single most important component of value, or lack of value, of a mooring is access to the mooring which, in all other harbors, is established by an adequate number of dinghy docks. While a person not familiar with the access problem in Newport Beach might see several public docks and mistakenly conclude that they have sufficient access to the mooring being purchased, that conclusion would be mistaken. Since the details of each of the reported sales are unknown, it is pure speculation to provide an opinion of the extent, if any, of disclosure regarding the material and functional lack of dinghy dock access in Newport Harbor. Once a person has acquired a mooring and put their boat on the mooring, it is difficult to find an affordable low cost alternative place to move the boat, which may be a reason why, after becoming aware of the access problem, a mooring might not be put up for sale in the short term (as the Harbor Department does not allow resale of moorings within one year of purchase), and the person might have to resort to far less desirable methods to gain access to the mooring.

In addition to the disclosure issue, there may be a handful of people for whom access is not a problem. For example, they may have a home dock, have access to a friend's home dock, may 0 2024 CBRE, Inc. 2E CBRE

Fair Market Rent Analysis
have a shore mooring, may have a small boat on a slip that they already used for other purposes. The number of buyers of moorings for whom access is not an issue or less of an issue is completely unknown.

It is also noteworthy that the reported sale data is provided by individuals and not from any formal source. In some cases, a mooring is sold in combination with a boat and because a sale of a boat is subject to sales tax, the allocation on the price between the boat and the mooring might be adjusted 'in a manner that might have a lower impact on the sales tax to be paid.

These are some of the reasons why focusing on the fact that moorings are sold at a particular price cannot be used to ascertain rates to be charged for the use of the tidelands occupied by boats on moorings.

Summary and Conclusion
In contrast to the subject Newport Harbor Mooring fields, the surveyed harbors above provide easy access to moorings, with dinghy docks for in water motorized dinghy/tenders to allow people to access their moorings 24/7 with no significate time limits. Access to the individual moorings in these other harbors (all other harbors) is far superior to the subject as the City of Newport Beach provides extremely limited in -water motorized dinghy access to moorings. The handful of spaces available are limited in time and only randomly available, depending on how many other dinghies are using the limited spaces at any time. Moreover, the handful of dinghy dock spaces are also available to the public, not lust for access to moorings, and the space is limited to a maximum of 36 hours which means, in effect, if a mooring holder were lucky enough to secure a space, by the time he or she came back the next weekend his or her dinghy would have been impounded by the City and subject to a large penalty. As such, to make an appropriate adjustment, the benefit provided by the dinghy docks at other harbors needs to be quantified. To obtain a space for a dinghy/tender of 9 to 12 feet at a marina in Newport Beach, the costs would be approximately $400 to $750 per month. There is a limited supply of such spaces and often there is a minimum length of 18 to 20 feet, which is reflected by the higher range cost of $750. The estimated cost would of course change were the City to require marina operators to provide smaller spaces (without losing revenue) but that is currently unavailable. On a comparative basis with what other harbors offer (which is a combination of mooring plus access to the mooring), an additional discount is warranted as related to the preceding discussion and analysis. In other words, on a comparison basis, if Newport Beach provided easy motorized in -water access to moorings 24/7 without any significant time restriction, the rate would be subject to an upward adjustment.

However, as noted above, a mooring without access, just like land without access, has substantially diminished value.
0 2024 CBRE, Inc. 26 CBRE

Fair Market Rent Analysis

INDICATED MARKET RENT
Tidelands Rent for 40' Boat
Estimated Annual Rent to Slip for 40' slips in 2024
$26,880
Estimated Annual Rent for 40'slip in lineal feet
$672
Ratio of Mooring without access versus slip
1 /14
% Multiplier = 1 / 14

7.1%
Annual Market Rent for 40 Lineal Foot Mooring
$1,920
Annual Rent Per Lineal Foot
$48.00
Compiled by CBRE
Again, this was provided for informational purposes only and is not weighted in our final reconciliation of fair rent due to diminished reliability of the ratio approach compared to the other approaches utilized in the appraisals.
0 2024 CBRE, Inc. 27 CBRE

Fair Market Rent Analysis

METHODOLOGY UTILIZING MARKET INFLATION FROM THE PREVIOUS BENCHMARK The previously determined rent for offshore moorings was concluded to be $35 per lineal foot per year based on an appraisal performed by Netzer & Associates as hired by the City of Newport Beach. This $35 rate adopted by the City as determined by the City -hired appraiser is considered to be representative of market. The following analysis utilizes this benchmark rate with appropriate inflation factor applied to accurately reflect a market based rental rate in today's more favorable market.

CALIFORNIA STATE LAND COMMISSION - BENCHMARK PAIRED INFLATION DATA Reassessed Market Indicated Simple
Location Base Year Tidelands Rent Adjusted Tidelands Rent Annual Inflation Southern California Benchmark $0.374/sf in 2016 $0.451/sf in 2022 4.1% San Francisco BayArea $0.198/sf in 2016 $0.227/sf in 2022 2.4% Tamales Bay $0.114/sf in 2015 $0.133/sf in 2020 3.3%
CPI 1982-84=100 ***July 2018 Newport Harbor Adjustment based on March 2016 GHJ Appraisal December 2023 CP1 302.408 March 2016 CPI 238.132 3.48%
December 2023 CPI 302.408 July 2018 CPI 252.006 3.69%
Mean of All Survey Data 3.36%
Median of All Survey Data 3.48%
Compiled by CBRE
As illustrated above, the most recent reports reflect the highest inflation due to the unprecedented inflationary times experienced in 2020 and 2021, and as a result of which the Fed has increased rates over 500 basis points. This is an offsetting factor in the determination of a new benchmark rate which is highly influenced by the artificially -created inflationary environment of 2020 and 2021, which is not reflective of long-term trends. When inflation is measured against the relevant time periods up until 2020, historical inflation is closer to 2% per year. As such, downward consideration is warranted from the preceding data.

We have concluded to 3% as a long-term trend which is based on the 3.5% to 3.9% indication above, adjusted downward for the artificial inflationary environment of 2020 and 2021. 0 2024 CBRE, Inc. 2E CBRE

Fair Market Rent Analysis
In addition to the preceding, we have also compared current surveyed rents to those indicated in a City of Newport ordered appraisal by George Hamilton Jones dated March 2016.

NEWPORT BEACH PAIRED RENT ANALYSIS
Rent From 2016
Indicated Simple
Location
Boat / Slip Length
Current Rent
GHJ Appraisal
Annual Inflation
Lido Yacht Anchorage
40'
$52
$37

5.5%
Balboa Yacht Basin Marina (no amenities)
40'
$50
$32

7.7%
Bayside Village Marina
40'
$41
$32

3.8%
Newport Dunes Resort Marina
40'
$76
$42

10.9%
Mean 6.5%
Median 6.6%
Compiled by CBRE
Of important distinction, note the greatest inflation was observed for those properties with the greatest amenities again which is a function of the q�f,�ficiqll created demand and resultant inflation resulting from the COVID-19 pandemic lockdowns and use restrictions where people spent increasingly more time on their boats, which is enhanced by amenities.

And again, demand is clearly tapering, and the recent two-year inflationary environment is not reflective of stabilized long-term trends. Furthermore, mooring utility and desirability is vastly inferior compared to a marina slip with immediately convenient accessibility and amenities such as water and power, restroom facilities, dedicated parking, etc. As such, the increase in demand and pricing for a mooring versus a slip would not be correlated 1 : 1, it would be reasonable that slip fees would increase at a much higher rate than a mooring, especially given the level of affluence of the surrounding community.

As evidence of this, we have reviewed the mooring transfer logs from 2017 to 2022 which includes pricing. The value of moorings while having increased over the years (again most recently given the uptick in demand during the COVID-19 pandemic), has increased by a marginal basis which is nowhere near the rates indicated in the preceding slip rent increase indication. As such, appropriate inflation for mooring rents should fall well below the indicated inflation or paired slip rent analysis over the same time period. The inflation and other tidelands rates serve as a much more relevant benchmark for inflation compared to paired slip rents.

Conclusion
Based on the preceding data indicated by the recently reassessed Benchmark Rates for California State Tidelands, market -driven inflation data, and actual paired -rent comparable information from Newport Harbor, an appropriate inflation factor should fall in the 3% range. We have based the time adjustment on the July 2018 adoption date of the previous benchmark rate change. The appropriate time adjust is approximately five and one-half years. The implied adjusted market rent is detailed in the following chart. 0 2024 CBRE, Inc. 25 CBRE

Fair Market Rent Analysis

INDICATED MARKET RENT
2016 Appraisal 2018 Adopted City Benchmark Offshore Mooring Rent $/Lineal Ft/Yr $35 Simple Inflation Factor at 3.5% without a cap Annual 3.5% July 2018 Adoption date versus I Q2024 New Benchmark Date Years 5.5 Total Inflation 19%
Prior Benchmark $35
Market Conditions Adjusted Rate $42
Benchmark Lineal Feet of Boat 40
Annual Market Rent $1,670
Compiled by CBRE
(D 2024 CBRE, Inc. 3C CBRE

Reconciliation of Market Rent
Reconciliation of Market Rent
The rent indications from the two methodologies are summarized as follows:

SUMMARY OF MARKET RENT ESTIMATES
Annual Rent
California State Tidelands Commission Methodology $1,613 Inflation Methodology Based on City's Prior Benchmark $1,670 Ratio Method $1,920
Reconciled Market Rent Estimate $1,640
Based on Typical 40 Lineal Foot Boat $41.00
Compiled by CBRE
As discussed throughout the report, the ratio method is deemed the least reliable methodology illustrated in the appraisal. We have placed equal approximate emphasis on the first two methodologies utilized in the preceding chart.

Based on the foregoing, the market rent of the sublect tidelands has been concluded as follows:

TIDELANDS FAIR USE FEES / FAIR MARKET RENT
Annual Rent per 40'
Mooring Based on
Market Rent / Lineal Foot 1,326SF of Tidelands
YR for Tidelands used for individual
Appraisal Premise Date of Value ($3.36 LF per mo) mooring As Is January 15, 2024 $41.00 $1,640
Compiled by CBRE
Tidelands Fair Use Fees / Fair Market Rent — Other Size Moorings Based on Methodologies Used in This Report the Value per Square Foot is $1.24 per Square Foot of Tidelands Used Per Annum. The square foot valuation would not change in relation to the size of mooring, only the square foot used and resulting adjustment to the total rate would change.

Sq Ft of Tidelands Used — No Swing Facto
Boat Size
+
Lines + Buoys*
x
Beam
Total Sq Ft
30 +
24 x
12 648
40 +
28 x
15 1,020
50 +
34 x
17 1,428
60 +
34 x
19 1,786
+
34 x
21 2,184
0 2024 CBRE, Inc. 31 CBRE

Reconciliation of Market Rent
Rates without a Swina Factor
Boat Size
Sq Ft with
Lines etc
x
Tota I Sq Ft
Fee Per Year
at $1.24 sq ft
Fee Per Year
Per Lineal Foot
30 648
x
648
$803.52
$26.79
40 1,020
x
1,020
$1,264.80
$31.62
50 1,428
x
1,428
$1,770.72
$35.42
60 1,786
x
1,786
$2,214.64
$36.91
70 2,184
x
2,184
$2,708.16
$38.69
Add Swina Factor at 20%
Boat Size
Sq Ft with
Lines etc
x
20%
Total Sq Ft
with Swing
Fee Per Year
at $1.24 sq ft
Fee Per Year
Per Lineal Foot
30 648
x
778
$964.72
$32.16
40 1,020
x
1,224
$1,517.76
$37.95
50 1,428
x
1,714
$2,125.36
$42.51
60 1,786
x
2,144
$2,658.56
$44.31
70 2,184
x
2,621
$3,250.04
$46.43
Add Swinq Factor at 25%
Boat Size
Sq Ft with
Lines etc
x
25%
Tota I
with Swing
Fee Per Year
at $1.24 sq ft
Fee Per Year
Per Lineal Foot
30 648
x
810
$1,004.40
$33.48
40 1020
x
1,275
$1,581.00
$39.53
50 1428
x
1,785
$2,213.40
$44.27
60 1786
X
2,233
$2,768.92
$46.15
70 2184
x
2,730
$3,385.20
$48.36
Add Swinq Factor at 30%
Boat Size
Sq Ft with
Lines etc
x
30%
Tota I
with Swing
Fee Per Year
at $1.24 sq ft
Fee Per Year
Per Lineal Foot
30 648
x
843
$1,045.32
$34.85
40 1,020
x
1,326
$1,644.24
$41.11
50 1,428
x
1,857
$2,302.68
$46.06
60 1,786
x
2,322
$2,879.28
$47.99
70 2,184
x
2,840
$3,521.60
$50.31
* Variations with Summary results from rounding square foot calculations. 0 2024 CBRE, Inc. 32 CBRE

Assumptions and Limiting Conditions
Assumptions and Limiting Conditions
CBRE, Inc. through its appraiser (collectively, "CBRE") has inspected through reasonable observation the subject property. However, it is not possible or reasonably practicable to personally inspect conditions beneath the soil and the entire inferior and exterior of the improvements on the subject property. Therefore, no representation is made as to such matters.

The report, including its conclusions and any portion of such report (the "Report"), is as of the date set forth in the letter of transmittal and based upon the information, market, economic, and property conditions and projected levels of operation existing as of such date. The dollar amount of any conclusion as to value in the Report is based upon the purchasing power of the U.S. Dollar on such date. The Report is subject to change as a result of fluctuations in any of the foregoing. CBRE has no obligation to revise the Report to reflect any such fluctuations or other events or conditions which occur subsequent to such date.

3. Unless otherwise expressly noted in the Report, CBRE has assumed that:
(i) Title to the subject property is clear and marketable and that there are no recorded or unrecorded matters or exceptions to title that would adversely affect marketability or value. CBRE has not examined title records (including without limitation liens, encumbrances, easements, deed restrictions, and other conditions that may affect the title or use of the subject property) and makes no representations regarding title or its limitations on the use of the subject property. Insurance against financial loss that may arise out of defects in title should be sought from a qualified title insurance company.
(i i) Existing improvements on the subject property conform to applicable local, state, and federal building codes and ordinances, are structurally sound and seismically safe, and have been built and repaired in a workmanlike manner according to standard practices; all building systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred maintenance or repair required; and the roof and exterior are in good condition and free from intrusion by the elements. CBRE has not retained independent structural, mechanical, electrical, or civil engineers in connection with this appraisal and, therefore, makes no representations relative to the condition of improvements. CBRE appraisers are not engineers and are not qualified to judge matters of an engineering nature, and furthermore structural problems or building system problems may not be visible. It is expressly assumed that any purchaser would, as a precondition to closing a sale, obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of building systems.
(iii) Any proposed improvements, on or off -site, as well as any alterations or repairs considered will be completed in a workmanlike manner according to standard practices.
(iv) Hazardous materials are not present on the subject property. CBRE is not qualified to detect such substances.

The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater, mold, or other potentially hazardous materials may affect the value of the property. (v) No mineral deposit or subsurface rights of value exist with respect to the subject property, whether gas, liquid, or solid, and no air or development rights of value may be transferred. CBRE has not considered any rights associated with extraction or exploration of any resources, unless otherwise expressly noted in the Report. (vi) There are no contemplated public initiatives, governmental development controls, rent controls, or changes in the present zoning ordinances or regulations governing use, density, or shape that would significantly affect the value of the subject property.
(vii) All required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, nor national government or private entity or organization have been or can be readily obtained or renewed for any use on which the Report is based.
(viii) The subject property is managed and operated in a prudent and competent manner, neither inefficiently or super -efficiently.
(ix) The subject property and its use, management, and operation are in full compliance with all applicable federal, state, and local regulations, laws, and restrictions, including without limitation environmental laws, seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density, allowable uses, building codes, permits, and licenses.
(x) The subject property is in full compliance with the Americans with Disabilities Act (ADA). CBRE is not qualified to assess the subject property's compliance with the ADA, notwithstanding any discussion of possible readily achievable barrier removal construction items in the Report. 0 2024 CBRE, Inc. 33 CBRE

Assumptions and Limiting Conditions
(xi) All information regarding the areas and dimensions of the subject property furnished to CBRE are correct, and no encroachments exist. CBRE has neither undertaken any survey of the boundaries of the subject property nor reviewed or confirmed the accuracy of any legal description of the subject property.

Unless otherwise expressly noted in the Report, no issues regarding the foregoing were brought to CBRE's attention, and CBRE has no knowledge of any such facts affecting the subject property. If any information inconsistent with any of the foregoing assumptions is discovered, such information could have a substantial negative impact on the Report. Accordingly, if any such information is subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may include the conclusions of the Report. CBRE assumes no responsibility for any conditions regarding the foregoing, or for any expertise or knowledge required to discover them. Any user of the Report is urged to retain an expert in the applicable field(s) for information regarding such conditions.

4. CBRE has assumed that all documents, data and information furnished by or behalf of the client, property owner, or owner's representative are accurate and correct, unless otherwise expressly noted in the Report. Such data and information include, without limitation, numerical street addresses, lot and block numbers, Assessor's Parcel Numbers, land dimensions, square footage area of the land, dimensions of the improvements, gross building areas, net rentable areas, usable areas, unit count, room count, rent schedules, income data, historical operating expenses, budgets, and related data. Any error in any of the above could have a substantial impact on the Report.

Accordingly, if any such errors are subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may include the conclusions of the Report. The client and intended user should carefully review all assumptions, data, relevant calculations, and conclusions of the Report and should immediately notify CBRE of any questions or errors within 30 days after the date of delivery of the Report.

5. CBRE assumes no responsibility (including any obligation to procure the same) for any documents, data or information not provided to CBRE, including without limitation any termite inspection, survey or occupancy permit.

6. All furnishings, equipment and business operations have been disregarded with only real property being considered in the Report, except as otherwise expressly stated and typically considered part of real property.

7. Any cash flows included in the analysis are forecasts of estimated future operating characteristics based upon the information and assumptions contained within the Report. Any projections of income, expenses and economic conditions utilized in the Report, including such cash flows, should be considered as only estimates of the expectations of future income and expenses as of the date of the Report and not predictions of the future. Actual results are affected by a number of factors outside the control of CBRE, including without limitation fluctuating economic, market, and property conditions. Actual results may ultimately differ from these projections, and CBRE does not warrant any such projections.

8. The Report contains professional opinions and is expressly not intended to serve as any warranty, assurance or guarantee of any particular value of the subject property. Other appraisers may reach different conclusions as to the value of the subject property. Furthermore, market value is highly related to exposure time, promotion effort, terms, motivation, and conclusions surrounding the offering of the subject property. The Report is for the sole purpose of providing the intended user with CBRE's independent professional opinion of the value of the subject property as of the date of the Report. Accordingly, CBRE shall not be liable for any losses that arise from any investment or lending decisions based upon the Report that the client, intended user, or any buyer, seller, investor, or lending institution may undertake related to the subject property, and CBRE has not been compensated to assume any of these risks. Nothing contained in the Report shall be construed as any direct or indirect recommendation of CBRE to buy, sell, hold, or finance the subject property.

9. No opinion is expressed on matters which may require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate appraisers. Any user of the Report is advised to retain experts in areas that fall outside the scope of the real estate appraisal profession for such matters.

10. CBRE assumes no responsibility for any costs or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance.

11. Acceptance or use of the Report constitutes full acceptance of these Assumptions and Limiting Conditions and any special assumptions set forth in the Report. It is the responsibility of the user of the Report to read in full, comprehend and thus become aware of all such assumptions and limiting conditions. CBRE assumes no responsibility for any situation arising out of the user's failure to become familiar with and understand the same.

12. The Report applies to the property as a whole only, and any pro ration or division of the title into fractional interests will invalidate such conclusions, unless the Report expressly assumes such pro ration or division of interests.
0 2024 CBRE, Inc. 34 CBRE

Assumptions and Limiting Conditions

13. The allocations of the total value estimate in the Report between land and improvements apply only to the existing use of the subject property. The allocations of values for each of the land and improvements are not intended to be used with any other property or appraisal and are not valid for any such use.

14. The maps, plats, sketches, graphs, photographs, and exhibits included in this Report are for illustration purposes only and shall be utilized only to assist in visualizing matters discussed in the Report. No such items shall be removed, reproduced, or used apart from the Report.

15. The Report shall not be duplicated or provided to any unintended users in whole or in part without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Exempt from this restriction is duplication for the internal use of the intended user and its attorneys, accountants, or advisors for the sole benefit of the intended user. Also exempt from this restriction is transmission of the Report pursuant to any requirement of any court, governmental authority, or regulatory agency having jurisdiction over the intended user, provided that the Report and its contents shall not be published, in whole or in part, in any public document without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Finally, the Report shall not be made available to the public or otherwise used in any offering of the property or any security, as defined by applicable law. Any unintended user who may possess the Report is advised that it shall not rely upon the Report or its conclusions and that it should rely on its own appraisers, advisors and other consultants for any decision in connection with the subject property. CBRE shall have no liability or responsibility to any such unintended user. (D 2024 CBRE, Inc. 3� CBRE

Addenda

ADDENDA
(9 2024 CBRE, Inc.

Addenda
Ad&

GENERAL DATA
(9 2024 CBRE, Inc.

UO

P BLICPOCK
'0.0
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294 285 2 .0
293 284 275 266 00
2 283 274 265 81 .0
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1. Zq 1. 282 273 254 245 236
272 26 235 22
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A ST
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ooring A
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City of Newport Beach
GIS Division
March 26, 2015

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City of Newport Beach
GIS Division
March 26, 2015

PARK AVE

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u u
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201 191 171 161 151 141 131 121 111 101
91 81
71 61 51
41 31
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:202 192 172 162 152 142 132 122 112 102 92
82 72
52 42
32 22
12 - - - - - - - - - - - - - -- WSJ 23 103 93
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14 35
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March 26, 2015

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March 25, 2015

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Moorings—Aflas—d

Addenda
Addendum

APPRAISER LICENSE
(9 2024 CBRE, Inc.

PROFESSIONAL PROFILE
ROBERT Z. JACOBSON, MAI
Lxecutive Vice 'resident
Valuation and Advisory Services
Cell. + 1909 227 2386
[email protected]
www.cbre.com/Robert.] acobson

CLIENTS REPRESENTED
Institutional
— Prologis
— Blackstone
— KKR
— Panattoni
— IDI
— Altus
— Trojan
local
— Lewis Group
— March JPA
— HIP
Bank
— Deutsche Bank
— Wells Fargo
— Cantor
— Western Alliance Bank
— US Bank
— Connerica
— Citizens Business Bank
Self Storage
— Trojan
— Public Storage
— SmartStop
— ExtraSpace
— A-1
— SoCal
ROBERT Z. JACOBSON, MAI
Robert Z. Jacobson, MAI is the head appraiser in the Ontario office for CBRE Valuation & Advisory Services. Mr. Jacobson joined the Ontario office in 2002 and has served institutional as well as local clients on all types of appraisal and consulting assignments throughout the Inland Empire. Mr. Jacobson also works in concert with the National Self Storage Valuation Group that Is based out of the Ontario office.

Assignment specific experience includes Mr. Jacobson's appraisal of harbor usage -oriented properties in Oceanside and Port Hueneme Harbors, and his access to and review of CIBRE's vast resources which include appraisals of commercial properties and associated water rights and associated rent determination in virtually every harbor along the California Coast, as well as more harbor specific uses nationally including but not limited to:

Property Description
CBRE Harbor Appraisals
• Harbor Redevelopment
• Port - Market Rent Arbitration
• Multiple Marina Portfolio
• Marina Harbor Apartments & Anchorage
• Deep Water Bulk Container Facility
• Dry Stack and West Slip Mixed -Use
• Super Yacht shipyard & dryclock
• Shipyard & Dryclock
• Super Yacht Marina

REPRESENTATIVE ASSIGNMENTS
Property Description
Industrial
• General Mills
• Proctor& Gamble
Self Storage
• Public Storage — Proposed
• SoCal Self Storage
Land
• Riverside Mining — Industrial
• Future Residential Land

CREDENTIALS
Location
Confidential, CA
Confidential, CA
San Diego, CA
Marina Del Rey, CA
Confidential, WA
Naples, FIL
Puerto Rico
Confidential, FIL
British VI
Location
Perris
Moreno Valley
Los Angeles County
Hollywood
Riverside
Adelanto/Victorville
Professional Affiliations/Accreditations/Certifications 0 Appraisal Institute, Designated Member (MAI)
0 Certified General Real Estate Appraiser, State of California, No. AG035731

EDUCATION
0 University of Arizona, Tucson, Arizona, Bachelor of Science Duel Major Finance and Accounting — Cum Laude
Size
Acres
239 acres
300 acres
900+ slips
966 unit, 321 slip
12,000 acres
350 slips
97,000 GSF
28 acres
30 slips
Size
SF
1,547,342
1,479,117
Units
2,065
1,007
Acres
223
1,150
CBRE

OF
Business, Consumer Services & Housing Agency
X 49

BUREAU OF REAL ESTATE APPRAISERS
4L #FOR"' REAL ESTATE APPRAISER LICENSE
Robert Z. Jacobson
has successfully met the requirements for a license as a residential and commercial real estate appraiser in the State of California and is, therefore,, entitled to use the title:
"Certified General Real Estate Appraiser"
This license has been issued in accordance with the provisions of the Real Estate Appraisers' Licensing and Certification Law.

BREA APPRAISER IDENTIFICATION NUMBER:
3070653
AG 035731
Effective Date: July 8, 2023
Date Expires: July 7, 2025
Angela Jemrr(��, Bureau Chief, BREA

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PALMIERI
HENNESSEYo_

LEIFER, LLP X

VIA E-MAIL
Mr. Joe Stapleton
District I - Mayor Pro Tern
Newport Beach City Council
100 Civic Center Drive
Newport Beach, California 92660
Email: istayleton(&newportbeachea.gov
Mr. Erik Weigand
District 3 - Councilmember
Newport Beach City Council
100 Civic Center Drive
Newport Beach, California 92660
Email: ewei2and(&newPortbeachca.2ov
Mr. Noah Blom
District 5 - Councilmember
Newport Beach City Council
100 Civic Center Drive
Newport Beach, California 92660
Email: nblomAnewyortbeachca.2ov
Mr. Will O'Neill
Michael H. Leifer
Direct Dial: (949) 851-7294
E-mail: [email protected]
File No.: 41508-000
July 9, 2024
Mr. Brad Avery
District 2 - Councilmember
Newport Beach City Council
100 Civic Center Drive
Newport Beach, California
Email: bavervAnewportbeachea.gov
Ms. Robyn Grant
District 4 - Councilmember
Newport Beach City Council
100 Civic Center Drive
Newport Beach, California 92660
Email: r2rantAnewportbeachea.gov
Ms. Lauren Kleiman
District 6 - Councilmember
100 Civic Center Drive
Newport Beach, California 92660
Email: lkleiman(a),newportbeachca.2ov
Ms. Grace K. Leung, City Manager
District 7 - Mayor, 2020 Mayor City of Newport Beach
Newport Beach City Council 100 Civic Center Drive, Second Floor, Bay E 100 Civic Center Drive Newport Beach, California 92660
Newport Beach, California 92660 Email: citycouncil(&,newportbeachca.20V Email: woneiU(&neWDortbeachca.eov
Re: Objections to City's Proposed Actions Regarding Mooring Rates Dear Newport Beach City Council:

We are hereby submitting objections to the City of Newport Beach's (the "City") expressed intention to adopt the Harbor Commission's recommendation or the "alternative." The City's recent posting of the agenda and staff report is unclear, deficient, and contradictory in material aspects. The general thrust of the City's agenda packet is that the City intends to act unlawfully toward offshore boat docking in the harbor —commonly referred to as offshore 3 Park Plaza, Suite 1950, Irvine, CA 92614-2518
(949) 851-7388 1 www.palmierilawgroup.com

PALMIERI

HENNESSEYO

LEIFER, LLP(X
Newport Beach City Council Members

moorings. The City's proposed acts concerning offshore moorings also reflect the City's improper conduct as to other activities relating to the harbor.

The City has a duty to comply with its legal obligations as pertains to the City's tidelands (including but not limited to the City's obligation to fulfill its fiduciary duties by, among other things, assessing tideland user fees in a fair and non-discriminatory manner). City staff and officials are furthermore obliged to comply with legal requirements imposed by statute and by common law to refrain from violating conflict of interest laws. Moreover, the City has due process and other obligations as relates to tideland users, including permittees. Aspects of the proposed City actions constitute improper takings of property. And, despite the City's assertions to the contrary, the City's proposed action(s) are not exempt from CEQA because they will directly or indirectly impact the environment.

1. THE CITY'S ACTIONS ARE DISCRIMINATORY AND VIOLATE THE

PROHIBITIONS OF THE BEACON BAY BILL
The City admits that it is bound by the provisions of the Beacon Bay Bill. The Beacon Bay Bill expressly prohibits the City from discriminating "in rates, tolls, or charges ... for any use or service... " with respect to the City's management, conduct, operation and control of the tidelands. The Beacon Bay Bill states, in pertinent part:
"(d) In the management, conduct, operation, and
control of the lands or any improvements,
betterments, or structures thereon, the City or its
successors shall make no discrimination in rates, tolls, or charges for any use or service in connection
therewith. [emphasis added]."
Section 17.60.040 of the Newport Beach Municipal Code (which governs mooring permit requirements) states that the mooring fees are to be based "...on a rent schedule established by the Harbormaster, which shall be similar to the schedule used to collect rent from other tidelands users in Newport Harbor." (NBMC § 17.60.040(h) [emphasis added].) The City's proposed rate increase would result in not only one type, but at least three types, of discrimination concerning tidelands users: (1) price or term discrimination; (2) use discrimination; and (3) political or socioeconomic discrimination.

A. PRICE DISCRIMINATION
The evidence of discrimination concerning price and/or terms is overwhelming. A boat can be docked to a mooring. It can also be docked to a pier. As conceded by the City staff

PALMIERI

HENNESSEY

LEIFER, LLP&
Newport Beach City Council Members

report, they are both forms of docking over tidelands.' Docking to a pier is a clearly superior form of boat storage on the tidelands. Yet, the City charges much less for this vastly superior boat storage option. The average dock permittee pays approximately $12-$30/month while the average mooring permittee pays approximately $133-$138/month for a 40' mooring. Indeed,the April 9, 2024 letter recently sent by the California State Lands Commission Staff to the City ("SLC staff letter") echoes the objections that have already been raised by existing and potential mooring permittees. The SLC staff remarked in its letter: "Staff also observes a significant disparity between the City's residential pier rates and mooring rates ... .. Disparity" is tantamount to "discrimination" in this context.

Monthly Rate
Dock v Mooring
S_
5'. $481
M
U.
$12
Dock Existing 40' Proposed 40'
(190 sq ft) Mooring Mooring Rate
The City has set the mooring and dock rates at different times, making different arguments, and reflecting different economic conditions. Non-discriminatory conduct and fairness dictate that tidelands uses be appraised in the same economic time periods using the same (or nearly the same) date of value. Did the City do so? No. The City has instead strategically picked and chosen the valuation of and the setting of charges for docking in different economic periods for supposed different groups of users who dock boats in the same tidelands. The City's approach has resulted in improper "disparities" —in other words, discrimination. In addition, the City now intends to cause further disparities between those who have a permit to dock their boats offshore as compared to those who dock their boats on a pier. 1 In its staff report, the City recognizes the obvious: Docking a boat is docking, regardless of whether the boat is docked to a floating metal ball in the channel or to a pier. (See, City's REP No. 21-53 characterizing a mooring as a type of "boat storage.")

PALMIERI

HENNESSEYO

LEIFER, LLP(X
Newport Beach City Council Members

The resulting disparate impact on certain tideland users (i.e., dock rates as compared to offshore mooring rates) is "use" discrimination. The City is playing a shell game where it is selectively picking and choosing different criteria at different time points to rig the discriminatory results.

The City's discriminatory conduct is further manifested in its treatment of individual mooring permittees as opposed to its treatment of certain favored mooring groups. While the majority of mooring permittees are individuals, there are two yacht clubs (the Balboa Yacht Club and the Newport Harbor Yacht Club) as well the Lido Island Community Association who provide moorings to their members or residents. The City discriminates concerning terms of use.

For example, unlike the individual mooring permittees, these organizations are allowed to sublease their moorings to members. 2
Despite the City's attempts to conceal this information from the public, a public records request recently uncovered a June 13, 2024 email in which the City's Harbor Commissioner confirmed that the Lido Island Community Association, the Balboa Yacht Club and the Newport Harbor Yacht Club will be exempted from the anticipated rate hikes. This clear evidence of discrimination runs squarely afoul of Beacon Bay Act's prohibition against discrimination "in rates, tolls, or charges ... for any use or service..." of the tidelands. As proposed, the yacht clubs and Lido Island Community Association will receive discriminatory advantageous treatment by the City.

The City's decision to discriminate in favor of dock owners and other groups via rate and terms is unlawful. The SLC staff warned the City in a recent letter that: "Charging less than fair market rates for the use and occupation of granted sovereign land may constitute an unconstitutional gift of public funds and a violation of the City's fiduciary duties...." The City uses this threat as a sword in its proposed action with moorings. It also hypocritically uses its position as tidelands manager as a shield when convenient to justify its discriminatory favoritism. The City cannot have it both ways.

B. USE DISCRIMINATION
Starting with some fundamentals, the dock "owners" are tideland users just as offshore mooring permittees are tideland users. They both dock boats by tying them over the submerged tidelands. The tidelands are owned by the State and not the City, as the City merely acts as a trustee for the public over these tidelands.
2 It is estimated that the Balboa Yacht Club obtains approximately $400,000 to half a million dollars annually, and the Newport Harbor Yacht Club generates approximately $400,0000 to $600,000 annually in profits from their moorings.

PALMIERI

HENNESSEYO

LEIFER, LLPCX
Newport Beach City Council Members

A docking on a pier is a far superior form of boat storage as compared to docking offshore to a mooring in the bay. There are intrinsic benefits that are incidental to ownership and value of the adjacent above -ground fee land with a dock on a pier. Such a dock benefits the adjacent land and home and vice versa. It is also easier to dock a boat to a dock on a pier than it is to dock a boat to an offshore mooring. The dock owner merely needs to walk across his dock to enter the docked boat, as opposed to the mooring permittee who must traverse open water to access his or her boat. Additionally, a dock adjacent to a bayfront home has readily available access to restrooms, fresh water and electricity.

Not only does the City inexplicably charge much less for docks, but the mooring permittees are also subject to certain significant use restrictions that are not imposed on dock owners. A mooring consists of little more than an anchor to the submerged tidelands and a line to the mooring ball or balls. Thus, mooring permittees cannot construct piers and wooden docks in the bay. And, unlike the dock owner (who pays much less with many less restrictions and many more benefits), the mooring permittee is prohibited from leasing to a third party It should also be noted that the costs incurred by the City in administering moorings are low since the mooring permittee is required to bear the majority of those costs (e.g., buoys and related equipment). This disparity is exacerbated when comparing the superiority of dock tidelands usage in comparison to tidelands usage involving docking to moorings.

Notwithstanding the vast benefits enjoyed by dock tidelands usage, dock permittees pay far less:

Boat Storage
Dock Permit Mooring Permit
I$1 1/mo
Aw"WWk-
6&iW-
TM_

PALMIERI

HENNESSEYO

LEIFER, LLP(X
Newport Beach City Council Members

A mooring user who docks to a metal ball in the harbor is using and getting much less but will pay astronomically more. The City has apparently concluded that a vastly inferior type of boat storage (i.e., a mooring), should command more money than a vastly superior form of boat storage (i.e., a dock).

The City's indefensible position begins from the City's instruction to its real estate appraiser that submerged, undevelopable tidelands should be (in fact must be) compared to and predicated upon the value of bayfront residential land in Newport Beach. The City's appraiser 3 utilized this approach. Establishing mooring rates based on the value of Newport bayfront real estate is untenable for many reasons. A mooring permit, as configured by the City, is not a property right. The SLC staff agrees that such an approach is incorrect. The SLC has explicitly warned the City that: "... staff disagrees that residential land values should be used as a basis for valuing the offshore moorings, because the moorings' use is not connected with the residential use." (4/9/24 letter from SLC to City.). Yet, obviously docks situated in front of bayfront homes are frequently physically connected to the residential use. The City cannot assess the "fair market value" of the offshore moorings based on the value of such real property especially when the offshore mooring is unconnected with the residential use. The City sanctions a valuation predicate which is prohibited and discriminatory. Value cannot be based on a use which the mooring permittees cannot make. California law prohibits such a valuation. (See, e.g., Wu v. Interstate Consolidated Industries (1991) 226 Cal. App. 3d 1511; Humphries Investments, Inc. v. Walsh (1988) 202 Cal.App.3d 766.)
The City has not, and cannot, justify its inequitable disparity in boat storage treatment, fees or fee increases.

C. POLITICAL AND SOCIOECONOMIC DISCRIMINATION
The City appears to concede that the majority of the mooring permits are currently held by individuals who lack voting rights in Newport Beach. It is our understanding that only approximately 42% of the mooring permits are held by residents of the City who are afforded voting rights (and of that population, the number must be divided by the seven districts). The City Council has succinctly, and accurately, remarked, "the mooring people do not vote." The pie chart below illustrates the discrepancy between mooring permit holders based on the city of residency.
3 The appraiser also made clear that his appraisal cannot be used and is invalid without considering this approach.

PALMIERI

HENNESSEYO

LEIFER, LLP(X
Newport Beach City Council Members

58%
Mooring Permit Holder City of Residence
42%
0 OTHER CITY 0 NEWPORT BEACH
City Council Districts
City ot Ne"­ B-ch
Newport Beach residents are in the upper echelon of wealth and income levels, and only a select few members of the public are able to afford the prices commanded by the Newport Beach real estate market. Many of the mooring permittees are not Newport Beach residents.

The large majority of dock owners live or appear to live, vote or could arrange to vote, in the City of Newport Beach.

Historically, moorings offer a more affordable option for members of the public living outside of the City limits who wish to enjoy recreational boating and access to the coast. The City is maintaining and creating barriers to the public's ability to access and utilize the State- owned tidelands. The City cannot discriminate against nonresidents. It cannot discriminate against perceived non -Newport Beach socioeconomic echelons.

Allowing this type of politically or socioeconomic based discrimination is not only inequitable but also runs afoul of the Beacon Bay Bill, the tenets of the California Coastal Commission Act and other applicable laws (See, e.g., Coastal Act § 30001, stating "The Legislature hereby finds and declares ... the California coastal zone is a distinct and valuable natural resource of vital and enduring interest to all the people...." [emphasis added]; see also, City's General Plan R 8.6, R 9, R 9. 1, et seq. confirming that the City is required to ensure that coastal access is accessible to the public regardless of socioeconomic status; Illinois Central Railroad v. Illinois (1892) 146 U.S. 3 87, 452-453 [municipalities hold tidelands and submerged lands in trust for the benefit of the public at large] .)4 4 It should furthermore be noted that Harbors and Navigation Code § 40 requires that, "Facilities

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Newport Beach City Council Members

11. THE CITY'S APPRAISAL IS UNRELIABLE.

An appraisal analysis which concludes that a rate for an inferior mooring should be greater than the fee charged for a dock is, to put it charitably, flawed and unreliable. In fact, it is absurd. Yet, this is precisely the scenario posed by the City's appraiser. The nonsensical conclusion reached by Mr. James Netzer should have caused the City to immediately recognize that the analysis was seriously flawed.

There are a myriad of other problems with Mr. Netzer's 2023 mooring appraisal. The defects in the City -directed report, include, but are not limited to, the following:

Use of Ingppropriate CoMparables: Using sales of bayfront residential property as "comparables" for undevelopable submerged tidelands is ludicrous. This approach irreparably taints the entire appraisal analysis. At the very minimum, it shows that the City and the appraiser are biased.

Impact of Inco!porating Non-CoMparables in Appraisal: Mr. Netzer's appraisal report concedes that his valuation conclusions are predicated the valuation methodologies which he chose to employ. (See, 2023 Appraisal Report, stating:
"The reconciliation process involves a thorough review of the valuation process and supporting data used in each of the valuation approaches." [emphasis added].) All three of Mr. Netzer's appraisal approaches are tainted by his use of non - comparable real property and renders the entire appraisal report unreliable.

Inconsistent Ci!y Conduct as to Valuation Approaches: In 2015, the City rejected the ratio analysis as a valid means of determining dock rates. Yet, the City has now reversed course and contends that the same ratio analysis should apply to moorings. The City cannot have it both ways — it cannot cherry -pick which methodologies it wants to apply in order to predetermine the discriminatory end result. This is particularly true where, as here, the City has already conceded that docking to a mooring and docking to a dock both constitute docking over the tidelands. Both to be treated as methods of boat storage.

Use of Ingpplicable Rate of Return: Mr. Netzer's appraisal report utilizes a rate of return which is applicable to income generating investments in commercial real estate improved properties, but which is inapplicable to tidelands usage. (See, 2023 Netzer Appraisal, p. 26.) There is also evidence that the City's in harbors and connecting waterways established under the provisions of this division shall be open to all on egual and reasonable terms." (Emphasis added.) The City has imposed unequal and unreasonable terms.

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appraiser was directed to undertake such approach by City staff and/or Harbor Commission personnel.

Failure to Take Into Account Mooring Permittees' Cgpital Investment: The appraisal fails to take into account the capital investment (estimated at $40,000 to $60,000) made by a mooring permittee. Nor does the appraisal address biannual mooring maintenance fees. The City and its appraiser fail to take into consideration the mooring permittees' investment in their boat which they presumably have nowhere else to store. A boat owner who has no real storage options becomes a boat seller —a seller in distress.

Failure to Consider Termination Provision (Among Other Terms): The City and its appraiser ignore the City's termination rights. The mooring permit allows the City to terminate the mooring permittee's rights if the mooring is subleased without the written permission of the Harbormaster. (NBMC § 17.25.020(L); Mooring Permit, page 2, § 6.) In fact, the appraiser wrongfully considered illegal subleasing as a basis for his conclusion.

Disregard of Historical Tideland User Rates: The appraisal conveniently ignores relevant past history as pertains to tideland user rates set by the City pursuant to its asserted obligations to do so. More specifically and stunningly, the City in 2015 set fair market rent and terms for docks. The dock is the superior, vastly superior, type of boat storage. It is the top of the market for tideland users. Here, the City directed its appraiser to turn the market upside down. The City is not excused from ignoring that absurd result.
111. THE CITY'S APPRAISAL PROCESS HAS BEEN TAINTED BY THE CITY'S

AND ITS APPRAISER'S IRREPARABLE CONFLICTS OF INTEREST
A. THE POLITICAL REFORM ACT AND THE NEWPORT HARBOR

COMMISSION'S RULES OF PROCEDURE PROHIBIT INDIVIDUALS

WITH A CONFLICT OF INTEREST FROM PARTICIPATING IN THE
PROCESS.

The Political Reform Act ("PRA") prohibits City commissioners, employees, and consultants from influencing or participating in City decisions in which they have a material financial interest. (Gov. Code, §§ 82041, 82048, 87100; 2 Cal. Code Regs., tit. 2, § 18700.) This includes but is not limited to any decision affecting business interests or real property worth at least $2,000. (Gov. Code, § 87103.) The PRA further prohibits City commissioners, employees, and consultants from influencing or participating in City decisions materially affecting any business entity in which the disqualified individual is an officer, director, partner,

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trustee, manager, or employee. (Gov. Code, §§ 82033, 82035, 87103.) A decision made in violation of these prohibitions can be enjoined from taking effect. (Gov. Code, § 91003; see also, Woody's Group v. City ofNewport Beach (2015) 233 Cal.App.4 1h 1012 [bias alone, either actual or an unacceptable probability of it, on the part of a municipal decisioninaker sitting in an adjudicatory capacity is enough to show a violation of the due process right to fair procedure].) Additionally, Section VIII.C. of the Newport Harbor Commission's Rules of Procedure expressly requires "[a]ny Commissioner who is disqualified from voting on a particular matter by reason of a conflict of interest shall publicly state or have the Chair state this determination and the nature of such disqualification in open meeting." Section VIII.C. further provides that "[a] Commissioner who is disqualified by reason of a conflict of interest in any matter shall not remain in the council chambers during the debate and vote on such matter and shall request permission of the Chair to depart until the item is closed." B. THE CITY'S APPRAISER HAS HAD A MATERIAL CONFLICT OF
INTEREST.

The City's valuation process has been tainted with numerous conflicts of interest. The City's selected appraiser is an officer and board member of the Newport Aquatic Center ("NAC"), which has a substantial financial interest at stake —its existence is dependent upon use of the tidelands. The NAC maintains a sizeable dock and fleet of small watercraft in Newport Harbor. The NAC was also expressly listed as a location for review comparison in the City's RFP for the mooring appraisal. The NAC also leases the land for its facility from the City.

Records show that the City's appraiser was directly involved on behalf of the NAC in lease negotiations with the City while he was simultaneously performing the City's mooring appraisal. In a June 26, 2023 email, Chris Blank (NAC President and brother of Harbormaster Paul Blank), informed the City that the City's appraiser would be attending a meeting on behalf of the NAC to discuss the NAC's ground lease with the City. The City went on to grant the NAC a generous, no -fee 3 0-year lease extension (with two additional I 0-year extension options) less than three months before NAC's representative/City Appraiser provided the appraisal as directed by the City.

Yet, the City's appraiser purported to certify in his appraisal that "I have no present or prospective interest in the property that is the subject of this report and have no personal interest or bias with respect to the parties involved" and that "I have no bias with respect to the property that is the subject of this report or to the parties involved in the assigm-nent." That was not the case. Any one of the conflicts above disqualified the City's appraiser.

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Page I I
C. THE CITY ALLOWED HARBORMASTER PAUL BLANK TO

PARITICPATE IN THE RATE VALUATION PROCESS DESPITE HIS
ADMITTED CONFLICT OF INTEREST.

Harbormaster Paul Blank was conflicted the moment the City hired him in May 2021.

During a Harbor Commission meeting in 2022, Mr. Blank represented that he is a mooring permittee who "does not participate in discussions or the development of recommendations related to use or financial arrangements associated with offshore moorings." Mr. Blank ftuther represented that this was disclosed and discussed with the City Attorney before he was hired:

CITY OF

NEWPORT BEACH
Harbor Commission Staff Report
M-y 11,2022
Agia.d. It.. N. 6 5
To, HARBOR COMMISSION
FROM' 1 131-11 �tr
pb_.,�M,Ib­h- q
(949)
TITLE' Harbormaster Upi — April 2022 AclivirLies
HaTbormaster Update —April 2022 Activities
May 11. 2022

Initiatives were launched resulting in better data capture and statistics reporting Future improvements will include customer satisfaction survey data analysis and calls for service location analysis
Participated in the Emergency Operations Response to the following. * Elly oil spill
* Tsunami warning
* Three severe weather occurrences
* Sewage spill into the harbor
* Out of control stolen boat in the harbor
The Harbarmaster has disclosed the arrangements made, at h is own expense to alleviate any conflict of interest associated with his ongoing use of an offshore mooning permit.

While undergo , ng the recruitment process: any and all known possible conflicts of mlorest were disclosed. Prior to the City making an offer of employment, all such possible conflicts were discussed with the City Attorney Agreements and arrangements satisfactory to all relevant parlies wete made during that discussion The Harbormaster was entrusted and empowered to make determinations guing forward related to any conflict discil In support of this arrangement, the flarbormaster does riot participate in discussions or the development of recommeridations related to use or financial arrangements associated with offshore moorings reminds anyone with an interest that input on recommendations related to offshore mooring permits are made by Real Property Administration staff does not deliberate or vote on any policy related matters before the Harbor Commission
Is expected to answer questions related to policy implementation and impacts on Harbor Department operations
hereby discloses that the offshore mooril permit he erjoys is hold in ar irrevocable trust the beneficary of which is the Balboa Yacht Club. The Balboa Yacht Club holds all the offshore mooning permits adjacent to the Subject mooring hoping to avoid other conflict of interest concerns also hereby discloses any significant finaricia� interests related to the Balboa Yacht Club including a membership certificate are held in the same irrevocable trust further discloses that all remaining financial interests in either the subject offshore mooring permit or membership in the Balboa Yacht Club are do minimis

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First, "agreements and arrangements satisfactory to all relevant parties during that discussion" concerning the City's hiring of the Harbormaster, does not in any way satisfy the public interest in avoiding the appearance of impropriety and conflict. Moreover, despite these representations, the City and the Harbormaster improperly involved the Harbormaster in the mooring valuation process for over two years. As proposed by the valuation process, the City intended to increase revenues enormously for itself. Public records show that Mr. Blank submitted numerous staff reports to the Harbor Commission on mooring rental rates between 2022 and 2024. This includes reports in January, February, and March 2022—while Mr. Blank was serving as Centennial Commodore of the dock owner and mooring field operator Balboa Yacht Club.

Email correspondence also shows Mr. Blank was directly involved in influencing the City appraiser's analysis of mooring rates. In one 2023 email, Mr. Blank instructed Mr. Netzer to "[p]lease just apply the 30' rate you determine to that mooring but definitely add an entry in the report that includes the 25' category." Although Mr. Blank belatedly claimed to have recused himself in March 2024, he and the City allowed his admittedly improper participation for two -plus years. Such participation irreparably tainted the process.

D. THE CITY FURTHER ALLOWED OTHER INDIVIDUALS WITH

MATERIAL CONFLICTS OF INTEREST TO ENGAGE IN THE
PROCESS.

The conflicts do not stop there. Harbor Commissioner Rudy Svrcek owns a dock and boat in Newport Harbor. The Deputy City Attorney previously advised Mr. Svrcek to recuse himself from discussions and from voting on mooring realigninent due to his dock permit being within 500-1000 feet of a mooring field. Harbor Commissioner Scott Cunningham owns a bayfront home and boat in Beacon Bay, which maintains a community dock —a tidelands user.

Yet, Commissioners Svrcek and Cunningham failed to recuse themselves from participating in the City's mooring valuation and rental review process. Moreover, Commissioner Cunningham acknowledged in a July 2020 email that he already had "two long conversations" with Mr. Netzer about his appraisal and that the "net net when we are ready" "and funded" is the "appraisal results will look much different than the 2016 numbers." How did Commissioner Cunningham know what the "net net" would be when the City's appraiser had yet to perform the appraisal? Why was Commissioner Cunningham talking to the appraiser about appraisal results in July 2020 when the appraisal RFP did not even go out until 202 1 ? It is incumbent on the City to comply with its own rules, the PRA and the Harbor Commission's Rules of Procedure. The City failed to do so.

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IV. THE CITY'S CONDUCT CONTRAVENES FEDERAL ANTITRUST LAWS The United States Supreme Court has repeatedly confirmed that a city is not immune from antitrust laws. (See, City ofLafayette v. Louisiana Power & Light Co. (1978) 435 U.S. 389 [rejecting the City of Lafayette's argument that antitrust laws protect only against conduct by private businesses and do not apply to municipalities].) The well -established antitrust rules prohibiting illegal conduct such as collusive price-fixing, bid rigging and the like therefore apply to the City here. (United States v. Socony-Vacuum Oil Co. (1940) 3 10 U.S. 150, 223 [stating, "Under the Sherman Act a combination formed for the purpose and with the effect of raising, depressing, fixing, pegging, or stabilizing the price of a commodity ... is illegal per se ...... ].

Following the Socony case, courts have broadly defined price fixing as an instance where the defendants have in any way agreed on a course of conduct affecting prices (See, e.g., Arizona v.

Maricopa County Medical Society (1982) 457 U.S. 332; Fisher v. City ofBerkeley (1984) 37 Cal.3d 644, 658-659.)
There is reason to believe that the City (through its staff and consultants) and certain entities in San Diego may have been working in concert with one another in connection with mooring rates. 5 Mr. Netzer's appraisal cites to a tentative proposal for mooring rate increases by the San Diego Unified Port District pursuant to which the San Diego Port District apparently provisionally agreed to a mooring ratio of 50% of slip fees. Mr. Netzer uses this provisional San Diego data to support his "mooring to slip" methodology and appraisal conclusion.

It is believed that at the time that Mr. Netzer referenced and disclosed the terms of the tentative mooring rate hikes being contemplated in San Diego, those terms were a part of certain confidential negotiations which were not made public. This, of course, begs the question of how such confidential information was available to the City's appraiser in advance of the information being made available to the public. Additionally, there is the concern that negotiations about rates, rather than agreements upon rates, influenced a rate determination by an appraiser for the city.

We also note that Mr. Netzer's appraisal claims that the SLC approved the rates being proposed in San Diego. This is untrue, as corroborated by the SLC. The SLC remarked in its April 9, 2024 letter to the City:
5 In addition to potential price-fixing concerns, federal antitrust laws are further triggered by the City's monopoly over the tideland user fees and its unfair business practices with respect to the mooring permittees.

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Second, the appraisal references proposed mooring rate Increases by the San Diego Unified Port DIstrict, another trustee of sovereign land, and states that they were approved by the State Lands Commission. Just like in Newport Bay, the State Lands Commission does not have review or approval authority over the Son Diego Unifled Port District's mooring rates and therefore dId not approve the Port's mooring rate increases.

Please advise whether Mr. Netzer and/or his company have been involved with appraisal of mooring rates in San Diego, including but not limited to the rates being considered or actually charged by the San Diego Port District. If he had no such involvement, the City should readily agree to confirming the same in writing.

V. THE CITY'S LAST-MINUTE PROPOSED "ALTERNATIVE" SCHEME IS PLAGUED BY FUNDAMENTAL DEFECTS.

A. THE "ALTERNATIVE" SCHEME IS YET ANOTHER EXAMPLE OF
THE CITY'S GAME -PLAYING AND LACK OF TRANSPARENCY.

The above issues, along with the myriad defects plaguing the City's conduct and 2023 appraisal report authored by Mr. James Netzer, have been presented to the City on a number of occasions. To date, the City has been unable to provide legitimate or logical answers to these issues. Public record requests have been met with claims that certain documents are either not publicly available or do not exist.

It is difficult, if not impossible, to accurately track down the City's ever -changing positions prior to its decision to act. For example: In 2015, the City rejected the very same appraiser's ratio valuation analysis. Yet, in 2023, the City embraced the ratio valuation analysis that it had already rejected. California law makes clear that, "California public policy will not permit a litigant'to blow hot and cold'by taking the benefits of a doctrine when it suits his purpose and then repudiating the same facts when it is no longer profitable or to his advantage to doso." (Kunec v. Brea Redevelopment Agency (1997) 55 Cal.App.4th 511, 525; see also, Woody's Group, Inc. v. City ofNewport Beach (2015) 233 Cal.App.4 th 1012, 1016 [Justice Bedsworth aptly noted in this case involving the City of Newport Beach, "You cannot change the rules in the middle of the game"].)
Now, rather than addressing the relevant issues head-on, the City intends to sweep the objections raised by the mooring permittees under the rug by proposing, at the eleventh hour, an 46alternative" scenario for mooring permittees. This proposed "alternative" utilizes the 2023 appraisal as a threat (without ever responding to the questions and objections asserted by the mooring permittees). Perhaps not surprisingly, the City's newest "alternative" scheme was conveniently posted during the July 4th holiday period in an effort to reduce public participation

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and opposition of the mooring permittees, potential mooring permittees and members of the public. The City apparently deliberated concerning this "alternative" plan during closed session meetings but chose to conceal its existence until just days before the upcoming public meeting.

Thus, rather than abiding by a linear and well -considered process which would ensure that the mooring permittees are treated in a transparent and non-discriminatory manner, the City has instead jumped all over the place, careening from one position to another without any logic or accountability. Not only that, but the City has apparently transacted secretive deals with private yacht clubs which were not offered to the individual mooring permit holders. The City's conduct in this regard calls to mind a game of "whack -a -mole" as opposed to the fair and equitable process that the Beacon Bay Act guarantees.

Stated another way, the City is a moving target. The City's treatment of the mooring permittees throughout this entire process has been not only unfair but is also irreconcilable with the fiduciary duties owed by the City to the mooring permittees.

B. THE STAFF REPORT IS REPLETE WITH VAGUE AND

INCONSISTENT STATEMENTS REGARDING THE PROPOSED
"ALTERNATIVE" PLAN; MORIEOVER, THE STAFF RIEPORT FAILS

TO PROVIDE THE MOORING PERMITTEES WITH ADEQUATE
INFORMATION ABOUT NEWLY PROPOSED SCHEME.

The July 9, 2024 Staff Report (the "Staff Report") raises even more issues about the City's treatment of the mooring permittees. It contains only skeletal and vague information and fails to provide the mooring permittees with sufficient time or information to fully evaluate the City's newest positions. In addition, the Staff Report is replete with problems in and of itself.

These include, but are not limited to, the following:

Lack of Analysis: The Staff Report does not identify what analysis, if any, was undertaken by the City in connection with its shift to the alternative proposal. The mooring permittees have submitted a public records request to obtain all documents involved in or relied upon by the City in the creation of the alternative plan since the City has not provided any of that information to them.

Lack of Information Provided to Mooring Permittees: As referenced above, the City's last-minute pivot to the proposed alternative plan is troubling for many reasons - not the least of which is that the Staff Report provides only negligible and vague information as to how the City proposes to implement the alternative plan. The Staff Report includes sweeping generalizations without identifying specifics. How are the mooring permittees supposed to provide a reasoned response to a vaguely described alternative proposal which was sprung on them at the last minute over a holiday weekend? The City's tactics

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are unfair, especially since the City, according to itself, is the sole arbiter of what information it chooses to release to the mooring permittees and when, if ever, it chooses to release that information.

Retaliatory Motive: Given the timing of the City's alternative plan, it would appear that the alternative plan was not motivated any genuine desire to address the objections raised by the mooring permittees but was instead drafted in an effort to retaliate against the mooring permittees. The alternative plan is draconian and punitive toward mooring permittees (e.g., If you do not agree with the rent rate increase, then the City will take your moorings and charge you even more rent in doing so).

Ci1y's Admission That Docks and Moorings Are Both Types of Boat Storage: The Staff Report acknowledges that, "... staff interprets that charging different rates for the same type of use that does not have a different value (e.g., a resident versus non-resident rate for the same mooring), would be a discrimination in rates and is prohibited by SLC." (Staff Report, p. 2.) The Staff Report further concedes that offshore moorings are a type of boat docking. (See, Staff Report, p. 1, T I ["The City of Newport Beach manages the tidelands in Newport Harbor, which includes parts of the harbor used for docking boats (called mooring fields)...." (emphasis added)].) This underscores the key point that dock owners and mooring permittees are similarly situated in that they are both docking boats over the tidelands. There is no legitimate justification for the vastly superior docking situation to be charged far less and while having far greater rights.

Private Yacht Clubs and Exclusive Commurifty Given Favorable Treatment: The alternative plan calls for private yacht clubs and an exclusive community to receive discriminatory favorable treatment. The purpose of the Beacon Bay Bill and other Coastal Commission legislation is to ensure the ability of the public to use the tidelands. (See, e.g., Coastal Act § 30001 ["The Legislature hereby finds and declares ... the California coastal zone is a distinct and valuable natural resource of vital and enduring interest to all the people....] [emphasis added].) The City turns the Beacon Bay Bill upside down by favoring yacht clubs and exclusive neighborhoods over the public.

Creation of More Classes Results in Additional Discrimination: From the vague information provided to date, it appears that the "alternative" scheme creates even more City -created "classes" of tideland boat dockers (e.g., dock owners, onshore moorings, offshore moorings, private yacht club mooring holders, new mooring permittees, city licensed mooring holders, etc.). The City simply creates new labels when it wants to discriminate. Doing so, however, does not alleviate or excuse the inherent discrimination.

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Historical Treatment of Other Tidelands Users: It is our understanding that, to date, the City has never required any other tidelands boat dockers to involuntarily forfeit their user rights in the manner that is being proposed under the alternative plan. Thus, this is yet another example of the City treating similarly situated tidelands boat dockers in a discriminatory manner.

Continued Omission of ALiy Response to the Mooring Permittees' Previously Raised Objections: The Staff Report fails to even attempt to respond to the objections previously raised by the existing and/or potential future mooring permittees. The City once again continues to ignore the valid points raised by these individuals.

Gift of Public Funds: Furthermore, the Staff Report again evades any discussion about its determination of dock fees vis-d-vis mooring permit fees. The City claims that it must increase the mooring permittees' rates by an exorbitant amount because it would otherwise be considered an unconstitutional gift of public funds. Why is the City unconcerned about charging dock owners reduced rates with greater rights over the tidelands? Applying the City's logic, wouldn't the situation with the dock owners' superior and broader use of the granted sovereign land for much less money over a much longer period constitute a past and ongoing gift of public funds in violation of the City's fiduciary duties as a trustee of State-owned land? If the treatment of the dock owners was not and is not a gift of public funds or gift of public land, then it cannot be disputed that charging the mooring users less than the dock owners is likewise not a gift of public land or funds.

C. THE "ALTERNATIVE" PLAN VIOLATES THE MOORING_
PERMITTEES' CONSTITUTIONAL RIGHTS.

Under the City's alternative plan, the mooring permits would automatically convert to a City -owned moorings which would be subject to the short-term license provisions of the 6 Newport Beach Municipal Code. The City would concurrently assume ownership of the mooring equipment that is currently owned by the mooring permittees, such as the mooring chains, mooring balls and weights.

The City's plan institutes a taking. More specifically, it is an uncompensated taking not in compliance with the Eminent Domain law or the United States and California Constitutions. 6 The conversion would take place upon the occurrence of certain conditions; however, all mooring permits owned by individuals will transform into a City license in no more than eight years regardless of what might transpire. The private yacht clubs are to be treated under a different set of rules.

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Nothing in the alternative plan calls for the City to pay just compensation to the mooring permittees even though the City will acquire ownership of the mooring equipment (which is currently owned and maintained by the mooring permittees) upon conversion of the permit into a license. To the contrary, the City intends to increase the mooring rates despite the taking of the mooring permittees' personal property. This scenario therefore presents a textbook case of an unconstitutional taking pursuant to the Fifth and Fourteenth Amendments' due process clauses as well as the Fifth Amendment's taking clause ["nor shall private property be taken for public use without just compensation"].)'
D. THE CITY'SPROJECT TRIGGERS CEQA ANALYSIS
The City's proposed project is not exempt from CEQA. The City's plans to make changes to the harbor, (including "re -aligning" mooring fields in the harbor), the precipitous rate increases and other threatened "alternative" schemes will trigger mooring permittees to respond by, among other things, removing their chains, mooring balls, weights and other associated hardware. The removal of mooring equipment by permittees and reinstallation of the mooring equipment by the City or others constitutes a project which would necessarily impact the sea bed and potentially stir up harniftil toxins. CEQA review is therefore necessary.

V1. CONCLUSION
Please be advised that this letter contains a summary of the arguments and objections to the proposed mooring rate increase/alternative scheme and does not constitute an exhaustive list of arguments and objections. The existing and potential mooring permittees therefore reserve all rights to revise and/or supplement their arguments and objections as appropriate. Moreover, the existing and potential mooring permittees hereby incorporate by reference the following: (a) all public records produced by the City; (b) all documents sought by the mooring permittees pursuant to a public records request but not produced by the City; (c) all documents which relate or refer to disputes involving the City concerning boat storage from 20 10 to the present; (d) all documents which relate or refer to the City's tideland usage; and (e) all objections, comments, arguments and positions asserted by others concerning rates for tideland usage. ' Other due process concerns are also raised by the City's proposed plans. For instance, the mooring permittees have invested a significant amount of money to obtain and maintain their moorings. Despite the sizable capital investment made by the mooring permittees and their vested economic interests, the City is now wrongfully threatening to force them to lose their rights. (See, e.g., Goat Hill Tavern v. City of Costa Mesa (1992) 6 Cal.App.4 1h 1519.)

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We trust that you will seriously consider these objections to the proposed treatment of the mooring permittees in relation to dock permittees and others boat dockers in the harbor that receive (or stand to receive) much more favorable treatment by the City. It is genuinely hoped that the City will comply with its obligations imposed by the Beacon Bay Act as well as the legal obligations imposed by state and federal law.

MHL:tb
Very truly yours,

Newport Mooring Association
Objection to Proposed Offshore Mooring Fee Increase
Date: February 14th, 2024
To: The Newport Beach Harbor Commission
Reference: February 14th, HC meeting agenda item 6-1 Mooring Rates The Newport Mooring Association strongly objects to the furtherance of DISCRIMINATION against mooring holders in Newport Harbor. In a separate position paper, the Newport Mooring Association will show the history of systemic discrimination against Mooring Holders, as compared to the treatment of all other users of Newport Harbor. An outline of our significant concern over the history of apparent discrimination is included in Exhibit 5 below. Mooring Holders already pay far more to the City of Newport Beach ("City") for use of a small area of the harbor compared to what is paid for by marinas, waterfront homes and virtually all other uses.

Now, the Harbor Commission is on the verge of substantially increasing the effect of the Discrimination Hammer in what appears to be an ongoing effort to force out people of low income and who may not be residents of Newport Beach. Make no mistake, the weaponization of the Appraisal Hammer is just a farther attack on mooring holders that appears to be part of an on -going effort to rid the harbor of outsiders. The fees being charged mooring holders are already four times more than what is being paid by waterfront homes for use of the tidelands in front of their home for their private docks. This proposal would increase the disparity drastically, so that the gap would be up to 10 times more than what private dock owners pay, and over five times more than what commercial docks and homeowner associations pay.

The Newport Mooring Association (NMA) also objects to the process by which this proposed rate increase was developed, which excluded public input and review. These objections pertain to proposed offshore mooring increases. Two years ago, the NMA provided a report objecting to the then -proposed increases in onshore mooring rates, which is a matter of public record. The agenda item in the previous regular Harbor Commission meeting concerned only offshore moorings. The appraisal submitted entitled offshore mooring rates, and the study session announced at the Harbor Commission meeting was for a February I" special meeting on only this matter. If, in the event that there is any discussion of on -shore mooring rates at the study session, the NMA strongly objects to including on -shore moorings as there no study of fair rates for onshore mooring rates (small boat storage 18ft or less) has been performed or included in this process.

Overview
The Newport Mooring Association ("NMA"), has studied the proposed fee increase, staff report and Netzer appraisal ("Netzer Report"), and finds that:
• The proposal significantly threatens affordable recreational boating • The proposal highly discriminates in fees charged by the City of Newport Beach for other tidelands use in direct violation of the Beacon Bay Bill • The proposal violates the reported and stated goals of the City to provide affordable boating access
• The proposal and methods used in the Netzer Report contradict the customary method used for determining fees charged for tidelands use, including the State Lands Commission, and contradicts the City's own 2017 appraisal and valuation of tidelands for almost all other uses, and
• The Netzer Report itself is based on an erroneous methodology and contains numerous false assumptions and errors.

Given the radical nature of the proposal, the clear discrimination in rates prohibited by the Beacon Bay Bill, and the clear contradiction in methods, rates, and conclusions in the City's own formal appraisal report for values charged for use of the tidelands, the NMA is requesting that any further discussion by the Harbor Commission be delayed no fewer than 90 days to allow the Commission, staff, and the stakeholders to provide input on any proposal to raise rates for the offshore recreational moorings.

Discussion
Boating and sailing are the heart and soul of Newport Beach. One needs only look at the logo of the City shown everywhere, from signs as you enter the City to the City's website and letterhead.

The social and recreational activities in the area, the commercial, restaurant, and entertainment opportunities of the City, and the unique values of properties, are all part of the current and historical connection to boating and sailing. Put another way, if the tidelands were just an open marshland, like those seen up and down the coast of California, Newport Beach would be nothing like it is today.

Preservation of this tradition is not possible without affordable and entry level boating and sailing. Young boaters and sailors learn their skills on smaller or older boats that are in the harbor only because there is affordable access. The Harbor Commission and the City should commit to supporting affordable boating and sailing. The NMA is concerned that this Commission will be the first in the history of Newport Beach to take steps to displace, diminish, and destroy the importance of sailing and boating in Newport Beach. 2 1. Discrimination in Rates
The Beacon Bay Bill, often referenced by the City of Newport Beach as guiding its administration of the harbor, provides that:
(d) In the management, conduct, operation, and control of the lands or improvements, betterments, or structures thereon, the city or its successors shall make no discrimination in rates, tolls, or charges for any use or service in connection therewith (See Exhibit 1).

The proposed fee increase will clearly discriminate in rates charged for the use of the same tidelands. For example, in 2017 the City received an extensive appraisal from George Hamilton Jones ("GHJ Appraisal") which assessed the rental charges to be applied to most of the uses in Newport Harbor, most of which were commercial, with some non-commercial uses. Uses not covered were called "Other Uses." In effect, the rates charged for every one of these uses, from large marinas, small marinas, fuel docks, shipyards, yacht club guest slips and "other uses" looked at the square footage of tidelands used by the particular use and applied a similar rate (with some very minor adjustments), including a few discounted rates. The general non - discounted rate was $.76 (76 cents) a square foot per year for the use of that area of tidelands.

That amount was indexed to a CPI adjustment which is still in use, and today's published rate is $.93 per square foot per year, including the rate for "other uses." This rate has already been published by the City for 2024.

Applying the City's published rates, the annual, non-discriminatory rate for a 40 ft. offshore mooring would be $948.60 per year (1020 sq.ft. x $.93 = $948.60). This is a rate somewhat less than the current rate even after adding extra square feet for lines to the buoys.

Unless the Commission and City were to recommend a substantial increase in rates being charged to all uses of the tidelands (e.g., the various Newport Beach large marinas, small marinas, restaurant docks, shipyards, guest docks, homeowner association slips and moorings, and waterfront home docks), singling out the recreational offshore moorings for a 300% to 500% increase in annual fees for the very same tidelands use would clearly be a discrimination that cannot be justified in any manner. Further, such exorbitant rates, tolls, or charges in uses would be an outrageous violation of the City's obligations under the Beacon Bay Bill, as well as provisions of the California Public Resources regulations.

11. Discrimination Against Outsiders and Protected Persons.

Without having to conduct any studies, it appears that offshore mooring holders are far more likely to live outside the City than homeowners with private docks and persons who rent expensive slip space for their yachts. When one combines the significant overcharges and discriminatory charges now in existence, and the radical proposed increases that further 3 discriminate, in addition to the many other ways mooring holders are treated unequally, this raises the obvious question of whether the proposed increases are intentionally or unintentionally designed to keep people out of the harbor if they do not live in Newport Beach.

Also, it would appear that the existing discriminatory policies, plus the proposed increases, do and will have a disparate impact on protected minorities. Therefore, the City should not double down on such discriminatory policies. 111. Violation of the City's Reported Commitment to Affordable Boating The NMA believes that the staff report incorrectly implies that the City's hands are tied and that the City must charge maximum fair market permit fees. In reality, the City has in the past taken a more reasonable, fair and affordable approach to setting mooring fees.

A. The staff report should point out that that the precedent -setting City resolution on setting mooring fees (Res #2016-17) gives the City authority in setting fair, reasonable and affordable mooring fees.

B. In the past, the City and its staff have incorrectly stated that the state lands grant (aka Beacon Bay Bill) requires the City to charge fair market rents (as if they were landlords in the private sector renting real estate without regard to other factors, including providing accessible and affordable recreational use of the tidelands). The "fair market" language in the Beacon Bay Bill, however, relates only to the private residential lots in Beacon Bay, and not the tidelands in general (See Exhibit 1). Any local ordinance or resolution that relies on or repeats the incorrect reading of the Beacon Bay Bill cannot be used to justify increases in recreational use fee in Newport Harbor. In fact, the City has always recognized special treatment for recreational use considerations. See, for example, the City's justification for lower rates charged for recreational and other uses of the tidelands in relation to boating activities — the City's Resolution 2017-49, Section 3 (Exhibit 2).

C. The staff report should also include City Council Policy F-7 (E) (Exhibit 3) which gives the city authority to keep fees at an affordable level for recreational purposes.

D. The State Lands Commission ("SLU), the state agency responsible for oversight of these tidelands, has approved and utilizes better methodologies (i.e., benchmarking) in determining fair and reasonable tideland fees. Resolution 2016-17, NBMC

17.60.060 (D) and the Beacon Bay Bill (Exhibit 1) give the City city-wide discretion in determining the best methodology in determining fair and reasonable rents for moorings. Moreover, in the Tornales Bay Mooring Valuation Report (Exhibit 4), just one year ago, SLC has used a totally different methodology; a methodology 4 consistent with the method used by the City of Newport Beach in its GHJ Appraisal 2016/2017 valuation of rates for different uses of the tidelands in the harbor.

E. The staff report fails to include City Policy 3.3.2-3 (LCP/CLU) (Exhibit 6) whereby the City will continue to provide moorings as an important source of low-cost public access to the water and harbor. The omission of this policy from the staff report is a failure to inform the Harbor Commission, City Council, and the general public that the City has made a promise to keep mooring fees reasonable and affordable, which is an important factor in determining any discretionary fee increase.

IV. The Netzer Report Ignores State and City -Approved and Established Methods
The Netzer report ignores the methods used by both the City, the City's appraiser, and by State Lands when valuing an appropriate fee to be charged for the use of tidelands in general, and in Newport Harbor in particular. Staff and counsel should review both the 2016/2017 GHJ Appraisal and City resolution regarding the rates and methods applied to valuation of the Newport Harbor tidelands, and also review and include the methods used by SLC in its recent determinations of rates to be charged in SLC's Tomales Bay Report.

V. The Netzer Report Uses the Wrong Methods and Contains Numerous Errors.

A. Overview regarding Mr. Netzer's Approach.

1. Ignoring Established Methods. The report totally ignores the methods of both the City in the recent past appraisal, and the methods used by State Lands, and is a major mistake. The State Lands report clearly says it is using the principle of "Substitution" — namely what the State would receive for the same tidelands if rented to a known use such as a marina owner. In effect, that was the same method used by the 2016/2017 City -approved appraisal. The Netzer report states clearly that it is not using the principle of Substitution, ignores established methods, and instead makes up methods never seen before as the report struggles to establish a type of "comparable" that the Netzer report admits does not exist, or did not want to go to distant harbors to find.

2. Use of Wrong Comparison. Using the price of expensive land and comparing land to water (tidelands) makes no sense and is not any type of established method. Put simply, you can build a house on land, but not on water, and the values simply can't be compared. 5 3. Not Understanding a Mooring. To "compare" two properties or two items one needs to understand how the two are alike and not alike. The Netzer report clearly shows a lack of understanding of how moorings are used, and compares a mooring to a slip without proper evaluation and proper offset for:
- lack of access,
- cost of having to rent a slip or dock space for a dinghy or tender for access. - lack of electricity,
- cost of batteries needed to start an engine,
- lack of water,
- lack of restrooms,
- lack of dedicated parking,
- lack of trash removal,
- lack of lighting and security
- dealing with and cost of installing and maintaining the buoy system, - cost of installing and maintaining the lines to the buoys, - the monthly cost of cleaning the lines that get full of marine life, Each of the above would need to be understood with an appropriate off -set when attempting to compare a mooring to dock space.

4. Failure to Account of Capital Investment. In comparing a mooring to a slip, there is no consideration of the fact that, unlike a person renting slip space, the person using a mooring is likely to have a substantial capital investment of $40,000 to $60,000 in addition to biannual mooring maintenance fees. A person renting a slip does not have any capital investment or maintenance cost for the slip and is required to pay only rent for the slip.

B. Specific Flaws in the Netzer Report

1. The Report Fails to Reduce Value for the Cost of Dinghy Dock Access. - All other harbors have dinghy docks for access; Newport Harbor does not. - To equalize comparisons, the cost of a slip for a dinghy or tender should be subtracted from Netzer's proposed fees.
- $500 to $700 per month is the current slip rate at marinas in Newport Harbor for dinghies and tenders 9 ft to 14 feet.

2. The Report Fails to Use Established Methods Used by State Lands Commission and Used by Newport Beach for All Other Uses. The SLC uses a benchmark of 5% to 6% of the rents received by a marina. Then, the SLC divides the amount by the square feet of tidelands exclusively used by the marina to establish a yearly fee per square foot of tidelands used. This 11 46value per square foot" is then used in other applications. The City of Newport Beach followed this standard method for virtually all uses in Newport Harbor in the 2016 George Hamilton Jones Reports, with yearly increases as is currently shown on the City's website. Netzer breaks away from the Standard Method used by both the State and the City of Newport Beach for all other uses in favor of what appears to be a convoluted contrived method aimed at clearly discriminating against mooring holders, many of whom do not live in Newport Beach and many of whom are of a protected class of persons.

3. The "Ratio" of Slip Rates to Mooring Rates is Unreliable, per Mr. Netzer in a Prior Appraisal and Compares Apples and Oranges. "The Ratio Analysis ... is notjudged to be a reliable measure ofFair Market Rent ". These are Mr. Netzer's words in his 2016 appraisal of offshore moorings (page 20). We concur; it's like comparing apples to oranges, and as shown below does not consider the lack of access in Newport Harbor.

4. The Ratio Approach Compares "Slip Rates to Mooring + Dinghy Dock" Rates in Other Harbors, Instead of Slip Rates to Newport Moorings Without the Same Access. - All other harbors that have large mooring fields provide two things, not one. Their mooring rates are for both an area of the tidelands for a boat, plus use of dinghy docks for a dinghy or tender for access to the moorings. Newport Harbor rates are for only one of these two things. i.e., the use of a small area of tidelands. However, it does not provide dinghy docks for access to the moorings. The real ratio referred to in the Netzer report is for a mooring plus a 24/7 dock space for dinghies as this combination is compared to slips. That ratio cannot be used in Newport Beach Harbor which does not provide half of what is offered in other harbors when someone rents a mooring.
- The ratio between slips and moorings without access, can be calculated by comparing the 2016 George Hamilton Jones report and the 2016 Netzer Report. When comparing 2016 rates for slips to the 2016 approved rates for offshore moorings, the ratio was approximately I to 14, or about 6% per lineal foot. As far as ratios are concerned, there is no reason why the ratio between Newport Harbor slips and Newport Harbor offshore moorings without access would have changed in the last few years.

5. The Report Greatly Exaggerates Tidelands Used by Larger Moorings. The area of tidelands used by larger -sized moorings will increase only marginally on a square foot basis.

Comparing the square feet used by a 65-foot boat to the area used by a 40-foot boat will result in no significant difference in rates charged per lineal foot. Here's a simple example:
7 40 foot mooring: allowing for extra distance to each buoy and the buoy itself = (40+28) x 15 (beam) = 1020 sq ft.
65-foot mooring: adding the extra distance to each buoy and the buoy itself — 65+34 x 16 =1,584 sq feet.

The 65-foot mooring rate is 1.55 the rate of the 40-foot mooring, but on a lineal foot the rate is the same. For example, using the current rate of $38 per foot, a 40-foot mooring is $1,520, and using the same rate per lineal foot, a 65-foot mooring would be $2,356 compared to the current rate for a 65-foot mooring at $38 per lineal foot = $2,470. The idea of charging the larger mooring substantially more per square foot cannot be justified.

6. Mr. Netzer Appears to have Misstated the Facts in his Public Comments. Upon inquiry by one or more commissioners at the January Harbor Commission meeting, many of us recall that Mr. Netzer stated that he had been in discussion with a person or persons in San Diego who advised him that (a) the Port Authority had approved a substantial increase in rates for San Diego moorings (which have dinghy docks) and that this had also been approved by the California State Lands Commission.

Members of the NMA contacted the owner of the San Diego Mooring Company, the Port Authority, and State Lands Commission and found that (a) there have been no approvals, (b) the request has not been made public yet and public input has not yet been requested, and (c) the State Lands Commission has received no request and had not even heard of the matter.

What is more, the San Diego Port Authority is not being asked to "approve" new rates, rather, they are being asked to amend a current restriction in the lease with the mooring company that would allow them to test the market and experiment with rate increases up to a new requested higher cap in rates. What may or may not be a rate increase and how the market responds over time is not a matter that any appraiser would ever consider at this time in rendering an opinion of values and rates.

7. Valuation of Home Docks is an Unacceptable Never -Before -Used Method, a False Comparison, and Will Raise Home Dock Taxes and Fees.
- The method does not account for location — homes with docks in more desirable locations will show a higher square foot value for the home, which does not equate to more value for use of the dock.
- The method fails to explain why a private dock next to an expensive home will rent for the same as a private dock next to a substantially less valuable home.

The method is derivative on derivative and is almost never used.

The method, if used, would require home dock fees to be increased 20-fold.

H.

- The Stop the Dock Tax cry will likely be heard again by homeowners with docks, if subjected to such an increase.

VI. The Harbor Commission Needs Time to Consider the Forthcoming Independent Appraisal
The NMA has requested an independent appraisal of market rates for offshore mooring rates. As announced a few days after the publication of the Netzer report at the Harbor Commission Meeting in January, that report was scheduled to be completed three to five weeks later. Following that announcement, the Harbor Commission chose to set its study session approximately a week before the independent report is due. It is unclear why they would want to have the study session without having the benefit of reviewing the independent report. Be that as it may, the NMA urges the Harbor Commission to take no action until they have the benefit of the independent report and set another study session with the full Harbor Commission to allow further study and public input after the independent report is available to the public.

CONCLUSION AND REQUEST TO CONTINUE
For the reasons stated above, and given the major public interest in the issue - the importance of current and future boating and sailing in Newport Harbor, the extraordinary proposed increase in fees, what appears to be a proposal that clearly discriminates in use rates in a clear violation of the Beacon Bay Bill, and the clear contradictions in methods, rates, and conclusions in the City's own formal appraisal report for values charged for use of the tidelands as stated above, the NMA is requesting that any further discussion by the Harbor Commission be delayed no fewer than 90 days to allow the Commission, staff, and the stakeholders to provide input on any proposal to raise rates for the offshore recreational moorings.

Newport Mooring Association,
Approved by the Board of Directors
M

EXHIBITS
10 Exhibit 1 — Relevant Sections of the Beacon Bay Bill Ch. 317 ] STATUTES OF 1997 CHAPTER 317
An act to amend Sections I and 2 of Chapter 74, and to add Section 2.5 to the Statutes of 1978, relating to tide and submerged lands in the City of Newport Beach. [Approved by Governor August 18, 1997. Filed with
Secretary of State August 18, 1997.]
The people of the State of California do enact as follows:

SECTION 1. Section I of Chapter 74 of the Statutes of 1978 is amended to read:

Section 1. There is hereby granted to the City of Newport Beach and its successors all of the right, title, and interest of the State of California held by the State by virtue of its sovereignty in and to all that portion of the tidelands and submerged lands, whether filled or unfilled, bordering upon and under the Pacific Ocean or Newport Bay in the County of Orange, which were within the corporate limits of the City of Newport Beach, a municipal corporation, on July 25, 1919; the same to be forever held by the city and its successors in trust for the uses and purposes and upon the following express conditions:
(a) The lands shall be used by the city and its successors for purposes in which there is a general statewide interest, as follows:
(1) For the establishment, improvement, and conduct of a public harbor, and for the construction, maintenance, and operation thereon of wharves, docks, piers, slips, quays, ways, and streets, and other utilities, structures, and appliances necessary or convenient for the promotion or accommodation of commerce and navigation.
(2) For the establishment, improvement, and conduct of public bathing beaches, public marinas, public aquatic playgrounds, and similar recreational facilities open to the general public, and for the construction, reconstruction, repair, maintenance, and operation of all works, buildings, facilities, utilities, structures, and appliances incidental, necessary, or convenient for the promotion and accommodation of any such uses.
(3) For the preservation, maintenance, and enhancement of the lands in their natural state and the reestablishment of the natural state of the lands so that they may serve as ecological units for scientific study, as open space, and as environinents which provide food and habitat for birds and marine life, and which favorably affect the scenery and climate of the area. 11 (b) Except as otherwise provided in this section, the city or its successors shall not, at any time, grant, convey, give, or alienate the lands, or any part thereof, to any individual, firm, public or private entity, or corporation for any purposes whatever; except that the city or its successors may grant franchises thereon for a period not exceeding 50 years for wharves and other public uses and purposes and may lease the lands, or any part thereof, for terms not exceeding 50 years for purposes consistent with the trust upon which the lands are held by the state and with the uses specified in this section.
(c) The lands shall be improved without expense to the state; provided, however, that nothing contained in this act shall preclude expenditures for the development of the lands for the purposes authorized by this act, by the state, or any board, agency, or commission thereof, or expenditures by the city of any funds received for such purpose from the state or any board, agency, or commission thereof.
(d) In the management, conduct, operation, and control of the lands or any improvements, betterments, or structures thereon, the city or its successors shall make no discrimination in rates, tolls, or charges for any use or service in connection therewith.
(e) The state shall have the right to use without charge any transportation, landing, or storage improvements, betterments, or structures constructed upon the lands for any vessel or other watercraft or railroad owned or operated by the state.
(f) There is hereby reserved to the people of the state the right to fish in the waters on the lands with the right of convenient access to the waters over the lands for such purpose, which rights shall be subject, however, to such rules and regulations as are necessary for the accomplishment of the purposes specified in subdivision (a).
(g) Notwithstanding any provision of this section to the contrary, the city may lease the lots located within Parcels A, B, and C described in Section 6 of this act for the purposes set forth in this act and for terms not to exceed 50 years. The consideration to be received by the city for such leases shall be the fair market rental value of such lots as finished subdivided lots with streets constructed and all utilities installed. The form of such leases and the range of consideration to be 12 received by the city shall be approved by the State Lands Commission prior to the issuance of any such lease. All money received by the city from existing and future leases of those lots shall be deposited in the city tideland trust funds as provided in Section 2. 13 Exhibit 2 - Section 3 of Resolution 2017-49
Section 3: The City Council sets the rental rates, phase -in, and adjustments contained in the attached Commercial Tidelands Rent Calculations For Commercial Uses Located Upon Tidelands for Shipyards, Yacht Club Guest Slips, and Free Public Access Docks (not associated with a restaurant) at less than fair market value. Pursuant to City Council Policy F- 7(E)(6), the City Council finds charging less than fair market value rent for these specific uses promotes the goals of the City to further marine -related services and activities. More specifically, the City Council finds charging less than fair market value rent for these uses promotes public recreation facilities and marine services to the general public, furthers the policies and objectives of the Beacon Bay Bill, and allows for continued operation and improved accessibility to the public. Thus, the charging of less than fair market value rent for these uses of the Tidelands is a matter of state-wide concern that benefits the citizens of the State of California. 14 Exhibit 3 - City Council Policy F-7 (E)
NB City Council Policy F7 (paragraph E) allowing city to discount for recreational public use:

E. However, in some circumstances the City may determine that use of a property by the public for recreational, charitable or other nonprofit purpose is preferred and has considerable public support, in which case the City may determine that non- financial benefits justify not maximizing revenue from such property. In such circumstances, the City has a vested interest in ensuring that the lessee of such property operates the activities conducted an or from the property in the manner that has been -represented to the City throughout the duration of any lease or contract with the City.
15 Exhibit 4 - Tomales Bay Mooring Valuation Report
(Excerpt re Mooring Fee Methodology)
Meeting Date: 12/17/20 -Work Order Number: W27247 Staff: D. Tutov, K. Foster Staff Report 28 - LAND TYPE AND LOCATION: Sovereign land in Tornales Bay, Marin County Category I Benchmark Methodology
Leases are issued by the Commission for private recreational facilities such as docks, piers, and buoys/mooring poles. These facilities offer many of the same amenities as a commercial marina, such as a place for the docking and mooring of boats and the loading and unloading of passengers and equipment. In this manner, these privately -owned facilities represent a substitute for a commercial marina berth/buoy. Accordingly, the method of valuation used in estimating a fair return and a fair rental value is based on what an individual would pay for a similar substitute site in a commercial marina. Since a Commission -leased site for a privately -owned pier or dock is a reasonable substitute for a marina berth, a lessee occupying state land should pay a similar rate for the leased site as the state would receive for leasing the land to a commercial marina.

The current methodology for setting rent for berthing vessels at docks and piers occupying state-owned sovereign land is based on the principle of substitution described above. The first step in setting the Tomales Bay Berths Benchmark is to survey local marinas to determine their rental rates. Marinas usually rent their berths on a per -linear -foot basis, based on the length of the berth or vessel. For benchmark purposes, the average surveyed rental rate is used. The rate is multiplied by the average or typical berth length as indicated in the survey data. Based on these inputs, the annual gross income is calculated. For Category I benchmarks the State's rent is based on a 5 percent rate of return of this annual income, which represents a comparable fair market compensation rate for the use of State-owned sovereign land. The State's rent is then converted to a per -square foot basis using a table calculated by the California State Parks Division of Boating and Waterways 2005 publication titled "Layout and Design Guidelines for Marina Berthing Facilities" (DBW berthing publication). This publication provides formulas and tables for calculating the submerged land area needed to accommodate various sizes and layouts of berths in marinas. Among other variables, the formulas account for the berth length, berth layout (single or double), 16 and the type of vessel (powerboat or sailboat). The publication can be requested from the Department of Boating and Waterways.

Category 1 Tomales Bay Benchmarks
The Commission has been using the Tomales Bay benchmarks since 20 10. They were last updated in 2015, when the rates were set at $0.114 per square foot for berths and $125 per buoy.

For determining the proposed new rental rates, the following summary describes the methodology. More detailed information is included in Exhibit C. A total of four marinas and/or buoy fields in Tomales Bay was identified. However, due to the lack of comparable rental data information for three of the locations (Marconi Cove Marina, Inverness Yacht Club, and Lawson's Landing), the Tomales Bay Resort (previously Tomales Bay Lodge and Marina, and the Golden Hinde Marina) was the only marina located in Tomales Bay used in the analysis for this benchmark.

Because of the limited number of marinas in Tomales Bay, a survey was done of other nearby marinas outside of Tomales Bay that might be used in absence of the three marinas acknowledged above. Four nearby marinas with slips were also used: Spud Point Marina, Mason's Marina, and Porto Bodega in Bodega Bay, approximately 20 miles northwest; and the Petaluma Marina on the Petaluma River, approximately 24 miles northeast. Thus, a total of five commercial marinas with slips was used in the analysis of the current Tomales Bay benchmark.

These five marinas with berths reported a total of 652 berths available to the public, or an average of 130 berths per marina. The average occupancy was reported at 85 percent.

The survey found that berth sizes in Tomales Bay, Bodega Bay, and the Petaluma River ranged from 12 to 80 linear feet, with an average of approximately 31 linear feet. Rent for berths is commonly expressed in terms of dollars per linear foot (per month). The survey data yielded an average rent for berths of $6.20 per linear foot.

The benchmark rental rate for berths is calculated by multiplying the average berth length by the average monthly rental rate. The product is then multiplied by 12 months to arrive at the gross annual income. The gross annual income is multiplied by 5 percent to get the income attributable to the submerged land. The income attributable to the submerged land is then divided by the amount of submerged land needed to accommodate the average berth length within a marina.
17 Using the DBW berthing publication described above, the submerged land area used in this benchmark analysis is based on a double berth layout (on the premise that it was the most economically efficient for the marina operator) and represents an average of the powerboat and sailboat berths.

From the tables in the publication, a submerged area of 865 square feet is shown as being necessary to accommodate the 31-foot average slip length indicated by the survey.

Taking all the inputs into account, the proposed benchmark rental rate is calculated as follows:
31-foot average berth size x $6.20/linear foot average berth rate $192.20/berth/month
$192.20/berth x 12 months =
$2,306[berth/year $2,306 x 5 percent of
gross income = $115-30 $115.30 865
square feet = $0.133/square foot
PROPOSED BERTHS BENCHMARK RENTAL RATE = $0.133/SQUARE
FOOT [NMA Comment. This this the annual, not monthly rental rate] Other than the leases being issued by the Commission, there is no independent market for buoys in Tomales Bay. Therefore, the current minimum annual rent of $140 is proposed to be applied per buoy. The minimum rent for a Recreational Use lease is set by California Code of Regulations, title 2, section 2003, subdivision (b), and as revised by Commission action on June 28, 2019 (Item 92, June 28, 20191.

PROPOSED BUOYS BENCHMARK RENTAL RATE = $140/BUOY
The table below summarizes the comparison between the 2015 and 2020 benchmark rates (Note by NMA — these are annual, not monthly, rates).

Figure 1. Tomales Bay Benchmarks
Tornales Bay Benchmark
2015
2020 [NMA note: fee per year]
Category I Berths
$0.114/square foot
$0.133/square foot
Category I Buoys
$125
$140
[NMA Comment: The entire report can befound here]:
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18 Exhibit 5
Outline of Concerns over Apparent Historic Discrimination by the City of Newport Beach against Mooring Holders
Moorings on the State Public Tidelands in Newport Harbor have been in existence for over 100 years and have provided an important source of access for boating both within Newport Harbor, the California Coast, and the Pacific Ocean. The granting statutes enabling and allowing the City of Newport Beach, including but not limited to the Beacon Bay Bill, disallow discrimination related to the administration of the tidelands among different uses both in the letter of the laws as well as the spirit of the law. This outline suggests discrimination over the last 20 years by the City Newport Beach as it relates to these 100-year-old moorings.

A Few Examples of Apparent Ongoing Acts of Systematic Discrimination Against Mooring Permit Holders.

1. Killing Access to Moorings.

Historically, shore moorings that provided access to offshore moorings were readily available. Over time the shore moorings were transferred to people who did not have offshore moorings. This created the need for dinghy docks for dinghies and tenders to access the offshore moorings, similar to virtually every other harbor in California and the United States that has a substantial number of offshore moorings. However, for decades the City has consistently ignored requests to provide real access for in -water dinghy docks for access to moorings.

The City's consistent reply is there is no place available for such access. Yet at the same time, the City has found such areas and used them for other projects.

2. Overcharging for the Costs to Administer Moorings.

The City collects about 1.5 million dollars per year from offshore moorings, when the cost to administer the moorings, in our view, may be less than $300,000 per year (unless you allocate inappropriate costs related to the harbor). Note the mooring permit holder is required to maintain its buoy and equipment, so other than collecting fees and inquiring about boat insurance and other contact 19 information, very little costs are associated with the administration of moorings.

Yet, over the last 20 years the City may have collected over 20 million dollars in excess fees without creating a single in -water dinghy dock to provide reasonable access. A mooring without access is like the sound of one hand clapping. It's just a method of making the acquisition and use of a mooring unattractive to most people. The exception might be local residents who have home docks, local slips, or access to a friend's dock for access to offshore moorings.

3. Failing to Provide Access While Building Dock Facilities for Access to Restaurants and Businesses.

While the City has claimed for decades "there is no space", the City has built docks for short-term tie ups to benefit businesses such as restaurants. For example, this is true of Marina Park, (reported to have been built at a cost of 40 million dollars) which created a dock that appears to be 200 feet long in order to allow boaters going to the restaurant at Marina Park a place to tie up, and for use of approximately 25 large boat slips (for boats over 40 feet) and 18 or more small boat slips. At the same time, not a single dock space was created for use by a motorized 9-to-10-foot dinghy for use in accessing a mooring (one 40-foot boat slip equals 8 in -water dinghy spaces). These slips, many of which are not used most of the year, are directly in front of the two biggest mooring fields. As a very minor concession, the City did allow "racks" for storage of a non -motorized rowboat, inflatable, or kayak, but these have to be lifted up and hauled to the shoreline in order for them to be rowed out to a mooring, if the mooring holder is physically able enough to do so. These are nothing like the real access afforded by having a motorized electric or outboard dinghy in the water, as provided for in virtually every other harbor with moorings.

4. Charging Fees that are 4 Times, or More, for Tidelands Used by an Offshore Mooring Compared to What is Charged for All Other Uses.

For the same area of tidelands used by an offshore mooring, the City charges homeowners with docks one -quarter of what it charges for an individual mooring.

In addition, an offshore mooring permittee is currently charged substantially more than the published rates charged by the City for almost all other uses, including commercial uses. At the same time, the City is now considering raising these rates so the discrimination will be up to 20 times more than what homeowners with 20 docks pay, and 5 to 10 times more than what commercial users pay for the same amount of space. Put another way, the other users are charged far less for the use of the same area of tidelands they use. In most cases these other uses are commercial uses, where the permit holder is making a profit. In general, the State is allowed to charge less for uses that are not commercial, not more.

As shown in the City's public posted rates, annual fees paid by restaurants with docks, marinas for releasing its slips, and homeowners with docks that sit on the same tidelands are charged far less than the annual fees set for mooring permit holders. Calculating rates based on the square feet of tidelands used is the standard method used by the State Land Commission when establishing the fair and non- discriminatory rates to be charged for use of tidelands, including offshore moorings in the state. Recent reports and appraisals from the State Lands Commission clearly demonstrate this is the proper methodology.

Ironically, many people would argue that tidelands which touch the shore have a higher square foot value because of easy access when compared to offshore tidelands with limited access. As such, it could be fairly argued that the use of tidelands for offshore moorings should be charged even less than what is charged for tidelands that touch the shore; yet the City of Newport Beach charges 5 to 10 times more for use of the offshore mooring tidelands.

5. Attempting to Make Access to Moorings Dangerous and Inaccessible by Eliminating Space Needed to Get On and Off Moorings, While Proposing to Increase Space for Boats on Homeowner Docks.

Currently before the Coastal Commission is a proposal to crowd together boats in mooring fields (which make it much more difficult to use moorings) in the name of making "open water" views for homeowners, while at the same time not asking the yacht clubs that have single -point mooring fields to bring their boats closer together. By way of background, the yacht club mooring fields use approximately twice the amount of tidelands space per boat than all the other public mooring fields. That's because these are "single point moorings" where a boat could swing in a 360-degree circle depending on the wind and tidal currents. However, no one, including me and all other mooring field permittees that I know, would ask these mooring fields to change to a different system that uses less of the tidelands. 21 Having noted the discrepancy and the fact that no one would consider asking the yacht clubs to put boats closer together, keeping the yacht clubs mooring configurations Oust like keeping the other mooring field configurations), is important. Yacht clubs' single -point moorings are easier to get on and off and allow for other uses such as small boat races within these single -point fields. Both systems work well together. San Diego, for example, has both single -point and double -point moorings and both serve an important public purpose.

6. Prohibiting the Rental of Moorings While Allowing the Rentals by Homeowner and Others.

If unoccupied, the City allows tidelands used by homeowners, restaurants and others to be rented by the permit holder. However, the City does not allow mooring permit holders to rent offshore moorings. Not only are mooring holders treated differently from homeowners and others for the use of the same tidelands, the City has also granted itself exclusive rights to rent unoccupied offshore moorings and retain 100% of the rent charged to visiting boaters. Although mooring holders pay the City a permit fee, own the mooring hardware (buoys, chains and tackle), and pay to maintain their mooring, they receive no compensation from the City for renting unoccupied moorings.

7. Claiming that the City is Attempting to Increase Access While Killing Access to the 100 Empty Moorings.

According to the Harbor Commission, at any given time there are approximately 100 vacant moorings. As noted above, the City has the right to rent these out to both visitors coming in for a few days as well as for people seeking affordable places to keep and use boats. For over 20 years, the City could easily have increased use of these 100 empty moorings. However, the City has set the rental rates so high that the vacancies remain. While a few are rented, the vast majority sit unused. The reason is obvious. The City intentionally sets the rental rates as high as the cost of having a boat on a slip a neighboring harbor, so that most boaters are priced out of the market.

The City has suggested that one reason for the vacancies is that they cannot offer boaters a 3 � 6, or 12 month lease, and that discourages the use of these 100 moorings. They claim that they cannot offer longer -term leases because the 22 mooring pen -nit holder has the right to put a boat on the mooring at any time, so the would-be long-term lessee is not interested if they can be asked to move on short notice. This explanation has no merit. First, most vacant moorings have been vacant for years and a simple inquiry will reveal if there are any plans for occupancy. So while it might be a theoretical concern, most people will understand this is a remote risk in most cases. Second, the Newport Mooring Association has proposed that the City ask vacant mooring holders if they would agree to not put a boat on a mooring for a certain period, such as 6 or 12 months, in exchange for a relief of having to pay mooring fees during that time. Having presented this obvious solution, the Harbor Commission never even studied the proposal, suggesting that it is more important for the City to keep the water free of boats on moorings, and enhance some homeowners' harbor views, than it is to actually provide additional public use of these empty moorings.

Simply put, by over -charging for the 100 moorings, in addition to the other acts and omissions noted above, the City has shown a systemic attempt to keep moorings vacant and through various means drive the diverse group of mooring holders, including many protected minorities, out of the City.

Effect of Discrimination
The discrimination is wrong and needs to stop. It violates plain decency as well as state and federal laws. This discrimination in rates and charges violates the Beacon Bay Bill (often referenced by the City of Newport Beach as guiding its administration of the harbor) which provides that:
(d) In the management, conduct, operation, and control of the lands or improvements, betterments, or structures thereon, the city or its successors shall make no discrimination in rates, tolls, or charges for any use or service in connection therewith
What is more, without having to conduct any studies, it appears that offshore mooring holders are far more likely to live outside the City than homeowners with private docks and persons who rent expensive slip space for their yachts. The combination of the significant overcharges now in existence, the excessive increases being proposed, and the many other ways mooring holders are treated unfairly, raises the obvious question of whether the City is intentionally or 23 unintentionally trying to keep people out of the harbor if they do not live in Newport Beach.

Even more concerning, without having to conduct any study, it would appear that the existing discriminatory policies and proposed increases do and will have a "Disparate Impact" on protected minorities. Therefore, the City should reconsider such policies.
24 Exhibit 6 - City Policy 3.3.2-3 (LCP/CLU)

3.3.2-3. Continue to provide shore moorings and offshore moorings as an important source of low-cost public access to the water and harbor.

3.3-2-4. Provide anchorages in designated areas, which minimize interference Mh navigation and where shore access and support facilities are available.

3.3.2-5. Continue to enforce the
ordinances that require
moored and docked
vessels to be seaworthy
and navigable and thereby
preserve the positive image
of the harbor and promote
public use of the water.

3.3.2-6. Protect,
and where
feasible,
enhance and
expand
guest docks at
public facilities, yacht clubs
and at
privately owned -
marinas,
restaurants and
other appropriate locations,
A
A
11" Stleal boat launch and mishore moor ngs

3.3.2-7. Protect, and where feasible, expand and enhance facilities and services for visiting vessels, including public mooring and docking facilities, dinghy docks, guest docks, club guest docks, pump -out stations and other features, through City, County, and private means,

3.3.3 Harbor Support Facilities
Harbor support facilities are uses, equipment, and vessels that provide repair, maintenance, now construction, parts and supplies, fueling, waste removal, clean�ng, and related services to vessels berthed in, or visiting the harbor. Harbor support facilities are considered essential to maintaining a working harbor.

Increased environmental regulation and real estate price inflation in coastal communities have impacted a number of harbor support businesses. Those businesses that do not have to be on the water have moved to inland locations.

Those that are more water dependent have been involved in land use conflicts with residential and other land uses. Newport Reach has used land use controls as the primary method to provide for the continuation of harbor support uses and minimize land use conflicts, However, additional strategies and incentives may be necessary to protect these facilities.

Local Coastal Prograrn
Coastal Land Use Plan
3-36
25 From: City Clerk"s Office
To: Mulvey. Jennife
Subject: FW: mooring rate increase one question
Date: July 09, 2024 5:36:57 PM
From: Biddle, Jennifer
Sent: Tuesday, July 9,2024 5:36:51 PM (UTC-08:00) Pacific Time (US & Canada) To: City Clerk's Office
Subject: FW: mooring rate increase one question
----- Original Message -----
From: Philip Lowry
Sent: July 09, 2024 5:13 PM
To: Dept - City Council
Subject: mooring rate increase one question
[EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the sender and know the content is safe.

I am sure you have received many many questions about the Mooring rate increase but I have one question I have not seen posed and that is how did we get here?
this increase of four or 500% has to be the result of something significant to require that additional amount of revenue and there have been hundreds of city Council meetings over the years and this has never been brought up years and years ago the need to increase the rates this high so again my question is how did we get here? ?? no one has explained what the city is going to do with all of these revenues or is there some additional cost problem with the harbor department that has never been brought to light so please explain to all of us how did we get here requiring this massive increase????
thank you
buzz lowry
call
Sent from my Whone

From: City Clerk"s Office
To: Mulvey, Jennifer
Subject: FW: City Council Meeting on July 9, 2024
Date: July 11, 2024 7:45:46 AM
From: Biddle, Jennifer
Sent: Thursday, July 11, 2024 7:45:38 AM (UTC-08:00) Pacific Time (US & Canada) To: City Clerk's Office
Subject: FW: City Council Meeting on July 9, 2024
From: Jamshed Dastur
Sent: July 10, 2024 2:39 PM
To: Dept - City Council
Cc: Stewards of the Harbor
Subject: City Council Meeting on July 9, 2024
[EXTERNAL EMAIL] DO NOT CLICK links or attacfnmnts unless you recognize the sender and know the ;ontent is safe.

Mayor O'Neill 8v City Council members:

I take no particular pleasure in saying that yesterday was a sad day in the annals of City Council meetings. The sheer arrogance and nonchalance with which an issue of financial importance to the tune of $30,000,000 to $50,000,000 affecting over 1000 families was rushed through, will be an indelible blot on this Council's credibility as representatives serving their constituents. A simple request to postpone decision on a subject of such importance, considering the last minute, highly ambiguous, major changes cobbled up to appease some of the opposition, fell on totally deaf years. It was as if the Council members had not heard one word of the very legitimate issues being raised by dozens of attendees.

Over the past couple of years, many of us have questioned the patently absurd increase is mooring rental requested by the Harbor Commission, based on a provably flawed analysis by a consultant.

We prepared for the July 9 meeting, with the understanding that we would be discussing the utterly absurd request of the harbor Commission. During our protracted interaction with the Harbor Commission we were absolutely assured, both verbally and in

writing, that the current protocol regarding "transferability" of moorings will not be changed - an issue that has a $30,000,000 to $50,000,000 impact on the pocket books of current mooring occupants.

The proposed changes to the Harbor Commission proposal by City staff, were distributed on Friday of the Independence Day week and put on the Agenda for the following Tuesday - no discussions, no debate, no public input, no time to digest the ambiguous proposal or offer improvements. Based on the questions that were asked by many of the Council members, even you appeared to be uncertain of what the new proposal entailed. However, one thing was clear. The written commitment by the Harbor Commission about mooring "transferability" was being reneged on, and a new commitment was being made by the City Council about "grand fathering" current mooring occupants against the increased rents. However, this commitment is not and cannot be binding on any future City Councils and hence it is of little value.

One can surmise, from the above shenanigans that what is being engineered here is a scheme to expropriate $30,000,000 to $50,000,000 from current mooring occupants and convert it into City income. Protestations by the City Council that the current system is unfair to new -comers and was never approved by the City Council has some superficial validity. However the Council and the Harbor Commission cannot deny that this was known to them and was administered by them for decades, without question. This acquiescence resulted in prospective mooring users forking out tens of thousands of dollars to acquire a mooring.This is not Cuba of Venezuela. This is the heart of Conservative Orange County. You do not take away something from an individual without due
compensation, even under eminent domain.

There are ways to fix this issue equitably for all parties, if the City Council finds the humility to ask for ideas and does not cater to vested interests.

Respectfully
Jamshed Dastur
949-887-1938

From: City Clerk"s Office
To: Mulvey, Jennifer
Subject: FW: Vote July 9 Moorings
Date: July 10, 2024 10:20:02 AM
From: Biddle, Jennifer
Sent: Wednesday, July 10, 2024 10:19:58 AM (UTC-08:00) Pacific Time (US & Canada) To: City Clerk's Office
Subject: FW: Vote July 9 Moorings
From: [email protected]
Sent: July 10, 2024 9:43 AM
To: Dept - City Council
Subject: Vote July 9 Moorings
[EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the sender and know the content is safe.

Mayor, City Council,
Good morning, I have regained my faith in good government by your actions and attempt to find reasonable remedies to the harbor issues regarding mooring fees and transferability. Although there is language still pending that is critical to the comments of last nights vote I am impressed with the concerns and ideas around such issues. There are 2 items for consideration: 1) Live Aboard need guarantees to not be subject to future amendments securing their position within the license, since a license could cause them to lose their rights to stay. It needs to be somewhat written including them as permit in residency. 2) That some consideration be given to transferring to family members. My kids grew up here, my grandchildren have memories here and will continue to live in this area. To eliminate that ability to transfer to them would be a major loss in community. Transfer to 2 generations seems fair.

I can only recant my last email in disappointment and say I have major respect for the comments and understand the difficulty in this decision.

Doing the right thing is hard. Doing the wrong thing affects many for generations. The decisions although not perfect took a lot to come to this agreement which we will watch closely to insure its written correctly and

with clarity. Even though we are coming close to a resolution, be aware that how that license is written will be scrutinized by every letter in the alphabet. Thank you........

Sincerely,
Tom Iovenitti
1425 W Bay Ave.

Newport Beach, CA 92661

From: City Clerk"s Office
To: Mulvey, Jennifer
Subject: FW: Review of Ordinance 2024-15
Date: July 12, 2024 9:22:15 AM
From: Biddle, Jennifer
Sent: Friday, July 12, 2024 9:22:10 AM (UTC-08:00) Pacific Time (US & Canada) To: City Clerk's Office
Subject: FW: Review of Ordinance 2024-15
From: Admin
Sent: July 11, 2024 7:43 PM
To: Dept - City Council
Subject: RE: Review of Ordinance 2024-15
[EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the sender and know the content is safe.

Dear Mayor O'Neill and Esteemed City Council Members,
Thank you for the insightful questions and for recognizing some of the issues during discussion/ consideration of Agenda Item 13, at the July 9, 2024 regular City Council Meeting.
(Ordinance No. 2024-15, Resolution Nos. 2024-46 and 2024-47. Harbor Commission Recommendations and Alternative Recommendations for Rental Rates
for Moorings)
As you know, there is an intense level of interest in these matters. Please Let us know when The Newport Mooring Association can
meet with City Staff and elected Officials to work towards overcoming these issues? We would also appreciate allowing NMA to review and comment on the final draft of the ordinance, given that the public only had one business day to review what was being voted on at the July 9th City Council meeting.

Respectfully,
NMA

City of Newport Beach
100 Civic Center Drive
Newport Beach, California 92660
July 13, 2024
Sent via e-mail to:
[email protected]; [email protected]; [email protected]; [email protected]
[email protected]; [email protected]
[email protected]; [email protected] Re: "AGENDA ITEM 13. Ordinance No. 2024-15, Resolution Nos. 2024-46 and 2024-47: Harbor Commission Recommendations and Alternative Recommendations for Rental Rates for Moorings".

Dear Mayor and Council,
In matters as contentious as these, I have often found that no one comes out fully satisfied. Having subsequently communicated about Mayor and Council's actions of July 9, 2024, with quite a number of stakeholders, as well as others though, I urge that you identify what mechanism(s) the City will use to assure/ guarantee, that the "grandfathered" rates will actually result, for the time periods promised? As I understand it, established precedent provides that Permit Terms and Leases for use of sovereign land in California, are allowed to run 50 years.

After consultations with many, I believe that applying that standard here, will allow most, to finally reach some level of satisfaction. I feel that it would be the most efficient and acceptable result, for the bulk of those to be impacted. It may also go a long way, towards reducing future conflict, and restoring a higher level of faith in Government. Please, please, please, let's work together on this. do sincerely thank each of you, for your thoughtful deliberation on these matters. However, I also truly feel, that members of the public should have been more timely provided agenda materials for such substantive, proposed changes in the Harbor.
,edam Leverenz
[email protected]