Register guest columnist Kevin Muldoon is a Newport Beach lawyer and former White House intern for President George W. Bush. In his column below for the December 21stedition of The Current, Muldoon analyzes the city’s assertion that the “Beacon Bay” bill makes them levy a dock tax on us.
Let’s take a quick trip down memory lane to remind you of the ever-evolving rationale by staff and the city politicians for the Dock Tax. First, they jumped on the Senate Bill 152 (Pavley) bandwagon saying the new legislation effective on Jan. 1, 2012 required Newport to charge a Dock Tax because it repealed a 1978 law prohibiting the tax.
Editorial: Repeal dock fees but don’t diminish parade
One of the delights of the holiday season in Orange County is the Newport Beach Christmas Boat Parade in Newport Harbor. The 104th parade launches Wednesday and continues through Sunday, starting at 6:30 p.m. each night. Fireworks will light up the sky on the opening and closing nights.
Unfortunately, roiling the waters this year is a threatened parade boycott by some boat owners. The boycott is on, Bob McCaffrey told us; he’s the chairman of Stop the Dock Tax. The owners object that the City Council voted 5-1 last week to raise yearly residential dock fees from a flat $100, no matter the dock size, to 52.5 cents per square foot.
It’s the first increase in 23 years and affects about 1,200 property owners with docks. For most owners, the fee will jump to as much as $300. However, some owners with large docks could pay “thousands of dollars in rent” per year, according to a story in the Register.
The flat fee raises about $118,000 a year, the City Clerk’s Office told us. When phased in over five years, in 2017 the new fee will bring in an additional $680,000. The total will be about $800,000.
Many people might not be sympathetic to the plight of the owners of homes worth well above $1 million. Yet it’s these folks who so beautifully decorate their boats for the parade for all to enjoy. And the dock owners also are being hit by other tax increases at the federal, state and local levels. The higher fee could lead to boat hands being laid off and being forced onto unemployment and public assistance.
Councilwoman Nancy Gardner, who also is mayor, told us the money “goes to manage the tidelands and the harbor for improvements, and for dredging, access areas and water quality.”
Mr. McCaffrey, a 20-year harbor resident, insisted that the fee is really a tax. Ms. Gardner said it’s not really a tax because the docks are over public property – the water. However, the docks are privately owned, constructed and maintained and are attached to the sale of the house.
The docks’ use of the public waters is “like an easement,” Bob Poole told us; he’s a transportation policy analyst at the Los Angeles-based Reason Foundation, a libertarian think tank. An easement is the right to use land owned by someone else.
He said that the new charge might be more akin to a “user fee” if it were directed only toward maintaining Newport Harbor. Ms. Gardener told us that the city attorney is “working on” legal language mandating that all the fee money “goes for care of the harbor.”
The only council member to vote against the fee increase was Leslie Daigle. She pointed out to us that homeowners with docks already have paid at least $500,000 more for their homes than neighbors without docks, meaning they already pay higher property taxes that go to the city.
“The fee seems excessive,” Mr. Poole said. “These people already are paying through their property taxes for having a dock.” We agree. And for some dock owners, the fee could rise to $3,000 or more from $100 – a 3,000 percent increase. Mr. McCaffrey warned, “Next year, the Council could say the tax is $40,000 per dock.”
We believe the council should repeal the fee/tax. The dock owners’ higher property taxes should be adequate for any harbor upkeep. We especially don’t like that the money is not yet dedicated to the harbor. Before it was passed, at a minimum the city attorney’s legal language should have been completed and debated by the council. In a city with some lifeguards paid $200,000 a year, everything should be checked.
As to the parade boycott, we understand the sentiment, but would rather see everyone’s holiday enjoyment undiminished.
Some waterfront homeowners angry over higher rental fees threaten to not participate in the city’s yearly Christmas Boat Parade.
Vessels cruise through Newport Harbor during last year’s Christmas boat parade. (Los Angeles Times/ December 14, 2011)
By Mike Anton, Los Angeles Times
December 18, 2012, 2:33 a.m.
Marcy Cook embraces the holiday season. The tell? Start with the teddy bears dressed as Santa. More than 1,500 stand sentry around and inside her Newport Beach waterfronthome. Garland and strings of lights threaten to strangle the place like kudzu.
“We decorate a little bit, if you haven’t noticed,” said Cook, 69. “It’s the highlight of the year for us.”
Each Christmas, Newport Harbor is ablaze in lights as homeowners go to extraordinary lengths to complement the city’s annual Christmas Boat Parade — an indelible tradition that renews itself Wednesday night and continues through Sunday.
Video courtesy of Geoff West at the Bubbling Cauldron
CITY ADOPTS RESIDENTIAL DOCK TAX – BOAT PARADE BOYCOT IS ON
For the past six months city staff and the Secret Ad Hoc Committee on Harbor Charges(now they call it a work shop – not a committee) has been claiming the state is making them levy the Dock Tax. In a bizarre volley of verbal backpedalling the city attorney said that the state legislation they have be relying upon to levy the tax doesn’t apply to Newport Harbor. It didn’t matter.
HARBOR RESIDENT AND BLOGGER DANNY SULLIVAN INTERVIEWS DAVE KIFF ABOUT DOCK TAX
PLEASE ATTEND & SPEAK
SPECIAL CITY COUNCIL MEETING TO LEVY THE RESIDENTIAL DOCK TAX
*** TODAY*** Tuesday, December 11th 4:00 p.m. Old Newport Beach City Hall (they recently changed locations back to the Old City Hall) 3300 Newport Blvd. Newport Beach
I want to thank Danny Sullivan for posting his interviewhere. It appears that City Manager Dave Kiff is basing this entire effort of raising Harbor taxes on what the State Lands Commission might do if the taxes are not raised. It is important to note that the Harbor taxes do not flow to the State of California – they stay in Newport Harbor. As the 1978 “grantee” of the tidelands, the State delegated the management of the Harbor to the City. I have made a few comments to Mr. Kiff’s responses below in RED.
What’s A Fair Market Rate For Newport Harbor Residential Piers?
Next Tuesday, the Newport Beach City Council meets again about assessing fair market rental rates on residential docks. But what’s the fair market rate for space over pubic waters that’s unlikely to be rented to anyone but the adjacent property owner? That’s a key question I’ve had in the current debate over proposed increases. Newport Beach spokesperson Tara Finnigan has sent me some answers, in conjunction with talking with city manager Dave Kiff.
CITY’S SECRET HARBOR FEE (TAX) COMMITTEE SUNSETS 20 MONTHS AGO – YET CONTINUES TO MEET IN SECRET WITHOUT AGENDAS OR PUBLIC DISCLOSURE
PLEASE ATTEND & SPEAK SPECIAL CITY COUNCIL MEETING TO LEVY THE RESIDENTIAL DOCK TAX Tuesday, December 11th 4:00 p.m. Old Newport Beach City Hall (they recently changed locations back to the Old City Hall) 3300 Newport Blvd. Newport Beach
This morning the City Council received a letter from Stop the Dock Tax lawyer and open meeting law expert Steve Baric outlining severe Brown Act violations of a Secret Committee formed to hatch Harbor tax increases over the past two years. On July 27, 2010 the City Council passed a resolution forming the Ad Hoc Committee on Updating Harbor Charges (“Secret Committee”). The Secret Committee has never met in public or published an agenda. Any committee established by city resolution is considered a permanent committee under the Brown Act and therefore must function according to open meeting laws. The Secret Committee – comprised of Councilmembers Henn, Rosansky, and Selich – has met dozens of times since its formation. According to Mayor Gardner, they met in secret as recently as November 18th to discuss the Residential Dock Tax. Furthermore, the Secret Committee was to sunset on March 31, 2011. The City Council failed to reauthorize the Committee, yet it continued to meet in secret and make recommendations to the full City Council. Baric reminds the City Council that all actions adopted in violation of the Brown Act are null and void.
STOP THE DOCK TAX TURNS OFF THE LIGHTS ON THE ANNUAL NEWPORT BEACH BOAT PARADE
Out of frustration with our city leaders failure to consult with us or sit down for a fair negotiation, we have placed ads in Southern California newspapers informing residents that the residential dock owners of Newport Harbor are protesting the Dock Tax by turning off our Holiday lights and pulling our boats out of this year’s Christmas Boat Parade. Below is the press release and advertisement that will run in Saturday’s newspapers.
MY REASONS FOR CALLING FOR A BOYCOTT OF THE BOAT PARADE – CITY FORGETS WE ALREADY PAY PROPERTY TAX & BOAT TAX
It was not an easy decision to call for all residential dock owners to boycott the 104th Newport Beach Christmas Boat Parade & Parade of Lights. I would never advocate anything that harms our special community. But this city staff and city council seems determined to levy a new Dock Tax at the December 11th special city council meeting. Newport Beach is flush with money. The December 11th meeting will be held in the sparkling new $150 million city hall (dubbed the Taj Mahal by the Orange County Register). My reasons for boycotting the Christmas Boat Parade are outlined in this Daily Pilot opinion piece. They city’s logic for imposing a Dock Tax is below the Daily Pilot piece.
MARK YOU CALENDAR & ATTEND
SPECIAL CITY COUNCIL MEETING TO LEVY RESIDENTIAL DOCK TAX
Tuesday, December 11th
New Newport Beach City Hall
Next to the Central Library
100 Civic Center Dr.
City Council Chambers
Saturday, Dec. 1, 2012
Commentary: Why we are boycotting the boat parade
By Bob McCaffrey
Many residents have asked why Stop the Dock Tax — representing Newport’s 1,200 residential dock owners – is organizing a boycott of this year’s Christmas Boat Parade.
We thoroughly understand the ramifications of this boycott on our business community, residents and visiting tourists. This is not a cavalier decision; we realize it will have an economic impact. This is a decision borne out of frustration with a city government that has chosen to treat its residents in a high-handed manner.
We are the homeowners that rim Newport Harbor. Every year we joyfully spend thousands of dollars to decorate our homes and boats for more than 1 million visitors to enjoy. We voluntarily spend this money so that children and adults alike can experience this special city that we cherish.
We are happy that the city of Newport Beach receives tax dollars from the packed restaurants and charter boats during the parade. Fashion Island is full, hotels are sold out, our friends at the Chamber of Commerce profit, and families from throughout Southern California see our beautiful community.
The boat parade and Parade of Lights does not happen if we turn off the switch.
We are boycotting this year’s Christmas Boat Parade and Festival of Lights to protest the Newport Beach City Council’s attempt to levy a new tax on our residential boat docks.
In protest of this unnecessary new tax, we are turning off the holiday lights and pulling our boats out of the parade.
We already pay property tax on the value of our docks. The city receives a portion of this tax, but claims it needs more.
Our council fails to understand that Newport Harbor residents are charitable, family-oriented and an integral part of the community’s success.
We are not the council’s piggy bank. Millions of dollars will be made during this year’s Christmas Boat Parade, none of it by us. Our generosity allows others to profit.
This week the council held a hearing to levy the new dock tax. We currently pay a small permit fee of $100. That’s not enough. We realize our responsibility to help pay to keep the harbor vibrant, safe and clean.
But the council has never called, written or asked for a meeting to negotiate. They are attempting to cram down the tax increase, up to 3,000% in some cases.
Once the city gets into our pocketbooks, it never goes away.
The city held a “workshop” three days before Thanksgiving. The workshop was analogous to receiving a lecture from a school teacher.
Eight days later — right after the Thanksgiving weekend — it scheduled the meeting to levy the dock tax. Why the rush to tax?
This week’s council meeting was finally a beginning of a discussion. Hopefully, they have figured out that the dock tax cram-down is an overreach that needs significant review.
Our right to boycott the Christmas Boat Parade is fundamental in our great republic. We choose to exercise this right until this council decides to sit down for a reasonable conversation.
Until then, the lights are out.
BOB MCCAFFREY is chairman of the Newport Beach Dock Owners Assn. and Stop the Dock Tax. He lives in Newport Beach.
THE TAXPAYER FUNDED P.R. MACHINE AT CITY HALL GENERATED THIS LAST WEEK
The City Strongly Supports the Newport Beach Christmas Boat Parade
Posted Date: 11/28/2012
The City of Newport Beach is aware that a relatively small group of residents is taking out advertisements in area newspapers, urging people to leave holiday lights off and boycott the Christmas Boat Parade. Whether the boycott is true or a threat, we can’t confirm. However, we can give you our perspective on what’s behind this effort.
Those behind the ad campaign have homes with piers along the harbor. Today it costs these residents twenty five cents a day to rent public lands – waters and lands owned by everyone in California – to put a pier on. That’s eight dollars a month. The group and their consultant have been sending out inflammatory, and often false or misleading, information to other residential pier owners in an attempt to block a proposed rent increase.
The State of California actually owns Newport Harbor and an area of land around it. Under and agreement with the State, the City is the “trustee” of these tidelands and is compelled to charge a fair market rent. We admit that for a number of years, there hasn’t been the political will to do so. However, between the legal requirement to charge a fair rent and the City’s need to do a number of important projects to protect the harbor and surrounding properties, it is past time to bring rents to a fair level. These are private uses of public property and we think it is right to ask those private parties to pay their fair share.
We certainly understand why a residential pier owner does not want to pay more rent. A flat $100 per year is a very good deal. But, our proposal is only to bring their rents to the fair market rate and to institute a rate structure that’s fair. Currently, the owner of any pier – whether it’s small, medium or large – pays a flat $100 per year. That’s eight dollars a month. The proposal adopts the recommendations of two independent appraisers and calls for pier owners to pay rent based on the square footage they use for private purposes. If you have a smaller pier, you pay less than the neighbor with the medium-sized pier. Most rents would increase to a range of $300-$600 per year. A few of the largest piers holding the largest yachts could go as high as $2000 per year (about $5.24/day). Yes, that is a significant increase over the $100 / year bargain rate, but it’s equitable and long overdue. We’re also proposing to phase the increase in over a five-year period. Not many landlords offer that kind of deal.
We’re saddened that this group decided to target the Christmas Boat Parade, an event that is very special to our entire community and important to the livelihood of a number of local businesses. Please join us in supporting our beautiful boat parade, one of our community’s much-loved holiday traditions.
StoptheDockTax.com claims that the proposed “fees” on their residential docks is a tax. The city claims it is rent. What does the city use as its authoritative source to substantiate its claim? The Daily Pilot! According to the staff report, the editor of the Daily Pilot recognized it as rent and not a tax. I can assure you that the city would never use this column as an authoritative source. That would mean they would have to agree with me. Are you holding your breath? Me neither.
Let’s use a landlubber’s example to bring this home.
If you park your car in front of your house, do you pay for the privilege? Maybe, if there is a meter or you have to buy a permit. But then is it rent? Or is it a tax?
So the city is proposing to charge the average dock owner around $1000 per year for the privilege of that residential landowner building, maintaining, and insuring their dock, and then parking their boat there. Imagine if the city charged you $1000 per year to park your car in front of your house. And that is after you paid for and built the side of the street to park it on.
Ad paid for by Residents for Reform
Committee major funding from Atlas PAC
Supporting Avery, Blom, and O’Neill, Opposing Herdman and Scarbrough for City Council
Not authorized by any candidate or any committee controlled by a candidate
Paid for by Residents for Reform
3843 S Bristol St #604 | Santa Ana, CA 92704 | ID#1351756