NEWPORT BEACH : City May OK Talks on New Club Lease

The City Council on Monday will contemplate whether to develop a a new 50-year lease for the Balboa Bay Club, which is a key element of the private club’s plan to renovate its grounds on city-owned land along Newport Bay.

Council members will decide whether to approve an agreement to begin discussions of a lease with representatives of the exclusive bayfront enclave at 1221 W. Coast Highway. Club officials say they need a long-term lease to obtain loans in order to proceed with plans for a $60-million renovation.

“A 50-year lease is the minimum necessary to get financing,” said Balboa Bay Club President Tom Deemer. “Most banks require 75 years to 99 years. The lease is key to redeveloping the property.”

The club entered its first 50-year lease with the city in 1948 when the Coast Highway site was little more than a stretch of cluttered sand and mud flats. Since then, the grounds have been improved dramatically, including the construction of a 145-unit apartment complex.

In May, 1986, the council approved a new lease to increase the rent and add 12 years to the original 50-year lease. The club now generates about $1.5 million a year for the city.

If an agreement to begin talks is approved, the city and club representatives will consider terms of a new lease, study possible uses for the property and have the site appraised.

The council’s desires to proceed with discussions of a new lease were sidetracked in March when questions arose over a City Charter provision that prohibits 50-year leases for waterfront property owned by the city unless voters approve.

A legal analysis for the city by the law firm of Wyman, Bautzer, Kuchel & Silbert states that the charter does not apply to renewals of leases made before 1955, when the charter was adopted. The club’s first lease was signed on March 24, 1948.

The analysis also concluded that the city legally could enter a 50-year lease without voter approval as long as the property reverted to the city at the end of the lease period.

“Now that the problem of granting a lease without the vote of the people has been solved, we are for the lease,” said Councilwoman Ruthelyn Plummer. “There is no opposition to it.”

However, Councilwoman Evelyn R. Hart said she will oppose the move toward developing a new lease because the voters should decide what they want on the property. She pointed out that in 1970, voters rejected a 50-year lease for the club.