Newport, Bay Club to Discuss New Lease; Public Vote Possible : Public access: The club wants a new long-term lease to facilitate its proposed renovation. Foes want a citywide vote on any new agreement.

The City Council has voted to begin negotiations with the Balboa Bay Club for a long-term lease but has left open the possibility of a citywide referendum on whether the private club should continue to use public land.

The vote late Monday night came after more than 100 people packed the City Council chambers and for nearly two hours discussed the future of the exclusive club, debating whether it pays enough rent to the city and whether the public should have access to the bay front.

The council will appoint an ad hoc committee to develop a new lease and coordinate a reappraisal of the Lido Channel property in view of the club’s proposed $60-million renovation.

In its decision, the City Council also dropped a proposal to make the club pay all legal costs, should the city be sued during lease negotiations. Council members said the current lease contains no such provision and might open the city up to legal action by the club if the measure is adopted.

City officials said it could be more than a year before a proposed rental agreement is drafted. Then the council will have to decide whether it should be put to a citywide vote.

Speakers Divided

The club is seeking a new lease of at least 50 years in order to secure loans for the redevelopment and expansion of its 14-acre site at 1221 W. Coast Highway. Its current lease expires in 2011.

Before the council voted Monday night, speakers at a public hearing were divided in their support for the club, a social landmark that counts among its 4,000 members some of Southern California’s most influential and powerful people.

“I am fiercely in support” of a new lease agreement, said William Lusk, an Orange County builder and club member. “Not to let this go through would be a travesty of major proportions.”

Other supporters told the council that the club grounds are heavily used by the public for conferences and other social activities. Donald Olson, a 12-year resident of the club’s apartment complex, estimated that half the people he sees using the facilities are non-members.

“It’s not a private club or exclusive,” Olson said. “It’s really a community center, a primo spot to visit . . . an unpaid public relations campaign for the city.”

Opponents, however, demanded that the lease go to a citywide vote, noting that the club sits on tidelands, which under state law must be used for the benefit of the people of California.

Some told the council that the club should be replaced with something more profitable for the city when the current lease expires. And one man asked why Balboa Bay Club members were so afraid of a public vote when they say it is such a public benefit.

Among those against the proposal was Frank Eisendrath, who said James Irvine, who donated the property to the city in 1928, never intended the land to be used by a private company. He and another speaker cited a letter purportedly written by Irvine.

Eisendrath questioned the club’s $642,000-a-year rent, which he said is less than the city charges other businesses that lease public land. He estimated that the club should be paying $2,066,000 a year for the prime bay-front property.

“Why is the Balboa Bay Club given preferential treatment?” Eisendrath asked. He called for a citywide vote, saying: “It would be a grave error to exclude our hands.”

Councilman John C. Cox Jr. said Tuesday that the public is misinformed about the club’s rent, which will be increased over the next decade under a 1986 agreement. Cox said he considered the current rent too low, but the best the city could get considering the original lease, which did not contain adjustments to raise the rent.

After a new lease is negotiated, council members said, they wil still be in a position to decide whether the public should be asked to approve a rental agreement.

“When the proposal comes back, we will reconsider a public vote, and we have every right to consider a public vote,” said Councilwoman Evelyn R. Hart, who has been attacked in Balboa Bay Club mailers recently sent to the public.

Since the first lease was signed in 1948, Newport Beach city attorneys and club lawyers have issued conflicting legal opinions about whether a public vote should be held on the lease. The present city attorney, Robert H. Burnham, has concluded that the City Council has the power, but is not required, to approve a new rental agreement on its own.

Another legal opinion issued in May by Bruce W. Sumner, an independent lawyer hired by the city, says the same thing, except that the council might want to put it to a public vote because of the “unique nature of the Balboa Bay Club.”

So far, Councilwomen Hart and Jean H. Watt say they think that the public should vote on the lease. Councilmen Cox and Clarence J. Turner have said the council--not the voters--should decide the issue. Phil Sansone and Donald A. Strauss, say they are undecided.

Mayor Ruthelyn Plummer has said that she is ambivalent about the matter, except that she would agree to a public vote “to keep peace in the community.”