Commercial marina owners of Newport Harbor greeted a city proposal to triple their rents with hostility Thursday afternoon.
Newport Beach has been revising all harbor fees since 2006, when the Orange County Grand Jury issued a critical report on the city's practices.
"None of us are real happy about having this discussion," City Manager Dave Kiff said during the meeting that brought about 100 attendees to City Hall. "I want to be real clear what the city's obligation is, and that is to charge fair market value for the use of the tidelands."
He said that the city will be switching from annual permits to long-term leases for commercial operators and will introduce a new rent structure. Final rates haven't been determined, but the plan under discussion is to go from the current 36 cents per square foot to $1.20, or 20% of the marina's gross revenue, whichever is greater.
As basis for the 20% charge, Kiff gave a half-dozen examples of marinas that pay upward to the county or others.
Several of the Newport Harbor businessmen objected to opening their books to the city, calling for a flat fee instead.
"Why do you guys want to be in bed with me in business?" asked Gary Hill. "You charge me so much a square foot and we're done."
Another business owner, who didn't give his name, said "to share 20 percent of the gross of my business is absolutely insane. I don't know anybody in the business even making 20 percent."
Councilmen Mike Henn and Steve Rosansky said that the alternate charge of $1.20 per square foot would apply for many of the smaller businesses.
Glenn Highland of the Balboa Yacht Club said that the city's fees were "50% more than every harbor between [Marina] del Rey and San Diego."
In the last fiscal year, the city paid $17.4 million in subsidies to the fund that covers the harbor and beach, according to its annual financial report. Kiff said after the meeting that the subsidy correlated with the cost of providing lifeguard service, plus 2% of all police and fire calls.
The city gets about $1.5 million from harbor licenses and permits, plus another $9 million or so in property income to fund harbor operations. The city has approximately $160 million in harbor projects to fund, according to a committee report.
Many of the business owners objected to the city's choice of an appraiser, arguing for another appraiser who used a methodology they favored which in the past arrived at lower fees.
Officials rejected the idea.
"We prefer to look at transactions in the market to determine values, not economic models," Henn said.