Last December the Newport Beach City Council majority levied the largest tax in our city's history on the 1,100 residential dock owners of Newport Harbor.
The dock tax was supposed to offset the cost of running the harbor, an elusive amount subject to the illusionary nuances of municipal accounting.
The means of implementing the dock tax is a new "permit" that spells out the details. City Manager Dave Kiff has been quoted as saying, "There's always been annual dock fees with an annual permit. What's changed now is the fees themselves, how they are calculated and that the city for the first time ever mailed out permits to people to keep for their records."
Kiff's comments go to the core of our issues with the city; he is referencing the $100 annual permit to inspect our electrical box and back-flow devices. It's an inspection that never occurred in the 15 years I've had a dock. The dock tax is not the former $100 permit that Kiff references.
Dec. 11, 2012 was former Councilman Steve Rosansky's last meeting. Council members rushed through the dock tax at a special 5 p.m. meeting because at 7 p.m. they were to christen the new Taj Mahal.
They adopted the dock tax after racing through two hours of angry public testimony. Rushing to the ribbon-cutting resulted in a poorly vetted permit that stripped us of the "property right" to our docks.
This is far more onerous than the actual dock tax. The new permit triggering the dock tax contains a clause allowing the city to confiscate a dock for "cause."
Translation: The right to your dock is removed. Since "cause" is not defined, I fear that a future City Council will condemn our piers by government fiat, deem it a public asset, confiscate it and go into the dock-rental business.
Let me explain. A vacant lot on Balboa Island without a dock might be worth $4 million. The same vacant lot with a dock could be worth $5 million.
The city has taken a valuable asset that has been tied to the upland property owner for decades and decoupled it for the purpose of setting "rent" over tidelands. Thus, the owner can no longer expect to recoup the equity at the time of sale.
Since the seller can no longer guarantee a secured dock with clean title, what happens to property owners? What will lenders do if the future of the dock is unknown? How does that affect loan amounts for future buyers?
Buyers are savvy folks who are already using the dock tax permit to low-ball offers. If your dock's status is cloudy, what will buyers offer? Less.
We have already seen one waterfront escrow of almost $5 million blow up over the dock tax permit. The potential buyer reviewed the permit and subsequently reduced the offer to $4.2 million. The buyer quickly surmised that the dock is no longer the property of the upland owner and counter-offered accordingly.
Essentially, the city has stripped away property rights. It's a clever way of "taking" property without triggering a condemnation action, which it would lose in court.
It's been eight months since the city passed the dock tax. Two public hearings were recently conducted to review the implementation of the tax. These were excellent meetings held about a year too late.
There are two basic issues between the dock owners and the city that I believe can be resolved by engaging in a good-faith discussion.
First, we want our equity back. The unintended consequence of the yearly permit can be resolved by adopting a multiyear instrument that is in accordance with state law. We believe this will restore the equity we have lost.
Second, we understand the need to financially support the bay — we've been doing it for more than 100 years. We derive our pleasure, equity and sense of community from this wonderful harbor.
We are not stingy, cheap, or anti-city. We simply want a true and correct accounting of how much it costs to run the harbor.
Residential and commercial interests are willing to pay their fair share, but no one has ever been able to quantify the cost.
BOB MCCAFFREY is chairman of the Newport Beach Dock Owners Assn. and Stop the Dock Tax. He lives in Newport Beach.