Newport’s pension liability might halt plans for library/fire station, pier restaurant and junior lifeguard HQ

Plans for a new library and fire station in Corona del Mar, a new restaurant for the Newport Pier and new junior lifeguard headquarters could be heading off Newport Beach’s immediate radar.

That was one takeaway from Tuesday’s wide-ranging City Council study session, where City Manager Dave Kiff raised the notion that those multimillion-dollar projects, while important to the community, may not be financially feasible, at least in the short term.

The sobering news came after Kiff resurrected a financial specter that haunts the city’s budgetary future: its unfunded pension liability, which has skyrocketed from almost nothing in 2002 to an estimated $315 million this year.

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That figure may jump to nearly $500 million, Kiff said, if the California Public Employees’ Retirement System lowers the percentage it thinks its investments will earn. If CalPERS alters that percentage, Kiff said, the unfunded liability would rise even higher and cities like Newport would have to make up the difference by pumping more money into the fund.

Because Newport has to address its employee pension costs, Kiff said, it likely will be unable to responsibly fund projects like the new CdM library and fire station, nicknamed the “fibrary.”

Construction costs for the $8-million project, approved in 2015, came in last year $800,000 higher than city officials originally projected. Because of that, Kiff in December slated it to return to the council. But on Tuesday he suggested shelving it for perhaps five years.

Regarding the Newport Pier restaurant, Kiff surmised that the cost of rehabilitating the pier and building a new two-story restaurant there — as the council approved doing last month — may be too expensive and, as an city investment, take too long to make its money back.

City officials estimate that to demolish the aging building at the tip of the city-owned pier — last used by Newport Pier Grill and Sushi, whose lease ended in 2012 — and build a slightly larger two-story restaurant in its place would cost $3.58 million.

The Bluewater Grill is the approved vendor for the new restaurant, which still requires a permit from the California Coastal Commission, if the city continues to move it forward.

City staff suggested making a new junior lifeguard headquarters near the Balboa Pier — the group has long relied on a large trailer — a privately funded endeavor.

The project is pegged at $3.5 million for a permanent space with roughly 5,000 square feet for administrative offices, lockers, restrooms, storage space and a meeting room.

Some balked at Kiff’s suggestions, particularly CdM library advocates who said that, at least in the immediate future, the old library needs better furniture, an air conditioning system and window fixes.

Joy Brenner, one of the advocates, said she hated seeing the momentum for the fibrary project dwindle.

“It was a textbook example of how you really gather community input,” she said.

The future of the CdM library and fire station, junior lifeguard headquarters and Newport Pier restaurant are poised to go before the city Finance Committee at a later date. They may then head to the council for final votes.

Mayor Kevin Muldoon, who has made addressing the pension debt one of his top priorities, lamented that it “takes a piece of the city’s heart and soul” to come up with lists of projects to remove.


Bradley Zint,

Twitter: @BradleyZint