City Takes First Step In Charging Rent To Monterey Bay Aquarium

City Takes First Step In Charging Rent To Monterey Bay Aquarium

MONTEREY — The Monterey City Council voted to hire a firm to conduct a rent appraisal of the Monterey Bay Aquarium Tuesday, taking the first step towards raising rent significantly and possibly putting the city on the path towards a court battle with the peninsula’s popular nonprofit.

 

In a 3-2 vote, the Monterey City Council passed a motion by Councilwoman Libby Downey to pay an appraiser $31,500 out of the city’s Tidelands Fund. Councilman Alan Haffa and Mayor Clyde Roberson voted against the motion.

 

“It seems to me a no-brainer that we need to do this,” said Downey.

 

For more than 35 years, the Monterey Bay Aquarium, which straddles both Pacific Grove and Monterey, has always paid $1 in rent. A portion of the building was constructed on tidelands property where the State Lands Commission ruled in the ’80s that no revenue-making enterprise can exist. A special exemption was made for the aquarium due to its non-profit status, its mission and the access it created for the public to the tidal zone.

 

Since its creation, past Monterey leaders have always pointed to the benefits the aquarium provides to the public: jobs, tax revenue, education, culture, worldwide recognition of Monterey and millions of tourists. Tuesday, Barbara Meister, public affairs director for the aquarium, pointed this out to the council. The aquarium employs 550 people and purchases $5.6 million worth of goods from local vendors. It raises $3.82 million in sales tax and TOT revenue through its partner hotels.

 

“We have a global reach with significant local impact,” Meister said. “There are considerable benefits flowing to the city of Monterey.”

 

Councilman Ed Smith asked Meister if there had ever been an appraisal of the property, pointing out that the buildings were insured and a corporate estimate of their worth must be known.

 

“You are being asked to appraise the tidelands, not our property. Our buildings are owned outright. The appraisal is not of the buildings, but of the land that we are stretched over,” Meister replied.

 

While that has historically been the case, new leasing policies passed by the council call for the city to be much more aggressive with entities on Tidelands properties. During negotiations with Fisherman’s Wharf businesses, the city has demanded the possession of the buildings as part of any new lease agreement. Old Fisherman’s Grotto owner Chris Shake has requested a permit to have his building demolished and sold for scrap if he can’t come to an agreement with the city on a long-term lease. Lease negotiations with Sam Balesteri, who operates three businesses on the wharf, recently failed and eviction notices have been served on the Wharf Front gift shop, the coffee shop and Paluca Trattoria, all longtime businesses. The Monterey Bay Aquarium’s 50-year lease expires in 15 years.

 

After Meister’s presentation, Councilman Haffa made a motion to not fund the appraisal because, given the benefits the aquarium provides, it seemed wise.

 

“I don’t believe paying somebody $31,000 is going to change the outcome,” he said.

 

Mayor Roberson agreed, noting that the money raised from any rent would go into the city’s Tidelands Fund, which is supposed to be used to improve the tidelands areas, something the aquarium was already doing with the money.

 

“Who protects the tidelands more than the aquarium?” he asked.

 

State law requires that revenues from activities within tidelands area be placed in a Tidelands Trust Fund and used to fund activities within the tidelands boundary in order to improve the tidelands area, promote commerce, recreation, navigation, or fishery activities. As reported previously, Monterey has never done this, and the State Lands Commission is auditing city records from the past seven years. For the past 18 months, the city has struggled to account for the money as the audit grinds on.

 

Soon after Haffa’s motion failed, Downey made the motion to pay for the appraisal. Before the 3-2 vote for her motion to pay the appraiser passed, Downey had appeared reluctant to vote either way.

 

“I think we need a staff report on this,” she said.

 

“I thought we had one,” Haffa replied in a matter-of-fact tone.

 

The staff report, which was provided in the council packet, gives more than a hint that the City Council’s decision might put Monterey on a path towards a court battle with the aquarium. It included historical documents with legal rulings and legislation regarding the aquarium’s founding, and a letter from Monterey Bay Aquarium Executive Director Julie Packard.

 

“The 1981 lease of the tidelands to the aquarium for $1 annually had strong legal underpinnings which remain in effect today,” Packard wrote. “The bottom line, based on the special legislation and circumstances, is that the City (and Pacific Grove, incidentally) is limited to charging only nominal rent to the aquarium.”

 

But Monterey City staff rejected the aquarium’s legal arguments.

 

“Staff reviewed the documents submitted by the Aquarium and sees no impediment to the appraiser-conducted review of the rent,” the staff report said.

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10 Comments

  1. Jerry Speraw 2016-08-17 at 10:38 pm

    So basically, the City of Monterey just spent $31K+ to determine whether and what additional land rent should be charged the Aquarium once the 50-year lease ends in 2031, so that those funds can then be used to improve Tideland areas where no other revenue generating activities are permitted. I would actually be more interested in finding out first what sort of Tideland area improvements the City of Monterey is considering that require more funds to begin with.

  2. danny 2016-08-19 at 10:30 am

    Monterey needs to get there stuff together running bussiness off wharf and now monterey bay Aquarium

  3. Terry 2016-08-19 at 7:56 pm

    Sounds like the city of Monterey is biting the hand that feeds it. I hope they have instant tenants for the stores and restaurants they want to close. Finding quality and reliable tenants is not easy. As for the Aquarium if that is not there a majority of other business in that area would not be there. It has taken a long time to build that area into what it is and a few extra dollars in rent does not seem worth the risk of losing good tax revenue.

  4. Mike 2016-08-20 at 3:28 am

    So let me get this straight, Monterey is currently receiving 3M from sales tax and the Aquarium is spending an additional 5M in buying from local venders? But apparently that’s not enough? This is ludicrous! We have a fantastic destination in Cannery Row and Fishermens Wharf but you run those world class businesses out you will end up with something like Santa Cruz or Morro Bay. Both places are just okay. Business owners want long term leases because they want to plan for the future to insure their very existence. The City coming to business and asking for more rent seems reasonable until you ask yourself would I go to Cannery Row or Fishermans Wharf if those businesses didn’t exist? What’s the draw without the destination? If Monterey isn’t careful the only thing will be on the Wharf is a corporate Red Lobster instead of the famous Old Fishermens Grotto.

    • Dr V 2016-09-19 at 11:02 pm

      Nicely stated! Something does not add up about all of this, especially when you consider that the wharf businesses have hung in there through good times and bad ecomonies. The Shake Family, Mr. Balesteri and a few others brought it back from ruins only to be evicted now. What? SORRY but this reeks of possibility of kickbacks!!!! Money is always the root of this type of evil toward good people.

  5. Jazmin 2016-08-21 at 12:54 am

    I can read between the lines. “As reported previously, Monterey has never done this, and the State Lands Commission is auditing city records from the past seven years. For the past 18 months, the city has struggled to account for the money as the audit grinds on.”

    So some of the council members are feeling uneasy that there account isn’t up to par for some reason so they decide to put the heat on some of our bigger revenue streams? The aquarium is not easy to run and they are getting pressure in efforts to protect otters in the area now from the state which is fine but expensive. Yes it gets revenue but it has slot of costs also.

    I feel like this is why we have a crappy night life

  6. Pete 2016-08-21 at 5:36 am

    Monterey somehow “lost” $20 million in what was supposed to be in the trust fund. Now they wants this???

  7. Kirsten Lassen-Smith 2016-08-21 at 8:44 am

    I suggest City Of Monterey spend more on keeping the city clean of trash, especially Cannery Row neighborhood as it all ends up in the Ocean due to lack of maintenance. Sweep sidewalks and streets and empty trash cans more often as sometimes it feels like walking around in a giant dump 😏

    • Dan 2016-08-21 at 8:54 pm

      That would be great! But the terrible company Monterey Waste Disposal is clinging tight to its city contract. And they are the worst!! Late pick ups and terrible customer service. They leave the streets filthy when they do their job.

  8. Jennifer 2016-08-21 at 9:32 pm

    I agree with many points made in the comments above. Instead of spending 31k and potentially creating a hostile relationship with the jewel of Monterey’s tourist economy, why negotiate with the MBA to make an additional flat fee contribution to the Tidelands fund if they feel it is really needed. I would like to know exactly what the city wants that money for.

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