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.