City’s Reason for Raising Rents on Wharf is Illegal

City’s Reason for Raising Rents on Wharf is Illegal

The Monterey City Council’s stated intention to raise rents on its tidewater properties to pay for city infrastructure and public services is illegal and in direct contradiction to the California Constitution’s requirement to reinvest rent from state-gifted tidelands into greater public access to those tidelands.

In fact, the city may already be in violation of this requirement and it’s possible it’s been going on for decades. Somehow this is being missed during the debates at City Hall about whether or not to increase rents, limit lease terms and require more maintenance fees from the businesses. While City Council members Alan Haffa and Libbey Downey have been keen to note that the state constitution requires the city to charge fair market rent, for some reason they have remained silent about the city’s requirements on how to spend that rent.

Instead, Haffa wrote a guest commentary to the Monterey Herald stating that new revenue from increased rents “could fund other public services such as public safety, infrastructure, parks and recreation.”

But according to Sheri Pemberton, Chief Legislative Liaison for the California State Lands Commission, that would probably be illegal and would most likely spark an investigation. Those lands, though owned by Monterey, have to be managed in the best interest of all Californians.

“Tidelands funds absolutely cannot be used for municipal purposes,” she said in a telephone interview. “They are supposed to get fair market rent for that property, and can adjust rents as they see fit, but can’t raise rents to use money on unconnected local purposes.”

Pemberton said that when the state transferred sovereign title of those tidelands to the city, it came with the requirement that the city had to manage the lands in a way and purpose that serves the statewide public; money gained from that land must be used to help connect the public to its waterfront. Pemberton mentioned things like boat ramps and parking lots, or a project that would help handicapped residents gain access. Hiring more police or building a school would be illegal, she said.

Since 2013, the state has required cities to submit a standardized form showing its expenditures and income from such properties. The city currently has a little more than $8 million in its tidelands fund. It has earned more than $1.1 million in the past two years and has not spent a penny of it on maintenance or improvements.

Pemberton sounded a little alarmed by this discovery, added with the fact that the city was planning on increasing its rents on these properties.

“We might follow up with city if they say they are raising rents on these properties and ask what they plan to do with the money,” she said.

What has the city been doing with the money? While the new reporting method is just two years old, the requirement on how to spend that money isn’t new. The fund, which is decades old, has grown from less than $7 million to more than $8 million in those two years. Perhaps the city has been misusing tidelands funds for decades.

Planning Commissioner William McCrone has been the most vocal supporter of increasing tidelands rents and using the money for municipal purposes. He has railed against the “outrageous profits” wharf merchants are making at the cost to Monterey’s public. According to his research, Fisherman’s Grotto paid the city $190,346 in rent in 2011. If just Fisherman’s Grotto can garner that much during a down economy, it seems the city should be flush with cash to spend on improving the wharf.

Instead, new policies will require more maintenance fees from wharf owners, making them pay for things that would seem to be a perfect use of the tidelands fund, like bathrooms. But why? Since the city has been filing the paperwork for the past two years, it is obviously aware of the $8 million it has in its tidelands fund and the state’s requirements regarding that money. And, if the city wants to use that money on its new waterfront plan, then eliminating parking spaces and access to boat ramps, as currently imagined, isn’t going to legally be a part of it.

The man who claims that plan as his vision is McCrone, who got this whole movement to change the rental policies on the wharf started. He was once an attorney and says he has spent more than 10 years studying this issue. He has been hailed a hero by some in the local press, as well as Hoffa, and has written thousands of words on local blogs, which failed to check any of his “facts.” He has maintained over and over again that the funds from these higher rents will prevent the need for an increased sales tax in Monterey. Certainly, he is also aware that to use the rent money in this way would be illegal. The city could be fined and the land could even be taken away.

So what is the intent here? McCrone has also stated over and over again how wonderful Monterey’s coastline would look without the wharf. He recently referred to Monterey’s 1939 Master Plan that once called for its removal “visionary.” It wouldn’t take many shuttered windows on the wharf to really put a damper on the whole environment. Make conditions more difficult there and a few closed businesses could get the ball rolling. Before long, McCrone, an avowed environmentalist on the blogs, would be rid of the wharf and many of the tourists who clog up the local roads.

Unfortunately, a huge chunk of our local economy and our city’s cherished history would go with it.

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