The City of Monterey has misallocated somewhere in the range of $20 million, and possibly much more, from the public trust — money that was earmarked to improve local beaches, the wharves, Cannery Row and other coastal properties.
Cannery Row, Old Fisherman’s Wharf, Wharf II, the Marina — all the property in Monterey that is below the high tide line — was granted to the city by the state of California in 1919 under the condition that any revenue generated be put into a tidelands fund that can only be used for services and improvements located on or related to the granted lands for the purposes of commerce, navigation, recreation or conservation.
But instead, Monterey has always put the majority of the revenue in its General Fund — everything except rents from Cannery Row. This is despite correspondence back and forth with the state over the issue every time any development is proposed on Cannery Row, the wharves or the marina.
Misuse of tidelands revenue became a big issue statewide in 1982 when the Orange County was sued by the state and found to have used more than $1 million of tidelands revenue for general fund purposes. A number of California cities’ budgets were questioned — Monterey was among them.
Monterey had just been fully briefed on the subject during negotiations and planning of the Monterey Bay Aquarium and Cannery Row in 1980. However, a letter dated June 16, 1983, from State Lands Commission Staff Counsel Jane Sekelsky to Monterey City Attorney Bill Marsh shows that the city had been claiming ignorance again. So once more, the SLC provided an explanation.
“Pursuant to our discussions, I have enclosed copies of an Attorney General’s letter of advice and a recent court decision concerning the matter of revenues from granted lands being subject to the Public Trust and the terms of the granting statute.
I have also enclosed a list of those materials that must be submitted to use before the commission meeting on June 23, 1983,” Sekelsky wrote.
City Attorney Marsh responds in a letter dated June 20, 1983 and agrees “that we will deposit all revenues received in a special trust fund as required by law.”
But Monterey didn’t do it. The issue came up again two years later when the city put more Cannery Rowy development plans before the State Lands Commission. A letter dated March 11, 1985 from City of Monterey Finance Director Dewey Evans to City Attorney Bill Marsh begins with the acknowledgement that the city must start complying with the law, but then discusses the merits of it.
“We have to set up a megafund into which all revenues from the tidelands area must go. I assume that Wharf I and Wharf II will have to be removed from the General Fund and placed in this fund, along with the tidelands lease money,” Evans writes, but he doesn’t seem convinced the city should really do it.
“One major drawback to this approach is that if these numbers prove accurate, there would be a net loss to the General Fund of about $280,000 per year,” he notes.
So, while Monterey continued to shortchange the public trust of more than $250,000 per year, the letters between the state and the city continued back and forth for a while and then just stop around 1991 without a resolution.
So what has Monterey been up to lately? Gradually, what was an annual theft of $280,000 has grown closer to about $2 million or more. According to the city’s own numbers, $1.46 million of Wharf 1 revenue was placed in the General Fund last year and since 2004, the city has basically embezzled more than $9 million just from Wharf 1— even after factoring in the expenses the city originally reported.
Of course, those were the numbers before the city had any reason to lie about them. A number of issues have caught the eye of the State Lands Commission and the city has been asked for an audit of the fund. It’s due this month and city leaders say it will show that Monterey has spent roughly as much on maintenance and improvements in its General Fund as it has earned from its tidelands properties.
Just take a look around and that’s obviously false. The need for repairs at Old Fisherman’s Wharf has been widely reported. The city’s public restrooms on the beach and at the wharfs are awful and much of Cannery Row is still undeveloped — fertile commercial and park property sitting fallow. Numbers can be made to lie, so I’m guessing the city will use numbers as big as the lie requires.
Monterey is fortunate that, because of the statute of limitations, it only has to go back seven years. But even then, the way the audit is being done probably isn’t legal. A letter from the State Lands Commission to Monterey back on April 4, 1985 reads: “We also explained that general fund expenditures upon the trust may be reimbursed from trust funds only if the intent to be reimbursed is clearly expressed before the expenditure is made.”
But not only does the city plan on claiming expenses many years after the fact, it also plans to count street improvements and maintenance on surrounding properties as a tidelands expense. The city has tried this before and was told it could not during both the ’70s and ’80s, including in the April 4, 1985 letter. The State Lands Commission was questioned if and why it is allowing this now, but did not respond.
Why is all this important? Imagine had all that money been used to improve Old Fisherman’s Wharf, Cannery Row and other beach properties in Monterey as it should have been. Imagine the wonderful recreational opportunities and conservation work that could have been done. Just think of the additional hotels, restaurants and commerce and jobs the region should be enjoying down there.
This is a real crime — the heist of the past two centuries for this county. It’s time for residents to demand action from the state, get involved and start rattling cages. There needs to be a full account of how much money was taken, even if all of it can’t be returned.
You can find out more about the State Lands Commission at www.slc.ca.gov. Call them or write them an e-mail or letter. Let them know that what Monterey has done is not OK and it shouldn’t be allowed to get away with it.