More than halfway through the Benicia Marina’s current lease period, the Benicia City Council received an overview and update on the property which prompted much discussion from councilmembers at Tuesday’s meeting.

The history of the marina was delivered by Assistant City Manager Alan Shear, who said a marina has been on the minds of city officials since 1975, when the city obtained the property between East B and E streets in a land swap for Arsenal property. The goal was to achieve economic development objectives, and the original master lease stipulated that the premises would only be used for a certain amount of items, some of which came into fruition— a marina, boat launching, offices and residential units— and others which have not— bait and tackle, restaurants and motels.
The city entered its first lease to the marina with Old Capitol Limited in Dec. 1982. It is set to expire in 2042. Old Capitol acted as a passthrough, with the marina immediately subleased to the Southern California Savings and Loan Association (So Cal).

In 1990, the original loan agreement was amended. Among the changes were establishing the minimum annual rent at 20 percent of the berthing charges, and restating responsibilities of the city as well as So Cal and its successors, including the current operator, Benicia Harbor Corporation (BHC). Under this agreement, the city was responsible for maintaining breakwater including tidal gates, all permitting costs and the dredge area as well as some surrounding areas, while So Cal was responsible for the dredge fairways and slips, maintaining all buildings and improvements and providing furniture and equipment to operate and maintain a small craft marina.

By the 2000-01 fiscal year, the city’s dredging costs had more than doubled with no increase in revenues and the marina fund reserves depleted. In the 2003-04 fiscal year, General Fund transfers were needed with the marina fund’s cash shortfall at $184,000. Shear noted that dredging disposal costs would be increasing in the near term. The dredging cost is currently $243,425. The marina’s subsidies are currently $230,000 a year and projected to be $274,000 a year with inflation in the future.

As part of a 2006 settlement agreement, some of the responsibilities changed. The BHC was now responsible for all dredging, and the city was now responsible for obtaining dredging permits, paying all administrative permit costs, paying for the dredging costs for everything but marina slips, and preparing a dredging episode plan.

By 2028, the original loan agreement will have been paid off. After the lease expires in 2042, five-year extensions will be available through 2057.

Councilmember Alan Schwartzman said he had asked if the city was getting an annual breakdown, and the answer he had received is that it was but the last time staff had gone to the BHC office over it was 2012.

“We’re long past due for an audit,” he said.

“I agree that city staff should go there and review,” Finance Director Cindy Mosser said. “It’s not a true audit. A true auditing firm would probably cost, I don’t know exactly how much, but I’m assuming it’s a lot more than just having us go and check.”

Councilmember Tom Campbell asked about the disposal of dredged materials and additional costs. Mayor Elizabeth Patterson noted the Bay Area was generally “sediment starved” and because of the concerns of potentially rising sea levels, there was an interest in sediment.

“The issue is the quality of the sediment,” she said. “A lot of progress has been made in the last few years about how to treat the sediment. Because of the particular concerns, maybe we don’t have a lot of the sediment and it’s not naturally coming down because of the dams up on the rivers in the Sacramento and San Joaquin. We get sediment locally, but we’re not getting sediment, but we’re not getting the sediment that we used to get.”

Patterson said the sediment question should be expanded because of the transition over what to do with sediment.

“I would include a hard number on increasing costs of dealing with sediment,” she said.

Vice Mayor Steve Young opined that very long leases, such as the 60-year lease, “work against the city’s interests” and asked City Attorney Heather McLaughlin why the city might have approved a lease for that length of time. She speculated that it may have been due to improvements that needed to be paid to help finance it.

Young felt many aspects of the lease, particularly the 2006 settlement, created problems for the city.

“This ’06 agreement seems to lock us into a permanent state of increasing subsidies with no way out,” he said. “I don’t understand why we would negotiate such an agreement or why the council would agree to such an agreement because, in my mind, this is a situation where the city is going to be at long-term fiscal obligations with no ability to ameliorate the situation in any respect. We’re subject to have the other party having the ability to extend that and continue it and make it worse.”

“We’ve done lots of bad deals, and most of them have had to do with the terms of an agreement and we’ve never been able to get out of that,” he added.

In a statement echoed by Councilmember Mark Hughes, McLaughlin felt the 2006 deal was a good one at the time based on the facts. She also noted the agreement may have been written with the option of BHC selling its interest in the marina in mind.

Earlier in the meeting, Campbell suggested that maybe the city cease being in charge of the marina. Patterson felt there would be issues in trying to market the marina to potential buyers.

No action was taken on the item, but Patterson suggested directing staff to look into a number of items, including doing an audit, looking at potential choices with sediment, obtaining seawall estimate replacements and examining the effects of rising sea level at the estimated rates adopted by the state. Schwartzman said he did not know where sea levels would be in 2057 but felt staff should take into consideration that the lease may have fully expired by then.

“What if councils forevermore decide that when they do that extension, that’s it? There’s no more lease,” he said. “There’s no more marina, the agreement goes away and we no longer have a mission. That’s food for thought.”

In other business, the council voted unanimously to deny bids for the City Park Gazebo replacement project and approve a contract for replacement of the play structure at Francesca Terrace Park. Patterson also read a proclamation honoring Donnell Rubay, a Benicia author, historian and local advocate who died on Aug. 2.

The council will next meet on Tuesday, Sept. 4.