The Benicia City Council will receive an update on the Benicia Marina and its funding history. (Photo by Nick Sestanovich)

For the sole business item on the Benicia City Council’s agenda, the council will receive an update on the Benicia Marina, a history of its development and a summary of the current operating agreement at the council’s Tuesday meeting.

According to a staff report by Assistant City Manager Alan Shear, the city obtained the Marina property in 1975 as part of a land swap for property in the Arsenal, including a good portion of the landward port acreage. The main purpose of the acquisition was to achieve economic development goals, Shear wrote. The original master lease stipulated that the land be used for a marina, dry boat storage and launching, boat repair, bait and tackle, restaurants, residential units and more.

To develop the marina, the city entered into a loan agreement with the California Department of Boating and Waterways in 1976. The agreement was amended four times between 1977 and 1979, which raised the amount of the loan to $5.2 million, Shear wrote.

The city entered into a 60-year lease agreement with Old Capital Marina, Ltd. in 1982, which is set to expire in 2042.

“The agreement, known as the Original Master Lease, required Old Capital to build an extensive project including a marina with wet boat berthing, dry boat storage and launching, boat repair, bait and tackle, chandlery, restaurants, residential, motel, offices, general commercial,” Shear wrote. “In reality, Old Capital acted as a pass through and immediately subleased the whole project to Southern California Savings and Loan Association (So Cal).”

In 1990, the city amended the original master lease. The amendment created four separate master leases for the project area, consisting of the Marina, 69 units for the first phase of condominiums, 116 units for the second phase of condominiums and a commercial project. Under the agreement, the city became responsible for maintaining the breakwater, including tidal gates; and allowing costs and for dredging the channel and surrounding areas. So Cal and its successors, including the Benicia Harbor Corporation, for dredging the fairways and slips as well as maintaining building improvements.

“This encompasses public facilities located in and around the marina such as the public access facilities serving the marina, including the floating dock and walkway adjacent to the existing boat launching area, the fuel tanks, the landscaping, trails, parking lots, and public restrooms,” Shear wrote. “BHC must also provide furniture and equipment to operate and maintain a small craft marina.”

In 2004, voters approved Measure C, which rezoned the commercial area to open space. Shortly after, the council adopted the Waterfront Park Initiative Measure, which effectively prevented commercial development of the area.

By the 2003-04 fiscal year, the marina’s reserve funds were depleted and the city began using General Fund transfers to cover the marina fund’s cash shortfall starting at $184,000, Shear wrote. After a 2006 settlement agreement, the Benicia Harbor Corporation became responsible for all dredging, which had previously been up to the city. The city also agreed to pay BHC a fixed fee to cover the costs of the dredging areas noted in the 1990 agreement that were considered the city’s responsibility.

According to Shear, the city’s long-term forecasts for the Marina display expenditures that continue to outpace revenues and the potential for future financial liability.

“As the loan is nearing retirement, refinancing the debt, which would extend the repayment terms by 15 – 20 years, does not seem to be a viable option at this time,” Shear wrote. “A near term future liability that has not been considered is the increased costs of disposal related to dredging. Disposal rates would substantially increase the dredging costs if the sediment needs to be moved to an area outside of the Bay. Should this occur, the City will need to provide a greater subsidy to the Marina fund, unless BHC picks up the cost.”

No action will be taken on this item.

Despite being the only business item, the consent calendar includes a lot of items up for debate. These include a resolution to reject current bids for the City Park Gazebo, voting on a Francesca Terrace Park play structure replacement and authorizing a budget increase of $60,000 to the Police Department’s Equipment Replacement Fund  to raise money for the first phase of upgrades to the women’s locker room.

The council will meet at 7 p.m. Tuesday, Aug. 21 in the Council Chambers at City Hall, located at 250 East L St._ A closed session will precede the meeting at 6 p.m. to discuss legal matters. A live stream of the council meeting can also be found online at ci.benicia.ca.us/agendas.

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