Submitted by: William Rogers, Acting Director, Parks Recreation & Waterfront. Fee Reduction And Retroactive Billing: Houseboats
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1 Office of the City Manager CONSENT CALENDAR February 26, 2008 To: From: Honorable Mayor and Members of the City Council Philip Kamlarz, City Manager Submitted by: William Rogers, Acting Director, Parks Recreation & Waterfront Subject: Fee Reduction And Retroactive Billing: Houseboats RECOMMENDATION: Adopt a Resolution reducing all fees owed by Houseboat owners in the Berkeley Marina during the construction period of the new H & I docks (March thru September 2007) by forty percent (40%) and to retroactively bill for the balance (sixty percent - 60%) via an 18 month interest free payment plan. FISCAL IMPACTS OF RECOMMENDATION The Parks, Recreation and Waterfront Department generates revenue to support the Marina operations through a variety of methods, including berth rentals and live aboard fees. There are over 1,000 boats in the Berkeley Marina, thirteen of which are houseboats. During the replacement of the H & I dock, the thirteen (13) houseboat owners were required to temporarily relocate to alternate locations within the Marina at their own expense. Due to this inconvenience, City staff suspended billing the 13 Houseboat owners for monthly fees from March through September 2007, which resulted in a $59,411 loss to the Marina fund. This fee reduction was not authorized by City Council and was determined by the Department to be a violation of City policy. After several meetings with the houseboat owners and the Waterfront Commission on this issue, staff recommended retroactively billing Houseboat owners for 60% of the total fees. This accounts for actual costs incurred by houseboat owners as a result of the relocation and will yield 60% of the uncollected fees, or $35,646 in revenue, to the Marina Fund, deposited to CURRENT SITUATION & EFFECTS City Council has sole authority to reduce fees. After an internal review, the Department determined that although the houseboat owners incurred some personal cost and inconvenience as part of the dock reconstruction, the staff-initiated fee reduction for houseboat owners during the H &I dock construction period was not authorized by City Council, nor was it justified, as the houseboat owners still received valuable resources of berthing and other Marina services throughout this period. The Department met with houseboat owners and the Waterfront Commission on several occasions to develop a resolution that was fair to all parties. On December 12, 2007, the Waterfront 2180 Milvia Street, Berkeley, CA Tel: (510) TDD: (510) Fax: (510) manager@ci.berkeley.ca.us Website:
2 Fee reduction and retroactive billing: Houseboats CONSENT CALENDAR February 26, 2008 Commission asked staff to provide the Commission with a reasonable proposal for collecting fees retroactively that accounts for legitimate costs incurred by the houseboat owners. The staff considered employee error, the actual relocation costs for houseboat owners, the value to the houseboat owners of remaining in the Marina during construction, and the pressure on the Marina Fund to pay for current service levels. The proposal to back-bill houseboat owners for 60% of the monthly fees accumulated during the construction of the H & I docks was discussed with both the Houseboat owners and the Waterfront Commission. On December 12, 2007, the Waterfront Commission M/S/C (Kamen/Barry) approved staff s recommendation to back-bill houseboat owners for 60% of the berthing fees that accumulated during the H and I Dock construction project between March 2007 and September 2007 via an 18 month interest-free payment plan, and that a new flat rate houseboat fee, previously discussed by the Waterfront Commisssion, not be assessed during the payment period (Ayes: 5; Noe s: 1; Abstained: 0). BACKGROUND From March 1 st, 2007 through September 30, 2007, the forty-year old H and I Docks at the Berkeley Marina were replaced at a cost of $4.2 million using a California State Department of Boating and Waterways loan. The City of Berkeley used $3.5 million of a loan from the California State Department of Boating and Waterways to rebuild H and I dock at the Berkeley Marina. Because H and I Dock contained thirteen (13) privatelyowned houseboats, that portion of the project was ineligible for the loan, and the City used $713,000 of the Marina Fund to cover that portion of the construction cost. The project was completed by November 1, 2007, and the thirteen houseboats were relocated back to the houseboat section of the newly-reconstructed H and I Docks at the Berkeley Marina. RATIONALE FOR RECOMMENDATION The City has no legal obligation to reduce costs or pay for expenses related to the relocation of private houseboats at the Berkeley Marina, a public facility. Of paramount importance is the health of the Marina fund, a public enterprise fund that is used solely to support Marina operations. In consultation with the Waterfront Commission and the houseboaters themselves, staff determined that the most reasonable method for collecting fees retroactively was to consider staff error, the bonafide relocation costs for houseboaters, the value to houseboat owners of remaining in the Marina during construction, and the pressure on the Marina Fund to pay for current service levels. After considering the above, the proposed solution was to collect 60% of the fees owed over an 18-month period with no interest accrual. Staff reviewed costs incurred by houseboat owners for relocation during the construction of the new docks. Because each houseboat owner incurred different costs and chose to expend dollars on different items related to the relocation, staff chose a common Page 2
3 Fee reduction and retroactive billing: Houseboats CONSENT CALENDAR February 26, 2008 expense for all houseboat owners -- the expense of moving their houseboats to temporary locations while the docks were being built. Even though all houseboat owners spent money to move their boats, those relocation costs were different. For example, some houseboat owners spent $500 to move their boats while others spent $1800. To be equitable, staff took the highest relocation expense, which was approximately 40% of the total unbilled charges from March through September. As a matter of equity, staff assigned the 40% across all 13 Houseboat owners. Staff determined that in no case did a houseboat owner s out-of-pocket costs to physically relocate their boat exceed 40% of the unbilled charges, therefore, while some houseboat owners will benefit more than others, 40% is a ceiling that ensures that no houseboat owner would be treated inequitably due to the relocation. Houseboat owners would be back-billed for the balance (60%) over an 18-month period on an interest free payment plan. During Fiscal Year 2009, the City will not impose any new flat rate fee for houseboats, although it may increase existing berth fees for houseboats such as per foot charges, or it may impose new premium fees for end berths or over-sized boats. The City will propose a new flat fee for houseboats for Fiscal Year CONTACT PERSON William Rogers, Acting Director of Parks, Recreation and Waterfront, Attachments: 1: Resolution Page 3
4 RESOLUTION NO. ##,###-N.S. RETROACTIVE HOUSEBOAT FEE WHEREAS, from March 1 st, 2007 through September 30, 2007, the forty-year old H and I Docks at the Berkeley Marina were replaced at an approximate cost of $4.2 million using a California State Department of Boating and Waterways loan and the Marina Fund; and WHEREAS, during construction, City staff suspended billing for berth and live aboard fees for the thirteen (13) Houseboat owners without Council authority for a total of $59,411.28; and WHEREAS, in actuality, during the construction period, Houseboat owners were able to obtain adequate berthing, electrical and telephone service, and sewage pump-out service at their own expense; and WHEREAS, after an internal review, the Department of Parks, Recreation and Waterfront determined that this was a violation of City policy and could constitute an unauthorized gift of public funds to owners of private houseboats at the Berkeley Marina; and WHEREAS, staff determined that the highest relocation costs paid by a houseboat owner was $1,800, which was approximately 40% of the total fees due for that owner over the seven-month period. In consultation with the Waterfront Commission and the houseboat owners themselves, staff determined that the most reasonable method for collecting the fee retroactively that accounts for staff error, the bona fide relocation costs for the Houseboat owners, the value to houseboat owners of remaining in the Marina during construction and the pressure on the Marina Fund to pay for current service levels would be to collect 60% of the fees owed, which amounts to $35,647. Houseboat owners will be back-billed for the fee over an 18-month period on an interest-free payment plan. In addition, the City will not assess a previously discussed new flat rate fee for houseboats for Fiscal Year 2009; and WHEREAS, on December 12, 2007, the Waterfront Commission M/S/C (Kamen/Barry) approved staff s recommendation to back-bill houseboat owners for 60% of the berthing fees that accumulated during the H and I Dock construction project between March 2007 and September 2007 via an 18 month interest-free payment plan, and that no new houseboat fee be assessed during the payment period (Ayes: 5; Noe s: 1; Abstained: 0); and WHEREAS, fees will be deposited into the Marina Fund (budget code: ).
5 NOW THEREFORE, BE IT RESOLVED that the Council of the City of Berkeley adopt a Resolution reducing all fees owed by Houseboat owners in the Berkeley Marina during the construction period of the new H & I docks (March thru September 2007) by forty percent (40%) and to retroactively bill for the balance (sixty percent - 60%) via an 18 month interest free payment plan. During Fiscal Year 2009, the City will not impose any new flat rate fee for houseboats, although it may increase existing berth fees for houseboats such as per foot charges, or it may impose new premium fees for end berths or over-sized boats.
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