DATE: March 12, 2019
SUBJECT:
Title
ORDINANCE GRANTING THE TERMINATION AND SURRENDER OF LEASE WITH THE CITY OF NATIONAL CITY FOR THE OPERATION OF AN AQUATIC AND RECREATIONAL CENTER AND THE ACCEPTANCE OF A QUITCLAIM DEED FROM THE CITY OF NATIONAL CITY FOR 8,412 SQUARE FEET OF PROPERTY LOCATED AT PEPPER PARK, IN NATIONAL CITY
Body
EXECUTIVE SUMMARY:
The City of National City (City) has a 30-year lease with the District for the operation of an aquatic and recreational center (Aquatic Center) at Pepper Park with a term through December 31, 2040 (Lease). The District contributed approximately $4.6 million from the Capital Improvement Program (CIP) to fund the construction of the Aquatic Center, which was completed in March 2016. The main purpose of the Aquatic Center is to provide recreational, aquatic, safety and environmental programs to the community.
The City is facing substantial structural deficits in their budgets over the next few years. In order to reduce the deficits, the City has been exploring measures to cut costs and has identified the transfer of the Aquatic Center as an important cost cutting measure. In May 2018, the City Council of National City (City Council) directed City staff to work with the District to pursue the transfer of the Aquatic Center to the District.
District staff has been working with the City to develop a transition plan to provide a smooth transfer. In the short term, the District will continue the activation of the Aquatic Center by working with local groups, including but not limited to the YMCA, Community Rowing of San Diego (CRSD) and Sailing Events Association San Diego (SEA San Diego) to provide programming. Consistent with the District issued Coastal Development Permit (CDP), the District will also offer facility rentals of the Aquatic Center for events such as birthdays, corporate/public meetings, school programs, and team building events. The District is also developing a long-term plan to ensure the lasting success of the facility which may include educational aquaculture, environmental conservation uses, and/or a facility operator to manage the day-to-day operations.
The proposed transfer of the Aquatic Center would assist a member city, provide waterfront amenities to the community and aligns with the District’s core mission by providing public access, recreation and environmental education. Staff recommends the Board adopt an ordinance granting the termination and surrender of the lease with the City and accepting the quitclaim deed.
RECOMMENDATION:
Recommendation
Adopt an Ordinance Granting the Termination and Surrender of Lease with the City of National City for the Operation of an Aquatic and Recreational Center and the Acceptance of a Quitclaim Deed from the City of National City for 8,412 Square Feet of Property Located at Pepper Park, in National City.
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FISCAL IMPACT:
The proposed Board action would not negatively impact revenues since the Lease with the City does not require rent payments. However, the proposed Board action would require the District to take over operations of the Aquatic Center which would require ongoing operational, maintenance and programming costs estimated at approximately $150,000 annually. Future expenditures for the Aquatic Center would be approved through the normal budgeting process The District will actively pursue facility rentals for the event space to help offset anticipated costs.
Compass Strategic Goals:
This agenda item supports the following Strategic Goal(s).
• A Port that the public understands and trusts.
• A vibrant waterfront destination where residents and visitors converge.
DISCUSSION:
Background:
Since 2004, the District and City have worked in cooperation to develop the Aquatic Center at Pepper Park, in National City (Attachment A - Location Map). In 2006, the Board adopted a Mitigated Negative Declaration (MND) and approved a Port Master Plan Amendment for construction and operation of the Aquatic Center. In 2010, the City, through its Redevelopment Agency, entered into a 30-year lease with the District commencing January 1, 2011 through December 31, 2040, which was subsequently assigned to the City after the Redevelopment Agency was dissolved. In July 2011, the Board authorized issuance of a CDP to the City for construction and operation of the Aquatic Center.
The City completed construction of the Aquatic Center in March 2016, which the District funded through the CIP with a contribution of $4.6 million. Since March 2015, the City has been unable to find a viable operator for the Aquatic Center. The following timeline summarizes the steps the City and District have taken to secure a long-term operator for the Aquatic Center:
• March 2015: City advertises and distributes a Request for Proposals (RFP) for qualified operators to operate Aquatic Center.
• May 2015: City Council authorizes staff to begin negotiating terms of an Operating Agreement with sole RFP respondent, Pier 32 Marina.
• June 2015: Pier 32 Marina ceases negotiations with the City due to the financial uncertainty of operating the Aquatic Center.
• February 2016: City Council authorizes staff to begin negotiating terms of an Operating Agreement with Southwestern Community College District (SWC).
• June 2016: City enters into a facility use permit with CRSD to offer programs at the Aquatic Center for summer 2016.
• September 206: The City and District issue a joint RFP seeking an operator for the Aquatic Center.
• December 2016: The City and District received one response to the RFP which was a collaborative proposal by four non-profit organizations, CRSD, SWC, Ocean Connectors, and the YMCA (collectively referred to as the “Collaborative”).
• February 2017: The City and District meet with the Collaborative to discuss the proposal and request additional details.
• March 2017: City Council authorizes City staff to contract directly with each member of the Collaborative to provide short-term programming at the Aquatic Center for the summer of 2017 while long-term negotiations with the Collaborative continue.
• September 2017: City staff determined the Collaborative did not have the wherewithal to operate the Aquatic Center.
• May 2018: Facing budget deficits, City Council authorizes staff to commence discussions with the District to transfer Aquatic Center operations and lease from the City to District.
Operations:
District staff has been working with the City to develop a transition plan to provide a smooth transfer of Aquatic Center operations. In the short term, the District will continue the activation of the Aquatic Center by working with local groups, including but not limited to the YMCA, CRSD and SEA San Diego to provide programming. The programming will likely include youth camps, courses, and community classes such as First Aid and CPR. Consistent with the CDP, when the facility is not in use the District will also offer facility rentals of the Aquatic Center for events such as birthday parties, public or corporate meetings, school programs, and team building events.
The District is also developing a long-term plan to ensure the lasting success of the facility. The District and City have received feedback from organizations that provide programming at the Aquatic Center that the special conditions in the CDP create operational challenges that impact the utilization of the Aquatic Center. As part of the National City Balanced Plan Environmental Impact Report (EIR), the District is analyzing the existing special conditions and pursuing opportunities to update the conditions to expand the allowed uses to provide more flexibility and to increase public utilization. Additionally, the EIR will analyze the expansion of uses at the Aquatic Center which may include educational aquaculture or environmental conservation uses, including small-scale research and development opportunities.
Lease Surrender and Termination:
As previously discussed, the City has a 30-year lease with the District commencing January 1, 2011 through December 31, 2040 for operation of the Aquatic Center. The Lease does not generate revenue to the District since the Aquatic Center is operated by a member city and serves a community benefit. The District and the City have prepared an Agreement for Surrender and Termination of Lease which would terminate the lease and transfer operations to the District (Attachment B - Agreement for Surrender and Termination of Lease). Additionally, the City will transfer the existing recreational equipment (kayak, stand up paddle boards, life jackets, etc.) so that future organizations and programs can utilize the equipment. A quitclaim deed has been prepared to allow the City to transfer their real property interests back to the District (Attachment C - Quitclaim Deed). On March 5, 2019, the City Council approved these documents.
The proposed transfer of the Aquatic Center would assist a member city, provide waterfront amenities to the community and aligns with the District’s core mission by providing public access, recreation and environmental education. Staff recommends the Board adopt an ordinance granting the termination and surrender of the lease with the City and accepting the quitclaim deed. This action will not prohibit National City from requesting a new lease in the future. However, the District is not obligated to agree to any such future request.
General Counsel’s Comments:
The Office of the General Counsel has reviewed and approved the proposed ordinance, lease termination and quit claim as to form and legality.
Environmental Review:
The proposed Board action, including without limitation, an ordinance granting the termination and surrender of a lease for the operation of the Aquatic Center and acceptance of a quitclaim deed for property located at Pepper Park was adequately covered in the Mitigated Negative Declaration (MND) for the National City Aquatic Center and Port Master Plan Amendment, prepared and adopted/certified by the District on October 10, 2006 (Resolution No. 2006-161). The proposed project is not a separate “project” for CEQA purposes but is a subsequent discretionary approval related to a previously approved project. (CEQA Guidelines § 15378(c); Van de Kamps Coalition v. Board of Trustees of Los Angeles Comm. College Dist. (2012) 206 Cal.App.4th 1036.) Additionally, pursuant to CEQA Guidelines Sections 15162 and 15163, and based on the review of the entire record, including without limitation, the MND, the District finds and recommends that the approval of the ordinance granting termination and surrender of the lease and acceptance of the quitclaim deed does not require further environmental review as: 1) no substantial changes are proposed to the project and no substantial changes have occurred that require major revisions to the MND due to the involvement of new significant environmental effects or an increase in severity of previously identified significant effects; and 2) no new information of substantial importance has come to light that (a) shows the Project will have one or more significant effects not discussed in the MND, (b) identifies significant impacts would not be more severe than those analyzed in the MND, (c) shows that mitigation measures or alternatives are now feasible that were identified as infeasible and those mitigation measures or alternatives would reduce significant impacts, and (d) no changes to mitigation measures or alternatives have been identified or are required. Because none of these factors have been triggered the District has the discretion to require no further analysis or environmental documentation (CEQA Guidelines §15162(b)). Pursuant to CEQA Guidelines §15162(b), the District finds and recommends that no further analysis or environmental documentation is necessary. Accordingly, the proposed Board action is merely a step in furtherance of the original project for which environmental review was performed and no supplemental or subsequent CEQA has been triggered, and no further environmental review is required.
In addition, the proposed Board direction or action complies with Sections 35 and 87 of the Port Act, which allow for the Board to do all acts necessary and convenient for the exercise of its powers, and for the use of tidelands for the construction, reconstruction, repair, maintenance, and operation of public buildings, public assembly and meeting places, convention centers, parks, playgrounds, bathhouses and bathing facilities, recreation and fishing piers, public recreation facilities, including, but not limited to, public golf courses, and for all works, buildings, facilities, utilities, structures, and appliances incidental, necessary, or convenient for the promotion and accommodation of any of those uses. The Port Act was enacted by the California Legislature and is consistent with the Public Trust Doctrine. Consequently, the proposed Board action are consistent with the Public Trust Doctrine.
Finally, the project was covered in the Coastal Development Permit (CDP) for the National City Aquatic Center (CDP-2011-01) approved by the District on July 12, 2011. The proposed Board direction or action is consistent with the project in that CDP. No additional action under the California Coastal Act is required at this time.
Equal Opportunity Program:
Not applicable.
PREPARED BY:
Ryan Donald
Assistant Director, Real Estate
Attachment(s):
Attachment A: Location Map
Attachment B: Agreement for Surrender and Termination of Lease
Attachment C: Quitclaim Deed