DATE: October 8, 2019
SUBJECT:
Title
ORDINANCE AUTHORIZING THE DISTRICT'S EXECUTIVE DIRECTOR AND AUTHORIZED DESIGNEE TO GRANT FIVE (5) YEAR WAIVERS ON TENANT RENT PAYMENTS FOR ELECTRICITY CHARGES PASSED THROUGH TO SLIP RENTERS AT MARINAS AND YACHT CLUBS THAT ARE FULLY SUB-METERED
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EXECUTIVE SUMMARY:
The District's real estate portfolio includes 40 marinas and 6 yacht clubs. These leases are predominantly percentage rent leases through which the District receives certain percentages of the gross income generated by the master tenant from a variety of activities conducted on the leased premises. Currently, the gross income from marina and yacht club leases include payments made by boat slips renters for their use of electricity. At the May 8, 2018 Board meeting, concerns were raised by members of the Port Tenant's Association ("PTA") regarding the District's practice of including electricity payments in the calculation of gross income and subjecting the income to percentage rent.
Although the District's current practice is lawful, staff believes other important Board policy goals may be advanced by finding an equitable solution that encourages the installation and continued preservation of sub-metered slips. There is evidence, supported by State-sponsored studies, suggesting that sub-metered marinas use significantly less energy than marinas without sub-metered slips. Sub-metering slips allows a marina to pass on the full charge for each individual boater's energy use, as opposed to one charge for the entire marina, eventually being divided among the slips. By incentivizing marinas and yacht clubs to become fully sub-metered, the District will potentially reduce the overall amount of energy consumed by marinas and yacht clubs. If approved, this action would authorize the District's Executive Director and authorized designee to temporarily waive the District's right to collect rent on gross income from electricity pass-throughs for all marinas and yacht ...
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