AN ORDINANCE relating to the Department of Parks and Recreation; authorizing the execution of a lease agreement with Marina Management, L.L.C. for moorage improvements, maintenance, and operation of the City of Seattle’s public Leschi and Lakewood moorage facilities on Lake Washington; and amending Ordinance 124927, which adopted the 2016 budget, to lift a budget proviso imposed on the Department of Parks and Recreation’s Capital Improvement Program budget in 2016 for the moorage facilities.
Thank you very much. Any questions about this appointment? Those in favor of confirming the appointment. Please vote i i. Those opposed vote. No. The motion carries. The appointment is confirmed. Please read the report of the Parks. Seattle Center Libraries and Waterfront Committee. The Report of the Park's Seattle Center Libraries and Waterfront Committee Agenda Item seven Council 118996 relating to the Department of Parks Recreation authorizing the execution of a lease agreement with Marina Management LLC for mortgage improvements, maintenance and operation of the City Sails Public, Lesh II and Lakewood March facilities on Lake Washington and in many ordinance 124 927 , which adopted the 2016 budget to lift a proviso budget imposed on the Department of Parks Recreation's Capital Improvement Program budget in 2016 for the March Facilities Committee recommends the bill passes amended. Thank you, Councilmember. Worse. Thank you. This is the came out of unanimously out of parks. And so I want to begin with some information and some little background information for those of you who hadn't had a chance to actually read this lease. The Lake Washington mortgage agreement is for the management of public mortgages on Lake Washington. These public mortgages were operated by a contractor for over 34 years and have only been operated by the Department of Parks and Recreation since October 2015. So respectfully, two years in 2013, a request for proposal was released and Marina Management LLC was chosen as a successful proposal. The lease agreement provides for a 20 year agreement with up to two successive year successive tenure extensions. The superintendent of the Department of Parks and Recreation will provide written approval of the capital improvements. The superintendent will also provide approval of slip rent increases, slips of 30 feet and under will have a rent cap of $12 adjusted by CPI. All other slip increases will have to be rationalized with a market study and approved by the superintendent. The tenant marina management must give 60 day notice to the superintendent to permit or deny rate increase. What's more important is that we are in this agreement looking at public ask to access will be a key component of this new agreement, creating more opportunity for non boat owners to enjoy access to Lake Washington. I want to make a few comments based on the lease and some of the issues that have arisen and particularly address some of the people that have. And thank you for showing up for public comment and all the other hearings that we've had in the actual agreement. It is on our sixth draft. We've had three committee hearings, public comment. We've met privately with the community groups. I want to thank central staff and legal for assisting us. And my understanding is this issue has been active for at least five years. The history which I had included in the lease is that since the 1930s, 1931 has always been operated by a private operator or company from 1981 to 2015. We again had a private operator that was so from 1981 to 2015. That's 34 years. And then, of course, the last couple of years, Department of Parks and Recreation has been attempting to operate these two marinas. I want to state that we did address the rental rates and made sure that we had notice and that capital improvements were done before any kind of rates could be increased. My understanding is that the on board people will be grandfathered in. So we addressed the issue of displacement. We also made sure that the tenant cannot raise rates until all capital improvements are completed. And inside the lease agreement, we are subject to DNR leases which supersede, of course, this lease. I should note that no land is being sold nor land is being transferred at or change from park use to any other use. In addition or in conclusion. I think we should note that this is indeed a partnership. It is not anything new, and it's not anything we haven't done before. I'm learning in this committee we have many public private partnerships with many of the park assets and all the other properties that the city owns. I would note that Councilmember Bagshaw, I believe, who is part of our committee, had a few comments to make as well. Thank you guys for being back, Joe. Thank you, sir. So for my colleagues, this legislation is something that I actually was working on five years ago when I was part chair and we had an RFP that the community really didn't like. And we went back to the drawing board and it took several years. We went through a project advisory team receiving their input as well. And for those of you who have been to Lesh, you know that the docks in the finger piers out there are impossibly bad. To say that they are sinking is an understatement. You cannot walk on parts of them. Some of the others who are we still have small boats moored are in just deplorable condition. We needed to do something and it was million dollar, millions of dollars that Parks did not have. So we entered into or proposed to be entering into this agreement that will be financially sustainable, where we will have assistance not only in the. Rebuilding but maintaining the asset going forward. Parks, as Councilmember Suarez pointed out, will continue to own the property. It's not like we're transferring property. We are getting assistance from the private sector with people who are experts in doing this to build and then operate. We have heard from a handful of people here today. I do want to say thank you. You have been very, very committed to your community. And I want you to know that we've heard loud and clear what your concerns are with Lakewood Mortgage in particular. I also want to acknowledge that we've heard from dozens and dozens of families that have urged us to move forward with this. They are have small sailboats. They've got small boat, but small things like this. Also, there are a lot of kayakers who would like to have access to the water. That is what we're trying to accomplish here. And as was pointed out already, the parks will review and approve the lease rates. This is not something where it will be dictated to us, but we will make sure that the rates are consistent with fair market value and that families will continue to have access to this. Both marinas and something came up last week that I pointed out. I think there is an opportunity for the community to stay involved. Lots of concerns. I heard about speedboats and jetskis and I wanted to use as a model what San Juan County did in the mid nineties where they actually put an end to jetskis in and around Friday Harbor and places where there were noise was being extremely annoying but also impacting the orcas that were residents around there. I think this is an opportunity for us to work with King County. Should the community continue to want to be involved in this? There's something we can do there and that there is a model from which we can follow. So with that, I just urge my colleagues to proceed with this, to vote yes for this marina. I see our superintendent, Susan Aguirre, in the front row. We have put them through their paces. So thank you for being here and joining us today. President Harrell, can I just say one comment? I'm sorry. Absolutely. I'll just wrap it up and I apologize in which. I have some comments as well. But I know you do. I just want to say this. After six variations of this lease and working with legal and working with parks and work with marine management and thank you, Joe, Brian, for meeting meeting with you and giving us a lot of great feedback. Our goal here for Seward Park is that this is a community asset and it should be open to all of the public that this is everybody's marina, that the marina belongs to the public and not just people that own boats. And that is our main goal here. When we were plowing through the maps, the lease in the agreements and the attachments, including the parking lot. And so when we look back at the history from the throes up into the fifties and then up to 91 in 1981, I think it's fair to say that. And there's nothing wrong with that, that particular communities did enjoy the lake and access and boating. But now that we're in an era of race and social justice and access and everybody being able to enjoy all of Seattle's benefits, that was really our goal, is to make sure that we open this up and that we partner with somebody that can make that a reality. We did not enter into this lease lightly, and again, that was our main goal. Here it is and certainly wasn't to destroy or displace or not take into account the wonderful individuals and families that have enjoyed their slips in this lake since the 1950s. But to open it up to all of Seattle's residents and beyond. Thank you. Thank you. I'd make a few comments here. And I again, I want to thank Councilman Waters and Bagshaw and the Committee for and that I sit on for really trying to do as much of a deep dove as possible in reviewing the lease and sort of reviewing the record. I, I can't support this legislation. We'll be voting against it for, quite candidly, for a variety of reasons. While we're not conveying the property, it is a 20 year lease with an option, I think two options at ten years an option. So we're certainly tying it up for quite a long time. And you know, I look at this from two perspectives. One is what's in the city's best interests and what's in the community's best interest. And hopefully those don't mutually exclude one another from the city's perspective. If you look at that, you know, I asked during the committee, what's the value of these two assets? No one ever looked at each other. And I said, well, if I just use the the amount of capital investments, but the both the city and marina management, the privately owned firm that will put into it there, they're allegedly putting in around 8.2 billion. I see. Allegedly or theoretically, because if you look at the lease, there's really not a dollar amount that they stipulate to investing. It's there's a an attachment that describes the kinds of capital improvements. But we don't know from this lease what the amount of capital improvements will be. But let's say it's 8,000,008.2, which is the number that those that were shared at the committee table and the city will invest approximately 7.2. So roughly, if you just add those two and say this assets worth 15 million plus what the city receives is about $25,000 annually. 25,000 on a $15 million asset to me is not a good rate of return, nor is it a prudent investment. I go a step further to look at that. We have been receiving anywhere upwards north of 350 to 400000 over the years. And I've heard Parks say, well, we're not in the business of renting a marina. That's not our core competency, so to speak. And I push back on that by saying, you know, we're we're port city, we're surrounded by water. We regulate houseboat rates and rental rates in Lake Union. We should know this line of business should should be part of our fabric as a city, as is a port city at that. And so I look at, again, the numbers where even at this stage of the legislation where we can't see specifically what the new slip configuration would be, we can't say with specificity how much capital improvements will be done. I can't say when you look at the rate of return, this is a good deal for the city that we are tying up for 20 million to 20 years plus now. We've have some great public private partnerships that have worked for the benefit of the community and for the city. And I applaud and have supported these. When we put this out for an RFP, you may recall that these two are these two marinas to to lump them together. I think someone does each of those marinas a disservice. Less shy is literally falling in the water. Lakewood is not in dire straits, is is less shy. And you may recall that we did put in about 3.8 million in the budget to fix up to fix Lesher. And what we then did some time after that was we allowed Parks instead of using that for capped repairs to less shy to sort of leverage that for this RFP. And through that RFP process, we listened to the community and come up with a plan well out of that work and that was good work. We only really had one significant responder to the RFP. I think that some of the communities and some of the people that oppose it put together sort of a response. And I don't even know if that was for both marinas, but we really had one commercial response. And to me that should have been a flag that perhaps we need to re approach or reevaluate our approach to this whole dilemma that we found ourselves in. And it's a very important to realize that we found ourselves in this dilemma because the city neglected to invest the revenues we received for year after year after year north of $350,000 into the marinas. So I think this is a shortcut. This is a shortcut to tie up this land with a very, very minimal return on our investment to a private entity. And I don't think that that's good policy. I would also suggest that when you have one bid and you do not have an independent consultant or an economist or anyone really look at the land value and whether this is a good business deal for the city. And I don't believe because I asked several questions about that when you don't have that kind of record to suggest this is good business, that it wouldn't be ready for legislation. And I think that's the situation we find ourselves in now in terms of the community. I don't think anyone's arguing that this should be open, this should not be open to the public, and it's not a public gem. And I think that the community understands that. But in Lakewood as an example, most of the residents are from 98118. You heard testimony and repeated testimony that these aren't rich, wealthy, affluent folks who just have money just to spend. You have a lot of working class people who have affordable that are willing to pay affordable rates, and they're not trying to compare that to private mortgages in other parts of the city. So I won't support this legislation because I think we have an incredible gem here and we're not doing the hard work to really look at what makes best sense for the city and for the community. And we sort of took a shortcut by privatizing this arrangement at a very nominal rate of return. Again, 15 million getting 25,000 per year, which is significantly lower than even what we were getting when we were running it ourselves. So that's my position, particularly as a District two person is very familiar with this area and the other one is of course in the other district, but I know them both. So that's that's my opinion. Councilmember Herbold. Couple questions. First, clarifying question for you. Councilmember Harrell or Council President Harrell, are you saying that our our rate of return historically has been around $350,000 a year? In your back of the envelope calculation is it's it's looking like $25,000 a year with this. Deal. Correct. That 380,000 maybe. We asked this question during committee how much revenues are receiving now. We've we had a small operator and then we managed it ourselves. And I want to say upward of 350 to 400000 under the new lease that you're being asked to consider now will receive roughly around $25,000. It may go up as rents go up and rents will go up. So it'll increase, but only slightly based on the rent increase, but roughly 25,000. And that's my my second question as it relates to the rent increases. Chair Whereas you spoke to the fact that there can't be any rent increases until the capital improvements are made and that those parks superintendent has some oversight of rent increases. I was wondering if, one, you could speak to what constraints the park superintendent is under in approving requested rent and increases in two. Are there any expectations in. The. In the agreement that relate specifically to the number of slips? That would be another concern I would have is if under this new agreement, they were allowed to reduce the total number of slips. Available for for public. Use. Well, maybe you should it to my committee for the last six months, but I will answer that, first of all. Number one, we actually changed the conditions in the lease that the superintendent first of all, number one, we changed the first and most important thing is that nobody's slip increase, rent increase would occur unless all capital improvements were done. And there's an attachment that has a list of all the capital improvements. The second piece is, as you said, and that's a very good question because that was brought up by many people that came and gave public comment, is that the increases will be done if their lessee slips of 30 feet and under will have a cap of $12 adjusted by CPI. Some may argue that's rent control with people, with boats. All other slip increases will have to be rationalized with a market study. So what we did in this was council. Harrell's concern is that the tenant wouldn't just be allowed to just raise the rent. They would have to show the superintended a market, study a reasonable rates and give them the tenant would have to give the superintendent 60 days notice that this is what they intend. And then the superintendent can make a decision whether or not to allow the tenant to raise the rent. And the superintendent cannot unreasonably deny or delay the tenant's request. And then Councilmember Bagshaw made sure that there were particulars in the lease so that people have an opportunity to voice their concerns about raising raising the rent. And again, the people that live on board, I understand, will be grandfathered in. And as far as and I just want to share this and just briefly how we got here. And again, I wasn't here five or six years ago because that's how long this has been going on. The city and marine management will partner to support the renovation projects, which we estimate will actually be on an estimate between 16 and $18 million, which we just don't have the money for. There's a reason why for decades and decades, we've had private operators managing these marinas, not the city. We've only been doing it for a couple of years. The partnership leverages the city's 3.8 million capital improvement allocation for the mortgages, increasing the scope of the improvements. So management will pay for all operating expenses related to the management and operation of the marinas. Re management is responsible for paying annual DNR lease payments, lease excise taxes and other taxes and penalties, including the lease and marine management, will pay rent in the amount of 3% of gross revenues. Now, this is a 20 term lease, and what I understand from legal that that's not uncommon. As you know, in the state of Washington, the the there is no. One of the few states in this country that allow private ownership of Thailand's. However, in this case, the state of Washington owns all the tidelands we own. Basically the effect not physical fixtures, but the buildings, which, as you can see from the pictures, if you looked at, are completely dilapidated as well as the docks. So this was what the agreement came to. Hence six drafts of it. And I want to add to that, we did take into the account about displacement and the DNR leases and we did make sure that we worked with legal and the superintendent on how what the process would be for people that are there, that people aren't displaced. And this is what we came up with. One other just answer to your question about the number of slips that's in attachment F to the lease agreement. And let's just take less shy as an example. You'll see reading down that there are 52 spaces for 25 foot slips. The same with 30. And then there are a couple of lines there for 60 foot slips. That's a pretty big boat to have a 60 foot slip, but those can be divided into throws or even two tows if they want to have some smaller boats on there. So in attachment, if you will see that those are the minimum set, what are expected, they may change as the configuration is put in play, but it gives that gives park some flexibility. So since we're all answering the question, I'll sort of give my answer as well. But I think what's critical about all these answers is, again, and this is not meant as a criticism of any of my colleagues, I just think it is what it is that the lease and even the attachment, these are aspirations, but it's not very specific. And I know that there's been emails to suggest that this slips and one of the marinas will drop from 138 to 1 or two. That's a those are very specific numbers, and I haven't seen anything to refute that. So again, I ask very simple questions like, when will the repairs be done? What's the schedule to be done? And if you ask central staff that, I think he would tell you he can't tell based on these documents because that's how scanty they are, in my opinion. Again, I think there's an enormous amount of sort of good faith in this lease, but I don't think we're here to make decisions on good faith. We're here to look at both the letter of the lease and the policy goals we're trying to achieve. And I say this particularly in terms of public private partnerships, particularly one that so long and again, this is these are, you know, I'm saying 15 to $16 million worth of assets and huge opportunities, by the way, when we're talking about particularly reaching residents in 98118, if you ask me, well, what would you how would you like to proceed? I'd like to fix like less shy and with capital improvements and really start from scratch on what the design to look from Lakewood. But you don't even have to start from scratch because all of that good community work has been done. But again, to sort of turn the keys over for 20 years, I don't think is a prudent way to go, given these very simple questions like, well, what exactly will the number of slips be? Because there's too many ambiguities, I think, in the attachments, because they're not we're not bound to the attachment. There's still there's still a lot of wiggle room. I have one last question that gets memorable. The two tenure extension options, we refer to them as options. But there if I if I'm correct, they're only options for the tenant. We we don't have the ability to say no. If the tenant wants to once the two tenure extensions. Is that. Correct? My understanding is that we do have the ability to say, well, cancel it. Yes, I could. Why don't I move to suspend the rules? Why don't I spin rules and. Mr. Goodenough, would you like to just answer that one question? Thank you. On the options. Ranga Knight Council Central Staff. So it is the option of the tenants to it. As long as the tenant has completed the capital improvements and is not in default of the lease, then they have the option to exercise the ten year extension options. Thank you. Yeah. Thank you, Mr.. Goodnight. Uh, okay. Well, we've got sort of Councilmember Bryan, please. Yeah, I'll. Just be brief. Council resident here. I share your concerns and your comments, and so I will also be joining you in voting no on this. Thank you. Any other concerns or questions at this point? Councilman, where did you want to see any closing remarks before we vote? Thank you. That's picture. Okay. Just let me get my notes. Okay. So we have a bill that came out of committee, so please call the role on the passage of the Bill O'Brien. No. No. No. You've got a choice as to. Who knows? Hi. Yeah. Yeah. Burgess Hi. Gonzalez Johnson Whereas I. Herbold No. President Harrell. Nope. Five in favor, three opposed. Okay, I'll kick. Please read the next agenda item into the record. I'm sorry. The bill passed and Cher was silent. Thank you for that. And please read the next gen item.