2013-10-10 / Front Page

No Change for Yacht Club Lease

By Tom Shevlin

After becoming the subject of controversy earlier this year, the city's lease with the Newport Yacht Club appears safe.

In a report issued earlier this month, City Manager Jane Howington told council members that the lease terms have remained within the bounds of a 30-year lease agreement first signed in 1993.

While the current lease agreement isn't due to expire until Nov. 1, 2023, the lease does allow either party to initiate a review of its terms on a five-year basis and seek out appropriate changes provided that a "substantial deviation from the general guidelines is found."

That's exactly what councilors were looking for when, earlier this summer, they directed staff to take a critical look at the lease to determine whether any additional revenues could be gained through the club's annual lease payment.

According to Howington, "Review of the Newport Yacht Club's tangible and intangible benefits to the City has not revealed any substantial deviation from the general guidelines of the existing agreement. Lease payments are adjusted annually for [inflation], the property is maintained, and major capital infrastructure improvements are scheduled."

According to the terms of the lease, each year the Newport Yacht Club is responsible for an annual base rate payment, which is adjusted based on the consumer price index and compounded each year. In addition, the club also pays tangible and real property taxes on their structures, equipment and improvements.

According to data collected by the city, in 2012, the club paid a total of $64,080 in taxes and lease installments, up from $63,059 in 2011 and nearly $20,000 more than in 1999 when it accounted for $44,321 in combined revenue to the city.

More broadly, over the past 14 years, the yacht club has contributed a grand total of $796,590 to city coffers through annual lease and tax payments.

And while that number may have been more if the facility were operating strictly within the private marketplace, as Howington notes, the club also provides other "intangible benefits" to the city, which are harder to quantify.

Howington said that those intangible benefits "have been maintained and, in some cases, expanded."

Among those benefits are slip space for a total of four harbormaster vessels, the use of hauling equipment by the city, and access to a shared utility building and parking lot.

In addition, Howington noted that the club is responsible for the maintenance of an abutting seawall, provides special event space for city events, organizes youth sailing programs, oversees various regattas, and has recently undertaken significant improvements to the property and dock infrastructure, including the installation of a wave attenuation system that helps safeguard other city-owned docks. That project, which was estimated to cost $800,000, is being borne by the club's membership.

Howington provided councilors with the report at their Oct. 9 meeting. No action was required and no changes to the lease are expected.

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