2013-10-24 / Around Town

Yacht Club Lease Affirmed

By Tom Shevlin

City Council members on Wednesday, Oct. 23 voted to affirm its lease agreement with the Newport Yacht Club, backing up a recommendation provided by the city manager’s office late last month.

In a resolution sponsored by Mayor Henry F. Winthrop, councilors voted to recognize the terms of the current lease as sufficient, citing both the tangible and intangible contributions it makes to the city’s financial and cultural health.

Last month, councilors were provided with a memo from City Manager Jane Howington that recommended that no changes be made to the 40-year lease agreement. However, upon receiving that report, Councilor Michael T. Farley renewed concerns that he had expressed several months before and implored his fellow councilors to bring the lease back in line with its original language.

On Wednesday, he expounded on that call, and provided a tinge of controversy to the night’s meeting.

In a separate resolution, which he sought to withdraw, Farley chided Howington for failing to “complete the direction (of the council) in a timely manner” by not renegotiating the lease prior to an Oct. 15 deadline.

He further called for Howington’s admonishment for “insubordination and willful disobedience of a lawful directive of the council” and asked that a special meeting be held on Nov. 6 “for the sole purpose of providing feedback on the lease” in time for a final vote on Nov. 13.

Councilors, however, pushed back on the resolution and, in turn, Farley's tack, which they said should not be played out in the press or for that matter in the public arena.

As Second Ward Councilor Justin S. McLaughin said, it's important that the council work together in order to achieve their objectives and asked that the council "take a few deep breaths" and "agree to disagree without being disagreeable."

McLaughlin's sentiments were echoed across the dais with Councilor Naomi Neville calling Farley's tactics distracting and dysfunctional, while First Ward Councilor Marco T. Camacho said that the resolution was distasteful, embarrassing, and petty. Councilor Jeanne-Marie Napolitano labeled it as improper. For his part, Mayor Henry F. Winthrop called Farley's resolution a form of "bullying" and unprecedented in his time in city politics.

Farley said that he would take the criticism to heart and sought to return to the substance of the resolution.

According to Farley, "the guidelines of the lease provided that the lease payment term should be approximately five percent of the assessed value of the property…If the guideline were followed, the lease payment would more than double to $102,505 per year.”

However, Howington, who began looking into the lease after a council directive earlier this summer, determined that while the property may have seen its assessed value increase, overall the arrangement has remained true to the spirit of the original 1993 lease.

And while the current agreement isn't due to expire until Nov. 1, 2023, the lease does provide that either party may 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."

According to Howington, "a 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, the Newport Yacht Club is responsible each year for a base rate payment, which is adjusted based on the consumer price index and annually compounded. 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 more almost $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.

But Farley took issue with that assessment.

"It is clear to anyone with a calculator that there is a substantial deviation (in the lease)," he said.

In her report, however, Howington noted that in addition to its financial contribution, the club also provides other "intangible benefits" to the city, which are harder to quantify. 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.

As Howington noted, such benefits "have been maintained and, in some cases, expanded."

In addition, Howington pointed out 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 cityowned docks. The cost of that project, estimated at $800,000, is being borne by the club's membership.

Winthrop agreed, calling the agreement much more than a simple lease: "It's a property management agreement for the city," he said.

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