Monterey City Councilman Timothy Barrett frequently aligns with colleagues Libby Downey and Alan Haffa but has taken a sharp turn to oppose their effort to reform the city’s archaic leasing policies for the city-owned Fisherman’s Wharf.
Barrett has distributed what he is calling an “information paper” to argue essentially that the city treats commercial tenants at the wharf unfairly even though several are operating under below-market rental agreements negotiated decades ago.
Unfortunately for Barrett and others who have taken up the tenants’ cause, he sabotages his argument with erroneous information, including a huge exaggeration of the taxes generated by the wharf merchants.
Early in his paper, Barrett features a list of “incontrovertible facts.” One is that the city is spending some of the wharf income on impermissible expenses. He writes that state law requires all income derived from tideland properties to be expended in the tideland zone but he cites no examples of money improperly spent. The implication is that wharf income must be reinvested in the wharf, though state law and city policy clearly allow for the money to be used for other tideland purposes such as harbor dredging.
The heart of his case that the city is impermissibly profiting from the wharf and not reinvesting all the rental income into the wharf for maintenance, improvements or other expenses. He argues that the wharf enterprises are subsidizing the city and suggests it should be the other way around.
What’s wrong with his argument is simply this. If all the income from rental property had to be plowed back into the property, what would be the point of owning the property? Would any commercial landlords intentionally adopt a break-even business plan? The city could operate the wharf as a non-profit venture by offering discounted rental rates, but it would need to offer leasing opportunities to all comers and require them to provide a public service component beyond the catch of the day.
Which brings up another of Barrett’s “incontrovertible facts.”
Without much thought, apparently, Barrett writes this: “Incontrovertible Fact: Wharf 1 generates approximately 25% of the City of Monterey sales tax revenues. Sales tax revenues accrue to the General Fund where they support City services such as fire and police, services which benefit the entire community.”
The problem here is that the wharf generates only 4 percent of the city’s sales tax revenue, according to City Manager Mike McCarthy in a memo to the council last week. Not 25 percent. Not 10 percent. Four percent.
Barrett must not have thought about the scale of the wharf operations – a dozen or so restaurants, some gift shops, some fishing and cruising operations – and compare it to the scale of the rest of the sales tax-generating businesses in the city. Such as Del Monte Center, downtown, the Fremont and Lighthouse business corridors and, of course, Cannery Row.
You may have seen Barrett’s 25 percent figure repeated in a letter to the editor of the Herald the other day. That doesn’t mean it’s right.
Finally, Barrett falls for a big piece of the PR campaign being waged by the wharf merchants in support of the status quo. They have argued, without evidence, that the city’s effort to modernize the leasing structure would bring in chain restaurants and eliminate some of the unique and local operations there.
Barrett writes, “On multiple occasions during comments delivered to the Monterey City Council, proponents of the City’s Leasing Policies / Guidelines have indicated a desire to see corporate chains on Wharf 1 where locally owned and headquartered businesses now exist.”
I emailed Barrett over the weekend and again Monday to ask him if he could cite specifics. I haven’t heard back from him. Downey said Monday that she has not heard any city representatives say anything of the sort. She and Haffa, the chief proponents of reforming the lease policies, have made it clear repeatedly that they want the city to maintain the local character of the wharf.
The council takes up the issue of wharf leases again Tuesday night. With Barrett’s defection from the reform camp, it seems likely that the wharf interests will continue to chip away at the reform measures and that people who signed wharf leases years ago will continue subleasing the properties to others for multiples of what they are paying the city. It amounts to profiteering at the expense of taxpayers.
There’s a lot of tradition in a place like Monterey, the good kind and the not so good.