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IMG_0690Monterey 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.

Here’s Barrett’s white paper and the city manager’s response.

Comments on this entry are closed.

  • gin October 31, 2016, 6:53 pm

    “Without much thought, apparently, Barrett writes this: “Incontrovertible Fact: Wharf I generates approximately 25% of the City of Monterey sales tax revenues.”

    As I read that quote, I thought to myself “that is NOT possible”

    My guess would have been closer to 1%.

    While my percentage would have been incorrect, it would have been a heck of a lot closer that Mr. Barrett’s “very obviously wrong guess”

  • Andrew Allison October 31, 2016, 7:34 pm

    Almost as ludicrous as the Seaside City Council’s crazed insistence on pushing Monterey Downs despite the fact that the project doesn’t have a hope in hell of surviving the challenges. Same diagnosis: are they really that stupid, or have they been bought?

  • Karl Pallastrini October 31, 2016, 7:58 pm

    It takes a lot of courage to take on the status quo…or the establishment. Much easier to get along and go along. A tip of the hat to Libby and Alan for remaining resolute in what they believe is fair and in the best interests of the City of Monterey.

  • Bob Coble October 31, 2016, 8:23 pm

    I had high hopes for Timothy Barrett when he first ran for Monterey City Council. I am extremely disappointed to see that he is willing to use the dishonesty of some of the Wharf tenants and cite false information as “facts.” Clearly he, along with some of the other council members, has essentially been “bought” by the tenants who make a fortune off Monterey’s largesse.

    • Esther Malkin October 31, 2016, 9:11 pm

      And if the challenger with no experience but old money backing him & daddy’s name recognition beats one of the incumbent council members it’s for the same reason sadly

  • Esther Malkin October 31, 2016, 9:09 pm

    Beginning to think we’re going to have our own local Trump?
    Amazing how small town politics resemble the national politics….

    • david fairhurst October 31, 2016, 10:19 pm

      Strange, I was thinking more like the corruption of Hillary and her attachment to A. Weiner.

  • Sandra October 31, 2016, 9:53 pm

    New lease terms proposed by the City are slated to meet current Fair market value they said. Turns out the “escalating” base rent, CAM charges and the expected TI’s amount to much more than the area FMV. You people have no idea what you’re taking about. Writing blindly as if you’re at all personally involved.

    • Michael B November 2, 2016, 9:46 am

      …although familiar with CAM (Common Area Maintenance), I am not up on TI and FMV. You could call me ignorant, or you could explain to enlighten. I suspect I am not the only reader in this situation.
      Thanks Sandra

  • Christy October 31, 2016, 9:57 pm

    Interesting to note that the ONLY Monterey City council member to endorse Albert was Ed Smith.
    I also will not vote for Barrett again. So weird that he about faced on the subject of Wharf 2 leases.
    Businesses on the Wharf should pay fair market value rents and not be able to sublease. And no more 50 year leases please!!!

  • Alan Haffa November 1, 2016, 5:51 pm

    Tonight, Tuesday, Nov. 1 at our 7:00 P.M. meeting, Council will address two important issues: 1) commercial leasing policy and 2) campaign finance regulation. If you are interested in speaking to council about leasing or about having regulations on campaign donations (currently there are no limits), please come to the meeting.

    • Ron Chesshire November 1, 2016, 6:02 pm

      I’ve been screaming for limits in this damned County for almost 4 years. It’s about time some public entity is finally considering it. Thank you.

  • Jon Chown November 1, 2016, 9:42 pm

    It’s not believable, to me, that Royal Calkins, who is a trained journalist, still hasn’t called the State Lands Commission or at the very least, reviewed the SLC’s website to review the restrictions of how the income from the wharf can be spent. It’s restricted, its Tidelands Fund income and has been misused by the city for decades. The city is STILL undergoing an audit for this misuse. Why does Calkins take Haffa’s word that this isn’t true without calling Sacramento? Hell, he could even look at the documents I have emailed him in the past and quickly ascertain the truth, but instead, he writes posts like these. It puzzles me. I can only guess that his friendship with Haffa and McCrone prevents him from it.

    • Royal Calkins November 2, 2016, 6:39 pm

      Jon– I’ve studied the issue and I believe that what i have written is correct. Tell me what the city is doing wrong now and how it unfairly affects the wharf tenants. You are a paid PR man. If you would like to lecture me on the public relations business, feel free, but beyond that I’m not interested.

  • Jerry Duncan November 2, 2016, 10:05 am

    According to the City Manager, who admitted this at last nights City Council meeting, he gave Barrett the wrong percentage number. It’s actually 4 % which is still a lot of money. Bottom line that was also proved last night was that the Wharf contributes millions of dollars per year more than it cost the City and the impact on the General Fund is $0.

  • Willard McCrone November 2, 2016, 2:53 pm

    Barrett’s “White Paper” was likely written by Chris Shake and his attorney, Anthony Lombardo. It is so sad to see Barrett co-opted by the Shakes and other private Wharf merchants. He is now a shill for the Wharf Lords, just like Ed Smith and Dan Albert Jr. would be. It is now all backroom politics for the good ole boys.

    I have written many factual essays about the ripoff of the public taking place daily on Fisherman’s Wharf (look in the archives under my name). The 1991 City Council gave away millions of public dollars to the good ole boys by extending expired ground leases at the same rent as in place for thirty years, for up to 50 years. Every year those leases remain in effect costs the public 2 or 3 million dollars, so of course the Wharf Lords want to do everything they can to corrupt the process and continue their monopoly indefinitely.

    The facts are indisputable. All tenants on the Wharf should be on building leases (the public obtained unfettered ownership of the buildings in 1989 by reversion). FMV for restaurants in this prime location should be 10 to 12% of gross sales, instead of the 3.5% now being paid. A restaurant like the Old Fisherman’s Grotto pays about $12,000 per month rent to the city. In addition, the restaurant pays a sub-lease rent to Chris Shake in an amount approaching $30,000/month, nearly three times as much as the city rent. The combined figures are about FMV for that restaurant, at 12% of gross.

    I have come around to thinking that people believe what they want to believe, facts be damned. This City Council is about to pull the wool over the publics’ eyes again. Depending upon how this comes out, the city could be ripe for a lawsuit to void all the leases as an unconstitutional giveaway of public funds.

  • bill leone November 6, 2016, 8:56 pm

    Ron & I are in strong agreement on this one!