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HomeMy WebLinkAbout1991-11-18; Parks & Recreation Commission; 1191-7; Agua Hedionda LagoonPARKS & RECREATION COMMISSION - AGENDA BILL AH* MTG. \\-jS-HI TITLE- AGUA HEDIONDA LAGOON (ACTION) RECOMMENDED ACTION: Review and support City staff's recommendation outlined on the draft agenda bill (Exhibit 1). ITEM EXPLANATION: The attached City Council agenda bill will be going before the City Council shortly for their action. The information contained within the agenda bill relates to the operation of the Agua Hedionda Lagoon, specifically issues related to insurance requirements. The City of Carlsbad was contacted by the State of California's Department of Boating and Waterways (DBW) regarding the requirement to name the City of Carlsbad as additionally insured prior to issuance of a lagoon use permit. In essence, the DBW has determined that this insurance requirement is illegal, and they have buttressed their position by obtaining a concurring opinion from the State Attorney General's office. Although the legality of the insurance requirement at this time remains questionable in terms of the rendering of a legal decision from a court of law, the agenda bill is recommending that the City of Carlsbad not pursue costly litigation. Rather, a recommendation will be submitted to eliminate the requirement to have the City named as additionally insured, continue the current enforcement program by implementing the existing lagoon ordinance and regulations on the lagoon, and to amend the lease with SDG&E by eliminating the middle portion of the lagoon and continuing to lease the inner portion only. Staff will present a verbal report for more detailed information. FISCAL IMPACT: Please refer to the fiscal impact statement of the attached City Council agenda bill. EXHIBITS: 1. Draft City Council agenda bill (AHL response to litigation threat) OQoo CITY OF CARLSBAD — AGENDA BILL mm. AB# MTtt DFPT ' ! %v AGUA HEDIONDA LAGOON • RESPONSE W LITIGATION THREAT FROM DEPARTMENT OF BOATING AND WATERWAYS (D.B.W.) DFPT. HD. CITY ATTY CITY MGR. RECOMMENDED ACTION: i ,0 That the Council adopt Resolution No. rescinding the November 6, 1980 supplement to the agreement between the City and Dr. Sarkaria to relieve the operators of the obligation not to launch any boat on the lagoon without insurance, which names the City as an additional insured. It is further recommended that the City leave the existing lagoon ordinance and regulations in place and direct staff by motion, to initiate steps to amend the lease with SDG&E by eliminating the middle portion of the lagoon and continuing to lease the inner portion only. ITEM EXPLANATION; The Department of Boating and Waterways (D.B.W.) has notified the City that they would seek appropriate legal remedies if the City did not remove its imposed restrictions to waterway access to Agua Hedionda Lagoon which in the opinion of the State's Attorney General's office is in violation of State law. The D.B.W. is soliciting the City's cooperation so that both D.B.W. and the City may avoid potential litigation and its attendant expenses (Exhibit 2). BACKGROUND: On November 4, 1980, the City Council adopted Resolution No. 6343 approving a supplement to the agreement between the City of Carlsbad and Dr. Sarkaria, the operator of Snug Harbor Marina, providing that boats launched from his property onto Agua Hedionda Lagoon must have $300,000 of liability insurance coverage which names the City as an additional insured. A copy of the Resolution and supplement is attached as Exhibit 1. During the last ten years, it has provided a good framework for the public to enjoy the Lagoon at an acceptable level of risk to the City. The liability insurance requirement has effectively protected the City against potential liability from the power boat and jet ski users of the Lagoon. The D.B.W. claims that the City is indirectly imposing an illegal insurance requirement on its "concessionaire". They buttressed their position by obtaining a concurring opinion from the Attorney General's office. The fact is that Dr. Sarkaria has voluntarily required liability insurance as a condition for allowing people to use his. private property. He told that to D.B.W. in a letter dated June 1, 1989, a copy of which is attached as Exhibit 3. In a letter dated June 6, 1989, the City Attorney pointed out the fundamental misunderstanding of the situation that underlies the D.B.W. position. A copy is attached as Exhibit 4. The City Attorney believes the D.B.W. is improperly attempting to impose its will on a private citizen and that the City would prevail in litigation against the State. However, the matter involving the ownership of the EXHIBIT 1 Page 2, AB # DRAFT Agua Hedionda Lagoon, tide lands rights and navigable waterways issues is complex and it is not recommended that we enter into extensive litigation with the California Attorney General. A controversy between the City and State would serve no useful purpose since both agencies share a common objective of providing recreational access to the Lagoon. Since the last review of the Lagoon's operation by Council, the City now has an insurance program for catastrophic claims. This program, the California Municipal Insurance Authority (C.M.I.A.), now will reduce the City's liability to $500,000 for each incident. The pool and it's carriers will provide up to $10,000,000 in coverage for each loss in excess of the City's self insured retention (S.I.R.). of $500,000. City staff has also discussed the matter with SDG&E. SDG&E has suggested that the City take no action regarding the threatened litigation from D.W.B. and that business continue as usual. SDG&E has offered to defend the City against any claim made by the State. A copy of a letter dated May 17, 1990 is attached to the Agenda Bill (Exhibit 5). Staff does not recommend that Council accept SDG&E's offer. The issue of ownership of the Lagoon should be settled between SDG&E and the State. SDG&E has also been asked what would they do if the City were to terminate their lease for the use of the inner and middle portions of Agua Hedionda Lagoon. Their response (Exhibit 7) was that: A. They would close the lagoon, and/or B. Keep the lagoon open for passive use, only if the City would reduce the speed limit and continue its public safety patrol program Exhibit 6. An additional point of interest while considering the matter of insurance requirements and public recreation use of the Agua Hedionda Lagoon is that SDG&E has recently indicated their intent to proceed with acquiring permits to dredge both the inner and middle lagoon (Exhibit 8). OPTIONS; In evaluating the State's position on the insurance requirements, the recreational value for the users of the lagoon, and the recent implementation of the California Municipal Insurance Authority's Liability program, staff has proposed several options for Council consideration: (1) Continue the current operations and prepare to litigate with the State. (2) Restrict the use of the lagoon to passive only. (3) Eliminate the requirement that the City be named as an additional insured on user policies. (4) Terminate all leases and agreements and get out of the lagoon business. 3, AB *DRAFT OPTION (1): Continue operation and prepare for litigation by the State. The City Attorney believes the D.B.W. is wrong and that the City may prevail in litigation against the State. The matter is very complex involving ownership, tide land rights and navigable water way issues. All would require extensive time and expense. It is felt that a confrontation between the City and the State would serve no useful purpose since both agencies share common recreational objectives for the general public. OPTION (2): Restrict the lagoon to passive use only Over the years, the primary cause of accidents has been either jet skis or ski boats. The City may impose a 5 mph speed limit or otherwise restrict the uses permitted on the Lagoon. Since ski boats and jet skis would be effectively eliminated from the lagoon, revenues would be reduced, patrol program could be discontinued and the insurance issue with the State would be resolved. Although this option is attractive, from a safety and liability stand point, there would be negative impacts for the various concessionaires', the boating public and the residents of Bristol Cove. OPTION (3); Continue the current safety program, and eliminate the requirement that the City be named as an additional insured on user policies. Under this option, the City would (1) release Dr. Sarkaria of his obligation as outlined under the November 6, 1980 supplemental agreement (2) modify the lease with SDG&E to include only the inner portion of the lagoon (drop the middle portion which is subsequently subleased to the Y.M.C.A.) and (3) leave the existing lagoon regulations and ordinance in place. This option would satisfy the States' issue regarding insurance and keep the lagoon open for various uses under our current safety patrol program. Dr. Sarkaria would remain free to condition the use of his property as he chooses. There would no longer be a requirement that the City be named as an additional insured on user insurance policies. The City would still have some liability exposure since it would continue to exercise regulatory control over the lagoon. However, the City's risk of loss has been reduced by the implementation of the C.M.I.A. program. Option (3) may have merit if the City's intent is to provide a public benefit on the lagoon which cannot be achieved without City involvement. It is a policy question as to whether or not the benefit received is worth continuing the Lagoon program and assuming the liability exposure. 3u Page 4, AB #DRAFT It is staffs feeling that accepting this liability is a prudent risk for two reasons: (1) the present regulations have a good track record. They have reduced conflicts among the users and increased safety awareness on the lagoon, and (2) the City now has liability coverage through its municipal insurance pool. OPTION 4; Get out of the Lagoon Business Under this option, the Council may direct staff to terminate the lease with SDG&E and repeal all lagoon regulations and ordinances and/or turn the operation of the Lagoon over to someone else. The D.B.W. and the Attorney General's office have concluded that the Lagoon is a navigable waterway, which means that the public has a right to access and use of the water surface. If that is the case, there may be no benefit to a lease with SDG&E, a lease that may burden the City with substantial liability exposure. If this option is selected, it is recommended that the D.B.W. be put on notice that they should be responsible for establishing safety regulations for the lagoon. Dr. Sarkaria would remain free to operate his business as he considers appropriate. The City would eliminate its liability exposure by terminating the lease with SDG&E and repealing the Lagoon ordinance and regulations. As stated earlier, SDG&E has indicated that if the City chooses this option, SDG&E officials would either close the lagoon to public use or keep the lagoon open for passive use only, contingent upon the City continuing to provide its safety patrol program. RECOMMENDATION; Staffs' analysis of the City's current lagoon program indicates that, to date, it has been very successful. Accepting the increased liability exposure and keeping the program in place may be a viable option on a trial basis. Therefore, if the Council concurs, it is recommended that they consider Option (3) and adopt the attached resolution which would release Dr. Sarkaria of the obligation outlined in the November 6, 1980 supplement to the original agreement. It is further recommended that the existing lagoon regulations be left in place and that staff be directed to initiate steps to amend the lease_with SDG&E by eliminating the middle portion of the lagoon and continuing to lease the inner portion only. Page 5, AB *DRAFT•P^&Lccv-^ nSCAL IMPACT; Currently, it costs the City approximately $40,000 per year to operate the Lagoon Safety Patrol Program and approximately $10,000 per year for administrative expenses. Revenues expected to be generated from the program will range from $17,000 to $20,000 for fiscal year 91-92. The financial impact of the various options would range from zero to approximately $50,000 per year. EXHIBITS; 1. Resolution No. _ 2. Resolution No. 6343 3. Department of Boating and Waterways letter dated 10/18/89 4. Dr. Sarkaria letter dated 6/1/89 5. City Attorney letter dated 6/6/89 6. SDG&E letter dated 5/17/90 7. SDG&E letter dated 4/09/91 8. SDG&E letter dated 9/24/91 o 8 1 2 6 7 1. The November 6, 1980, supplement to the agreement between the 8 City of Carlsbad and Snug Harbor Marina owner for the use of Agua Hedionda 9 Lagoon approved by Resolution No. 6343 is rescinded. The City Council hereby10 11 12 13 18 19 20 27 28 DRAFTRESOLUTION NO. Pi(Z.Q>^ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, WAIVING ITS RIGHTS AND RELIEVING DR. SARKARIA OF HIS OBLIGATIONS UNDER THE NOVEMBER 6, 1980, SUPPLEMENT TO HIS AGREEMENT WITH THE CITY OF CARLSBAD FOR USE OF AGUA HEDIONDA LAGOON The City Council of the City of Carlsbad, California does hereby resolve as follows: waives the City's rights under that supplement and relieves Dr. Sarkaria of his obligations to comply with the provisions of the supplement. 2. That all the terms and conditions of the July 1, 1980, agreement 14 force and effect. 17 between the City and marina operator on file with the City Clerk shall remain in full 15 16 PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Carlsbad on the day of 1991, by the following vote, to wit: AYES: 21 NOES: 22 ABSENT: 23 24 25 ATTEST: 25" CLAUDE A. LEWIS, Mayor ALETHA L. RAUTENKRANZ, City Clerk (SEAL) Q..I. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19! 20 21 22 23 i 24 25 26 i 27 28 RESOLUTION NO. 6343 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING A SUPPLEMENT TO AGREEMENT BETWEEN THE CITY OF CARLSBAD AND SNUG HARBOR MARINA OWNER FOR USE OF AGUA HEDIONDA LAGOON WHEREBY THE OPERATOR AGREES NOT TO LAUNCH ANY BOAT WITHOUT INSURANCE AND AUTHORIZING THE MAYOR TO EXECUTE SAID AGREEMENT. The City Council of the City of Carlsbad, California, does hereby resolve as follows: 1. That that certain Supplement, to Agreement between the City and Marina Operator dated July 1, 1980, whereby Marina Operator agrees not to launch any boat without insurance, a copy of which is attached hereto as Exhibit A and made a part hereof, is hereby approved. 2. That the Mayor of the City of Carlsbad is hereby authorized and directed to execute said agreement for and on behalf of the City of Carlsbad. PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Carlsbad, California, held on the 4th day of No vender , 1980 by the following vote, to wit: Council Members Packard, Casler, Anear, Lewis and Kulchin None AYES: NOES: ABSENT: None RONALD C. PACKARD, Mayor ATTEST: :. y/d-zi/^ ALETHAL. RAUTENKRAN2I, City ClerU (SEAL) 40 EXHIBIT 2 EXHIBI \ TO CITY COUNCIL RESOLUTION NO. 6343 SUPPLEMENT TO AGREEMENT BETWEEN THE CITY OF CARLSBAD AND SNUG HARBOR MARINA OWNER FOR USE OF AGUA HEDIONDA LAGOON This agreement is made this /j ' day of IJo\/£r\Bbfl, 1980 between the CITY OF CARLSBAD, a municipal corporation of the State of California (hereinafter referred to as "City") and Dr. Daljit Sarkaria (hereinafter referred to as "Marina Operator"). RECITALS: 1. The City and Marina Operator entered into an agreement, dated _July 1, 1980, whereby the City granted Marina Operator non-exclusive rights to provide launching and marina facilities for boats on the surface of the Agua Hedionda Lagoon. 2. Marina Operator in return for such rights agreed to certain obligations regarding the use of the Lagoon. 3. City wants to be assured that the people using the Lagoon for boating purposes are aware of the need to observe safety rules and are responsible people financially and otherwise, who will conform their conduct to the rules in order to insure a safe Lagoon. To help accom- plish that purpose, both City and Marina Operator agree that liability insurance should be required as a condition of launching a boat on the Lagoon. 4. City and Marina Operator wish to supplement their agreement whereby the Marina Operator will agree not to launch any boat that is »t insured. 41 NOW, THEREFORE, in consideration of their mutual covenants and conditions, the parties hereto ftare-s as follows: 1. The agreement between City ano Marina Operator, dated July 1, 1980, on file with the City Clerk and incorporated by reference herein is hereby supplemented and amended to add the following provision as a part of said agreement: (8) The Marina Operator will not launch or allow to be launched any boat onto the surface of the Agua Hedionda Lagoon without first insuring that at least a $300,000 liability insurance policy exists on the boat, naming the City as an additional insured, which cannot be cancelled without notice to the City. IN WITNESS WHEREOF, the parties hereto have executed this agreement on the day and year first above written. CITY OF CARLSBAD, a municipal corporation of :;he State of California ATTEST: RONALD C . PACKARD , Mayor ALEThA L. RAUTENKRANZ, City Clerk APPROVED AS TO FORM: VINCENT F. 9dQ<»DO,- 3ft/, City Attorney Dr. MTiyit S-arkana ' _DANIEL S.'tHENTSCHKE, Assistant City Attorney -2- 42 DePARTMENT OF BOATING AND WATERWAYS 629 S SmiT SA££*MCNrO. CA 958)4.7791 CPTr 0|i crnr ATTO Cicy Council Cicy of Carlsbad 1200 Elm Avenue Carlsbad, California 92008-1989 Dear Council Members: I am writing co you directly'to bring to your attention a long- standing problem of concern to the Department of Boating and waterways. For the past eight years, the Department has attempted co resolve issues of boating access at Agua Hedionda Lagoon. As a statutory responsibility, the Department of Boating and Waterways reviews state and local ordinances, rules or regulations relating to vessels for conformity with State law. Section 650 of the Harbors and Navigation Code limits local agencies to regulation of boating in four specified areas: special use areas (defined in Section 651), time-of-day restrictions, speed zones, and sanitation/pollution control. In 1980, the City of Carlsbad enacted a boating ordinance imposing a 5300,000 liability insurance requirement on boaters as a precondition to use of a navigable waterway,' Agua Hedionda Lagoon. Boaters were also required to list the City of Carlsbad on"their liability policies. ''This requirement had the effect of closing the Lagoon to all boaters outside of the City of Carlsbad, i.e., boaters who were uninformed of the insurance requirement, boaters who chose not to insure their craft, boaters who" are insured under general provisions of homeowner's policies (under 25 horse power) but did not show the City as an additional insured in such policy, and boaters who were already insured with companies which would not list the City of Carlsbad as an additional insured at any cost. After lengthy, but unsuccessful, negotiations with the City to remove this requirement, a formal opinion was sought from the Attorney General to address this issue. The Opinion (No. 80-901) found the precondition of liability insurance to be in violation of State law.. EXHIBIT 3 C-arlscaa Civ/ Council -2- QQ- . Memcers '7* Sucsequent to that opinion, the Cicy repealed the portion of -.-.e ordinance imposing an insurance requirement:. r.ecently, w® received. complaints from the public regarding an insurance requirement imposed by a concessionaire who operates -.-.e coat launching facility. We found that the City, through the c c ness s i cna i re , was imposing an insurance requirement as a creccnai- ion to use of the launching facility, i.e., -he concessionaire is required to check that boaters have a permit before launching their boats on the Lagoon. To obtain a cermi- frcm the City, a boater must produce an insurance policy whicr. names the City as an additional insured. In investigating this complaint, we attempted to launch a state- owned vessel on this navigable waterway and were denied access solely on the basis of the insurance/permit requirement. we have returned to the Office of the Attprr.ey General to ask for a supplemental opinion concerning the legality of the restrictive access procedure currently in place. The opinion, attached, reaffirms our findings that the City may not impose such requirement . We are prepared at this time, to seek appropriate legal remedies to remove "locally imposed restrictions to waterway access which are "in conflict with State law. This letter is to solicit your cooperation proactively so that both the Department and the City of Carlsbad may avoid litigation and the attendant expenses. We ask that the objectionable restrictions be removed, and that a copy of your resolution or minute order so directing be forwarded to the Department. If you have any questions on this matter or the Opinion of the Attorney General/ "please feel free to contact us. Sincerely, WILLIAM H. IVERS Director Copy: Honorable Robert Frazee, Assemblyman, Seventy Fourth Assembly District Vincent Biondo, Jr., City of Carlsbadi^^ Jeremiah. Blair, Office of the Attorney General Jack Rump, State Lands Commission Enclosure •«-• ^ DALJIT S. SARKARIA ReaJ Estate • Investments • Developements • Management June 1, 1989 . _.» i_•* o « Vincent F. Biondo, Jr. City Attorney City of Carlsbad 1200 Elm Avenue Carlsbad, CA 92008 Dear Mr. Biondo: Thank you for letting rue know that the Department of Boating and Waterways has raised an issue with the attorney general regarding the legality of my requirement that any boat owner wishing to use my property in the City of Carlsbad to launch a boat onto Agua Hedionda Lagoon must be insured. Please see that the deputy attorney general who is writing the opinion gets a copy of this letter so he understands my position. I own property in the City of Carlsbad generally located on. the north shore of Agua Hedionda Lagoon immediately to the east of Interstate 5. My property extends into the water. The property is developed with a boat launching facility in- cluding a snack bar and rest rooms and is leased to an operator. I strongly disagree with the position taken by the Department of Boating and Waterways. As a private property owner and prudent businessman I have the right, independent of any city ordinance or state law of which I am aware, to set reasonable conditions on people who wish to use my private property. The launching of power boats is a high risk activity and I think it's important that I protect myself from foreseeable liability. The City did not impose any insurance requirement on me. It was something I deemed necessary. Liability insurance is getting very expensive and difficult to get. When the state forced the City to give up its own insurance requirement I determined it was important to impose one myself. I won't operate without it and would be forced to close the facility in the absence of adequate proof of insurance by facility users. Having made that decision I can't see any reason why I shouldn't also ask that the City be named as an additional insured. In almost all cases, that can be done at no additional cost to the people and it doesn't do me any good to require insurance if the individuals are free to sue an uninsured city who can then cross-complain against me for indemnity. Unless the City and POST OFFICE BOX 5766 • ORANGE. CALIFORNI myself are covered there is no protection quirement has been imposed since November of any complaints and the level of people about the same as it has always been. I service to the public at a fair price and my property numerous power boaters would the lagoon. I believe my policies are in of all concerned and I intend to continue of action. The insurance re- 1980. I am unaware using the lagoon is provide a valuable without access to not be able to enjoy the best interests my present course Please do what you can to convince the attorney general that the Department is just not correct in trying to make an issue of this matter. CITY OF CARLSBAD 1200 CARLSBAD VILLAGE DRIVE CARLSBAD. CALIFORNIA 92008-1989 VINCENT P BIONOO. JR. (619) 434-2891 ClTV ATTOflNEY RONALD R BALL ASSISTANT ClTV June 6, 1989 Rodney O. Lilyquist Deputy Attorney General Department of Justice 110 West A Street Suite 700 San Diego, California 92101 RE: OPINION NO. 89-503 - AGUA HEOIONDA LAGOON Dear Mr. Lilyquist: • Than* you very much for your letter of May 5, 1989 soliciting the city's views of the above referenced opinion request. Mr. Ivers' letter to you April 27, 1989 requesting an opinion reflects the views of an over zealous member of his department who has chosen to view Or. Sarfcaria's efforts to protect himself as a personal affront. It is apparent this individual had substantial input into Mr. Ivers' letter because it does not accurately reflect the facts of our situation. The true facts with comments on the April 27 letter are as follows: 1. Mr. Ivers asserts the Agua Hedionda Lagoon is a navigable waterway. I don't think that has ever been determined. The property underlying the lagoon is private property owned by the San Diego Gas and Electric Company (SDG4E). The lagoon was created by SDGtE's substantial dredging of a mud flat. The lagoon closest to the ocean (outer lagoon) remains under the control of SOG4B and the public is not allowed to use it. The outer lagoon has direct access to the ocean. If any portion of the lagoon can be considered navigable waterways it is the outer lagoon. Nevertheless, the San Diego Gas & Electric Company excludes the public entirely. Chained log booms are maintained at the ocean entrance and the railroad bridge which divides the outer and middle lagoons. Any individual attempting to operate a boat or otherwise use the surface of the water is arrested for trespassing. The Department of Boating and Waterways has historically acquiesced in SDGtK's exercises of dominion and control over the outer lagoon and, in effect, agreed that it is not navigable water. I don't thin* they should be allowed to take a contrary position with the lagoon west of 1-5 (inner lagoon). 47 FYHTRTT 2. Mr. Ivers states that the City's insurance requirement, which we repealed at the insistence of the Department and your office, "had the effect of closing the lagoon to all boaters outside of the City of Carlsbad." That is false. It has always been true and it is true today that a substantial majority of people utilizing the lagoon for power boating purposes are from outside the City of Carlsbad. Use of the lagoon has not been affected since Dr. Sarkaria has been enforcing his insurance requirement. (The permit figures from the department are enclosed). Boat coverage is generally and readily available either separately or as a part of people's homeowner's policies and the City can be included as an additional insured at no extra cost. It has been suggested that Dr. Sarkaria (or the City) buy an insurance policy and recover the cost from increased launch fees. Such insurance is not available to the City. Dr. Sarkaria reports it is only available to a limited extent and then only at a very high price. Imposing that cost is uneconomic compared to the minimal cost to the public under his present system. It also does not meet his need of Halting the use of his property to financially responsible operators. He doesn't want people who can't get insurance or who won't on his land. If there is any burden on boating it is minor when compared to a loss of a public use which will result unless you can persuade the department to be reasonable. 3. Mr. Ivers claims that his department has "received complaints froa the public." : I don't believe the department has received "complaints" from power boaters. The City has not received any complaints. Our information is that the general reaction froa the boating public is extremely favorable and they appreciate that the city allows public use of the lagoon. 4. Mr. Ivers states that Dr. Sarkaria1 s property is the only trailer boat access on the lagoon. That is not correct. Boats are launched froa Whitey's Landing and Bristol Cove or across the beach froa the City's publicly maintained access easement. 5. The City, under pressure froa the Department, repealed its ordinance requiring insurance in 1980. Although it was my opinion (with respect your opinion notwithstanding) that our insurance ordinance was legal, the Council decided to avoid litigation. That does not mean it is settled that the city cannot impose the requirement. However that is beside the point sines the city is not imposing an insurance requirement. Mr. Ivers statss that the city is attempting to indirectly do what it could not do directly by imposing the condition on the "concessionaires business permit." That is not true. When I conveyed your inquiry to Dr. Sarkaria he was surprised. It is his opinion that he was iaposing the insurance requirement on us and not vies versa. He is not a concessionaire of the City and ws have not conditioned his business permit. Dr. Sarkaria is a private property owner. He has a nonexclusive license with ths City to operate his business which he has -^ 48 voluntarily agreed to do with us in a societally responsible manner. Enclosed for your information is a copy of the agreement between the City and Dr. Sarkaria and the supplement from November 1980. His consent was freely given Or Sarkaria doesn't even need his "license" from us to operate' The launching that occurs at White's and Bristol Cove have no license. We have an agreement because we are both involved in a high risk activity and it is only "common sense" to "write down" our relationship to avoid litigating with each other over a duty of care when accidents on the lagoon result as they inevitably do in litigation. 6. The only reason the public gets to use the inner lagoon is because SDG&E has leased the surface area to the City of Carlsbad on a year to year basis for public recreation purposes. That lease requires the City to take all necessary steps to protect and indemnify SDG&E from any possible liability. Thanks to Dr. Sarkaria, to date, we have been able to do that. It is ironic that the Department is objecting to Dr. Sarkaria's insurance requirement in the name of boaters. Without it the public won't be able to use the lagoon at all. The City will not stay in the lagoon business unless we can continue to benefit from Dr. Sarkaria's insurance requirement. My clients will simply return the lagoon to SDG&E. Enclosed is a copy of a letter dated June 27, 1988 stating SDG&E's position if that were to occur SDG&E would close the inner lagoon to the public. 7. Mr. Ivers1 letter requests your opinion on whether or not the city can "impose a liability insurance requirement." That assumes a fact not in evidence. The City has imposed nothing. Mr. Ivers has absolutely no evidence in support of his position. Or. Sarkaria has a right to require insurance of people who use his private property. Dr. Sarkaria has determined for his own protection that it is necessary to limit the use of his property to financially responsible individuals with insurance and we appreciate his willingness to include the City in his risk management program. Enclosed with this letter is a letter from Dr. Sarkaria dated June 1, 1989 which sets forth his understanding of the matter. Again, as is the case with the gas and electric company, if a reasonable risk management program cannot be provided Dr. Sarkaria will close his launch ramp with substantial adverse effect on the ability of the boating public to enjoy the lagoon. Mr. Ivers has asked you to communicate with Mr. Blair of your office regarding this matter. We strongly object. Mr. Ivers and Mr. Blair have been threatening to litigate with the City on this issue. Z am confident we could persuade a court our position is correct both on the facts and the law. This is a classic example of "burning down the village in order to save it." This Department which claims to be acting in the best interests of the boating public is in effect attempting to destroy one of the few remaining places in Southern California where people can water ski. Dr. •~- 413 Sarkaria's business is financially marginal at best and the citv's lagoon progra. which primarily benefits nonresidents is in mttlcl subsidizing a stats rscrsational program at th« expense of city taxpayers. Ths Department should be supporting ths City in its efforts to aaximizs ths opportunity for ths boating public to use ths lagoon. Instsad, thsy ars pursuing thsir own perverted bureaucratic intsrssts which, if successful, can only have one result and that is denying ths public any uss of the lagoon. I don't think ths Department's position will stand scrutiny in any reasonable public forum either ths court or ths legislature. And, frankly, I am at a loss to undsrstand why thsy continue to pursue it. In any case, having besn threatened with litigation, I think Mr. Ivers is attempting to secure an advisory opinion which will buttrsss thsir interests in ths subsequent litigation. That is the worst kind of interdepartmental bootstrapping. We object, if an opinion were written adverse to the City's interests we would object strongly to any use of it as authority in court. Mr. Ivers seems to me to be inviting ths worst kind of self serving self dealing. I trust you will have no communications with Mr. Blair on this matter and will put out of your mind the fact that he is apparently given Mr. Ivers som« encouragement on his particular "March of Folly." (See, Barbara Tuckaan. Pursuit of a course of conduct directly contrary to your own best interests despite the fact that ths folly of that has been explained to you). Ths true facts of ths situation on ths lagoon can bs verified with SDG4E, Or. Sarkaria, or our Parks and Recreation Department. The fact that Dr. Sarkaria has voluntarily chosen to impose an insurance requirement and givsn the city the benefit of that is no concern of ths Department. Substantial numbers of people have enjoyed ths lagoon undsr ths prsssnt systaa for over eight years. The Department has no legitimate interest in and no right to regulate private conssnsual conduct. If thsy ars truly interestsd in ths right of ths boating public to uss ths lagoon thsy ought to build, improve, opsrats and maintain thsir own public launch ramp. Or, otherwiss, taks ovsr responsibility for ths lagoon. We would be happy to assign our Isass with SDG6B to ths stats. Otherwiss, I don't think thsre is any doubt that ths boating public would best be served by ths stats just leaving us alons. Ve VI City Attorney rmh enclosurss c: Mayor and City Council city Msnagar Parks and Rscrsation Comaission Parks and Rscrsation Dirsctor 5«n Diogo Gas & Electric NORTH COAST DISTRICT OFFICE MIS AVCNIQA CNCINAS • CARLSaAd CA MOM OCEANSIDE BRANCH OFFICE 1611 OCEANSIOE BOULEVARD • SUITE C • OCEANSIOC. CA 92054 May 17, 1990 PILE NO Mr. Frank Mannen Assistant City Manager City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, California 92008-1989 Dear Mr. Mannen: Your letter dated May 1st asked me to clarify further our offer to the City of Carlsbad relating to the Agua Hedionda Lagoon. San Diego Gas & Electric will defend the City of Carlsbad against the claim by the State of California that the Agua Hedionda Lagoon is subject to the public trust, including, but not limited to any claim by the State that insurance cannot be required by users of the Agua Hedionda Lagoon based on the imposition of the public trust doctrine. San Diego Gas & Electric is willing to enter into a written agreement with the City of Carlsbad to that effect. Also, San Diego Gas & Electric is willing to amend the existing lease agreement to delete the middle lagoon from the lease. When you have had a chance to review your position, why don't we set up a meeting date to discuss this matter further. Very truly yours, Paul O'Neal Senior Governmental Representative PO:bha cc: Mr. Claude Lewis, Mayor Mr. Raymond Patchett, City Manager 028 51 EXHIBIT 6 c o San Diego Gas & Electric NORTH COAST DISTRICT OFFICE MIS AVI MID* I NONAS • O*LS»»a CA KOM OCEANSIOC BRANCH OFFICE tll« OCIANSIOC •OULEVAHO • SUITE C • OCEANSIDE. O April 9, 1991 Mr. Frank Mannen Assistant City Manager City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 Dear Frank: You asked me what San Diego Gas & Electric/ would do if the City of Carlsbad were to no longer lease the Agua Hedionda Lagoon from the Company. Unless the Company was successful in finding another lessee for the lagoon, we would have two options: 1. Close the lagoon to public use. 2. Keep the lagoon open for passive use only. The Company would consider this option if the City of Carlsbad were to pass an ordinance establishing a boating speed limit on the lagoon, and if the City were to agree to continue it's public safety patrol program. Frank, I appreciate your patience in this matter. If you have any questions or would like to discuss this further, please let me know. Sincerely, V Paul O'Neal Senior Governmental Representative Governmental Affairs cc: Claude Lewis - Mayor, City of Carlsbad Julie Nygaard - Councilwoman, City of Carlsbad 52 EXHIBIT 7 San Diego Gas & Electric NORTH COAST DISTRICT OFFICE 531S AVENIOA ENCINAS • CARLSBAD, CA 92008 OCEANSIOE BRANCH OFFICE 1818 OCEANSIDE BOULEVARD • SUITE C • OCEANSIOE, CA 92054 September 24, 1991 FILENO Mr. Frank Mannen Assistant City Manager CITY OF CARLSBAD 1200 Carlsbad Village Drive .' Carlsbad, CA 92008 Dear Frank: You asked me to advise you what San Diego Gas & Electric's intentions were as to the dredging of the Agua Hedionda Lagoon. Company representative Jay Barnett and I met recently with Lloyd Hubbs and Dave Hauser to discuss the scope of our dredging needs. Mr. Barnett is preparing a letter to Mr. Hubbs that will describe in detail our plans relating to the outer lagoon. It is our intent to have this project become an annual occurrence and encompass not only the dredge, but maintenance of the periphery of the lagoon itself. At the meeting, we also discussed the inner lagoon. We advised Mr. Hubbs that it is the Company's intention to proceed with acquiring permits to dredge both the inner and middle lagoons. At this point our effort is one of discovery. We are aware that permitizing a dredge of the inner lagoons will not be as simple a process as that of the outer lagoon. At this point, it appears that 7 or 8 agencies will become a part of the process. Mr. Barnett is preparing to meet on an informal basis with these agencies to determine the scope of their needs relating to the project. Frank, it is our intent to move forward on the two inner lagoons. The only problems that I can foresee would be ones created if the environmental barriers placed upon us create too severe an operating constraint. If the cost of mitigation becomes too great, we would need to reconsider our goal. At this time, we are hopeful of getting the dredge accomplished. 53 CYUTDTT Q I hope that this answers your questions. Very truly yours, Paul O'Neal Senior Governmental Representative PO:tt cc: Claude Lewis, City of Carlsbad Ray Patchett, City of Carlsbad Gary Nessim, Beach Erosion Committee 54