City says Newport Aquatic Center is violating its lease through ‘prohibited’ activities

The city of Newport Beach says the Newport Aquatic Center is violating its lease for its bayside site through “prohibited business activities” and “unauthorized use of property” and that the rowing center might be in danger of losing its space.

Following up on a letter NAC officials submitted in March in response to a city inquiry, City Attorney Aaron Harp said in a letter Friday that NAC leaders had “not relieved the city of its concerns regarding the management of the Newport Aquatic Center” and that they must immediately correct violations or Newport Beach “will be forced to take action, which could include termination of the ground lease.”

NAC operates under a long-term, no-cost lease of city- and county-owned land on the shores of Upper Newport Bay and has offered recreational and competitive rowing and paddling for all ages since 1987. Its lease is up in 2023.

Harp’s letter focused on activities that he said NAC officials acknowledged and constitute breaches of the lease terms and an associated city facilities management plan. The activities include running an onsite boat repair shop and coaches providing direct, for-profit lessons using NAC facilities or equipment. They are among several criticisms by former NAC board members against their one-time colleagues.

The battle has included internal investigations, several appeals to Newport Beach officials at City Council meetings, a query from the state attorney general’s office and a lawsuit filed in 2017 by then-board members Bruce Ibbetson and Donna Warwick against NAC Director Billy Whitford, board President William Grant, board members Jon Van Cleave and Jim Netzer and several staff members.

The complaints — which the Daily Pilot reported in a two-part series published in September — broadly cover financial misconduct, including allegations of using NAC credit cards for personal purposes and directing funds raised for the junior rowing program to other programming; allowing for-profit businesses to operate out of the aquatic center base; and creating a hostile environment for employees and opposing board members.

The city did not determine whether any laws had been broken but said any illegal activity also would violate the lease.

Harp’s letter said the city also is “troubled by the fact that the NAC is unwilling to immediately take steps to comply” with a new City Council policy that requires nonprofits that lease city property at less than market rate provide for election of directors. NAC board members are selected by existing board members.

“However, debating whether council Policy F-7 is applicable to the NAC is somewhat pointless given that the city does not have to renew or extend the ground lease,” Harp wrote. “Based thereon, you are hereby advised that the city will not be entering into negotiations with the NAC to renew or extend the ground lease.”

David Dimitruk, an attorney representing Whitford, Grant, Van Cleave and Netzer, said he had not yet discussed the letter with his clients.

In their March letter, Whitford and Grant said the center’s operations are not within the city’s jurisdiction. They also called the accusations “scorched-earth tactics by those who desire to either destroy the NAC or usurp control of it” through misunderstandings, distortions or outright falsehoods.