Newport City Haul

The latest scandal in the city conservatives built

Murphy lamely defended himself before the council. "Frankly, time-sometimes-is an aid for the staff in reaching certain conclusions," he said. (He did not mention the importance of elected officials having adequate time with an agreement that would still have been operative in 2048.)

His remark was met with expressions of disbelief on the council. He added, "I guess we, um, apologize."

A dapper Ratkovich attended the hearing, complimented Murphy for doing "a wonderful job" and reassured the council that he "believed" that city residents (not he and his partners) would be the true "beneficiaries" of the lease. Jim Landis, a real-estate agent with a financial stake in Lido Marina Village, said the deal was "certainly the most challenging" in his quarter-century career, but he urged the city to immediately approve the lease because "time kills real-estate deals." The "potential" for Ratkovich, he said, was "off the map-I've never seen a greater opportunity on a piece of property in my life."

Noyes didn't appreciate the pressure tactics. "[Landis] said this is the most challenging deal of his career, and we're supposed to make a decision in less than a week?" he asked incredulously at the hearing. "This is probably one of the biggest deals that will ever happen in Newport Beach, and we're going to have to have more time with it. What's happening here is the people who are trying to put this deal together are trying to pressure us. . . . We're talking about the public's property."

You wouldn't know the public owned the property by the way Murphy and the city staff tried to lease it. In May, when it came time to value the land, the city manager let Ratkovich unilaterally select an appraiser-and then agreed that the lease value of the property would be whatever Ratkovich's appraiser said it was. When Ratkovich's handpicked appraiser came back with his valuation, Ratkovich-without official explanation to city officials-rejected it. Murphy allowed him to find another appraiser.

When the Weekly asked Assistant City Manager Sharon Woods for the first appraiser's conclusions, she said neither she nor anyone in the city knew that answer. "We never saw that appraisal, so I can't speak to it," said Wood, who heads the city's economic-development efforts. "I do know that Ratkovich said he didn't like that appraisal." Asked if it was standard procedure for the city to let buyers and renters of public property determine values, Woods would only say that city employees were "apparently very busy" at the time. They were also apparently too busy to get their own appraisal or to hire outside legal counsel with real-estate expertise to review the lease.

With Murphy's consent, Ratkovich required that the second appraisal be "limited," that its assessment exclude comparable nearby bayfront-property leases. Ratkovich liked the second appraisal. He would have to pay the city a laughable $2,900 per month in rent while keeping more than $50,000 per month. The second year of the proposal further required the developer to pay 9 percent of his gross receipts from the boat slips. Similar city and county deals call for greater base rents coupled with 25 percent-sometime even 31 percent-of gross receipts. In a memorandum to the council, Woods portrayed the financial terms of the deal as "negotiated," even though official records shows that Murphy's administration was proposing to concede to each of the developer's key demands.

Thomson, who is a real-estate broker, hinted that the deal screwed local taxpayers. "This deal is a homerun, it's the World Series, it's everything all in one [for Ratkovich], and we're deciding this over a weekend," said Thomson. "Can you imagine what the right to own all those boat slips would be worth over a 50-year period? It's certainly worth a whole lot more than $35,000 per year or $2,900 per month, plus the 9 percent. Something good can happen to this property, but it doesn't mean we have to give it away."

Noyes said he found it "surprising that anyone would vote for that deal."

On June 24, the Murphy-Ratkovich arrangement died when it was rejected in a 4-3 vote. Two weeks later, a council majority met in a closed session and forced Murphy's resignation.

What role the proposed lease played in his departure remains unclear. Murphy did not respond to the Weekly's request for an interview before deadline. But for all of those citizens who were wondering if their council had had good reason to dump Murphy, the Murphy-Ratkovich deal suggests the answer is an unqualified yes.

Fastforward to January. Murphy-who received a generous $70,000 severance package-works for a Costa Mesa firm that does business with local government agencies. Newport Beach has yet to find another city manager. The Pilot continues to publish editorials that cast Murphy as an outstanding public servant who was victimized by petty elected officials. Ragland refuses to concede that the ex-city manager's performance in the Lido Marina Village ordeal-the details of which Pilot readers are oblivious to-was even remotely questionable. She wrote in a December column that she dismissed that possibility "after a few quick phone calls."

In the pages of the Pilot, the city that presents itself as a model of John Wayne values-rugged individualism and common sense-emerged from the Murphy affair with its image intact. A relationship so lucrative for many of the city's elite remains unchallenged. The most horrifying possibility to conservatives-that there may be little to distinguish the governments of Newport Beach and any urban Democratic city-was banished.

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