Code Section Group

Harbors and Navigation Code - HNC

DIVISION 1. DEPARTMENT OF BOATING AND WATERWAYS AND THE BOATING AND WATERWAYS COMMISSION [30 - 88]

  ( Heading of Division 1 amended by Stats. 1978, Ch. 365. )

CHAPTER 2. Department of Boating and Waterways [50 - 77.1]

  ( Heading of Chapter 2 amended by Stats. 1978, Ch. 365. )

ARTICLE 5. Recreational Marinas [76 - 77.1]
  ( Article 5 added by Stats. 1985, Ch. 1307, Sec. 2. )

76.
  

It is the intent of the Legislature that Harbors and Watercraft Revolving Fund moneys be used to implement the intent of Section 71.5 by providing loans directly to private recreational marina owners for the design, acquisition, development, expansion, and improvement of boating facilities. It is the further intent of the Legislature that borrowers receiving loans not charge unreasonably high boat berthing fees at their harbor facilities, but that those borrowers be entitled to charge rates that provide for servicing of borrowed indebtedness obtained to develop those facilities, provide for other expenses incurred in operating the facilities, establish reasonable reserves for repairs, maintenance, and replacement of those facilities, and provide a reasonable return on the borrower’s invested capital.

(Amended by Stats. 2009, Ch. 610, Sec. 10. (SB 717) Effective January 1, 2010.)

76.1.
  

“Private marina owner” means a profit-oriented business enterprise which owns and operates, or intends to develop and operate, a small boat recreational facility providing boat berthing on a wet or dry storage basis and other improvements commonly found in a facility of that type on privately or publicly owned waters within this state.

(Added by Stats. 1985, Ch. 1307, Sec. 2.)

76.2.
  

“Recreational marina” means a marina owned by a private marina owner which is used by the public primarily for recreational purposes.

(Added by Stats. 1985, Ch. 1307, Sec. 2.)

76.3.
  

(a) The department may make loans to private marina owners to develop a recreational marina. Loan funds from the department may be utilized for both of the following:

(1) Construction costs for berthing facilities, dredging, parking, public access facilities, restrooms, vessel pumpout facilities, oil recycling facilities, utilities, landscaping, receptacles for the purpose of separating, reusing, or recycling all solid waste materials, and other incidental boating-related amenities.

(2) Acquisition, collateral appraisals, permit fees, planning, engineering, and design expenses directly related to the items specified in paragraph (1).

(b) The department shall not make a loan to a recreational marina that restricts access or bars the public other than that which is consistent with general commercial business practices.

(c) Any private marina owner who purchases facilities previously developed with a department loan is eligible to apply for a new construction loan from the department.

(d) (1) The department may also make a loan to a recreational marina for the purpose of refinancing an existing loan, subject to the following conditions:

(A) Not more than 70 percent of the proceeds from the loan shall be used to refinance an existing loan.

(B) Not less than 30 percent of the loan proceeds shall be used for construction activity authorized under this section.

(C) The loan applicant shall meet all other requirements under law for loan qualification and any other applicable term or condition of law.

(2) This subdivision does not prohibit a person from applying for a loan under subdivision (a).

(Amended by Stats. 2009, Ch. 610, Sec. 11. (SB 717) Effective January 1, 2010.)

76.4.
  

(a) An application for a loan under Section 76.3 shall be filed with the department and shall:

(1) Include a feasibility study containing sufficient information and detail to demonstrate that the project is engineeringly and financially feasible.

(2) Be processed with due diligence, giving consideration to the needs of the borrower and the interest of the public in preserving the integrity of the Harbors and Watercraft Revolving Fund.

(3) Include evidence of compliance with the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code).

(4) Include all costs incurred by the applicant in processing and obtaining loan proceeds.

(b) The costs of brokerage fees, planning studies, and all other costs for the preparation of the loan application shall be borne by the applicant.

(Added by Stats. 1985, Ch. 1307, Sec. 2.)

76.5.
  

In processing applications under this article, the division shall give priority to applications from qualified private marina owners who have not received previous loans from the department. If the department finds a proposed loan project is feasible, the loan request shall be submitted to the commission for its advice.

(Amended by Stats. 2013, Ch. 353, Sec. 114. (SB 820) Effective September 26, 2013. Operative July 1, 2013, by Sec. 129 of Ch. 353.)

76.6.
  

Loans made under this article shall include, but are not limited to, the following terms and conditions:

(a) The minimum annual rate of interest charged by the division for a loan shall be set annually by the division and shall be a rate equal to 1 percent per annum plus the prime or base rate of interest.

(b) The division shall require collateral in a minimum amount of 110 percent of the loan.

(c) The repayment period of a loan shall not exceed 20 years, or be longer than the length of the borrower’s leasehold estate, including renewal options, if the loan is based upon a leasehold estate of the borrower.

(d) All loans shall amortize the principal over the term of the loan. However, a loan shall become due and payable in full if the borrower sells or otherwise transfers the recreational marina developed with divisional funds, unless the transfer is, by reason of the death of the borrower, to the borrower’s heirs.

(e) The division’s loans shall not be subordinated to any future loans obtained by a private marina owner, except in those cases involving loans acquired for refinancing previous senior loans.

(f) The division may allow assumption of loans from the original borrower by future parties, subject to completion of the application process and upon approval by the division.

(g) The division may, upon written request by the borrower, restate an existing loan.

(Amended by Stats. 2013, Ch. 353, Sec. 115. (SB 820) Effective September 26, 2013. Operative July 1, 2013, by Sec. 129 of Ch. 353.)

76.7.
  

(a) All loans made by the department to private marina owners shall be funded from the Harbors and Watercraft Revolving Fund.

(b) All loans, including those loans previously made under Section 35300 of the Financial Code, shall be repaid by private marina owners to the Harbors and Watercraft Revolving Fund.

(c) Private marina owners receiving loans made by the department shall not charge unreasonably high boat berthing fees.

(d) The department shall monitor the berthing fees of the private marina owners receiving department loans to ensure that these rates are reasonable and not exorbitant.

(Amended by Stats. 1990, Ch. 1428, Sec. 4.)

76.8.
  

The department shall adopt regulations to implement or make this article more specific, including standards for the approval of loans, which shall include, but not be limited to, definitions of collateral, standards for the payment of loans, weighing and ranking criteria to qualify and prioritize the loans, and the form of documents to be used to evidence loans. The purpose of the regulations shall be to ensure that loans made under this article conform with customary commercial practices. No loans shall be made pursuant to this article from funds appropriated in the Budget Act of 1999 until the loan approval standards have been approved by the Department of Finance. Any subsequent changes to the loan approval standards shall also be approved by the Department of Finance.

(Amended by Stats. 1999, Ch. 66, Sec. 3. Effective July 6, 1999.)

77.
  

(a) The department, subject to the approval of the Director of Finance, may borrow funds from the Harbors and Watercraft Revolving Fund when a borrower has defaulted from any financial obligation and funds are required to protect the security interest of the department with respect to any loan made under Section 76.3.

(b) The funds borrowed under this section shall be repaid within three years from the date of the approval of the Director of Finance. The repayment shall include the principal amount of the loan, plus interest equal to the rate of earnings of money deposited in the Surplus Money Investment Fund at the time the loan is approved by the Director of Finance.

(c) A maximum of ten million dollars ($10,000,000) per year may be used for purposes of this section.

(d) The borrowed funds may be used to do any of the following:

(1) Pay any administrative and legal expenses incurred in connection with those defaults.

(2) Acquire through negotiated purchase or bid at auction any property which serves as collateral for those defaulted loans.

(3) Pay any costs of operating and maintaining a recreational marina acquired as a result of a failed loan, until the marina is sold.

(Added by Stats. 1990, Ch. 1500, Sec. 3.)

77.1.
  

The department, upon whatever terms and conditions it deems proper, may sell or otherwise dispose of property serving as collateral for a defaulted loan made under Section 76.3 or may operate, contract to operate, or let property involved in the default. All proceeds from any action of the department pursuant to this section shall be deposited in the Harbors and Watercraft Revolving Fund and credited towards the repayment of the defaulted loan.

(Added by Stats. 1990, Ch. 1500, Sec. 4.)

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