Article 5. Recreational Marinas of California Harbors And Navigation Code >> Division 1. >> Chapter 2. >> Article 5.
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
"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.
"Recreational marina" means a marina owned by a private
marina owner which is used by the public primarily for recreational
(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
(2) This subdivision does not prohibit a person from applying for
a loan under subdivision (a).
(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
(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
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.
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.
(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.
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.
(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
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