Conclusion with State Lands PRC Sunnyside Lane Tahoe City 20 February 2015 Prepared by Greg Price (415)

What issues remain? Our current lease from October 2011: Rent: $2,765. Admin Fees: $2,705 + $875 If our lease happened to renew after February 2014: Rent: $1,750. Admin Fee: $875  The review of methodology for Tahoe piers and buoys began January 2012 and ended in February 2014  Core issues of Benchmark, Seasonality, and Use Area remained until resolved.  Commission continually asked staff to engage stakeholders. The last issue, Use Area, was resolved in February 2014  Commitment by Commission to be retroactive with our lease during review of methodology.  Worked with staff Feb, March, April 2014 and again this Oct, Sept. 2

January 26, 2012 Commission Meeting At the January 26, 2012 Commission meeting, I challenged the methodology for calculating pier and buoy lease calculations: a) Inconsistencies in Benchmarks for buoys and piers b) Seasonality / Local Conditions in Lake Tahoe, and c) Use-Area Commission directed staff to address the issues I raised and meet with stakeholders Action: Paid back rent. Signed lease with commitment from Commission if review of methodology deceases our rent, retroactive to October 2011 “Should the Commission change the rent methodology in a way that results in a reduction in rent for 2280 Sunnyside, LLC, the annual rent would be modified and 2280 Sunnyside, LLC would be refunded the difference paid.” Minutes, Item 22, page 4. 3

January 26, 2012 Commission Meeting “I hope you [staff] wrote all those concerns down.” --Newsom page 52 “Approve the item and direct the staff to go back and look at some of these issues that Mr. Price has brought up.” --Fossum page 64 “I think Mr. Price has outlined probably other remarks that some of the people have commented to us…” -- Fossum page 65 “…we want to direct staff to take another look at this…Talk to the folks in Tahoe and see if there’s something there that could be taken into consideration when establishing this” – Reyes page 66 “…if the methodology changes and impacts this property owner, then it will be adjusted accordingly.” --Reyes. Page 69 4

Methodology vs. Benchmark “The addition of the terms ‘adjustment formula’, ‘CPI’, and ‘impact area’ are necessary because they are used in the rent calculation methodology proposes in amendments to Section 2003.” --Calendar item 119. Background. Page 2. December 2, “Benchmarks are typically used to establish a uniform rental rate in a given and specific geographic area, where we have a large number of a similar type of facilities, mostly in areas where we have private recreational piers.” --Connor page 28. January 26, 2012 “the methodology is based on principle of substitution” --Connor page 37 January 26,

May 24, 2012 Commission Meeting At the May 26, 2012 Commission meeting, Jan Brisco presented to the Commission about: a) Support flat-rate for buoys in Benchmark, b) Seasonality / Local Conditions in Lake Tahoe, c) Use-Area, and d) Direct staff to continue to work with stakeholders Item 82 is silent on Use Area. In discussion, greater comfort with Benchmark for buoys and concern about piers and Use Area (pages and ) “…the buoy systems seems to me to be eminently reasonable and what the benchmark is and how we get there.” “…the methodology that we’re using for the buoys…strikes me as fairly simple. The homeowners will know what to expect. The dock part is where I’m bogging down, as we get to this incredible complexity as to how to do that.” --Gordon pages “I’m prepared to support that [Item 82], with the caveat here that Ms. Brisco I think rightly had, which is to direct the staff to continue to work with the stakeholders.” -- Garland page 198. This caveat becomes the motion that approves Item 82, page 199 6

Rent Methodology “…the retroactive concept was specific to the benchmark methodology reconsideration that began in January 2012 and concluded in May 2012, with the Commission confirming staff’s recommendation for continuing the benchmark methodology and not authorizing any amendments or changes to those leases approved in January and March 2012.” --Jennifer Lucchesi. Oct 23, Actually… The Benchmark was but one of the issues raised in January The other core issues, seasonality and Use Area, did not get resolved until February 2014 Retroactivity applied to the Methodology not the Benchmark No lease amendments were authorized because no amendments were raised Calendar item 82 never mentions Use Area. It was approved May 2012 with the caveat “to direct staff to continue to work with stakeholders” about Use Area. Use Area continues as an issue in August 2012 & Dec 2013 meetings 7

Use Area discussion Use Area (or Impact Area) was resolved in February 2014, but Executive Officer Lucchesi characterizes this was an “outskirts” issue that was not started until February 2013 and discounted from Methodology discussions. “A little less then a year later, on February 1, 2013, Commission staff commenced the rulemaking process to make changes…this was a completely separate and distinct process from the methodology consideration that occurred in 2012” --Jennifer Lucchesi. Oct 23, Actually…Use Area continued as core item …before February 2013 Use Area was discussed at length in January 2012 and May 2012 commission meetings and in August 2012 after the June stakeholder meeting. May 2012 Benchmark approval was contingent on more stakeholder meetings August 2012 meeting, Newsom asked about outcomes from June 2012 stakeholder meeting at Granlibakken. Fossum responded that staff had internal discussions and will bring alternatives to the Commission 8

Use Area discussion August 2012 Meeting “I think probably their [stakeholders at June 2012 Granlibakken meeting] primary concern was the fact that the Commission was charging a rent, even though it’s a significantly reduced rent, for the areas that are not on the footprint itself of the pier.” – Fossum page 9 “Internally, we have had discussions already and we haven’t come to a final decision as to whether there should be some modifications to that or not.” --Fossum page 10. “But many of the property owners at the lake who have piers on State property don’t think it’s appropriate to charge anything for that [Use] area. But we will get back to you.” - Fossum page 11 “Let us know. Appreciate that you followed up.” --Newsom page 11 9

Use Area discussion December 2013 Meeting December 2013 meeting (proceeded by April and November 2013 comment periods): Calendar item 119. Amends / updates language to sovereign lands, CPI and impact area (Use Area) in response to BSA audit and stakeholder comments. Most of the comments at the December meeting, including my comments, were about the Use Area. Staff directed to “develop language to address the impact area [Use Area] concerns raised by the Commissioners and by the public.” -- Lucchesi page 129 Concluded with February 12, 2014 Notice Use Area defined to area used for docking 4-month season in Lake Tahoe 10

Summary This was a two-year process. The core issues raised in January 2012 were not resolved until February 2014 Commissioners asked staff to address these issues and consistently directed staff to engage with stakeholders If our lease were not one of the first leases to come up after SB 152, our lease amount would be $1,750 Commitments made to me to sign our lease for a retroactive reduction to October And apply that rate going forward Also seek a refund of $875 paid in August 2014 to amend our lease. Should not have to pay to honor Commission’s commitment 11