Why Do Pete's Harbor Owners Owe $406,000 to the State?

Earlier this week, Patch broke the story that Paula Uccelli and her late husband Pete Uccelli - the founders and owners of Pete's Harbor - had not paid any of their rent on the outer harbor to the state for the roughly 28 years they have been leasing it.

At the Dec. 5 meeting of the State Lands Commission (SLC) - attended by the Uccellis' attorney Ted Hannig, as well as many tenants and supporters of Pete's Harbor - SLC Chief Counsel Jennifer Lucchesi said the estimated amount now owed to the state was "$406,000, give or take."

Many Patch readers have commented, saying they were scratching their heads, wondering how the state came up with that number.

Here's information from the SLC, to answer that question.

A break-down of the fees, courtesy of the SLC

Shelli Haaf, an attorney for the SLC, said, "more than half" of that roughly $406,000 amount is made up of penalties and fees.

Here is the full text of Haaf's e-mail:

"The State entered into two leases with Peter Uccelli, dba 'Pete’s Harbor,' in 1984 (those leases are coded as 'PRC 6856 and 6857). PRC 6856 has a graduated rent schedule as directed by Chapter 447, Statutes of 1983 (special legislation re: Pete’s Harbor) and PRC 6857 has a rental rate of $1,680 per year for the term of the lease. 

Both leases provide that any rent unpaid be subject to penalty and interest pursuant to Public Resources Code § 6224.  Penalties are assessed at 5% of the principal sum due, and the rate of interest is 18% from the date on which the sum became due and payable, until the date of payment. 

The following explanation is provided to illustrate how the $406,941.05 due on both leases through Dec. 1, 2012 (daily interest continues to accrue on both leases) was calculated.

For example, a $75 penalty would be assessed for each delinquent $1,500 yearly rental payment (e.g. years 1-10 of PRC 6856).  When the rent graduates to $2,500/year, a $125 penalty would then apply, and so on. 

With regard to interest, the longer the monthly rental payment goes unpaid, the more interest is owed, and continues to accrue until paid.  In short, the amount of interest accrued on past due rental payments is considerable and represents more than half of the $406,941.05 due on both leases (as calculated through December 1, 2012).

Should the Uccellis have to pay penalties?

As Patch explained in our article earlier this week, attorney Ted Hannig spoke before the SLC at the Dec. 5 meeting and said that, for the roughly 28 years the Uccellis have been leasing the land from the state, they have made repeated attempts to try and pay their rent, but the state has refused to tell them how and where to do so.

Hannig said both Pete and Paula Uccelli and he, himself, have made repeated calls to the SLC asking where they should mail their checks, with no calls returned.

Hannig said Paula Ucelli even met in person with a member of the SLC once and said she whipped out her checkbook right then and there, asking if she could write a check on the spot, but the SLC member said he or she didn't know the exact amount she owed to date, and promised that she would receive a call with instructions - which Hannig also said was never received.

Hannig said the Uccellis even asked a friend in Congress to help, and that the Congressman made calls on their behalf to the SLC asking where they could send money, but even he got no response.

Hannig also said he sent a good-faith check of $20,000 to the state in the past, but that the check was never cashed.

PATCH WANTS TO KNOW - Given those claims, do you think the Uccellis should have to pay 'more than half' of the amount owed in penalties - meaning, over $200,000 in fees? Tell us in the comments below.

Deputy State Controller Alan Gordon, who ran the Dec. 5 meeting of the SLC, has asked Chief Counsel Lucchesi to calculate a new number that did not include any fees or penalities, implying that he may decide to take pity on the Uccellis and not charge them more than the "straight rent." No word has been received yet on whether that will happen.

Another Patch reader who commented our story brought up the point that, since Hannig said Paula Uccelli has been depositing rent checks from the outer harbor tenants into a separate bank account all this time, waiting for the moment she was told where to send the money, that she may have been collecting quite a bit of interest on this money over the past 28 years. 

If so, do you think Paula Uccelli should be allowed to keep that interest? Or should that be given to the state as well? Join the conversation in the comments below.

Patch will continue to follow this story.

Haaf's response came to questions posed by researchers for The Journal of Local History, which is published by the Archives Committee at the Redwood City Public Library.

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