The fate of a boutique-style hotel and surf lodge proposed as part of the $700 million Dana Point Harbor revitalization remains uncertain after the OC Board of Supervisors again couldn’t agree on two new 66-year land leases that developers want to help secure financing.
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“Disappointment is an understatement here,” Bob Olson said Tuesday, Aug. 25, following the supervisors’ meeting.
Olson is one of three Dana Point Harbor Partners and heads up R.D. Olson, the company that has been working for years to secure permits and develop plans for the new hotels intended to be a crowning jewel of the harbor revitalization. The two other partners, from whom he wanted to separate the ground lease, are Joe Ueberroth of Bellwether Financial Group, who is leading the marina reconstruction, and Bryon Ward of Burnham-Ward Properties, who is constructing the commercial core. Both of those components are well underway.
“It’s sad to see the board turn down such an incredible investment and opportunity for Dana Point Harbor and Orange County,” Olson said. “Without the lease bifurcation, we are forced to remodel the existing hotel.”
Fifth District Supervisor Katrina Foley encouraged her colleagues to move forward on Tuesday with the bifurcation of the leases so the developers could secure financing and keep moving forward with building the two hotels. She didn’t want the supervisors to even entertain a renovation of the existing Marina Inn at this point, saying, “If the remodel path is chosen, we may never get two new hotels.”
But at least four of the five supervisors had to agree, and only Foley and Second District Supervisor Vicente Sarmiento voted in favor of signing the new land agreements. Fourth District Supervisor Doug Chaffee and Third District Supervisor Don Wagner were opposed and First District Supervisor Janet Nguyen abstained from the vote.
“We have to have protection for workers, that’s a simple thing,” Chaffee said of the employees of the inn and other displaced harbor businesses. “I’m not willing to move forward on these other items until that’s been cured.”
Though he voted in favor, Sarmiento said he was still interested in getting protections included for the workers and having more social justice programs included, such as field trips for inner-city students to experience the harbor and ocean.
Olson is already required to contribute to such programs in exchange for the approvals the hotel projects received from the California Coastal Commission.
“I hope we can go beyond the minimum required and go to a more robust program,” he added.
“My real goal is to make sure there is continuing work for those who made the Dana Point environment a positive one,” Sarmiento added. “To the extent this is re-introduced, I don’t want us to forget about the discussions we’re having today.”
Supervisors had already discussed the new land leases, which would restart the clock and give the developer group Dana Point Harbor Partners 66 years going forward, at their last two meetings, saying they needed more time and had questions about the proposed revisions.
The county first tapped Dana Point Harbor Partners for a public-private partnership in 2018 — with a 60-year lease — to undertake the massive overhaul of the aging harbor.
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Without the new land leases, Olson has said it would be difficult to get financing for the hotels and renovating the aging Marina Inn would be the alternative.
At the supervisors’ June meeting, Foley suggested several last-minute additions to the land leases, including provisions for hotel employees and limits on rent increases for marina slips.
Olson said the additions would make the projects impossible to move forward. He has said he has stopped all planning for the hotels since that meeting.
The delays at that point, the developers have said, also eliminated any possibility of having the new hotels ready for the LA 2028 Olympics, which is holding the surfing competition at nearby Lower Trestles, south of San Clemente.
At the supervisors’ meeting earlier this month, Foley said she was ready to approve the land leases without her suggested additions and pushed for an agreement to keep progress moving forward, but several of her colleagues, including Wagner and Sarmiento, raised their own concerns about how the displacement of employees at the Marina Inn and at the soon-to-be shuttered Wind & Sea restaurant would be handled.
Wagner also noted his concern with a request in the lease agreements that the county be guaranteed free access to meeting space and public venues up to six times a year.
Olson said on Tuesday that he is not sure of next steps now that the supervisors have again not approved the land leases Dana Point Harbor Partners have negotiated with the county’s real estate department.
Olson said he will wait to talk with the county’s chief real estate officer, Mat Miller.
He said the two new hotels could provide 200 new jobs and $12 million in ground rent to the county over the first 10 years and more than $50 million over the term of the new proposed leases.
The hotels would be a much bigger source of revenue for the county and the city of Dana Point than a renovation of the Marina Inn, he said.
“They keep pushing this out, and I think not understanding the positive financial impact to our communities,” he said. “There is less direction today than at the first or second hearing.”
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