By Andrea Swayne
(updated: March 18)
After nearly two decades of planning and 2015 approval by the California Coastal Commission for the landside improvements, the county has taken a new step forward for the Dana Point Harbor Revitalization Plan.
On Wednesday, the County of Orange issued a formal Request for Qualifications, in an effort to find a suitable candidate with which to form a public/private partnership, or P3, for the revitalization of the Harbor.
The county’s revised approach to the project has expanded in scope to include waterside redevelopment and replacement of the Dana Point Marina Inn hotel, along with the commercial core redevelopment. The original price tag given to the project when it included just the commercial core was $140 million. The new estimated cost is yet to be determined.
Following the RFQ’s narrowing down of qualified private companies interested in taking on the job of funding, designing, permitting, building, renovating and then operating the Harbor via a master ground lease, a Request for Proposals (RFP) will be the next step in finding a project partner from the resulting short list, the notice said.
Among community groups reacting to the news is the Dana Point Boaters Association. DPBA Vice President James Lenthall responded with an update to the group’s membership in which he gave his impression of the pros and cons of the idea. Lenthall referred to the partnership as a “near certainty” due to the lack of available funds to pay for the project.
“How do you pay for a $200 million project with less than $60 million in the bank, and a county unwilling to finance construction costs from its general fund?” he wrote. “Seek a private partner willing to pay the bill.”
According to county officials, the Harbor generates more than $82 million in annual gross revenue, a number Lenthall said doesn’t pencil out as anything but a very long-term tenant/landlord relationship for Harbor-based boaters and businesses.
“A developer doesn’t invest in excess of $100 million dollars and not expect a return on their investment,” Lenthall said. “And our Harbor doesn’t generate the sort of revenues to make a quick return on this investment. So expect this developer—our new private partner—to own a stake in our Harbor for very long time. A master lease making all of us—slip renters, shops and restaurants, yacht clubs, Embarcadero, fuel dock, ship yard, and so on—their tenants for 50 years.”
But an upside to such a partnership, Lenthall told DPBA members, is that an influx of private funds would provide a remedy for the long-awaited improvements on hold as a result of the county’s lack of available funds.
“If we wait for OC Dana Point Harbor reserves to accumulate enough to fund reconstruction of our marinas, following reinvestment in the landside portion of the project, we’ve been told to expect a wait of 10 years or longer (our math says much longer),” Lenthall wrote, adding that the additional wait time would amount to an added decade of wear and tear on docks that were due for replacement 10 years ago.
The county’s P3 includes a requirement that the East and West marinas and guest slips, along with the commercial core and the Dana Point Marina Inn be fully reconstructed. Other areas of the Harbor would undergo renovation.
A private developer could fund and commence marina construction right away, perhaps making it a priority,” Lenthall said. “After all, the majority of harbor revenue is generated from the marinas; it’s the one steady, reliable source of cash flow in our harbor. It’s a sound investment. And the sorts of developers that will qualify for this project will have built quality marinas around the country, perhaps around the world. We’re likely to get new docks and related infrastructure (utilities, security, service buildings) to rival some of the finest marinas that we envy when visiting other harbors. So, decent docks in 10 years or more or first-rate docks in two to three years?”
Lenthall also discussed a possible downside for boaters that could result from the change of how the Harbor has traditionally operated as a nonprofit entity under California Tidelands Trust rules. The Tidelands Trust does not permit revenue to be added to the county’s general fund, requiring it to instead be reinvested in the Harbor. This reinvestment, he said, has been good for boaters and is the reason slip rental fees have not skyrocketed over time.
“The same can’t be said for a private developer, master lease holder and operator,” Lenthall said. “While they will still be governed by the same Tidelands Trust, their development agreement will surely allow them to recover their investment, and then some. A private developer/operator will be in it for the profit. So where will they be allowed to make their profit? Slip rate increases? Reductions in services? Deferred maintenance? Undesirable dock reconfigurations? There are all sorts of ways to increase their margins. What rules will be in place to prevent our new partner from lording over us with the leverage of their 50-year master lease? And if after the marriage we realize we made a mistake, there’s no divorce. Not after a nine-figure dowry.”
In addition to handling operations and holding the master lease, the county’s plan requires the chosen partner to administer leases and collect rent from tenants. The partner company would be responsible for paying all operational costs and pay rent “based on gross receipts pursuant to a lease that will be deposited into the special Tidelands Trust account for use online in the Harbor area,” the county press release said.
The county has committed to holding a series of community meetings to answer questions from the public and, according to their update, will be scheduling such gatherings soon.
For prospective bidders, the last day to submit questions about the RFQ is May 16 and the final due date is June 20. The county will conduct interviews with the interested parties between July 11 and July 15. As of press time, no final date for the announcement of the county’s shortlist has been set.
A list of recommendations—the first draft of which was prepared by the Dana Point Harbor Merchants Association, and the final product a joint effort with the DPBA—to the county for use in its search for a project partner has been included in the RFQ.