Yesterday was a landmark day in the story of our harbor. The County released its official recommendation for a private partner to redevelop and operate our harbor for the next 66 years. This recommendation will go to the OC Board of Supervisors on October 17 for a vote. If the supervisors agree with County staff's recommendation, we are likely to have a new harbor landlord and developer in place by March, with construction commencing by the end of 2018. We're going to break this down for you, so please read on...

 

[ For past newsletters on this topic read this, this, this, then this.]

 

After 20 years of Harbor Revitalization planning, including the past two years contemplating the selection of a private developer to rebuild and operate our harbor, yesterday the County released its summary evaluation of the two teams' proposals, concluding with a recommendation on which is the more capable and preferred team. This next part is very important: The analysis and recommendation is based almost entirely on the financial capabilities and ownership structures of the two teams and their proposals, and their capacity to carry out the project successfully. The analysis paid much less attention to their proposed architectural and marina plans for our harbor. Simply put (and it's hardly simple), construction plans are open to further refinement during contract negotiations, the financial capabilities and ownership structures of the two teams are not. In the end, the County concluded that one of the two teams " would be more likely to ensure the timely commencement and completion of the project's development and generate consistent revenue...."

 

The Teams

 

The two teams have confusingly similar names: Dana Point Harbor Partners LLC and Dana Point Partners LLC. To make this easier, let's call them Team A and Team B for now. County staff is recommending Team A. For you endurance readers, we provide more details on the two teams at the end of this newsletter. But for those of you already impatient with the length of this article, let's hit the highlights first.

 

The proposed architectural and marina plans in the two proposals are not significantly different, and again, are open to further refinement in the coming months. In fact, we (you) have been promised participation in this process; we still have an opportunity to influence the final design. However, the ownership and financial structures of the two teams vary significantly and are what ultimately separated them in the County's analysis.

 

Team A - Team A is comprised of three development partners (marina, retail, hotel) that will jointly own the entirety of the project and enter into a single contract with the County. Team A has the "internal capacity" to fund the entire project without external equity sources.

 

 

 

 

Team A - Team A has agreed to fully commit to the project within 120 days of commencement of contract negotiations.

 

Team B - Team B has proposed a term of up to four years to commit to the project, with an option for any individual partner to "walk away" at any time within those four years. Should this occur, the County "would be compelled to restart the revitalization process in whole or in part".

 

Team A - Team A is forecasting lease payments to Dana Point Harbor in the amount of $47,130,352 over the initial 10 years, and $117,190,251 over the first 20 years of the contract.

 

Team B - Team B is estimating lease payments to DPH of $70,574,294 over the first 10 years and $175,629,386 over 20 years.

 

The County points out in their analysis that neither estimate takes into account the requested financial subsidies or the proposed lease structures. Also, Team B's forecast is predicated on all three partners delivering separately.

 

Based on these key differentiators, " the evaluation committee concluded that both teams are highly qualified and experienced, but found [Team A] would be more likely to ensure timely commencement and completion of the project's development and generate consistent revenue to the County and to provide funds for both ongoing County operations within DPH and growth of reserve funds for future capital renovation and improvement."

 

But You Want to See What It's All Going to Look Like, Right?

 

We understand that the preceding data about finances and leases and so on are not the sexy details so many of us are anxious to see. We want to see what our new harbor will look like. What our marinas will look like. We want to know about the docks and restrooms and other boater facilities. We get that. And it's all coming. We promise... as soon as the County authorizes release of this information. But we wanted to provide this quick overview of the report released by the County yesterday, which focuses almost entirely on what we covered above. In the coming days we hope to be providing additional details about the two teams and their plans, including the sexy stuff. Please stay tuned.

 

More on the Two Teams

 

Here are some additional details about the two teams. Click the links to explore more about the teams and their portfolios.

 

Team A - Dana Point Harbor Partners LLC is comprised of three developers: Burnham Ward Properties for the commercial core (retail, restaurants, etc.), Bellwether Financial Group (aka Bellingham Marine) for the marinas, and R.D. Olson Development for the hotel.

 

Team B - Dana Point Partners LLC is comprised of DJM Capital Partners for the commercial core, Pacific Marina Development for the marinas, and Pacifica Hotels.

 

Interestingly, Pacific Marina Development (Team B) proposes using Bellingham Marine as their marina development subcontractor. So, the same marina developer will rebuild our docks with both teams. However, Bellingham is a full partner in Team A and a subcontractor in Team B.

 

Please understand that this overview is a summary of the County's analysis of the two teams and their plans. This does not constitute our DPBA position on the matter. In the coming days we will continue to review and digest the County's analysis, plus continue to work with the two teams to better understand their proposals, and we will continue to provide you with the information you want and need.

 

Thanks for sticking with us!