Since the slip rate increase in October 2021, we have routinely checked with the Orange County Executive Office to confirm evidence of financing for the revitalization of Dana Point Marina by Dana Point Harbor Partners.
To quote from integral portions of the lease:
“5.5.6 Evidence of Financing. Lessee shall have provided County with evidence that it has access to sufficient financial resources, whether in the form of debt or equity, to complete construction of the Improvement Project within the applicable time periods approved for such construction, and such evidence shall be subject to the approval of Chief Real Estate Officer in Chief Real Estate Officer’s reasonable discretion. Without limiting the generality of the foregoing, Lessee shall deliver to the CREO Office, for Chief Real Estate Officer’s review and approval, copies of all notes, guaranties, construction loans, and/or permanent loan commitments, as applicable, evidence of equity commitments, documents creating and/or perfecting security interests, and all documents and exhibits referred to any of the foregoing, together with any and all recorded documents affecting an interest in the Property. With regard to the Redevelopment Work, Lessee acknowledges and agrees that, prior to commencing with the Redevelopment Work on any one Component, it shall be required to satisfy this condition with respect to such Component. Lessee shall keep County apprised of the status of its discussions and negotiations with the potential sources of Lessee’s funding for the Improvement Project, including the identity of the sources (for both construction and permanent financing) that Lessee is considering for each Component from time to time.”
“1.1.51 “Component” means each of three (3) portions of the Property, including the Commercial Core, Hotel, and Marina (both Wet Marina and Dry Marina), the boundaries and location of which are identified on Exhibit A-2 subject to Lessee’s right to reallocate portions of the Property wherein marina related services are provided and which are currently located within the Commercial Core Component to the Marina Component, subject to the reasonable consent of the County. In addition, subject to the limitations contained herein, Lessee shall have the right to consolidate or re-allocate the management of the parking areas on the Property, in whole or in part.”
“1.1.27 “Marina” or “Marina Component” means the Component of the property identified as the Marina on Exhibit A-2.”
On July 14, 2022, we received the attached documents (click here) from the County of Orange as evidence of financing. The attachment does not include the bank statements mentioned in the correspondence, but we have recapped the bank information on a spreadsheet.
The cost to revitalize the marina is $106,963,802 (a multimillion-dollar project)
- The evidence of financing provided only covers Phase 1 of the project (C Dock, West Marina) for a cost of $4,913,188.
- The evidence of financing are copies of six months of bank statements from two bank accounts which show average ending balances of $7.4 million.
- The bank statements are from November 2021 through April 2022, coincidentally thirty days after the slip increase.
In your opinion, is this acceptable evidence of financing for the “Marina Component”? Is it apparent to you that the slip rate increase is what is funding this project? Was it appropriate for the County Real Estate Officer to approve the evidence of financing for a multimillion project with six months of bank statements that only support one phase of the project? Would a bank underwriter have approved a transaction of this size with six months of bank statements? You decide.
Your Dana Point Boaters Association asks, where is County oversight of this project? On March 8th,2022, didn’t the Orange County Board of Supervisors approve Amendment 2 to the Master Ground Leases with Dana Point Harbor Partners, LLC, and Dana Point Harbor Drystack, LLC in part to secure financing for the revitalization of Dana Point Harbor? Are the minutes of the March 8, 2022, Board of Supervisors meeting not accurate? Why are our questions always redirected to Dana Point Harbor Partners?
We believe it is time to remind our Board of Supervisors and County Officials to act a little more like Harry Truman.