In October of last year when the Orange County Board of Supervisors selected Dana Point Harbor Partners to redevelop and operate our harbor, a few optimistic voices within the County predicted that a contract might be concluded before the end of 2017. But nobody really believed it. More cautious and realistic players targeted the end of the first quarter - March 31 - to conclude contract negotiations. That date has come and gone, and we're still not hearing any convincing optimism from the negotiating room that a contract is imminent. There is zero expectation that a proposed contract will go before the Board of Supervisors for consideration this month, and May isn't sounding likely either. So, six months later, what's the delay?
Nobody expected this to be easy. Negotiating a construction investment nearing $300 million and a master operating lease covering 66 years is complicated, to put it mildly. Our Harbor is and will remain a County property, with a master tenant contracted to rebuild and operate it. Assigning liabilities - that is, who is responsible for what after the contract is signed - is perhaps more daunting than either the County or developer anticipated. It is a game of both tug-of-war and hot potato. Naturally, both sides want to maximize their revenue opportunities, and both want to evade exorbitant and unpredictable expenses. Who pays for harbor patrol? Who is responsible for the quay walls, bridge, breakwaters, dredging? Who will be liable for unanticipated environmental factors or new regulations that affect costs?
Every tweak in the terms has cascading financial implications over decades. Every little change requires complicated math and a crystal ball. Every new demand, every new assertion, send the teams retreating to their drawing tables. Every achievement is a false summit; you think you've made it, only to see another hill to climb. When will it end?
As the two teams continue to push and pull, for every gain achieved, for every expense cast to the other side, the cost of the project escalates. For every liability retained by the County, the more they will demand in rent. For every obligation assigned to the developer, the more they must seek in revenue. And both are drawing from the same well: all of us who enjoy our harbor, boaters most of all. The longer this goes on, the less we get and the more we pay. It must end.
Compounding the challenging and complicated negotiations is the County Real Estate team's well-deserved reputation for pushing their prospective business partners to the breaking point, agreeing to terms only when they have coerced every possible concession from their tenant. Perhaps this is savvy business practice when leasing out office space or the like. But in this matter we are dealing over a community-serving public asset. These aggressive tactics have no place here.
We would like to remind the County of the unique rules that govern our harbor. The State of California entrusted this stretch of coast to the County of Orange to develop and operate a public-serving recreational boat harbor. Revenue generated in our harbor must be reinvested in our harbor. Our harbor does not -
- contribute to the County's general fund, and we receive no subsidies from the County. Seeking to turn our harbor into a lucrative government profit center serves only to unnecessarily inflate the costs of enjoying this singular community asset.
We encourage the County and Dana Point Harbor Partners to settle on terms that both obligate and allow the developer to build a quality harbor that retains our charm and character without compromising affordability. Neither side should seek to conquer the other, but to collaborate to create a proud legacy that continues to serve the public interest for generations to come. Anything else would be a disservice to the community that makes this harbor possible. Let's get this deal done.