Dana Point Boaters, be sure to attend the Dana Point Civic Association’s Coffee Chat on March 17^th at 8:30 a.m. at Coffee Importers. The featured speaker will be Supervisor Foley. This is your chance to voice your concerns about what has been happening in our harbor. Please turn out and give concise, respectful comments.

Supervisor Foley’s office was helpful in getting us access to the most recent “evidence of financing” signed off by Orange County Chief Real Estate Officer, Mat Miller, on the marina revitalization project.

Evidence of Financing:

In the opinion of the Dana Point Boaters Association, the so-called evidence of financing is not in compliance with the Master Lease between Orange County and Dana Point Harbor Partners. Click here for our July 18, 2022 newsletter on this topic. Nothing has changed!

To quote the Orange County Real Estate Office:

“As we discussed, DPHP is self-funding the phases of the marina project in advance of their full construction loan being acquired, and thus are providing evidence of financing for each phase as they go along. This works well with the marina, which is made up of 17 phases, but when the commercial core construction of the building starts, they will likely need a larger loan as evidence of financing. To this point, DPHP has provided evidence of financing for Phases 1 and 2 of the Marina Improvement Project, which involves the demolition and construction of docks in the West Basin. They have provided evidence of financing for almost $10 million to cover the following project elements:

• Mobilization: $313,670
• Phase 1 - The demolition and construction of three West Basin docks, W10, W11, and W12, for a cost of $4,599,518
• Phase 2 - The demolition and construction of three West Basin docks, W7, W8, and W9, for a cost of $4,904,819
• Grand Total - $9,818,007

Click on the links to the County's approval of DPHP's evidence of financing for Phase 1 and Phase 2. The approval letters also include the supporting documentation.”

(DPBA has removed copies of the bank statements from the documentation sent to us.)

Why Is It Like Groundhog’s Day?

Groundhog’s Day is a situation in which events that have happened in the past, happen again, in what seems to be exactly the same way. Let us explain.

• On October 29, 2018, following the satisfaction of all the conditions required to exercise the Option Agreements, the Chief Real Estate Officer executed the two Master Leases on behalf of the County. DPHP and DPHP Drystack have assumed responsibility for the operation, maintenance, and revitalization of the commercial core, dry storage area, west and east basin marinas, and the Marina Inn. CEO Real Estate, working in conjunction with OC Parks, oversees the revitalization of the Harbor.

• On April 21, 2020, the County executed Tolling Amendments with DPHP and DPHP Drystack, pursuant to Resolution: 20-025 Item No. 1 Emergency Real Property Authority (COVID-19), which was approved by the Board on March 26, 2020, to address the impacts of the COVID-19 pandemic on the terms and conditions on the Leases. Specifically, the Tolling Amendment extended the dates and deadlines in the Leases, with the exception of the lease term and due dates for the monthly minimum rent and percentage rents, to a period equal to the number of days from the declared COVID-19 County State of Emergency on March 3, 2020, to the date the State of Emergency has been lifted, terminated or otherwise ended by action or inaction of the Board.

• On March 8th, 2022, the Orange County Board of Supervisors voted to “Approve Amendment 2 to Master Ground Leases with Dana Point Harbor Partners, LLC and Dana Point Harbor Partners Drystack, LLC to secure financing for the revitalization of Dana Point Harbor, provide additional time and flexibility to execute hotel component development, and terminate Tolling Amendments executed in response to COVID-19 pandemic; and authorize Chief Real Estate Officer or designee to execute amendments under certain conditions - APPROVED AS RECOMMENDED.”

• On October 18, 2022, the Orange County Board of Supervisors voted to ”Approve the Ground Lessor's Estoppel Certificates and Agreements to Bank OZK to assist Dana Point Harbor Partners, LLC, and Dana Point Harbor Partners Drystack, LLC to secure a loan to fund construction of Marina, Commercial Core, and Drystack; and authorize Chief Real Estate Officer or designee to execute certificates and agreements, related documents necessary to effectuate loans, and minor modifications under certain conditions –  APPROVED AS RECOMMENDED.”

The Orange County Board of Supervisors has made at least three concessions regarding the terms of the Master Lease in order for DPHP to secure financing for the revitalization of the harbor, and no financing has been secured. All that the boaters have received in return are exorbitant slip fee increases. Those same slip fee increases are being used for so-called “evidence of financing” to bring the DPHP bank balances to a level that will cover the cost of construction for Phases 1 and 2 of the marina revitalization.

The slip fee increases were effective October 1, 2021, resulting in $7 million of additional revenue in the DPHP coffers, if our estimate is correct. DPHP provided bank statements to the county in June 2022 showing adequate balances to cover the Phase 1 construction of $4.9 million. The bank statements were from November 2021 through April 2022, but DPHP had a seven-month period of increased slip revenue to boost their bank balances. Phase 1 construction started in August 2022, even though it was supposed to start in June 2022, and was supposed to be completed in November 2022. It is now almost March 2023 and Phase 1 is not done. In March 2023, DPHP will have had 18 months of increased slip rates to increase bank balances.

In November 2022, DPHP requested the approval of Orange County to proceed with Phase 2 of the marina revitalization. They indicated in their letter that demolition would start in November. They provided bank statements from April 2022 through September 2022 to support an expense of $5.9 million for Phase 2 and the remaining costs of Phase 1. The Orange County Real Estate approved the start of both phases with bank statements as evidence of financing, even though Phase 1 has not yet been completed. At the current pace of construction, we wonder if Phase 1 and Phase 2 will even be completed in 2023.

Will it take over eight years for marina construction to be completed, rather than five, because DPHP doesn’t have traditional financing? Is the delay in construction because of the time needed to replenish the bank account balances?  Would DPHP have better success in securing financing if the members (Bellwether, Burnham Ward, and R.D. Olsen) left more money in the LLC? Remember, the 2021 distribution was $13.6 million. We understand they have to take some distributions to pay tax liabilities, but $13.6 million seems excessive to us.

And when will Orange County Real Estate Office hold DPHP responsible for upholding the terms of the lease?

A big THANK YOU to all who have donated to our legal fund. We appreciate you and your support in helping to keep boating affordable on publicly granted Tidelands. Let’s finish strong!  Donate here.