Orange County Selects Partner for Dana Point Harbor Revitalization

Dana Point Harbor Partners tapped as developer to overall aging and dilapidated waterfront.

SANTA ANA — Dana Point Harbor could be fully revitalized as early as 2023 – about 36 years after Orange County officials began the process to update the dilapidated waterfront.

Orange County’s Board of Supervisors, at its Oct. 17 meeting in Santa Ana, elected Dana Point Harbor Partners to move forward with the $250 million revitalization project as part of a public-private partnership.

The development firm is the second such vendor Orange County selected to oversee Dana Point Harbor’s revitalization, which was first proposed in 1997.

“This project has been in the works for literally 20 years. A decision should definitely be made today,” Supervisor Lisa Bartlett said of Dana Point Harbor, which was built out in the early 1970s.

She added the revitalization was intended to be county led project at the outset. Bartlett, however, said she switched the revitalization project to a public-private partnership in an attempt to speed up construction.

The revitalization’s footprint was expanded as part of the public-private partnership to include a hotel and other upgrades beyond commercial and waterside components.

The Proposals

The two finalists offered varied proposals as to how they’d realize an updated Dana Point Harbor, with one partner – Dana Point Partners – planning to finish construction in 2023 and the other – Dana Point Harbor Partners – scheduling the final nail to be hammered by 2025.

Dana Point Harbor Partners proposed a commercial retail component with about 116,727 square feet of rentable space, including marine retail and a surfing museum.

Plans also call for Dana Point’s marinas to include 2,296 slips, 388 dry stack boat storage spaces, valet boater slips, 266 hotel rooms, restaurant and outdoor dining options and 4,880 total parking spaces.

The entitlement process would begin in January 2018, with construction planned to run between December 2018 and December 2025.

Dana Point Partners’ plan called for 2,316 boat slips, 400 dry dock spaces, 200 hotel rooms, a parking garage and 119,631 square feet of office space and restaurant/retail to be built by April 2023.

The Dana Point Partners proposal included a four-year option, compared to a 90-day option request by Dana Point Harbor Partners.

Both bidders requested a county subsidy to help them bring the revitalization project online.

Dana Point Harbor Partners formally asked for up to $20 million from the county’s harbor reserve funds; the subsidy, according to city staff, would be applied to the construction of a parking structure.

Dana Point Partners, conversely, requested a $45 million subsidy to cover the construction of two parking garages, fund circulation improvements and assist in making renovations to sportfishing docks. The $45 million subsidy would also be used to fund tenant lease terminations, a buyout of Vintage Marina and infrastructure improvements.

Each bid, of course, did include financial projections of what the revitalized harbor would bring back to the county.

The Dana Point Harbor Partners proposal, for example, estimated its development would yield the county in excess of $47 million within the first 10 years of the lease – more than double the subsidy it requested – and an additional $70 million in rent payments in years 11 to 20 ($117.1 million total).

Dana Point Partners, by comparison, anticipates $70.5 million in rent payments to the county during the first decade (and a total of $175.6 million over 20 years).

“These estimated amounts do not take into account other factors, including the effect of the requested county financial subsidies, the length of the option terms, the lease structures, and the payment of guaranteed rent versus percentage rent,” county staff stated in its report to supervisors.

Questions from the Dais

The approval did not come without supervisors questioning the county staff report and overall bidding process.

At least three supervisors questioned county staff’s vetting process of the bidders. Supervisors Todd Spitzer, Scott Nelson and Andrew Do each grilled county staff over expressed concerns of whether county staff was thorough enough with the vetting process.

Each supervisor added they still had several substantive questions about the proposals after reviewing the county staff recommendation.

The supervisors said they weren’t able to effectively differentiate between the two bidders, since they had such widely differing proposals.

Boat slip rents, for example, was the single largest source of revenue in one proposal, one supervisor pointed out.

Revenue projections and public subsidy requests also were widely apart, when comparing the two proposals.

County staff verbally explained to supervisors why the public agency would be walking away from Dana Point Partners’ proposal, which projected greater revenues but potentially included greater risks.

Only when county staff addressed what supervisors believed to be procedurally deficient questions did they ultimately vote in favor of electing Dana Point Harbor Partners as the harbor revitalization developer.

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