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Agenda Item
ASR
Control 22-000140 |
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MEETING DATE: |
03/08/22 |
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legal entity taking action: |
Board of Supervisors |
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board of supervisors
district(s): |
5 |
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SUBMITTING
Agency/Department: |
County Executive Office (Approved) |
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Department contact
person(s): |
Thomas A. Miller (714) 834-6019 |
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Dylan Wright (714) 480-2788 |
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Subject: Second Amendments to Dana
Point Harbor Leases
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ceo CONCUR |
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Clerk of the Board |
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Concur |
Approved Agreement to Form |
Discussion |
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3 Votes Board Majority |
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Budgeted: N/A |
Current Year Cost:
N/A |
Annual Cost:
N/A |
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Staffing Impact: |
No |
# of Positions:
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Sole Source:
No |
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Current Fiscal Year Revenue: N/A
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Prior Board Action: 03/26/2020
#1, 07/17/2018 #27 |
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RECOMMENDED ACTION(S):
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1. |
Approve the Second Amendment to the Master Ground Lease with Dana Point Harbor Partners, LLC to secure financing for revitalization of Dana Point Harbor, provide additional time and flexibility to execute the Hotel Component development, terminate the Tolling Amendment executed in response to the COVID-19 pandemic and authorize the Chief Real Estate Officer or designee to execute the Second Amendment in substantially the form attached, with approval of County Counsel. |
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2. |
Approve the Second Amendment to the Master Ground Lease with Dana Point Harbor Partners Drystack, LLC to secure financing for revitalization of Dana Point Harbor, and terminate the Tolling Amendment executed in response to the COVID-19 pandemic and authorize the Chief Real Estate Officer or designee to execute the Second Amendment in substantially the form attached, with approval of County Counsel. |
SUMMARY:
Approval of the Second Amendments to the Master Ground Leases will assist Dana Point Harbor Partners, LLC to secure financing for revitalization of Dana Point Harbor, provide additional time and flexibility to execute the Hotel Component development, and terminate the Tolling Amendments executed in response to the COVID-19 pandemic.
BACKGROUND INFORMATION:
On July 17, 2018, the Board of Supervisors (Board) approved Option Agreements and Master Leases with the Dana Point Harbor Partners (DPHP) and Dana Point Harbor Partners Drystack LLC (DPHP Drystack) for an approximately $400 million revitalization of Dana Point Harbor (Harbor), including upgrades to the commercial core, marina, and hotel. 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 works in conjunction with OC Parks oversees the revitalization of the Harbor.
Tolling
Agreement
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.
Development
Update
The City of Dana Point (City) has issued a substantial conformance determination letter for the commercial core Coastal Development Permit (CDP), which will allow DPHP to start construction on the Commercial Core phase of the revitalization. On September 9, 2020, the California Coastal Commission (CCC) approved DPHP’s application for reconstruction of the marina. In February 2021, the CCC issued a coastal development permit to begin construction on the redevelopment of the marinas. The Commercial Core and Marina team of DHPH are currently working with OC Public Works Development Services on plan checks to ensure compliance with governing implementation documents so that construction on the respective components can commence later this year.
The hotel development requires an amendment to the existing Local Coastal Plan (LCP) as well as a CDP to allow for the two hotels proposed by DPHP as part of the overall revitalization program. The application for the LCP Amendment was approved by the City in July 2021 and was under review by CCC. In late November 2021, the City and DPHP withdrew the application to address new extensive conditions of approvals imposed by the CCC. DPHP anticipates re-submitting and appearing before the CCC in early 2022. The draft EIR for the CDP has been published and circulated for the required review period. With approval of the LCP Amendment permitting can commence followed by construction of the hotels thereafter.
DPHP and DPHP Drystack are currently procuring financing for the $400 million revitalization of the Harbor. With financing in place construction on the first phase of the commercial core, parking structure, and marina development will commence.
Second Amendments
DPHP and DPHP Drystack proposes amendments to the Leases for its financing purposes, particularly with respect to the Hotel Component, approval of subtenants, and termination of the Tolling Amendments (Second Amendment(s)).
The Second Amendment to the Master Ground Lease Agreement with DPHP, to be executed by the Chief Real Estate Officer, in substantially the form attached, would amend the Master Ground Lease to:
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· Allow for a lot line adjustment, parcel map or similar subdivision to align the legal descriptions of the various legal parcels within the leased premise; |
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· Extend the required construction commencement date for the Hotel Component from 2023 for the Affordable Hotel to 2026 and from 2025 for the Boutique Hotel to 2028; |
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· Allow DPHP to commence a repair and maintenance program of the Marina Inn’s interior, exterior, lobby, guest rooms and common areas, if DPHP is unable to procure entitlements or is unable to procure financing for the proposed Hotels (Alternative Hotel Component); |
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· Clarify DPHP’s maintenance obligation regarding maintenance and repair of the seawall and limit DPHP’s replacement obligations to its negligence or actions that cause the need for wholesale replace of the entire seawall; |
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· Require DPHP to conduct annual bathymetric surveys of the Harbor to establish dredging schedules to maintain or increase the depth and width of navigation channels, anchorages, or berthing areas and ensure year |
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· Increase DPHP’s approval threshold from 7,500 rental square feet (RSF) of interior space to 10,000 RSF; |
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· Require DPHP to submit a quarterly written report that includes information on operation of the Harbor and revitalization of the commercial core, marina and hotel(s) including but not limited to schedules, entitlement, permitting, as well as any additional information the Chief Real Estate Officer may require; and |
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· Terminate the Tolling Amendment to the Master Ground Lease (First Amendment to the Master Ground Lease). |
The Second Amendment to the Master Ground Lease Agreement with DPHP Drystack, to be executed by the Chief Real Estate Officer, in substantially the form attached, would amend the Master Ground Lease to:
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· Allow for a lot line adjustment, parcel map or similar subdivision to align the legal descriptions of the various legal parcels within the leased premise; |
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CEQA COMPLIANCE:
This action is not a project within the meaning of CEQA Guidelines
Section 15378 and is therefore not subject to CEQA, since it does not have the
potential for resulting in either a direct physical change in the environment,
or a reasonably foreseeable indirect physical change in the environment. The approval of this agenda item does not
commit the County to a definite course of action in regard to a project since
the action authorized herein is limited to assisting Dana Point Harbor
Partners, LLC and Dana Point Harbor Partners Drystack, LLC in securing financing
for revitalization of Dana Point Harbor project. Dana Point Harbor Partners,
LLC and Dana Point Harbor Partners Drystack, LLC are the entities responsible
for obtaining all required environmental approvals and they must provide
evidence to the Chief Real Estate Officer, prior to the commencement of
construction, that any required environmental documentation has been certified,
approved or adopted by the applicable government authority. This proposed
activity is therefore not subject to CEQA.
Any future action connected to this approval that constitutes a project
will be reviewed for compliance with CEQA.
FINANCIAL IMPACT:
N/A
STAFFING IMPACT:
N/A
REVIEWING AGENCIES:
OC Community Resources/OC Parks
ATTACHMENT(S):
Attachment A – Second Amendment to the Master Ground Lease
with Dana Point Harbor Partners, LLC
Attachment B – Second Amendment to the Master Ground Lease with Dana Point
Harbor Partners Drystack, LLC