This past Friday afternoon, Dana Point Boaters Association directors again met with Orange County 5th District Supervisor Lisa Bartlett's staff in what will probably become a recurring monthly meeting. We were assured that she is still extremely committed to our harbors' welfare, including making both waterside and landside revitalization happen. Below is a summary of the latest updates. Please contact us if you want to discuss in more specifics.
Sailing and Events Center
There has recently been intense community interest, both before and after DPBA's position paper recently explored the issues. (Click here) We believe the issues raised so far are being effectively engaged and the community is now actively involved in recurring, constructive discussions with Staff.
One of the topics discussed during our meeting with staff last Friday was a complete pro forma revenue and expense summary, which both clearly explained why the action is being taken and clearly demonstrated that the goal of no negative impact on the community, in particular the Sea Scouts, appears to be achievable. Indeed, according to the proforma, the rates for those non-profit organizations that use the facilities, like the Sea Scouts, will not go up and may actually go down. At the same time service levels and maintenance are targeted to be substantially improved. Last, but duly noted, boater slip rents will no longer be expected to cover the $300,000/year operating deficient. The above points made however, it is also important to add that the proforma is a planning tool, conceptual in nature rather than a final budget. The final budget can only come from the selected P3 candidate and so we will continue to follow up as the selection process proceeds.
What's next? The bidder site visit planned for November 9th was postponed to accommodate a "meet and confer" with representatives of OC parks employees who will be redeployed when a private company assumes operational management responsibilities. We were advised that this is largely a matter of form (but still a process requirement) as employees impacted are reportedly in favor of this project. We anticipate that an RFP (Request for Proposals, already published last month) finalists selection panel will be named and begin meeting sometime in January. If schedule holds that would mean that the final bidder selection could begin in late March or April.
Landside Revitalization
It was clear that staff was very forthcoming and answered our questions completely as they could, given the current stage in process. The value engineering effort in preparation for the Private-Public-Partnership (P3) that we recently announced was now in the formative stages has yielded the results we expected, and have publicly advised repeatedly since 2007.
It's no wonder revitalization has been 18 years in the making, and until our new supervisor took the helm was not really making genuinely significant headway. Consider this, we were advised that the latest unofficial but fairly well-defined cost estimate for landside construction alone, prior to value engineering, was approximately 198 million dollars. Meanwhile, the available reserves to fund construction sits at approximately 53 million dollars. Since there isn't a snowball's chance that Santa Ana wound fund the ~145 million-dollar shortfall, that means the project could never, ever happen.
That's where the current two pronged approach comes in. First, the project is being value-engineered down to somewhere south of 100 million dollars. It's not yet appropriate to get into specifics as to how, but there is one very obvious opportunity to save and we are assured that after eight years of pointing this out, we are being heard now, loud and clear. We are of course referring to the elimination of the 30+ million-dollar boat barn that nobody wants.
Second, it makes sense to us too that the P3 landside development and management lease should be created, thereby to permit a private business entity to invest its own money in construction, as well as acting as the management agent as has been done for 45 years since the harbor was opened in 1971.
We mentioned above that is wasn't appropriate yet to talk about other proposed value engineering changes but the drawings and financial information we saw made sense. So when will it be appropriate? Relatively soon. Meanwhile the street improvements will apparently continue as promised. An RFQ (Request For Qualifications - not a Request For Quote) should be available in the March 2016 time frame.
Waterside Revitalization
We also need to discuss the impact on waterside redevelopment and point out a second reason why we favor the P3 landside development approach, even beyond the fact that it allows the long awaited landside redevelopment to actually happen. Here we're referring to the the additional benefit that engagement in a P3 master lease will retain our harbor's reserve funds for the waterside redevelopment that is sorely needed. It is obviously that waterside redevelopment couldn't possibly happen anytime within the foreseeable future if The County stuck to to their original plan to pay for the entire landside redevelopment from reserves.
That said, we also want to express a strong voice of concern. Our fear is that The County may become so enamored with the P3 approach that they will want to do the exactly same thing on the waterside. What's wrong with that you might ask? Well, obviously not-for-profit marinas must be managed much differently than commercial real estate. However, the answer is more basic than that. Given the waterside redevelopment was done in the exact same way as on the landside, then perhaps a private, profit-seeking entity would (again) take over total control of the harbor's marinas. Were this to become reality, then we fear that a situation could be recreated, such as was the case during the darkest days of our harbor's history. Three marina master lease agreements created in the 1970's and 80's resulted in years of consecutive 10% rate interests during the 80's and 90's, while at the very same time (to cite just one example) the docks in the West Basin were literally sinking underwater due to lack of appropriate maintenance. It is critically important for boaters to understand that these three master lease arrangements were finally ended after legal adjudication with one marina. Further, it was for precisely this reason that contracts for all three existing marina companies were converted from master leases to operating agreements in the 2005-2006 time frame. (The actual dates varied by marina.) Equally important, a harbormaster department (OC DPH) was created in 2005 to closely oversee the waterside operations, in particular, since the landside was still being managed via master leases.
We're of course tracking this potential exposure and have already started to discuss our concerns with some appropriate County staff. We intend to expand our efforts here and will of course welcome hearing from fellow boaters who have relevant background / expertise.
