R.D. Olson Development may now have to shelve plans to build a pair of new hotels at the harbor and revert to its backup plan after the Orange County Board of Supervisors failed — again — to advance a ground lease that separates financing for the $225 million project
On Tuesday, Aug. 25, the Board of Supervisors voted 2-2, with one member abstaining, in its latest effort to get the four votes needed to separate the hotel component from the harbor’s commercial and marina leases.
If it had been approved, the restructuring would have allowed hotel developer Bob Olson to seek construction financing for the planned 130-room Doheny and 169-room Salthaus hotels at the county-owned Dana Point Harbor.
No lease, no financing, Olson said.
As it stands today, it looks like we’re
“As it stands today, it looks like we’re going to have to renovate the [Marina Inn] hotel,” Olson said of his backup plan.
“We’re just sort of in purgatory here. And we’re running out of time,” the developer told the Business Journal, sounding discouraged.
The failed approval is the latest delay in the roughly $700 million effort to revitalize the aging Dana Point Harbor and has already eliminated Olson’s goal of completing the hotels before the LA28 Summer Olympics as reported in the Aug. 24th issue of the Business Journal.
When finished, the project is expected to be
When finished, the project is expected to be one of Dana Point’s economic engines, creating 200 new jobs, attracting tourists and bringing in millions of dollars in tax and ground-lease revenue for the city and Orange County.
The proposed hotels, one an upscale boutique and the other a rate-restricted surf lodge, are slated to anchor the overhauled harbor along with about 100,000 square feet of new commercial and retail space, renovated marina slips and a nearly 1,000-space parking structure.
R.D. Olson is one of three Newport Beach-based developers working together as Dana Point Harbor Partners LLC, which was chosen in 2018 to revamp the 239-acre, 55-year-old county-owned harbor.
Work began in 2022.
Bellwether Financial Group, in charge of the marina
Bellwether Financial Group, in charge of the marina redevelopment, and Burnham-Ward Properties, developing the commercial core, have already made significant progress on their parts of the project.
The hotels remain in limbo.
“As it stands today, these hotels are not financeable,” Olson said.
The board voted 2-2, with Supervisor Janet Nguyen abstaining. Supervisors Don Wagner and Doug Chaffee voted against the lease change, while Supervisors Katrina Foley and Vicente Sarmiento supported it. Four votes were required for approval.
The central point of contention is how to protect the 19 employees of the Marina Inn, which would be demolished to make way for the two new hotels.
The labor issue was not my problem, Wagner
“The labor issue was not my problem,” Wagner told the Business Journal. “It is for two of my colleagues.”
Wagner said he is open to changing his vote if colleagues settle the labor dispute.
Chaffee, the board chair, did not respond to a Business Journal request for comment. Nguyen also did not respond to requests for an interview or statement.
Foley proposed separating the hotel ground lease
Foley proposed separating the hotel ground lease from the harbor’s commercial and marina leases, allowing R.D. Olson to seek financing while continuing to negotiate labor issues with the county.
She had previously asked the developers for a labor peace agreement, a transition plan for displaced Marina Inn employees and limits on marina slip fee increases before changing her position a month later.
Foley did not return a Business Journal’s request for an interview.
Sarmiento voted for the lease change but said he still wants stronger commitments to Marina Inn workers before supporting future proposals.
Frankly, I admit I am perplexed
“Frankly, I admit I am perplexed by the unwillingness of the developer to come forward and address even minimal protections for the 19 affected employees at the hotel,” Sarmiento told the Business Journal in a statement. “It is my hope that we will see progress in negotiations and that future proposals will address the need for social justice and youth programs beyond the minimum required by the state and that protections for workers are offered.”
Olson disputes that characterization.
Olson said they have agreed to comply with the state’s Worker Adjustment and Retraining Notification (WARN) Act by giving Marina Inn employees advance notice of layoffs and will also help employees find jobs at other hotels operated by the inn’s management company and refer them for positions at the two replacement hotels once they open.
“We’ve agreed to that. We’ve already agreed to that, and I don’t know what more they want,” Olson said.
Alan Reay, president of Newport Beach-based hotel brokerage
Alan Reay, president of Newport Beach-based hotel brokerage and consulting firm Atlas Hospitality Group, has been following the saga between Olson and the county.
He believes the dispute goes beyond the labor protections the county is seeking for the 19 Marina Inn employees and is part of a push toward unionization of the proposed Dana Point hotels.
“If you look at this in terms of the fact that the developer is being held up by 19 employees, we’re seeing, especially with hotels along the coast and the Coastal Commission, there’s a push to make these hotels union,” Reay told the Business Journal.
Reay said that decision to unionize though should
Reay said that decision to unionize though should be left to the hotel workers, not during the development approval process.
What’s Next?
Even though he voted against the latest proposal, Wagner said he still wants the hotels to be built and that county real estate officials have been told to keep talking with the developer.
“We’ve instructed our real estate team to engage in further discussions,” Wagner said.
He said he would ideally like to see all five board members approve the project, rather than the four votes required to pass.
After his latest meeting with county real estate
However, after his latest meeting with county real estate officials on Wednesday, the day after the second failed vote, Olson was less optimistic.
“We’ve offered everything that they’ve asked for,” Olson said. “We’re just not sure where the county is.”
