Newport Beach-based R.D. Olson Development will have to wait at least two more weeks to break ground on two hotels at Dana Point Harbor after the Orange County Board of Supervisors delayed approval of 66-year ground leases for the $700 million-plus revitalization project on Tuesday, Aug. 11.
Supervisor Katrina Foley, who represents Newport Beach, cast the lone dissent, while the other four supervisors voted to continue the item to the board's Aug. 25 meeting, the OC Register reported. The delay jeopardizes R.D. Olson CEO Bob Olson's goal of opening both hotels by the 2028 Summer Olympics, when surfing competitions will be held a few miles south in San Clemente. Without the new leases, hotel construction stays on a 2030 track.
Foley urged colleagues to hash out remaining concerns on the dais rather than push the item to yet another meeting. In a statement released Aug. 12, she said she pushed hard for approval to advance hotel construction from 2030 to 2028, calling it the final major piece of the revitalization.
It was the second consecutive delay. The board first saw the lease proposal in June but postponed after Foley introduced additions related to hotel employee protections and limits on marina slip rent increases. On Aug. 11, Foley could not get a single colleague to second her motion to approve.
Third District Supervisor Don Wagner said his biggest concern was a provision guaranteeing the county free access to meeting space at the hotels up to six times a year, which he compared to extortion. Wagner also questioned what the county owes the 198 employees of the Wind & Sea restaurant, set to close Sept. 15, and the 20 Marina Inn workers who will be displaced by demolition.
Second District Supervisor Vicente Sarmiento called the negotiations a "one-time opportunity to negotiate a meaningful lease" and pressed for stronger worker protections. Fourth District Supervisor Don Chaffee said the agreement needed rewriting to include worker guarantees but added he does not want the project to die.
Olson told the board he would give Marina Inn workers 60-day notices and pledged to take care of them, noting a shortage of hotel workers in South County. After the meeting, he told the OC Register he was disappointed but "willing to do what makes any of the supervisors happy" regarding displaced employees.
The project involves Dana Point Harbor Partners LLC, a group of three Newport Beach-based firms. R.D. Olson is designing a 130-room luxury hotel called The Doheny (Marriott Autograph Collection) and a more affordable 169-room hotel called The Salt Haus (Marriott's Moxy brand), at a combined cost of about $160 million. The other two partners, Bellwether Financial Group handling the marina and Burnham-Ward Properties building the commercial core, are already well underway.
County real estate CEO Mat Miller told the board the lease is projected to generate about $2.2 billion in revenue for the county over its full term, with the developer's return projected above $25 billion. If R.D. Olson cannot secure financing for the new hotels, the lease reverts to a remodel-only option with a shorter term.
COVID-era delays, permitting holdups and new financing requirements prompted the updated lease structure, which splits the original agreement into separate hotel leases to help R.D. Olson secure standalone financing.
The board is scheduled to take up the leases again at its Tuesday, Aug. 25, meeting. Foley is also hosting a community workshop on Wednesday, Aug. 19, at 6 p.m. at the OC Sailing and Events Center to gather public input on park, parking and facility improvements at the harbor. Residents can submit public comments to the board ahead of the Aug. 25 vote.
