“They seem more interested in extracting political wins or extracting additional gifts for different special interest groups just like it’s another housing project in California,” said Dana Point Mayor John Gabbard. “And as such, they miss the point that they are supposed to be promoting the development of the harbor for the betterment of the residents of Orange County and their business partners.”
This week, the next phase of Dana Point Harbor’s massive redevelopment project came to a screeching halt after Fifth District Supervisor Katrina Foley introduced eleventh-hour restrictions to a key ground lease. The project’s partners, who were in the final stages before breaking ground on the development of two luxury waterfront hotels, announced Wednesday that Supervisor Foley’s demands “kill any hope of going forward.”
“As it stands today, the hotels will not get built,” said Bob Olson of Dana Point Harbor Partners, who leads the hotel project. “We have stopped all work: architects, engineers and designers.”
Among Supervisor Foley’s demands was a requirement that hotel operators enter a labor peace agreement with a labor organization. On top of that, she proposed that the hotelier should support displaced workers from the demolished Marina Inn and work with County staff on education and transition plans. Further, she proposed limits on future marina slip rate increases and a mandate to create a broad community benefits package.
“There is no lender that would touch the hotels with these kinds of restrictions,” Olson said.
The hotels have long been part of the $600 million harbor overhaul designed to “turn Dana Point Harbor into a world-class destination while preserving its local charm and historical significance,” underway since 2018. The marina is now largely complete, though the commercial waterfront is still being built. The hotels—which had already been approved by the City of Dana Point and the California Coastal Commission—were intended as the final private investment needed to finish the redevelopment.
According to Orange County staff reports, the projected return to the City over the 66-year lease is approximately $2.2 billion.
“Katrina’s [Foley] actions Tuesday delayed the creation of jobs and potentially reduced transit occupancy tax by $80 million over 20 years,” said Dana Point Mayor John Gabbard.
The County of Orange initiated the public-private partnership (P-3) model in 2016 by soliciting bids from private developers to revitalize and manage the aging coastal asset. Following this, the county officially selected the development consortium in 2017 and signed a 66-year ground lease in October 2018. Mayor Gabbard says this partnership—which began nearly a decade ago—was forsaken by County staff earlier this week.
“I am struggling with Tuesday’s actions. It is as if the County does not understand the meaning of partnership,” said Mayor Gabbard. “They seem more interested in extracting political wins or extracting additional gifts for different special interest groups just like it’s another housing project in California. And as such, they miss the point that they are supposed to be promoting the development of the harbor for the betterment of the residents of Orange County and their business partners.”
Mayor Gabbard went on to say that Supervisor Foley’s actions are personally disappointing to him given the way that it ultimately undermines the City’s residents who have already had to tolerate several years of development—and the quality-of-life impacts and disruptions that come with it—only to see the project’s long-promised payoffs placed in jeopardy.
“The residents of Dana Point are already dealing with this construction on a daily basis. When they go out to dinner, they’re walking around barriers, fencing, lots, and stored materials which we have to endure because the harbor is getting redeveloped. In the long term, it’s a good thing. But during it, it’s not fun,” said Mayor Gabbard.
Prior to recent events, Mayor Gabbard had worked adamantly with to keep the project on track, telling both the County staff and developers to ensure the project could be completed on time: “I tell them the same thing: hurry up and get this done because our residents don’t need to endure a European cathedral project that takes 200 years.”
Naturally, residents may now ask why Supervisor Foley would only now attempt to introduce these requirements, on the eve of a time-sensitive 66-year ground lease approval, knowing that they could disrupt the hotels from being built in time for the 2028 Summer Olympics. One prevailing theory—while yet unproven—is that Foley may be helping her political ally settle a score.
Enter the Dana Point Boaters Association (DPBA): one of the most vocal organizations opposing aspects of the harbor redevelopment.
The DPBA sued both the County and Dana Point Harbor Partners in September 2021 over slip fee increases and the redevelopment. They lost on summary judgment, then appealed, lost again on appeal, and then additionally litigated the attorney’s fees issue.
This did not go their way either. The plaintiffs became liable for a substantial attorney’s fee award to Dana Point Harbor Partners and allegedly still owe $500,000.
In March 2023 (mere months before the trial court first granted summary judgment in favor of Dana Point Harbor Partners), Supervisor Foley took a tour of Dana Point Harbor and agreed—over coffee, allegedly—to consider the formation of a Harbor Advisory Committee. This eventually took the form of the Dana Point Harbor Oversight Advisory Committee (DPHOAC), which held its first official meeting in the Fall.
Robert Langan, a Director on the DPBA Board, was selected to chair the Committee—a position he still holds today. Langan is a donor to Foley’s Supervisorial reelection campaign.
Mayor Gabbard said the affinity that the relationship between DPBA and Supervisor Foley, as it pertains to their collaboration on DPHOAC, is common knowledge.
There’s also the matter of the aforementioned forced labor peace agreement (LPA). Across Orange County (particularly in Anaheim) and Los Angeles County, hospitality workers unions put pressure on local officials to require hoteliers to enter into LPAs before the first wall of their building has even been constructed.
It’s nothing new in the industry, perhaps, but creates tremendous uncertainty for developers at a time when they are still trying to secure financing and may not know whether their project is even financially viable.
There is no public evidence showing who specifically drafted Supervisor Foley’s proposed language, but the provisions themselves closely resemble standard, almost boiler plate LPA frameworks used in other hotel negotiations across Southern California.
Community reactions across social media have been characterized by confusion and frustration, with many lampooning Supervisor Foley’s handling of the ordeal.
“This is what happens when you have people in government oversight positions that have no background in the building industry,” said Dana Point resident Debbie Malloy DiBernardo.
As for Supervisor Foley herself, she seems optimistic and unbothered.
“It’s not the end of the world,” said Supervisor Foley. “We have time over the summer. Let’s get together and work it out.”
