County turns Newport course lease over to businessman
This past Tuesday, the Orange County Board of Supervisors voted to turn the remaining five years of a 10-year lease for the Newport Beach Golf Course over to Newport businessman William “Buck” Johns.
To give you some background, the golf course property is owned by John Wayne Airport, which is owned by the county.
JWA calls the area in question the “Airport South Clear Zone.” In Santa Ana Heights, where Johns lives, many refer to it as the “crash zone.”
In 1975, the county leased the Clear Zone to the partners George C. Lane, Steven G. Lane and Christopher Jones, for development and operation of an 18-hole golf course facility, the Newport Beach Golf Course.
In 1998, the partnership incorporated under the name Newport Beach Golf Course LLC.
In 2010, the Board of Supervisors approved a new 10-year lease for the group. That lease expires Dec. 1, 2020.
Now current shareholders of NBGC LLC have agreed to sell their interest to the Newport Beach-based Inland Group Inc., owned by Johns.
No doubt the golf course has fallen into disrepair, and on paper, Johns’ plan to refurbish it sounds promising.
Inland has established a working capital fund of $1 million for initial property improvements over the next 12 months. Additional improvements will be funded from cash flow, the plan states.
The plan includes improving the fairways, upgrading the pro shop and replacing the current restaurant with something along the lines of the Yard House.
The initial improvement phase, $722,000, will be spent mostly for the course itself, with the second phase including $1.2 million for the driving range and $1 million for the pro shop, starting in early 2016.
The third phase includes improvements of $178,000 to the restaurant/bar, $900,000 to the parking lot/garage, and $600,000 for the events room.
Total upgrades are estimated at $4.6 million.
2016 operating costs are estimated to be $1.67 million, with revenues of $2 million, and estimated costs for 2017 are $1.78 million. Revenues are projected at $4.2 million.
The county required Johns to put up a security deposit of $60,000, and he’ll pay minimum annual rent of “$180,000, as adjusted, or the percentage rent,” per the current 2010 lease agreement, county documents state.
County staff vouched for Inland’s ability to manage the property.
“JWA financial staff have reviewed Inland’s request and determined that Inland is financially capable in performing the obligations of the lease and believe that they have presented a reasonable plan for management and operation of the golf course for the remaining term of the lease,” according to the county staff report.
The staff report also says Johns’ company is “involved in real estate/infrastructure oriented projects in Southern California, including housing developments in the Inland Empire and power plants in the High Desert. “
I contacted Johns on Thursday, and he said he wouldn’t have a comment until the deal was completed.
“We haven’t actually acquired it yet,” he said.
He hung up shortly after, and I didn’t get a chance to ask him about a well-publicized deal involving his firm that went south in San Bernardino County — a deal that is not mentioned in the Orange County staff report to the supervisors.
“Johns played a pivotal role in an ill-fated power plant project at the Southern California Logistics Airport in Victorville that became subject to a grand jury investigation in 2009 and 2010,” according to a 2014 article in the San Bernardino County Sun. “He was also instrumental in marketing and helping the city launch its failed EB-5 visa program at the airport.
“In 2011, U.S. Citizenship and Immigration Services, in an unprecedented action, pulled the plug on Victorville’s EB-5 program, alleging the city misrepresented the number of jobs that would be created by investors.”
The jury’s findings did not result in charges, but the city of Victorville lost millions.
According to a 2012 article in the Sun, the city of Victorville “did not conduct proper due diligence and entered into an ‘onerous and open-ended agreement’ with Newport Beach-based Inland Energy Inc. and a high-risk, $182-million agreement to purchase power generation equipment from General Electric.”
Johns declined to comment to the Sun, and I didn’t get a chance to ask him about it.
I texted Todd Spitzer, chairman of the O.C. Board of Supervisors, early Tuesday morning, asking if we could talk after the meeting, and he agreed.
Late afternoon, his office called wanting to know my specific questions.
At the end of the day I heard from Jean Pasco, manager of public information for the county, and asked her about Johns’ history in San Bernardino County.
She didn’t know if supervisors knew or didn’t know about Victorville or the EB-3 program. All she could tell me was that the issue passed as a consent calendar item with no discussion.
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BARBARA VENEZIA lives in Newport Beach. She can be reached at bvontv1@gmail.com. Listen to her weekly radio segment on “Sunday Brunch with Tom and Lynn” from 11 a.m. to noon on KOCI/101.5 FM.