Orange County "credit dentist" Dr. Robert F. Beauchamp has halted plans to lease most of Ventura Harbor's financially troubled retail area, saying the price is too high.
Bank of America, the village's largest creditor, says the 100-business Ventura Harbor Village owes $10 million, which must be paid before another operator can take over. Beauchamp Enterprises and the Ventura Port District have estimated the debt of the village, whose previous operators declared bankruptcy in 1987, at $6.5 million to $8 million.
"It's very discouraging and disappointing," said Ventura Harbor Manager Richard Parsons. "While we are getting calls from other interested parties, no one wants to pay $10 million."
In a letter last week to the port district, Beauchamp Enterprises, which already operates two commercial marinas with 560 slips at Ventura Harbor and has assets estimated at $500 million, said it would reconsider if Bank of America lowered its demands.
Westrec, a subsidiary of Glendale-based Public Storage Inc., has also expressed interest in operating Harbor Village. A spokesman said that while $10 million is too much, the firm is studying how much it can afford. Public Storage has assets of $3 billion and owns 19 marinas in the United States, including facilities in Sacramento and Georgia.
For now, Ventura Harbor remains mired in a complex legal quagmire that must be unraveled to the satisfaction of almost a dozen parties before a new operator can take over. Until it is, long-term planning and promotions for the harbor retail area, as well as some wharf maintenance, may have to be postponed, Parsons said.
"This is the most complicated action I have ever dealt with," said Peet Saaret, a Bank of America vice president for corporate trust administration. "We want to bring about a solution to this. If people have an interest in the property, they should bring it to the table."
Meanwhile, the bank has sued the port district in Ventura Superior Court for breach of contract. It has also started foreclosure proceedings to take over Ventura Harbor Village, a cluster of shops, restaurants and boating-related facilities that comprise the tourist core of Ventura Harbor.
Bank of America is the trustee for about $5.5 million in outstanding municipal-type bonds that were issued by Ventura Harbor on behalf of Ocean Services Inc. to finance construction of the village. The bonds held the port district conditionally liable should Ocean Services default. Because Ocean Services did just that with its bankruptcy in 1987, the bank claims in its lawsuit that it gained legal right to take possession of the property.
The suit claims that uncollected lease payments plus interest at 12% annual rates have raised the debt to $10 million.
Port officials plan to challenge those figures in court, Parsons said.
In addition, the port district would prefer to turn over operations of the harbor to Beauchamp Enterprises or Westrec to keep harbor businesses out of the control of CIB Development, another firm that has laid claim to the property.
After Ocean Services filed for bankruptcy, Huntington Beach-based CIB bought most of the outstanding bonds and has several times attempted to claim legal title to Ventura Harbor Village.
So far, harbor officials have thwarted the move in court.
CIB has links to former savings and loan executive Ranbir S. Sahni, who operated American Diversified Savings Bank, a Costa Mesa thrift that was seized and liquidated by regulators in 1988. That move resulted in a $1.14-billion refund to depositors--the largest payout ever by the Federal Savings and Loan Insurance Corp.
Bobby S. Mehta, CIB's president, is Sahni's brother-in-law and a longtime Sahni aide who once headed a division of American Diversified and served as one of its directors.
Federal savings and loan regulators think that CIB is controlled by Sahni, according to Joseph E. Thomas, a Costa Mesa attorney representing the FSLIC in a lawsuit against Sahni and CIB.
Sahni and Mehta have both denied this.
In a brief interview Tuesday, Mehta said the ownership of CIB was irrelevant.
"CIB was an innocent victim who bought the bonds in efforts to get a good return on their money and is trying to recover its investment and a reasonable rate of interest," he said.
Despite the legal and financial mess, CIB, Beauchamp, Westrec and a number of other firms see Ventura Harbor as a potential cash cow once its debt is resolved.
"Marinas are a unique investment opportunity in that it's difficult to make any more of them and boat sales and boating activity is growing at a rate . . . that's difficult to keep up with," said Wayne Hughes Jr., a vice president of site acquisitions for Public Storage.
Expertise and Growth
Parsons said a deal with Beauchamp or Westrec would bring expertise and growth to Harbor Village. During the tenure of Ocean Services, many tenants found business less than booming because of too few tourists, spotty advertising and a management style that Parsons said "left a lot to be desired."
Ventura Harbor earns some of its $2-million annual budget by leasing Harbor Village. The operator, in turn, subleases the shops and boat slips, runs the village and turns over to the port district a percentage of gross revenues that ranges from 1% to 20%, depending on the business.
Should CIB gain control of the harbor, the port district might be forced to turn over all its revenues from leasing Harbor Village--an estimated $325,000 annually--until it pays off the harbor bond debt, Parsons said. Another operator would have to agree to pay off that debt to obtain a lease.