$500-Million Resort Plan Approved in Dana Point

A $500-million resort that some say will rival Monterey Peninsula’s Pebble Beach in scope and luxury has received final approval by the City Council, holding out the prospect for hundreds of construction jobs and $2.26 million a year in tax revenue.

“The vote represents one of the most critical decisions this community has made since we voted for incorporation in June of 1988,” Mayor Mike Eggers said. “This is no minor subdivision. This is a half-billion-dollar, world-class destination resort project that will bring new revenues, new jobs and new opportunities to our small city.”

The council voted Tuesday night, 4 to 1, to approve the Monarch Beach Resort, one of several coastal hotel complexes approved in Orange County in the past 10 years. Councilwoman Karen Lloreda dissented.

The six-month approval process was marked by relatively little controversy, except for an unprecedented decision by the council in December to require the developer to provide a total of $210,000 a year in rent subsidies for resort employees who will earn $20,000 or less yearly. Details of that requirement have not been worked out.

The plan calls for a 400-room, five-star hotel and 238 homes and condominiums on 225 acres just off Coast Highway at Niguel Road. A 27-acre city park will be provided, along with improvements to the Links at Monarch Beach golf course that would make it more attractive for professional tournaments.

The plan is less than half the size of a project advanced in the mid-1980s. The earlier version included a 1,100-room hotel and 300,000 square feet of commercial space. Nippon Shinpan Co. Ltd., the developer, eliminated the commercial space and scaled down the hotel.

Nippon Shinpan, the largest credit card company in Japan, bought the Monarch Beach site in 1990 from Qintex, an Australian company that tumbled into receivership and bankruptcy.

The development, which must be approved by the state Coastal Commission, is expected to provide some relief for the construction industry, which has been reeling under the longest recession in decades.

“This could provide quite a few jobs--perhaps several hundred over the 18- to 24-month construction period,” said Mike Potts, executive director of the Building and Construction Trades Council of Orange County, a group of county trade unions. “We are not turning anything down at this point. It is definitely a shot in the arm.”

City officials estimate that Dana Point stands to gain $2.26 million in annual revenue from the hotel and resort, which will bump hotel taxes up from one-third to one-half of the city’s annual $11 million in revenue.

“It’s wonderful to see that construction will begin imminently on a major development in spite of these economic times,” City Manager William O. Talley said.

Company representatives have assured him that construction can begin in a few months, Talley said. If approved by the Coastal Commission, hotel construction would start first and could be finished in as little as 18 months. The housing will be phased in along the way.

The coastal panel has not yet scheduled a hearing. Officials do not expect serious delays or problems with the panel because in 1985 it approved the bigger plan.

Talley warned that the city expects Nippon Shinpan to build the project and not offer the property and its newly won entitlements for sale to another developer.

Similarly, Lloreda said she is not opposed to project itself but wants more assurances from Nippon Shinpan that it will carry out its promises.

“I don’t think it’s a bad project,” she said. “I wanted to push for stronger language, more securities and safeguards for the city. I want to be sure there are no surprises down the road.”

Robert Rockefeller, a spokesman for resort, said his company is committed to the project by virtue of the $150 million it has already invested in the project.

The developer, he said, is locked in to the specific plan because of the council’s approval.

The proposal to build the resort originated in 1972. But the project became mired over the years; setbacks included bankruptcies, two recessions and the incorporation of Dana Point in 1989, which forced developers to restart the approval process.

“This is of critical importance to the city and its citizens for reasons other than financial,” Eggers said. “This site has been vacant for so long and planned and replanned so many times that I think quite honestly it has been analyzed more than any other piece of coastal property in California.”

The project still needs financing, said Eggers, adding that he hopes that Nippon Shinpan will work as hard to secure construction loans as the council did in getting the project approved in just six months.

Real estate analysts say, however, that resorts have been dramatically affected by the recession and that new ventures are having a hard time getting financing.

“The difficult thing to do in this market is attract investors,” said Gary Wescomb, a partner at Kenneth Leventhal & Co., an accounting firm with expertise in real estate. “The market is overbuilt, and bank loans are hard to get. The ability to find financing is next to nonexistent.”

But there is still good demand for top-quality hotels, Wescomb said, noting that the tony Ritz-Carlton--across Coast Highway from the Monarch Beach site--has done well because it is a destination resort.

Jeffrey Meyers, president of the Meyers Group, a real estate consulting firm in Newport Beach, said he doubts that the Monarch Beach Resort will be as attractive as the Ritz-Carlton, which has a premier location on bluffs above the ocean.

Other county coastal resorts have not done well in the recession, but as the market improves in the years ahead, Meyers said, Monarch Beach could become very attractive.

About 20 miles north in Newport Beach, the Irvine Co. plans two resort hotels in its Newport Coast project, but neither is on as fast a track as Monarch Beach, said Dawn McCormick, an Irvine Co. spokeswoman. One is still in the county planning process and another is on hold.

“I think the hotel industry in most cases is taking a fairly cautious approach as they move forward on new projects,” she said. “Luxury hotels have been especially hard hit.”

Monarch Beach at a Glance

Facilities: 400-room, five-star hotel; 238 residential units.

Size: 225 acres improvements for the Links at Monarch Beach golf course.

Estimated cost: $500 million.

Owner: Monarch Bay Resorts Inc., a division of Nippon Shinpan Co. Ltd.

Next: Project still requires state Coastal Commission approval.

Source: Monarch Bay Resorts Inc.