O.C. Endorses Plan to Boost Marina Control

Breaking with past policy, the Orange County Board of Supervisors on Tuesday endorsed a plan to eventually regain financial control over five county-owned marinas and to raise boat slip rates, bringing them more in line with the private market.

The county now maintains decades-long leases with private companies for operations of its marinas. But a report commissioned 18 months ago recommends against continuing these lease arrangements, ranking this approach as the “least advantageous” option open to the county.

The main reason behind that conclusion is money, officials said. The report says the county’s public marinas generally charge less for boat slips than do private operators, meaning large losses of potential revenue.

If the county changes its leasing arrangements, the study concludes, “the difference in revenue could be in the millions of dollars.” But a change in policy would also mean more financial risk for the county, officials said.

In 1991, the county share of revenue at the marinas was nearly $2.9 million.

Marina operations generated controversy for the board last year when The Times Orange County Edition reported that the Culver City firm of Goldrich & Kest had been negotiating with the county to extend its 30-year lease for the Sunset Marina Park at Huntington Harbour, even though the lease did not run out for another eight years.

The Times also disclosed that there had been no competitive bidding for the 30-year extension, that Supervisor Harriett M. Wieder’s son had negotiated with the county on behalf of Goldrich & Kest firm and that the supervisor had frequently interceded with county officials on the firm’s behalf.

At the time, Wieder defended her involvement, saying she only wanted the county to get the best deal. And she said the presence of her son, Lee E. Wieder, had not influenced her actions.

Goldrich & Kest dropped the lease extension idea in October, 1991.

Some who were critical of the Sunset proposal saw the plan adopted Tuesday as an outgrowth of last year’s controversy. “Now we’re seeing more of a business-like arrangement than we had before,” said Ed Bynon, president of the Sunset Aquatic Marina Boatowners’ Assn., which opposed the Goldrich & Kest extension.

But county officials disputed that claim.

“There’s a perception that this arose out of the Sunset Marina issue, but this (plan) really predated that,” said Michael M. Ruane, director of the county’s Environmental Management Agency, which oversees marina operations.

Supervisor Wieder also said the new tack taken by the board with regard to management of the county-owned marinas is unconnected to the questions raised last year about the Sunset Marina lease.

The long-range plan for marina operations, which results from a study commissioned by the supervisors in the fall of 1990, was adopted unanimously by the five supervisors Tuesday without comment.

It provides a framework for future policy on the county’s five marinas in Dana Point, Newport Beach and Huntington Harbour, but does not apply to the private restaurants, offices and retail space run in these areas.

The five marinas are now leased to separate companies, with the county receiving roughly 25% of gross revenues, county officials said. Under state law, most of the county’s share must be put back into harbor operations. These leases run from 30 to 50 years and expire between the years 1999 and 2038.

The study, prepared by the Irvine office of the Williams-Kuebelbeck consulting firm, ranked the county’s options for future marina operations in order of preference, based largely on the prospect of increasing revenues.

The best option, the study concludes, would be to buy out the existing leases at the five marinas and hire a management firm to run the operations. But this idea would prove “academic at best” unless the current operators agreed to give up their leases, the study said.

Goldrich & Kest has said the county could buy out its lease for $12 million, the report said. But county officials--in the midst of their worst-ever budget crunch--say that kind of money is not available at this time.

The second-ranked option--and the one that county officials say appears most feasible--would be to allow the current leases to run out and then reassume financial control of the marinas.

The county could then hire a private management firm to operate the marinas, probably at a rate of 5% to 20% of gross revenues, said Ted E. Miller, chief of marina lease arrangements for the county.

The idea of extending current leases once they run out is ranked last among five options in the study. While “viable,” it is termed “the least advantageous option” available to the county.

Wieder said hiring a private management firm to run the marinas when existing leases expire is “my first choice. . . . We want a cash flow, and we think this is a better business approach for the county. We need to be entrepreneurial.”

EMA Director Ruane said of the favored approach: “What this means is the county will be more of a business partner and of a manager. . . . We’d have a more active role in the purse strings.”

But Ruane and other county officials acknowledged that by seeking to generate more money, the county is also taking more of a risk.

“It means added responsibility, so there’s a greater risk,” said County Budget Director Ronald S. Rubino.

Signs of the potential risk have been seen in recent months during the recession, officials said, as vacancies at some of the county’s marinas have grown, and waiting lists at others have become shorter.

In response, marina operators are generally holding rates at current levels, county officials said.

In the past, the regulatory demands of running a public marina have sometimes made it difficult to raise slip rates, and the study found that as a result, public marina rates have generally lagged behind private marinas.

While slips cost an average of less than $9 per foot monthly at Orange County’s public marinas in 1991, private operators charged more than $13, the study found. “The effect of this disparity is a loss of potential revenue to the county through pricing restraints, which could be construed as a subsidy for boaters,” the study says.

As a partial response, the county now plans to adopt a market approach to pricing slips, relying more on factors of supply and demand than it has in the past.

Bynon of the Sunset boaters’ association said he doubts that slip renters will protest future rate changes. “There can be no real objection to market rates. . . . Market forces are coming into play, and I think boat owners have to recognize that. That’s the facts of life.”

And Paul Hegness, a spokesman for the Dana Point Marina Co., which operates the biggest of the county’s marinas, said he also accepts the study and its recommendations without strong objections.

He said the plan adopted by the supervisors still leaves room for future lease operations at the county’s marinas and said he is confident that supervisors will ultimately favor that option.

Managing the County Marinas

The Board of Supervisors on Tuesday endorsed a report that said the county would benefit by phasing out leaseholder operation of the five county-owned marinas. Critics say the action stems from public controversy over the county’s oversight of the lease for the Sunset Marina in Huntington Harbour, though officials deny that.

Early 1989--Lee E. Wieder, son of Orange County Supervisor Harriett M. Wieder, is hired as a lobbyist by Goldrich & Kest Inc., which operates the Sunset Marina. The firm had been a campaign contributor since 1981 to Supervisor Wieder.

Dec. 5, 1989--County supervisors vote to open exclusive lease negotiations with the Goldrich firm for continued control of Sunset Marina, which generates millions of dollars of boat-slip rental and other income. The company had operated the marina since in 1969. It sought a 30-year lease extension.

June 21, 1990--Lee Wieder ceases work as a lobbyist for Goldrich and Kest.

October, 1990--Supervisors commission a study to determine the value of Sunset and two other county marinas and to analyze management options.

June 23, 1991--The Times reports that Supervisor Wieder, after meeting with the president of the Goldrich firm, insisted on a shuffling of the county negotiators. Dumped from the team was the head of the Harbors, Beaches and Parks Department who believed the county should demand a greater share of marina income. Wieder said she only wanted to get the county a good deal, adding that her son’s involvement didn’t influence her actions.

Aug. 28, 1991--The Harbors, Beaches and Parks Commission voted 4 to 2 not to endorse a county staff recommendation to renew the Goldrich & Kest lease for another 30 years.

Sept. 25, 1991--The Harbors, Beaches and Parks Commission split 3 to 3 on a proposal to extend the Goldrich & Kest lease.

Oct 28, 1991--The president of Goldrich & Kest asks the supervisors to drop a proposal to extend his company’s control of the marina.

County-Owned Marinas

Sunset Marina Park

Newport Harbor (Newport Dunes & Harbor Tower Marina)

Dana Point Harbor (Dana Point Marina & Dana West Marina)

Source: County Environmental Management Agency