Supervisors Consider Major Extension of Marina Leases

Moving swiftly but quietly, the Los Angeles County Board of Supervisors is poised to make a landmark decision as early as today that would give a handful of politically well-connected developers and major campaign contributors control over publicly owned Marina del Rey well into the 21st century.

Through a complex strategy largely crafted out of public view, the supervisors would set in motion a process to extend the developers’ lucrative long-term leases on prime waterfront property for up to two decades beyond their current expiration date if they agree to refurbish the properties.

The plan, if approved, is intended to encourage a dramatic make-over of the aging marina by continuing the control long enjoyed by some of Los Angeles’ most powerful developers. Those developers have long been among the top campaign contributors to their landlords, the supervisors, giving well over $600,000 to board members’ campaigns along with other marina interests during the last 10 years.

The entire marina is owned by the county, but developers built and operate the harbor’s hotels, apartments, boat slips, restaurants, shops and offices under long-term, generally 60-year leases with the county. Those leases will expire over the next 30 years, most between 2020 and 2029.

The vast majority of the marina leases are controlled by six operators: developers Douglas Ring, Jona Goldrich, Jerry Epstein, Jerry Snyder, Saudi businessman Sheik Abdul Aziz al-Ibrahim and CS First Boston Mortgage Capital Corp., an investment firm that recently foreclosed on some of the sheik’s marina holdings. The company is quietly seeking buyers for its leases, and several marina leaseholders are reportedly interested in purchasing them, a move that would further concentrate control of the harbor.

Critics charge that the county’s plan, referred to as the “asset management strategy,” is nothing short of a wholesale giveaway of prime public land. But county officials defend their approach, saying it will increase revenues while making the marina a major attraction for tourists and residents.

The decision marks the first major test of the county’s newest supervisor, Don Knabe, who has received tens of thousands of dollars in campaign contributions from the marina leaseholders. Knabe has received contributions from Marina del Rey interests in every election campaign he has waged since becoming mayor of Cerritos in the mid-1980s.

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Knabe, whose district includes Marina del Rey, has been a key player in the area since the early 1980s in his former role as chief of staff to Supervisor Deane Dana.

In an interview Monday, Knabe strongly backed efforts to revitalize the small-craft harbor, including adoption of the asset management strategy to provide a futuristic look at Marina del Rey.

“I think it’s a great blueprint,” Knabe said. “It’s absolutely critical to the success of the marina. We need major redevelopment out there.”

Knabe acknowledged that he has sought contributions from Marina del Rey leaseholders in various campaigns beginning with his reelection to the Cerritos City Council in 1984. And he said he has met with them since becoming a supervisor. “We’re partners,” he said. “We’re not in an adversarial role.”

Some of the earliest seed money for Knabe’s hard-fought supervisorial race last year came from the marina. The largest contributions, totaling at least $31,000, came from marina entities controlled by Ring.

Knabe called the marina “the crown jewel” of the county and said it cannot be allowed to decay. “Without this plan, it sits there as a wasting asset.”

But critics, including the lone member of the county’s Small Craft Harbor Commission to oppose the plan, take a decidedly different view. A draft of the plan was prepared by county officials without any public involvement until the commission met to discuss it in September, January and February. The plan is on the supervisors’ agenda for action today.

“The asset management strategy is the last great giveaway of Marina del Rey,” said Carole Stevens, a longtime member of the commission that advises the supervisors on marina matters. “How dare the staff denigrate the intelligence of the supervisors in such an obvious and avaricious manner by throwing in front them a report that in no manner, shape or form gives them any information?”

Stevens said the policy is long on concepts but short on details. It would take away from the county and give to the leaseholders, she said, by offering the prospect of 10-year to 20-year extensions on the existing leases and a deferral of rent on the properties if developers agree to refurbish their marina holdings.

A key component of the strategy involves creation of two developments--one on the east side of the marina and one at Mother’s Beach on the west side--as catalysts for remaking the harbor.

The easternmost project is described by county Beaches and Harbors Director Stan Wisniewski as “analogous but not necessarily identical to the Universal CityWalk project,” Santa Monica’s Third Street Promenade and Old Pasadena.

The project also must conform to the county’s plan adopted last year by the Coastal Commission, which allows for construction of 22-story high-rise buildings on the western flank of the harbor.

David Naftalin, attorney for the Marina Tenants Assn., said the plan calls for a harbor developed as a “user-friendly tourist trap that would compete with glitzy projects.”

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“The assumption is that such a development would benefit the county financially,” Naftalin wrote the supervisors. “The actual effect, however, would be to commit the county to continuing with the present players, the present financial relationships and the present balance of power between the lessees and the county.”

But Wisniewski defended the county’s stewardship of the marina and said the strategy marks a historic moment in the evolution of the world’s largest harbor created for small craft.

The plan is intended to maximize public use and lease income by transforming the marina into a more exciting place to live and visit, he said.

In recent years, the supervisors have seen virtually all of the harbor’s income go to repay bondholders. In 1993, the financially strapped county mortgaged the marina for 15 years in exchange for a one-time infusion of $189.5 million to pay operating expenses.

At present, the county is earning about $23 million from the marina each year before paying most of it as interest on the bonds. County consultants estimate that adoption of the plan will increase the county’s income from the marina by $2.3 million per year to an average of $33.8 million through 2030.

After a yearlong investigation of the marina, The Times reported in 1992 that the county was earning far less than it should be from the prime waterfront property. Fred E. Case, a retired UCLA management professor and prominent authority on Southern California real estate, said the county should have been earning at least $50 million to $75 million under the current leases given the value of the underlying property.

After performing a market valuation, a financial study less comprehensive than a formal appraisal, Case estimated the marina was worth $1.4 billion. One of the county’s major objectives in crafting the new plan was to have the flexibility to make short-term lease extensions and development decisions when most of the current leases expire.

Wisniewski said the strategy lays out a long-term vision of the harbor as an urban waterfront development while maintaining an emphasis on recreational boating. Although the marina was originally developed as a small-craft harbor, there was no mention of that role when the strategy was first proposed.