Crystal Cove Luxury Resort Contract Signed

With environmentalists urging caution, the state and a private partnership Tuesday signed a controversial 60-year contract that provides new details of what the pact calls a “first-class vintage California beach resort” at Crystal Cove, one of the most picturesque public sites in coastal Southern California.

The contract officially opens the door for what state parks officials hail as a creative private-public partnership, but which some environmentalists denounce as setting a dangerous precedent by allowing a luxury resort on public land.

The contract, made public with its signing, reveals new details about the planned resort at Crystal Cove State Park, between Newport Beach and Laguna Beach. The state gives the partnership permission to develop and operate on more than 28 acres of the park, 12 acres more than the state previously said. While state officials have said rooms would cost from $100 to $400 a night, the contract does not specify rates. Instead, it grants the developer the right to set room rentals “at market rates for such first-class resort accommodations,” subject to approval from the state Department of Parks and Recreation.

The contract must be reviewed by the state attorney general’s office, the state Office of General Services and the Irvine Co., which retained the right of first refusal on any project when the company sold the land to the state for $32.6 million in 1979. In addition, the project will undergo environmental reviews by state agencies, including the Coastal Commission.

The resort would be centered in the Crystal Cove Historic District, a collection of picturesque beachfront cottages listed on the National Register of Historic Places. Although the area is only a small piece of the 2,800-acre park--which stretches from the ocean deep into barren hills--it occupies some of the park’s most striking beachfront property.

The cottages, currently privately leased, would be refurbished and made available for overnight stays.

The contract is the longest in the state parks system. It would allow the resort to be developed and operated by a consortium of companies that includes the owner of Big Sur’s Post Ranch Inn, one of the most exclusive resorts on the California coast. Among the new details made public Tuesday in the 105-page contract:

* Thirty-nine cottages will be rehabilitated, seven torn down and 14 “new cottage-type structures” built.

* Features such as a fitness center will be reserved for overnight guests, although parks spokesman Ken Colombini said the public will continue to have access to the beach.

* Although some facilities, such as the restaurant, will be open to the public, resort guests will receive priority.

* Parking for as many as 150 cars will be constructed between the beach and Coast Highway.

* The project area includes both the 12.3-acre historic district and a 16.2-acre piece of land on the inland side of Coast Highway that already includes parking for 425 cars, public restrooms and an entrance. Public parking would remain, Colombini said.

* The contract will run for 55 years once the resort opens, but also allows for an additional “development period” not to exceed five years.

The resort promises to be the priciest in the parks system, and early reports about it this summer stirred fears among some who called it out of place in a system that typically draws tent campers and hikers.

“Why did the public buy this property to begin with if we were just going to turn it over to a bunch of millionaires for a fancy resort?” said Mark Massara, director of coastal programs for the national Sierra Club. “We are going to go over this with a fine-tooth comb, because we are very concerned that state parks is giving away extremely important public trust property.”

Said Murray Rosenthal, chairman of the state parks committee of Sierra Club California: “If this goes through, it’s the most dangerous precedent for the state parks. It has the potential for converting a great state parks system into a profit-making business.”

But others point to the financially strapped condition of state parks, describing the project as a way to shore up park finances. A parks official defended the contract as increasing public access.

“It will be much safer, more public access to a significant historic part of California,” Colombini said.

The resort will be developed by Crystal Cove Preservation Partners, made up of Resort Design Group of San Francisco, Post Ranch LP of Big Sur, Investec Management Co. of Santa Barbara and EKOTEK of Laguna Niguel.

The state is to receive 5% of gross receipts from the project or $100,000 a year, whichever is greater. Earlier, state officials had said they hoped that amount, coupled with the value of capital improvements, would produce a return of $60 million over the length of the contract.

The state released the contract Tuesday, along with hundreds of pages of other documents, including the resort proposal it had kept secret since accepting it 17 months ago.

The state asked for proposals in 1995, and received three--from Resort Design/Investec, Sanderson J. Ray Development of Orange County and a group of Crystal Cove residents. The state refused to release them until the contract was signed.

Sanderson J. Ray Development’s proposal, put together with several different companies, called for a flat 5% return to the state on gross receipts and estimated that would yield $306,000 to state coffers during the first year of operation, rising to $508,000 by the fifth year.

Sanderson was responsible for the $20-million Old Town Irvine project. In the Crystal Cove proposal, it was working with the management firm Grand Heritage Hotels, which runs the historic U.S. Grant Hotel in San Diego and the Clift in San Francisco.

Under the Sanderson proposal, room prices would be set on a seasonal basis, ranging from $75 for the cheapest during the winter months to $350 for the most luxurious during the summer.

Some current residents of Crystal Cove proposed a $1-million face lift that would have essentially kept the status quo. Under their proposal, the cottages would have been rented by existing residents for another 20 years, with the state receiving proceeds ranging from $500,000 to $850,000 a year.

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Resorting to Plans

The most detailed description to date of the proposed Crystal Cove resort was made public Tuesday with the signing of a contract between resort developers and the state. The contract, up to 60 years long, would allow creation of a private resort on public parkland. Here’s how the development would be arranged:

1. Parking lots

2. Reception area

3. Dive center/public restrooms

4. Fitness center

5. Restaurant

6. Interpretive center

7. Art center

8. Children’s pool

9. Swimming pools

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Key Development Features

* Rehabilitating 39 of 46 cottages in the Crystal Cove Historic District; seven cottages and about 10 garages would be removed

* Constructing about 14 “new cottage-type structures,” a new reception/administration building, a fitness center (added to existing cottage) and a restaurant with conference and private party facilities

* Installing up to three swimming pools

* Constructing new roads and parking for up to 150 cars

* Building an educational interpretive center within the historic district and possibly a second center across Coast Highway in the Los Trancos parking lot

* Adding a beachfront boardwalk, “public pedestrian walkway system,” restrooms, drainage and erosion control and sea walls as needed

Source: Crystal Cove Preservation Partners