State OKs Luxury Beachside Resort at Crystal Cove

The state’s signing of a controversial contract Tuesday paves the way for creating what the agreement calls a “first-class vintage California beach resort” at Crystal Cove State Park between Newport Beach and Laguna Beach.

A portion of one of Orange County’s most peaceful and scenic stretches of public coastline would be leased to a private developer for up to 60 years, making it the longest concession contract in the state parks system.

The resort promises to be the priciest in the parks system, and early reports of its scope this summer stirred controversy among environmentalists and some other Orange County residents who called it ill-suited to publicly owned land. But state officials point to the financially strapped condition of California parks, hailing such public-private partnerships as a way to shore up park finances.

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. The cottages, currently privately leased, would be refurbished and made available for overnight stays for $100 to $400 a night, according to the state. The new contract does not specify room rates.

The contract calls for leasing more than 28 acres of the park--12 more acres than previously acknowledged by the state--to 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.

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

The contract made public Tuesday offered previously undisclosed details about the proposed resort. According to the agreement:

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

* Features such as a fitness center would be reserved for overnight guests, although Ken Colombini, a spokesman for the state Department of Parks and Recreation, said the public could still use the beach.

* Resort guests would receive priority in using hotel facilities such as a restaurant open to the public.

* Parking for up to 150 cars would be constructed between the beach and Pacific Coast Highway.

The contract would run for 55 years once the resort opens, but also would allow for an initial “development period” not to exceed five years.

Parks officials praised the arrangement as a way to increase public access to a state-owned park.

“It means they’re going to have a much better place to visit. 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. It is being planned as a sister resort to Post Ranch Inn and Jean-Michel Cousteau Fiji Islands Resort.

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

State Department of Parks and Recreation officials released the contract Tuesday, along with hundreds of pages of other documents, including the resort proposal they had kept secret since accepting it 17 months ago.

The state asked for proposals in 1995, and received them from Resort Design/Investec, Sanderson J. Ray Development of Orange County and a group of Crystal Cove residents. State officials declined to release the proposals until Tuesday, when the contract was signed, saying early publicity about details could disrupt the selection process.

In its original proposal, Investec estimated that the project would cost more than $20 million.

The estimated return to the state, according to the original proposal, would be 5% of gross annual revenue of $2 million or less, and 3% for revenue greater than $2 million. But the group’s proposal offered no estimate of how much revenue was anticipated each year. Those details were not available Tuesday.

One of the losing proposals, from Sanderson J. Ray Development, called for a flat 5% return 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.

Under the Sanderson plan, room prices would have ranged from $75 for the cheapest room during winter months to $350 for the most luxurious during the summer.

The current residents of Crystal Cove have opposed all resort development plans and proposed a $1-million face-lift that would have essentially retained the status quo.

Under the proposal offered by the Crystal Cove Resident Assn., the cottages would be rented by the month to their current occupants for 20 more years, with the state receiving proceeds ranging from $500,000 to $850,000 a year.