Major Upgrade of Dana Point Harbor on Way

County supervisors on Tuesday cleared the way for an $82-million revitalization of Dana Point Harbor, the first true make-over of the marina since its birth.

Among the changes ahead are a renovation of the 132-room Marina Inn, a harbor parking structure and larger boat slips.

The project has evolved during a two-year stretch as the county renegotiated new contracts to replace 30-year leases that were signed in 1971 when the U.S. Army Corps of Engineers completed the harbor.

Though controversial because its construction eliminated one of the county’s finest surfing breaks, the 1,500-slip marina has become one of the county’s prime assets and a popular destination with its lineup of restaurants, shops, a public boat ramp and sportfishing and whale-watching trips.

But it’s aging. Retail operators have complained the buildings need work, the shopping areas need more public restrooms and parking is a major concern. Still, operators were opposed to the glitz of a major marina and sought to retain the image of a village harbor.

“We need a parking structure, like, tomorrow,” said Donna Kalez, Dana Wharf Sportfishing general manager. “The buildings need upgrades and we’ve been turning away so many people because we don’t have plenty of parking.”

Under the plan, the county eliminated leases and opted for 20-year operating agreements, a shift that county officials said can triple the revenue.

“Under the old leasing system the county was the landlord and we got a small percentage of the gross receipts,” said Vicki L. Wilson, director of the county’s public facilities department. “Now, we’ve gone from a landlord collecting rents to a general manager of the development and operations of the harbor.”

Revitalization is expected to take 10 to 12 years, a county spokesman said.

“The idea is to start planning now,” Wilson said, ‘to start identifying exactly what renovation and where. We need to come up with an overall development plan on the phasing of the improvements. But we will do the hotel first.”

A manager of the Marina Inn declined comment.

Under the new business arrangement, the county and the former lessee reverse positions in receiving net income from the businesses. Financial analysts who reviewed the contract said net revenue will increase threefold within five years.

That will help the county collect $347 million over the next 20 years, roughly $17 million annually. Under the leasing system, the annual revenue was about $4.5 million, just less than annual operating costs.

Additionally, revenue will accrue to a harbor infrastructure account to help pay for any necessary renovation to the harbor’s bulkheads and breakwaters, which are beginning to show wear. These major repairs, which could cost $150 million, are expected between 2025 and 2050, according to an analyst’s report.

“The marina will still retain the small village harbor idea,” Wilson said.

But the county is still in the planning phase, she cautioned. In fact, she expects to recommend the hiring of a consultant later this month to speed things along with a list of improvements.

Only one business, the Beach House restaurant, will remain under a lease. The lessee took over the restaurant two years earlier and has invested $800,000 in improvements. The new lease is for 10 years and rent funds to the county have increased from 3% of gross receipts to 11%.