Construction of the two proposed hotels in Dana Point Harbor is on hold after the Orange County Board of Supervisors delayed a vote on Tuesday, June 23, for the new 66-year ground leases needed to move forward.
By Hayze Law | 11 hrs ago
Instead of approving the leases, supervisors voted to continue the item to their next meeting on Aug. 11 after several members said they needed more time to review the lease documents and proposed changes made by Fifth District Supervisor Katrina Foley.
“We respectfully stopped our planning team for this project given the new demands placed on the hotels,” said Bob Olson of RD Olson Development, one of the three Dana Point Harbor Partners spearheading the $600 million Dana Point Harbor Revitalization Project. “It’s a sad day, for sure.”
The board was considering new lease agreements for the hotel, commercial core, marina and drystack portions of the project. The hotel leases are needed before Dana Point Harbor Partners can secure financing and begin construction.
During Tuesday’s OC Board of Supervisors meeting, Foley proposed three recommended actions: requiring a labor peace agreement for future hotel operations, creating a transition plan for Marina Inn employees who will lose their jobs when the hotel is demolished, and placing new limits on future marina slip-fee increases.
A labor peace agreement is a written agreement between a hotel employer and a labor organization that protects hotel operations from strikes, picketing, work stoppages and other labor disruptions. Foley said the agreement would not require the hotels to unionize.
“It just means that the hotel unions will not strike at the hotel when we reopen,” Foley told Dana Point Times. “What I was mostly trying to address was that everybody’s going to be losing their jobs, and it had come to my attention the night before that there wasn’t a plan to transition those employees.”
Olson said Dana Point Harbor Partners had hoped to get approval Tuesday so the company could move forward with financing and begin construction on The Doheny, an upscale, 130-room hotel, and The Salt Haus, a more affordable 169-room surf lodge geared more toward younger travelers. The hotels had been greenlighted by the Coastal Commission in 2025.
“We were hoping to get approved so that we could get our financing together, so that we could start the construction of the hotels,” Olson told Dana Point Times.
He said the proposed changes leave the project with no clear path forward.
“There’s absolutely nothing we can agree to,” Olson said.
Dana Point Mayor John Gabbard criticized the board’s decision and said the project has already faced years of added requirements.
“Disappointment and frustration are two adjectives to describe how I walked out of the chambers,” Gabbard told Dana Point Times after attending the OC Supervisors meeting.
The timeline for the Harbor Revitalization Project targets completion before the 2028 Los Angeles Summer Olympics, which are projected to provide a major economic boost to Dana Point.
Gabbard said the delay could have financial consequences if the hotels are not completed in time.
“The $1.5 million is my estimate for 60 days of TOT (transient occupancy tax) during the Olympics,” Gabbard said.
He also said the project could face long-term financial losses, though Foley denied his figures, saying there was no data to support them.
“The last four years have been an endless sea of demands,” Gabbard said. “All of them create an extraordinary burden for the partnership, and it reaches a tipping point that it’s just not feasible to develop.”
Hotel broker Alan Reay, who has worked in California’s hotel industry for nearly three decades, said he was surprised by the outcome.
“I’ve never seen it before,” Reay said when asked how common it is for a hotel project this far along to face new conditions.
He said stability and clear expectations are important to financing a hotel.
“When you underwrite the development of a property, you underwrite it with certain assumptions,” Reay said. “When you have to do extra stuff outside of the conditions you acquired it under, it makes it infeasible.”
“If this deal does not work for Bob Olson, it is not going to work for anybody else,” Reay added.
Foley pushed back on claims that the proposed conditions came at the last minute and said many of the issues had already been part of negotiations, with the exception of the labor peace agreement, which was brought to her the night before the meeting.
“All of those things I presented, CEO Real Estate had been trying to negotiate for the entirety of the time we were negotiating,” Foley said. “These are all community benefit items.”
Foley also disputed Olson’s assertion that the new conditions will prevent the project from proceeding, saying the board needs more time to study the lease documents and the changes she recommended.
“They are contractually obligated to build two hotels. This 66-year deal is worth hundreds of millions of dollars and needs the attention of all five supervisors,” she said. “This short delay is not a legitimate reason to walk away. We’ve worked together as a team to secure entitlements to bring this project forward after a lengthy delay.
“A 66-year lease deserves the time and attention of the full board. My colleagues needed a reasonable amount of time to review the 600-page document and six-page legal memo emailed the night before. My response to Bob is to ask that he schedule a meeting with our real estate team and let’s resolve the issues over the summer so we give the board plenty of time to contemplate.”
Olson responded to Foley’s comments and rationale. “We are obligated to build the two hotels unless we are not able to get financing,” he said. “In that case, we are to remodel the existing hotel (the Marina Inn). Given what we were presented yesterday at the board meeting, it’s not possible to get financing for the hotels, unfortunately.
“We have had countless meetings with the real estate team and negotiated what was presented yesterday. Staff recommended approval. Not sure how we meet with the real estate team again. Not sure what we are supposed to cover.”
Olson said the commercial core and marina projects will continue as planned. If the hotel project cannot move forward, Dana Point Harbor Partners plan to instead pivot into renovating the existing Marina Inn, which had tentatively been scheduled for demolition later this year.
The Board of Supervisors is expected to take up the lease agenda item again at the next Board of Supervisors meeting on Aug. 11.