A decision by county authorities to grant a well-known developer an amended lease agreement for a 585-unit, 225-slip property in Marina del Rey was met by harsh criticism from members of the public at the March 11th meeting of the Small Craft Harbor Commission.
Douglas Ring, principal of the Ring Group, a real estate investment company, had been in discussions with officials from the Department of Beaches and Harbors to negotiate a new lease for the Esprit II apartment complex and anchorage. He said he was unable to meet the prescribed conditions to begin and complete its target construction dates last year, constituting a breach of his lease, which was reported by The Argonaut last July.
Critics of the amended lease charge that Ring defaulted on the agreement and that the land should be returned to the county.
But county authorities recommended the approval of the new agreement, despite the public protest.
ìWe evaluated several different options before deciding to recommend the new lease for approval,î Santos Kreimann, director of the Department of Beaches and Harbors, told the commission.
Those factors included having the land revert to the county, allowing the lease terms to go back to the original provisions or permitting additional time for the project to be completed.
ìAfter evaluating all of those options, we decided that it would be in the countyís best interests to offer an amendment that would allow the developer additional time to begin construction,î Kreimann said.
The commission, which was short two commissioners but still managed to have a quorum of three, voted unanimously to give Ring a renegotiated lease, which requires the developer to complete the project by June 20th, 2013.
David Barish, a Marina del Rey resident and director of We ARE Marina, was dismayed to learn that he was not able to review the financial terms of the renegotiated lease at the meeting.
ìI believe that it was bad business to give this developer a break,î Barish told The Argonaut.
He also believes the inquires by the three commissioners regarding the project did not probe deeply enough into the reasons why Kreimann decided to renegotiate the lease with Ring.
ìThe questions that were asked were slanted toward the developer,î Barish asserted.
Commission chair Russ Lesser acknowledged that it was Barish who initially brought his concerns about Ringís failure to meet his construction benchmarks to the commission last year.
Under the new agreement, the county will receive $1 million from the developer in four installments. In addition, Ring will be required to pay a higher annual minimum rent than in the prior lease ó $630,000 instead of $415,272 ó and renovate and replace the marina in the event that Esprit II is not constructed and the lease reverts to its original date of 2022, among other provisions.
The latter requirement is an important one, said Kreimann.
ìOnce he has the financing, he would want to build as quickly as possible,î Kreimann noted. ìRight now, the finance and credit markets are not doing very well.î
Both Kreimann and Lesser said that the financial components of the restructured deal were key to their approval of the new lease.
ìThe affordable housing component was crucial as well,î Kreimann added.
In a letter to Kreimann the day after the meeting, Barish disagreed with the Beaches and Harbors directorís assessment of the lease agreement.
ìMy review of the lease leads me to conclude that county counselís claim that the countyís sole remedy is to revert the length of the lease to its original term is incorrect,î he wrote.
Like Barish, Bruce Russell also took issue with Kreimannís recommendation to the board and feels that the property should go back to the county.
ìThereís a terrible inequality because he is in violation of the terms of his lease,î said Russell, a Marina del Rey resident.
Reached at his office after the commission meeting, Ring, the husband of former 11th District Los Angeles Councilwoman Cindy Miscikowski, said that he was aware that there continues to be dissonance surrounding the project among some outspoken Marina residents.
ìThere are people in the Marina who donít want anything to be built,î the lessee told The Argonaut. ìIn the real world, when things get old, they need to be replaced.î
Lesser defended his vote for the project, stating that the commission reviewed all the pertinent financial data before reaching its conclusion.
ìItís a good and fair concept,î the commission chair said days after the vote. ìApproving the renegotiated lease versus starting over from scratch was in the best interests of the county and the residents of Marina del Rey.î
Commissioner Vanessa Delgado inquired about the viability of the environmental impact report that had been conducted by the county on Esprit II several years ago when it was first approved.
ìDoes an eight-year-old EIR need an update?î Delgado asked.
Thomas Faughnan, county counsel for the commission, responded, ìIf the developer were seeking a reapproval or a new entitlement, perhaps, but weíre not approving new entitlements. Weíre just looking at economic changes in the business deal.î
The county Board of Supervisors must approve the new lease before Ring can begin construction.
Barish questioned whether Ring, who also owns Esprit I, would be able to build his project on time.
ìEsprit I was failing before the economy tanked, and what I hope is that Ring doesnít kick everyone out of his apartments in order to meet his deadlines and then find out that he canít make his deadline,î he said.
Ring chose not to predict what action the supervisors would take when the recommendation comes before them, despite the fact that it had been approved several years ago.
ìIíve been appearing in front of public boards for nearly 35 years,î said Ring, a former commissioner with the Los Angeles Community Redevelopment Agency. ìI really donít know.î
Asked if he thought that he would be able to acquire financing for Esprit II soon, the developer responded, ìI hope so.î
Barish, like many others at the meeting, had harsh words for the commissionís action.
ìI think that this deal is shameful,î he said.