The Los Angeles County Small Craft Harbor Commission voted March 9 to recommend the adoption of a mitigated negative declaration and approval of an option for the amended and restated lease for redevelopment of the Marina del Rey Hotel (Parcel 42) and anchorage (Parcel 43).

The lessee is proposing to divide the existing parcels into two leaseholds, one relating to hotel development and the other to anchorage improvements. The commission’s vote included division, or bifurcation, of the existing lease and the addition of water area to the anchorage portion.

The reason for the leasehold bifurcation is to allow the lessee to concentrate on its area of expertise – hotel development – and to assign the anchorage leasehold to an entity experienced in the redevelopment and operation of marinas, according to county documentation.

The exercise of the marina extension option would be contingent upon the prior or simultaneous exercise of the hotel extension option.

The first leasehold would encompass a revised Parcel 42, comprised of only the landside portion of the existing leasehold. The second leasehold would be a modified Parcel 43 leasehold consisting of the waterside (docks) areas of the existing leasehold; certain limited land areas associated with boater amenities and would terminate on Feb. 28, 2022.

The existing lessee has proposed to assign the marina leasehold and extension option to Pacific Marina Development, Inc., which is currently developing Parcels 52/GG as a dry stack storage facility, and has a strong background in marina development and management, states county documentation.

The proposed Marina del Rey Hotel project involves renovation of the existing 154-room hotel to include: room interiors (including bathrooms, windows and doors), building facades, landscaping and hardscape; the replacement of all building systems (HVAC, electrical, plumbing, and elevators), in accordance with a renovation plan to be attached to a new amended and restated lease for the hotel leasehold. The lessee is IWF MDR Hotel, L.P., a single-purpose entity, whose parent company is Pacifica Hotel Investors, LLC.

The proposal for Parcel 43, the anchorage, includes completely replacing the existing 349-slip and 16 end-tie marina with no fewer than 277 new slips, 13 end-ties, and one side-tie in a configuration and design according to current marina standards. Parking and boater amenities (dockmaster’s office, restrooms, showers, and laundry facilities) are to be provided on the landside.

The lease agreements for the renovation of Parcels 42 and 43 reflect the county’s current market rate percentage rents for all relevant categories, according to county documentation. Staff said the transactions will produce the following fiscal benefits to the county: 1) an option fee for each of the two options; and 2) if the options are exercised, an extension fee for each of the two options; and 3) if the options are exercised, revenue increases due to renovation of the hotel and replacement of the anchorage.

The option fee for Parcel 42 would require the lessee to pay a non-refundable (except in case of default by the county) fee of $100,000, due upon execution of the option agreement.

The option fee for Parcel 43 (anchorage) would require the lessee to pay a separate non-refundable (except in the case of a default by the county) fee of $100,000, due upon execution of the option agreement.

The extension fee for the Parcel 42 option would have the lessee pay an extension fee of $300,000 when the option is exercised. The option fee of $100,000 would be credited against the extension fee and the $200,000 balance would be due and payable in 10 equal installments of $20,000 annually.

The extension for the Parcel 43 option would have the lessee or assignee (Pacific Marina Development, Inc.) pay an extension fee of $300,000 when the option is exercised. The option fee of $100,000 would be credited against the extension fee and the $200,000 balance would be due and payable upon the exercise of the option.

The total revenue derived from the hotel and anchorage parcels during 2009-10 was approximately $916,000. After construction and stabilization, the county economic consultant has estimated that the total county rent will rise to approximately $1,643,000 annually, an increase of approximately $727,000, states county documentation.

During public comment at the meeting, some boating tenants at the anchorage said it was time to renovate the anchorage and bring it up to date, offering a mix of larger slips. Other speakers who represent the projects or are associated with them spoke in favor of commission approval.

Resident Jon Nahhas said the California Coastal Commission has stated that landside and waterside components can’t be separated, and noted that one of the commissioners had asked that question at a previous meeting. He also said that a California Department of Boating and Waterways study said that recreational boating is increasing, and with the reduction of slips, boater access would be lost.

Another speaker, Roger Howard, said that renovation of the anchorage needs to be done, and claimed that the small slip proponents who say there is a loss of slips are wrong, because the 30-foot-and-below boat slips have more vacancies.

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