City may look to bond to block Dunes resort

June Casagrande

NEWPORT BEACH -- A bond measure could be the only way to prevent a

hotel from being built at Newport Dunes Waterfront Resort, city officials

are warning.

Though residents have shown overwhelming support to have the city take

over the site to prevent a hotel development there, purchasing the lease

could cost the city more than the property brings in -- a major problem.

The City Council will hold a study session on Tuesday to look at the

figures. Initial estimates suggest it could cost between $25 million and

$50 million to buy the lease on the Dunes site, which is now held by

longtime owner Evans Hotels of San Diego. The lease on the county-owned

property is good through 2039.

“You don’t just pick up a lease. You pay for it, and there’s a

question whether that’s economically feasible here,” City Manager Homer

Bludau said.

Revenues now generated by the marina, RV park, a restaurant and other

businesses on the site aren’t enough to cover projected lease payments,

Bludau said.

“The big question is: Are people willing to pay the difference by

floating a bond?” asked Councilman Steven Bromberg, whose district

includes the Dunes.

Evans Hotels put the Dunes up for sale this summer, in part because

plans for a 470-room resort were stopped in their tracks by the city’s

slow-growth Greenlight measure.

While a lawsuit settlement dating back to the 1970s allows a 275-room,

family inn-style hotel to be built there, Dunes officials envisioned a

large resort, which would include numerous conference rooms and other

sprawling amenities.

After the Greenlight measure passed last year, requiring voter

approval on projects large enough to require general plan amendments, it

became unlikely the larger hotel plan would become a reality.

Because of the settlement, anyone who takes over the lease has a right

to build the 275-room hotel. The only way the city could prevent such a

development is by taking over the property.

Voters would have to approve the bond by a two-thirds vote.

Susan Skinner Caustin, a Newport Beach resident and founder of Stop

the Dunes Hotel, said such a bond would be worth it.

“I’ve got to question their figures,” she added. “If the city took

over the property, you’d have less traffic and other impacts that have

been projected. That’s worth a price to me. It’s not worth $50 million,

but if there’s an interim price, depending on what that is, I would

support a bond.”

Dunes operators pay about $1.8 million a year to the county for their

lease and net about $2.5 million in revenue from businesses such as the

marina and the RV park, Bludau said.

He added that, at its current value, the lease could cost much more to

take over than Evans is now paying.

* June Casagrande covers Newport Beach. She may be reached at (949)

574-4232 or by e-mail at o7 june.casagrande@latimes.comf7 .