Vote on hotel plan expected in 2 weeks

Deirdre Newman

Insecurity about a proposed agreement covering some terms of a lease

between the city and Sutherland Talla Hospitality for the Marinapark

hotel project derailed the agreement Tuesday.

The uncertainty came from project opponents, the two lawyers who

crafted the proposed agreement, known as a “memorandum of

understanding,” and the council itself. Most of that doubt centered

on who developer Stephen Sutherland’s financial partners would be for

the hotel he wants to develop on the Balboa Peninsula harbor-front

site.

Ultimately, the council decided not to pursue an agreement and

instead voted to bring back a proposed term sheet in two weeks that

spells out the city’s expectations for its lease with Sutherland if

Measure L passes in November.

Measure L will ask voters if they want to change the city’s

general plan to allow a hotel on the property. Sutherland has

designed a 110-room hotel -- 98 rooms for nightly rental and 12 for

sale -- for the site where mobile homes now sit. He also has offered

a host of amenities for neighboring properties, including renovating

the Girl Scout house and a community center.

The council decided to scrap the agreement and craft a terms sheet

instead, because the council didn’t want to be bound to the

memorandum, which has to be signed by both parties.

“It’s difficult to present enough information and be accurate and

not handcuff the city’s hands in future negotiations,” Councilman

John Heffernan said.

Discussion over the agreement was marked by vitriol from opponents

of the hotel project and testy exchanges between council members and

the public.

Many of the opponents attacked Sutherland’s qualifications and

questioned who the city was trying to come to an agreement with.

Sutherland’s company has changed a few times since the city gave

Sutherland Talla Hospitality an exclusive right to develop the hotel

project in 2000.

“These exclusive agreements will effectively lead to the transfer

of 8 1/2 acres of designated parkland to the control of an

individual representing an organization that does not exist, never

has existed and, most important, against whom the city has no

recourse in the event problems arise,” 33-year Newport Beach resident

Joe O’Hora said. “This is playing fast and loose with the taxpayers

assets.”

Others questioned why an earlier agreement with Sutherland Talla

Hospitality had referred to it as a limited-liability partnership

when subsequent ones didn’t. Former City Atty. Bob Burnham, who has

been working on the Marinanpark issue, said he could not explain

that.

Sutherland said Sutherland Talla Hospitality had never been a

limited-liability partnership.

“It has never been more than an agreement with Mr. Talla and

myself to proceed down this road,” Sutherland said. “I need to dispel

these personal attacks on my character. They are without basis.”

Sutherland said in July that he dropped Talla from his partnership

after it came to light that Talla was involved in litigation over his

business interests in Las Vegas strip clubs. Another potential

partner, Michael Rosenfeld, of Woodridge Capital LLC, withdrew after

some Newport Beach residents harassed references that Rosenfeld

provided at the request of the City Council, Sutherland said.

Tom Billings, founder of resident group Protect our Parks, which

is pressing the city to keep Marinapark as open parkland, said he was

disappointed absentee voters won’t receive the financial information

in the terms sheet because they will receive their ballots before the

council reconsiders the terms at its Oct. 12 meeting. The absentee

ballots will be mailed out starting Monday.

“The City Council could not answer all the questions in terms of

due diligence that should have been done months ago on this project,”

Billings said.

When it does come before the council, the terms sheet should have

as much information for voters as the proposed agreement would have,

Councilman Steve Bromberg said. The point of drafting the deal was to

get some financial information to voters before the election.

Some residents may be confused about the city’s relationship with

Sutherland, which hopefully the terms sheet will clear up, Bromberg

added. The 2000 agreement gave Sutherland the right of first refusal

to develop a project on the Marinapark property. But that right is

dependent upon the council feeling comfortable with issues like the

lease terms and Sutherland’s ability to get funding for the project,

Bromberg said.

“A lot of people think it’s a fait accompli -- if [Measure L]

passes, we’re going to do business with Sutherland,” Bromberg said.

“That’s not even close. That’s when we’ll look at him [and at] his

financials.”

Bromberg chastised Marinapark opponents Tuesday for attacking

Sutherland personally.

“Get a grip, folks,” Bromberg said. “Let’s understand what the

issue is. Put your self-righteousness aside. Don’t go into personal

attacks.”

* DEIRDRE NEWMAN covers government. She may be reached at (949)

574-4221 or by e-mail at deirdre.newman@latimes.com.