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Stakes High in Marina Dispute : County Wants Bigger Bite, Businesses Fight Hikes

April 11, 1985|JAMES RAINEY | Times Staff Writer

Marina del Rey is the most valuable and profitable piece of property that Los Angeles County owns: 804 acres of land and shimmering water along a prime stretch of coastline.

Privately operated apartments, boat anchorages, restaurants and shops in the marina brought in $215.7 million last year. The county skimmed off $11.5 million in rent, about half of which is needed to provide services in the marina. The balance is almost enough to operate all the county's beaches.

But county officials say that they should get more in exchange for the 60-year leases they hold on lucrative marina properties.

In a series of tedious and expensive negotiations, the county is attempting to increase its share of the revenues, while business interests are fighting to keep rents down and protect their profits. The high stakes have triggered charges by each side that the other has negotiated in bad faith.

10-Year Arrangements

Roughly 100 Marina del Rey businesses are located on 56 separate sites leased from the county. Each of the leases runs for 60 years and most have a provision for renegotiation of rent after 20 years. Since most of the leases were signed in the early 1960s, they are now being renegotiated for another 10 years.

The county receives 20% of the revenue from boat slips, 7 1/2% from apartments and 3% from restaurants as rent, but officials have said those figures could rise to as high as 35% for slips, 15% for apartments and 5% for restaurants during renegotiation.

"Right now we get roughly 5% of the (total) revenue of the marina leaseholds," said Victor Adorian, director of the county Department of Beaches and Harbors. "If that went up to even 10% that would be quite a bit of money, and 20% even more than that. And some of the appraisals come in even higher than that."

Adorian said the county is appraising each property on its own merits. No one knows exactly how much the county stands to gain, he said.

Businessmen say that the county already gets enough of their money, according to Richard Hamlin, a lawyer representing most marina businesses in the negotiations with the county. Rents on many parcels should stay the same or go down, during the appraisals, Hamlin said.

At the heart of the debate over how much the county should get from Marina del Rey is the value of the land in relation to the improvements built there by businesses.

"The improvements are more important than the land," Hamlin said. "Until these improvements were put in it was nothing but a mosquito bed. People want to be in this area because of the improvements that the lessees put in."

'Worth a Lot'

Hamlin said the $300 million spent by private developers at the marina is six times the amount government agencies spent for initial development of the property. "I think that everyone who knows real estate would disagree with him," Adorian said. "The land out there is worth a lot of money.

"The improvements are worth a lot, too. But . . . the whole idea of the process is to determine what that value is."

Those improvements are just one of the factors discussed by representatives of the county and the concern leasing the site during the negotiations. If both sides cannot agree on a new rent, a board of appraisers--composed of a county representative, a business representative and a neutral third-party appraiser--is established.

The three meet and compare information, including rents on similar facilities, until at least two can agree on the new rent.

Rents for 11 parcels are being set by arbitration panels and renters of eight parcels are attempting to settle without arbitration. Leases will continue to come up for renegotiation through 1993. Even then, the task will not be complete because a second round of renegotiations is scheduled to follow just 10 years after the first. The negotiations are likely to continue on one lease or another until the 2020s, when almost all marina leases expire and use of the land returns to the county.

Only one concern, the Del Rey Yacht Club, has settled its rent case without going to arbitration. The county will get 25% of the fees from Del Rey boat slips for the next 10 years, instead of 20%.

Arbitration on two other parcels left the county's boat slip share at 20% and granted fractional increases in the county's share of restaurant revenue.

Pay Hike

In just three years, the county has spent an estimated $500,000 on appraisals and renegotiations costs. Last week, the Board of Supervisors voted to increase the maximum pay for one appraiser from $7,000 to $50,000 for research and negotiation on two parcels that has spanned two years. It also agreed to pay legal fees if the appraiser is sued by lessees. Hamlin said businesses have spent similar amounts to present their positions.

County officials have two basic complaints about how businesses have handled the negotiations.

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