Rings Marina Go-Round
|Photo by Debra DiPaolo|
What do you do if youre an L.A. County official, faced with a Marina del Rey developer who, despite angry tenants, legal problems and rotting docks, wants to extend his county lease? If that developer is former lobbyist and powerful businessman/ attorney Doug Ring, you recommend giving him control of the multimillion-dollar property for an extra 40 years.
Ring is just one of the real estate magnates circling Marina del Rey these days with visions of a new marina complete with a four-star resort and entertainment center dancing in their heads. But Ring stands out as the one with the best political connections and the longest history of political largess hes been a major campaign contributor for decades as well as the marina landlord with one of the worst records for maintenance and tenant complaints.
Negotiations over extending the leases at Marina II are now under way with the Department of Beaches and Harbors. But as the county considers doing a few more decades of business with Ring, boat owners complain that dock repairs have been dangerously neglected, apartment tenants are threatening to sue amid accusations of mismanagement and broken promises, and lawsuits once filed over Marina IIs business practices are being refiled. One recent plaintiff even succeeded in challenging the legal status of Marina IIs ownership.
As county officials decide who will be the chosen ones on hand for future bounty, the deliberations over Rings status raise questions about the countys own performance. Based on the record to date, neither the supervisors nor their minions at the department of Beaches and Harbors have proved capable of managing the competing interests and myriad problems arising from a public asset that some consider a crown jewel of L.A. County real estate.
In the early 1960s, Marina del Rey was an undeveloped gamble that the county planned to lease to wealthy entrepreneurs willing to build a marina on a former swamp. A $13 million bond resolution from 1959 had paid for the drainage, streets, sewers and other needed facilities first, with hopes that soon the public would have access to boating and a waterfront park. The property was then leased to developers to build apartments and docks, and the county in return got a small cut of the millions of dollars in annual revenue.
Its 30 years later, and the marina is not a gamble but a revenue center, not a public playground but a posh residential retreat for well-heeled Westsiders, and now the Board of Supervisors has approved a plan to bring another hotel and a Third Street Promenadestyle shopping center to the harbor. The county is in the drivers seat for these new deals as developers bid for a piece of the action five on the entertainment complex and four on the hotel.
In the meantime, the elite group of businessmen holding current leases on the apartment buildings and boat slips that make up the seaside development have a chance to avoid such bruising competition. They can instead apply on an exclusive basis to extend what were originally 60-year leases. Nearly all of the 51 leases making money for the county about $26 million in fiscal year 97-98 will expire by 2029, when the properties would return to county control. But county officials assumed that a wait would jeopardize the plans for new development at the marina and, in March 1998, issued an "invitation" for current leaseholders to apply for extensions. Marina activists, who have criticized the countys supervision of these leaseholders in the past, saw the extensions as further reward for powerful campaign contributors at the expense of the public.
"Theyre giving away this public asset to a handful of people," said John Rizzo, president of the Marina Tenants Association. "Its not a public marina run for the people. Its set up as a way to get campaign contributions, not to benefit people who live [at] and use the marina."
Its a familiar refrain for Rizzo, who has been fighting this battle for 20 years. He and others have argued that the county doesnt receive a fair share of the revenue generated by the marina, that the county charges lower rents to the developers than market values dictate, and that the marina does not operate as called for in the marinas master lease to the "maximum benefit" of the public. In 1994, Rizzo managed to persuade the L.A. County grand jury to ask the District Attorneys Office to investigate all the countys leases. The D.A.s Office met with Rizzo to discuss the situation further, but chose not to investigate the charges, instead informing Rizzo in a terse letter that "without substantial evidence to indicate that a crime has been committed, our review of your materials will remain closed."
There seems little dispute, however, over one of the central charges made by marina tenants that lax maintenance has allowed many of the facilities to fall into disrepair. County staff seem to validate that claim even as they advise the board to go ahead with the extensions, predicting that "as the leaseholds near expiration, maintenance levels will inevitably decline, rents will grow at progressively slower rates, and the project could become blighted."
On the strength of that dubious assessment, and without any discussion of possible shortcomings in the performance of the leaseholders, the county went ahead with its offer to extend the leases for another generation. That can only come as good news for Doug Ring and his Marina II Holding Partnership, which controls more than 400 apartments and 700 boat slips spread over 35 acres.
In the good ol days, Ring handled other peoples real estate problems. Over the course of a lobbying career that spanned the 1980s and 90s, Ring had a long list of powerful clients calling on him to usher their real estate deals through the halls of government. They ranged from a national developer trying to build a $150 million project in Malibu that area homeowners opposed, to a concrete company hoping to build a plant near Lennox that school officials feared would bring pollution problems to the area, to name corporate clients like McDonalds and ARCO.
During his days as a lobbyist with Mitchell, Silberberg & Knupp from 1993 to 1996, Ring was a key campaign-cash connection for District Attorney Gil Garcetti ($2,500 in August 1993 and August 1995), Supervisor Yvonne Brathwaite Burke ($4,000 in March 1995), Supervisor Mike Antonovich ($1,500 in July 1996), Supervisor Zev Yaroslavsky ($1,274 in January 1994) and Supervisor Don Knabe, whose district contains Marina del Rey ($1,000 in July 1995).
One of the firms clients listed in Rings county filing was his own Marina II, which paid Mitchell, Silberberg & Knupp $10,000 in lobbying fees from April to June of 1993 alone. By 1996, Ring was being called "one of City Halls premier insiders" and "one of City Halls highest-paid lawyer lobbyists" by the L.A. Times.
Ring took a step back from the lobbying life in 1996 when his wife, Cindy Miscikow-ski, announced she would run for the L.A. City Council. From then on, Ring steered clear of City Hall and potential conflicts of interest there, but continued to shepherd his substantial interests two blocks away, cultivating relationships with the county Board of Supervisors. After all, Ring had a personal stake in the 7,000-unit, $300 million real estate empire built by Rings father, Selden, and uncle Ellis particularly the Rings extensive holdings at the marina. Accordingly, Doug Rings campaign-contribution filings for 1998 list a $1,000 donation to Yaroslavsky, $1,000 to Burke, another $1,000 to Knabe, and $5,000 to Antonovich in 1996.
The other lessees approved for negotiations along with Marina II back in November 1998 are no strangers to the supervisors either. The general partners behind Tradewinds Marina are Jona Goldrich and Sol Kest, who joined with their partners in Goldrich & Kest Industries for $2,350 in donations to Antonovich, Burke and Knabe since 1996. Marina Pacific Associates, the lessee for Marina Harbor Apartments and Anchorage, has CMR Inc. a group composed of members of Ellis Rings family as one of its general partners. And Marina Harbor is managed by E&S Ring Management Corp., which also manages the Marina II properties, and which claims Doug Ring as an officer and director.
The architect of the Ring family holdings was Selden Ring, a leading developer of properties across L.A. County. Among his several stakes in the marina, Selden launched the Marina II partnership in 1984 with accountant Irving Axelrad and state Senator Alan Robbins, then among the most powerful figures in California politics.
Upon Selden Rings death in 1992, Doug Ring moved into his fathers general-partner spot and began collecting rents and fees for the apartments, boat slips and assorted moneymakers found within Marina IIs Deauville Marina and Bar Harbor Apartments and Anchorage. The high-profile partnership had become burdensome, however, with Robbins 1991 conviction on federal racketeering charges, but by 1998 Ring had become the sole general partner at Marina II.
Ring claims that the members of the Marina II partnership have not made a dime on the venture since he came aboard. He would not discuss specific figures, however, and his critics contend he makes more than enough income to foot the bill for maintenance.
While the question is critical, the facts are difficult to settle. In 1998, documents show, Deauville and Bar Harbor brought in a combined gross of about $10.1 million. The county took about $1.2 million of that, and mortgages ate up another $3.6 million, according to documents filed with the county in 1988, leaving Marina II with more than $5 million in available revenue each year.
While Ring declined to divulge details, he insisted that 100 percent of the revenue from Bar Harbor and Deauville has been put back into the property every year since he became a general partner. Ring has submitted financial statements to the county, but theyre considered proprietary and so have not been made public.
Additional insights into Marina IIs balance sheet, however, can be derived from two lawsuits filed to decide where Robbins would fit into the Marina II partnership following his release from prison. In February 1998, Ring estimated in a declaration that by the time a balloon payment came due in April of 2003, the Marina II mortgage would remain as high as $28 million.
Ring goes on to state that "as of February 1998," Marina II was "overburdened with debt" and that the properties could not be sold for more than the huge tab owed to the bank. Marina II would have to refinance its debt to survive, Ring said, and to have any chance of that they needed lease extensions from the county.
With the lease talks under way, however, Ring now says that Marina II is out of the financial woods, and that the declarations cited in this story were dated from the "middle 1990s" and thus no longer relevant.
(Ring feared that the fallout from Robbins conviction would jeopardize the coveted lease extensions, and tried to remove Robbins as general partner. Robbins sued in 1996 to fight the coup, leading to a two-year legal battle that the parties finally settled in June of 1998. The settlement banished Robbins to a powerless but still potentially lucrative limited role, and with Axelrads death in 1998, Ring was left as the only general partner.)
As Ring also testified in February of 1998, the docks and apartments owned by Marina II faced "serious deficiencies" in maintenance. The property was "deteriorated" by "substantial deferred maintenance." So deteriorated, he said, that the only solution would be to tear everything down and start over.
Ring never explained in his court declaration why his partnership had "deferred" maintenance at the marinas for so long. Ring also declined to address how much money had been spent on maintenance when asked by this reporter, saying he did not want to share details on cost and revenue relating to his property.
For longtime marina tenants the report of poor maintenance was old news, and statistics from the countys Department of Beaches and Harbors confirm the problem. Inspection reports from August 1998 to January 1999 show that Marina IIs docks at Bar Harbor and Deauville suffered from "serious deficiencies" cracks, dry rot, listing docks. Between August and September of 1998, there were 160 serious deficiencies found among the 465 slips in Deauville. From February to March of 1999, there were 67. Bar Harbor has 262 slips, and its number of serious deficiencies has gone from 54 in August 1998 to 39 in March 1999. As for the other lessees approved alongside Marina II, Tradewinds Marina had 10 major deficiencies from its 157 slips between February and March 1999, and Marina Harbor, another run by E&S Ring Management, had 252 deficiencies among its 639 slips in the same period.
Whether that leaves these managers in violation of their leases is in dispute. Beaches and Harbors Director Stan Wisniewski insists that Marina II has complied with its lease. "The lease says we are to inspect, document deficiencies and pursue correction," he said. "Deferred maintenance is a serious problem, and weve taken steps to deal with it."
"Every single repair the county has identified, were dealing with," Ring added in an interview. "Boat owners have one of two choices they can ask to be moved to another slip in Deauville or Bar Harbor, or they can say, I dont like the condition my boat slip is in, and can terminate the relationship."
But some tenants say the process takes far too long and believe this shows that Ring and other lessees have been taking inappropriate profits out of the county property. Andy Bessette, a longtime boat owner and president of the Marina Boat owners Association, has lived on his boat in the area for 23 years and has appeared repeatedly before the Small Craft Harbor Commission to protest delayed repairs.
"These problems should be fixed immediately," Bessette said. "Theyre a safety hazard. Any other place theyd fix it immediately, because it would hurt their business. These people act with impunity because the county supports their business.
"Instead of paying to keep these things corrected, the lessees put that money into their pocket and call it profit. People make a stink, and here they are getting lease extensions."
Both Bessette and Rizzo said most tenants and boat owners hesitate to complain because they feel the county officials in charge of the marina dont care, the tenants feel powerless against the political and financial firepower of the developers, or the tenants fear retaliatory rent increases. But occasionally Marina II tenants have taken their cases to court. A pair of recent lawsuits between Marina II and its tenants in the past few years met with mixed results, but have raised other concerns about the partnership.
Back in June of 1996, Patrice Carlton started leasing restaurant space from Marina II for $5,000 a month and a $30,000 deposit. She planned to open a restaurant called the Bourbon Street Café. But by September of 1997, Carlton was suing Ring, his property managers and L.A. County for fraud, and asking for $3.5 million in damages.
According to papers filed by Carlton, who was representing herself without an attorney, she was "unable to conduct business at the subject premises for one year because the condition of the subject premises was in such a badly maintained state." As Carlton tells it, it would be a year and $593,000 worth of repairs before the building was up to code and she had a permit to open. Within a month of opening she was evicted from the property. She said she had to drop the case in 1998, in part because of the difficulty of defending herself, but has found an attorney and plans to refile.
"I think theres something really smelling in Denmark, that they would keep these ties and associations with Doug Ring," Carlton said. "For him to get away with what he did to me, he has a lot of power, and I dont think it stops with the county and the leases."
Ring said that he allowed Carlton to stop paying her rent until an agreed-upon date when she would be open and operational, but when the time came she was not open. He started eviction procedures, took her to court and won his unlawful-detainer action against her. As for Carltons civil suit and its allegations, Ring said he was never notified about it.
Several Deauville tenants were also critical of how Marina II and its property managers went about raising rents on lease renewals starting in October 1998, but spoke off the record because they are still living there. One tenant said he had a two-year verbal lease that was switched to a month-to-month with a $195 increase by the management. Another said that when she asked management what her increase would be when her lease expired in May, she was told the increases were "just a rumor." But she recently received an increase as well.
"To tell you a month before your rent is going up $250 to $500 is just indecent," said the tenant. "Youre really stuck."
Ring said Marina II is simply raising the rents to their fair-market value.
"I have found there are tenants who have had no increases in three to five years," Ring said. "Were playing catch-up."
One former tenant who moved away earlier this year after the rent increases said she was cheated by Rings managers at the Deauville Apartments and plans to sue. Rose Dolfi said she had agreed to a yearlong renewal of her lease in September of 1998 with a $55 increase per month. In October of 1998 Deauville stopped offering annual leases; Dolfi learned of the new policy via a note slipped under her door notifying her of a $185 monthly increase. Ring said that he knew nothing about the situation.
"The manager said I had no lease and my rent was going up, and if you dont like it, move," Dolfi said. "They dont get how upsetting losing your home is, and they dont care. I had a deal and it was in writing, and they told me it disappeared."
Dolfi said she had not received her own copy of the yearlong lease, however, and when she had brought her previous complaints to Beaches and Harbors, she was referred by a staff member to John Rizzo the tenant activist, who doesnt work for the county and is usually filing complaints of his own.
"Its like you cant get at these guys," Dolfi said. Rizzo agreed during a recent interview. He said he routinely gets calls from tenants who say their complaints to the Small Craft and Harbor Commission are ignored. "The boaters and people living in the apartments complain, and the SCHC reaction is to stonewall everything."
One Bar Harbor tenant did find an attorney willing to take on her case from the start, and managed to successfully fight the group in court in 1998. Earlier in the year, Rings managers decided to collect more than $800 in late fees that they had ignored in the past, and took Barbara Gilliam to court after disputes over the fees and her rent. Gilliam fought the move with the help of attorney Robert Schell, a lawyer who publishes a small biweekly newspaper in the marina area called The Baywatcher.
During the case, Schell filed a motion to dismiss that disputed Marina IIs ability to sue. He argued that the death of a general partner dissolves a partnership under California law unless arrangements have been filed to deal with the situation. Marina IIs original partnership certificate, filed in 1984, lists the three original general partners Selden Ring, Irving Axelrad and Alan Robbins. The certificate does not mention any arrangements for such an incident, and states that future amendments would require the acknowledgment of all three partners.
The only amendment on file with the secretary of state at the time was from November of 1998, when Doug Ring listed his DR9 Co. as the sole general partner, with a note attached stating that Axelrad, Selden Ring and Alan Robbins were no longer general partners. The only signature was Doug Rings. Schells motion that this amendment was bogus leaving Marina II unable to sue was approved by the judge, and the case was dismissed. Just what this means for Marina IIs future deals is uncertain, but it doesnt seem to have hindered lease-extension negotiations. Ring said he didnt know anything about the decision.
Doug Ring seems to have enough lobbyist savvy and political muscle to steer Marina II through this latest period in its rocky history. So far he hasnt had to break a sweat, judging by an outside evaluation committees recommendation, a unanimous recommendation from the Small Craft Harbor Commission, and county-supervisor approval for the county to enter lease-extension negotiations with Marina II. The committee even praised Rings proposal, based on recommendations from staff at the Department of Beaches and Harbors, for "the demonstrated project management, property management, and marketing experience of the Proposer."
So negotiations plow onward for Ring and others trying to hold on to their leases for the better part of the next century. Officials said that with each request, the leaseholders development proposals are studied and weighed against what the county might get if it waited and put the lease out for competitive bidding. But it appears that, in the case of Doug Ring and Marina II, some concerns are being left out of the equation.
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