The bad lease between the Hotel Del and the city of Coronado

“That land was a crummy piece of dirt!”

People in Coronado are saying that Hotel Del Coronado owner Larry Lawrence and others associated with the Coronado landmark are making thousands of dollars a month on city-owned property for the same reason that decisions in Coronado usually favor the hotel. “The hotel has always managed to come up with a majority vote on the city council when they needed it,” says Sally Krummenacher, a former planning commissioner who resigned her post about six months ago in a protest over what she saw as illegal procedures. “Some people in this town seem to think that the bridge separates them from the statues in the rest of California.” Despite such cynicism, Krummenacher and a number of Coronadans are lobbying to get Coronado to revise its lopsided lease with the hotel group. The issue promises to continue to disturb the town’s customary complacency.

The land in question is an 1100-foot stretch running along the edge of Glorietta Bay which these days would light up any developer’s eyes. It became city tidelands with the 1962 California Tidelands Act. Today the Chart House restaurants and the Glorietta Bay Marina are the major tenants on the property, but neither leases the land directly from the city. Instead they sublease it from a business entity known as U.S. Oceanics Incorporated, and while their rents haven’t been disclosed, the hotel’s critics have estimated them to be at least $10,000 a month. (Lawrence calls that estimate ‘bullshit” but refuses to discuss the actual figures.) Oceanics, however, only pays the city $320 a month on a lease which won’t expire for at least 33 years. The major owners of Oceanics appear to be Lawrence, hotel president Carlton Lichty, and Los Angeles financier Leonard Friedman.

A few Coronadans, like prominent Republican Eleanor Ring Stores, still remember the genesis of that original lease in 1962, “[John] Alessio [who then owned the hotel] walked in to the council meeting with I don’t know how many lawyers, and they kept saying that it was urgent that something be done immediately,” recalls the long-time Coronado resident, who later became a council member herself. She thought the terms of the lease were outrageous then, but she says the pro-hotel council approved it that day, over the objections of only one member. Lawrence wasn’t there then (he joined the hotel in 1963), but he paints a drastically different picture. “That land was a crummy piece of dirt!” he rages. ‘The boathouse was under water . . . Alessio was doing the city a favor by signing the lease since that land wasn’t even clearly the city’s.”

Lawrence’s account notwithstanding, citizen complaints about the lease surfaced periodically over the years. Krummenacher, for example, two and a half years ago wrote a memo to the city officials while she was a planning commissioner, urging that Coronado reclaim the property under eminent domain; but like most of the protests, her memo never made it to the public forum. The recent exception occurred in late May, when an attorney named John Yeager appeared before the city with a plea.

Yeager took pains then to disclaim any affiliation with the Concerned Citizens of Coronado, a citizens group with which Lawrence has frequently tangled. But Yeager did point out that he’d been raised on Coronado and still has close ties to the town. He says people there had brought the issue to his attention. When he studied the lease, he came up with the complex and novel argument which he said the city could use to renegotiate the issue. Basically, the attorney says the city has been under the false impression that it relinquished the right to approve Oceanics’ subleases. It never really did so, however, Yeager argues. Thus, he says the city should have the arrangements restricted to give it a fairer percentage of the rents.

Yeager made that presentation in May. Since then, the issue has developed under a tight lid, like pressure cooker building up steam. Yeager has met a few times with the council and the city attorney in executive session, but so far Yeager refuses to talk about any of those discussions.

Whether the city will ever take any action is the question now hanging in the air. Yeager sounds sincere when he says, “I think it’s up in the air at this point . . . I really don’t know what the city’s going to do,” He adds, however, that people on the island are “flat mad,” and if the city council lets the question languish, he warns that the next step would be to “have some city council member who agrees with me make a motion, have a vote to get it in the public record, and then let the citizens decide at the next election.”

Lawrence also utters warnings, although the refuses to speculate on whether the city will actually try to renegotiate the lease. Should the city do so, the hotel owner promises a full-fledged legal battle. Renegotiating the lease would be grossly unfair, he rails since he says the property values have increased largely because of the money which Oceanics has invested to improve it. ‘They’d have as much chance of winning as a snowball’s chance in hell,” he scoffs.

City Councilman Bill Adams, an old friend of Yeager’s and the most persistent critic of the hotel, says one other council member besides himself currently wants to see the lease renegotiated, one certainly will oppose such a move, and the other two have been asking probing questions in the closed-door discussions. “That’s a good sign,” he notes, encouraged. “Still, if I was a great gambling man, I guess I’d bet that when all the questions are answered, two members will go to war on this, and the other three will still say ‘no, let’s go on to another issue.’”

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