• News
  • SAN DIEGO
  • Real Estate
Facing bankruptcy

Belmont Park operator gets more time

The leaseholder of Belmont Park will be allowed to keep controlling the property for now, but that could change early next year.

On Nov. 18, U.S. Bankruptcy Court Judge Laura S. Taylor issued a stay preventing the city of San Diego from forcing out operator Wave House Belmont Park LLC until Feb. 11, when the court determines whether the stay should be continued.

Wave House, headed by principal Thomas Lochtefeld, has operated Belmont Park in Mission Beach for the past eight years. It took over a 50-year lease dating back to 1988 when many of the modern improvements to the park were constructed. Belmont Park sits on a 7.2-acre parcel owned by the city of San Diego.

Wave House was forced to file for Chapter 11 reorganization on Nov. 3 after the city allowed a subsidy to lapse last June that had enabled the annual rent payment to be capped at $70,000 per year. This is in addition to providing the city a percentage of the gross receipts generated by the park.

As a result of the subsidy's expiration -- a subsidy that covered much of the operation of The Plunge swimming facility -- Lochtefeld says the effective annual base rent jumped from $70,000 to $480,000.

When asked about the situation, City Attorney Jan Goldsmith said while he refuses to litigate the issue in the press, the lease conditions themselves were not changed.

"The city enforced the existing terms of the lease agreement. The lessee has an obligation to the taxpayers to fulfill the terms of his lease agreement and pay the rent he owes the city. On behalf of the taxpayers, we will pursue every dollar that is owed to us," Goldsmith wrote.

Efforts to contact City Councilmember Kevin Faulconer's office on Wednesday were unsuccessful. Faulconer represents District 2, which encompasses Mission Beach.

While the city may have been within its rights to allow the subsidy to expire, that doesn't mean the operator could manage without it.

Lochtefeld said Wave House would have been able to operate the park without the subsidy if it had been allowed to develop a 200- to 300-room hotel, rides, games and retail as originally planned about three years ago. This is in addition to wave features and retail components already built by Lochtefeld.

"I had the financing, but the city rejected the plans," Lochtefeld said, conceding that concerns were raised over height and density.

After Wave House was unable to get its development under way, two consultants Economic Research Associates, an AECOM company, and Economic Consulting Services were hired to demonstrate that Belmont Park, with its 23 tenants, wouldn't be viable without the subsidy.

Belmont Park doesn't have the draw of some better-known venues in town.

Figures from 2009 weren't available, but in 2008, gross revenue at Belmont Park totaled about $21.4 million, equal to $204 per square foot of gross leasable area (excluding The Plunge building) per year. By comparison, most coastal-oriented specialty centers generate $400 to $500 per square foot per year, or more. San Diego's Seaport Village, for example, reported gross sales of $60 million in 2007, equal to $680 per square foot of gross leasable floor area.

User Response
0 UserComments