Frequently Asked Questions

>> Why did The Plunge close its doors?
>> How long will The Plunge be closed?
>> When will The Plunge reopen for public use?
>> Why doesn’t Tom pay his rent?
>> How will The Plunge's closure affect Mission Beach / Belmont Park?
>> Per the lease, who is  obligated to maintain the Plunge? Is it the Lessee or the City?
>> Why have the previous Lessee’s of Belmont Park paid such low rent?  Is this a sweetheart deal?
>> It sounds like the City might be shopping around for a new Lessee, what does this mean for The Plunge and Belmont Park?
>> What exactly are the “structural safety issues”?
>> If the City deemed the Plunge structure “not unsafe” why not keep it open while continuing to negotiate the terms with the City?
>> Why was the decision to close the Plunge so abrupt?  Why could not more notice have been provided to the Athletic Club members and general public?
>> Why did it take Mr. Lochtefeld six years (from the date of the Fifth Operating Memorandum in 2000 until 2006) to submit a proposal for a revenue generating upgrade to rehabilitate the Plunge building?
>> In 2006, what department in the City received the Phase II development plan to rehabilitate the Plunge building?
>> How much later was the Phase II plan to rehabilitate the Plunge building rejected? 
>> Why did the City deny Mr. Lochtefeld’s 2006 proposal for a revenue generating upgrade to rehabilitate the Plunge?
>> Was there any proposed modification of the Phase II plan as originally submitted?
>> During this two year period (from 2008 – 2010) did Mr. Lochtefeld tell the City that he couldn’t pay more rent, if he was to continue with responsibility for the Plunge? 
>> During their period of negotiation, or anytime thereafter, did the City ever conduct their own studies on what it would cost to rehabilitate the structure of the Plunge building?
>> Does the City’s current claim for rent take into account the reduction in value to the Belmont Park leasehold as a result of the known structural defects?
>> Is Mr. Lochtefeld damaged in any other way by the City’s actions to unjustifiably raise the rent?
>> How will The Plunge's closure affect my Wave House Athletic Club membership?
>> What can I do to help?

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Why did The Plunge close its doors?
Unfortunately, the Plunge building has design flaws that has caused severe corrosion of key structural elements. The pool portion of the building is no longer safe to occupy (the gym is fine). Tom Lochtefeld, owner of the master lease on Belmont Park, raised this problem to the City (owner of the Plunge Building) eleven years ago. Tom worked out an agreement with the City (the Fifth Operating Memorandum) that outlined a plan to allow for structural rehabilitation and adaptive re-use of the Plunge Building. Tom submitted his plan to the City in 2006. The City rejected Tom’s plan without citing any specific reason. The Fifth Operating Memorandum also allowed Tom to request rent credits in the event he was unable to develop and economic re-use of the Plunge. Rent credits would allow Tom to re-purpose the City rent and repair the Plunge building. The City denied Tom’s request for rent credit.

How long will The Plunge be closed?
Without cooperation from the City, we have no idea how long the Plunge might be closed. If we can get the City to cooperate, we could have a temporary solution within a month.

How will The Plunge's closure affect Mission Beach / Belmont Park?
The demise of the Plunge is but the first step in the negative progression that Mr. Lochtefeld had warned of eleven years ago, and recently reiterated to the City. If the Plunge does not reopen, one can expect vacancies to increase at Belmont Park, and as vacancies increase, family pedestrian will decrease which will lead to even more vacancies. This cycle exposes Belmont Park to the very real risk that it will return to the crime infested blight which existed before Mr. Lochtefeld tried to realize his dream of revitalizing the area. If that prediction comes true, one of the gems of the San Diego coastline will be lost.

When will The Plunge reopen for public use?
Tom Lochtefeld is ready, willing and able to commence on interim structural repairs and reopen the pool as soon as possible. It’s possible The Plunge could open in as little as 30 days, however, he needs the City of San Diego to support the Rent Credits which will allow him to pay for the structural refurbishment. For some inexplicable reason, they have denied use of the rent funds towards The Plunge, as agreed.

This was our original agreement with the City, section 3.03 of the 5th Operating Memorandum (download here), an amendment to the Master Lease:

“Tier 3 - Plunge Building Re-Use...  LESSEE shall use all best efforts to develop an adaptive reuse of the Plunge Building... to generate sufficient revenues to justify expenditure of funds for said reuse or construction.  If LESSEE is unable to develop such economic reuse, but still desires to redevelop the Plunge building..., LESSEE may request Additional rent credits... Approval of rent credits shall be in the City’s Manager’s (Mayor’s Office) sole discretion.”

Why doesn’t Tom pay his rent?
As stated in the 5th operating memorandum (download here), which amends the Master Lease, in order to rehabilitate The Plunge structure, Tom was to be provided Rent Credits. The City has refused to allow these Rent Credits, consequently Tom refuses to pay the rent until the City agrees that this money will be dedicated to refurbishing The Plunge.

Per the lease, who is  obligated to maintain the Plunge? Is it the Lessee or the City?
This goes to the heart of the dispute.  As a general premise, the original lease requires that the LESSEE (Mr. Lochtefeld) maintain the “premises”.  However, the lease was amended by the Fifth Operating Memorandum (“5OM”). In the amendment, the Plunge structure was singled out as being defective and requiring “major renovation in order to overcome design flaws and permit an economically viable adaptive re-use”.   The 5OM also characterizes the structural rehabilitation of the Plunge as a public improvement. In consideration of building (or structurally refurbishing) public improvements, the 5OM envisioned that Mr. Lochtefeld would be permitted to do 2 phases of improvements, the second including a hotel which was to provide the financial engine to pay for the improvements to, and ongoing maintenance of, the Plunge.  The 5OM also provided that if an economically viable re-use could not be developed, the City would consider additional rent credits if Mr. Lochtefeld decided to proceed with improving the Plunge.  Despite the intent of the 5OM, the City precluded Mr. Lochtefeld from redeveloping the property in a way that was economically viable, and also denied his request for rent credits, it is Mr. Lochtefeld’s position that because the City has failed in delivering its part in the bargain, Mr. Lochtefeld is not obligated to correct the major design flaws, or do the refurbishment that the Plunge structure required. Rather, this obligation falls back to the City.  

Why have the previous Lessee’s of Belmont Park paid such low rent?  Is this a sweetheart deal?
Belmont park is on a ground lease, i.e., the Lessee leases the underlying ground, and then builds (and owns) all the buildings above the ground.  In consideration for use of the ground, the Lessee pays the Landlord (City) a minimum as against a percentage of gross receipts (whichever is higher).  At Belmont Park, the percentage rent is 5% of tenant gross sales. The minimum rent is Seven Hundred Five Thousand Two Hundred Eight Dollars ($705,208) per annum. However, in the special case of Belmont Park, the City requested that the Lessee build certain public improvements, e.g., the Mission Beach Lifeguard Tower, the South parking lot public bathrooms, and the Plunge building / structural refurbishment.  The Lessee is permitted to offset the cost of these public improvements against the Rent, however, at a minimum, the Lessee must pay the City a cash amount of $70,000 per annum.  There are approximately $4 million of rent credit that remain under the lease.  Consequently, to say that the Lessee is “paying low rent, or has a sweetheart deal” is incorrect, rather, the Lessee has paid its rent in advance by building a public improvement that the City wanted, yet did not have the money to build on its own.

It sounds like the City might be shopping around for a new Lessee, what does this mean for The Plunge and Belmont Park?
We don’t know the City’s intent.  However, even if that is what the City is doing, we do not think it holds out much prospect for success.  Recall that this development has already failed twice by the time the City asked Mr. Lochtefeld to take it over.  Mr. Lochtefeld had a plan to redevelop Belmont Park in the two phases referenced in response to the previous question, and discussed further below.  Mr. Lochtefeld has completed the first phase resulting in a rejuvenated Belmont Park.  While it is now more vibrant and attractive, the project still does not generate revenue to sustain the Plunge and pay the rent the City wants.  That requires a large cash infusion, or the development of Phase 2.  Without either of those, there simply is not the money to pay to refurbish the Plunge.  Bringing in a new developer does not change that fact. The demise of the Plunge is but the first step in the negative progression  that Mr. Lochtefeld  had  warned of eleven years ago, and recently reiterated to the City.  If the Plunge does not reopen, one can expect vacancies to increase at Belmont Park, and as vacancies increase, family pedestrian will decrease which will lead to even more vacancies.  This cycle exposes Belmont Park to the very real risk that it will return to the crime infested blight which existed before Mr. Lochtefeld tried to realize his dream of revitalizing the area.  If that prediction comes true, one of the gems of the San Diego coastline will be lost.

What exactly are the “structural safety issues”?
See the ‘Initial Seismic Evaluation of the Plunge’ by Dodd and Associates Consulting Engineers here.

If the City deemed the Plunge structure “not unsafe” why not keep it open while continuing to negotiate the terms with the City?
In the same letter issued by the City that deemed the Plunge structure “not unsafe”,  the City also requested that Mr. Lochtefeld obtain an independent third party engineering report.  In compliance with the City’s request, Mr. Lochtefeld  recently procured  an engineering  study to ascertain the safety of  the Plunge structure.  The engineers report found the structure  to be unsafe and recommended closing it down in the interest of public safety.  The City was provided a copy of the report, and invited to send over its own engineers to verify the safety issues, but has not done so.  Accordingly, Mr. Lochtefeld has determined that the closure of the Plunge is necessary to assure that no one is injured as a result of the structural deficiencies.    The Plunge was closed effective Thursday, May 26, 2011, and will remain closed until such time as the City conducts the necessary repairs and certifies the structure as safe.

Why was the decision to close the Plunge so abrupt?  Why could not more notice have been provided to the Athletic Club members and general public?
To the members of WHAC, Mr. Lochtefeld had raised the issue of the Plunge buildings structural deficiencies in an email and flyer that was distributed in early September 2010 .  Subsequent to this notice, the City came out to inspect the building and issued a letter stating that the building was “NOT in an unsafe condition”.  The City also requested that Mr. Lochtefeld provide a copy of his engineer’s report, as soon as it was available.  Mr. Lochtefeld provided this report to the City on May 18, 2011.  The report stated that the building was unsafe and should be closed immediately. The City was provided an opportunity to counter this report and certify the building safe.  The City failed to respond.  The Pool building was shut down on May 26, 2011.

Why did it take Mr. Lochtefeld six years (from the date of the Fifth Operating Memorandum in 2000 until 2006) to submit a proposal for a revenue generating upgrade to rehabilitate the Plunge building?
The Fifth Operating Memorandum required two phases of development:  Phase 1 was a $4 million dollar upgrade to add the wave water features and reposition and revitalize Belmont Park, and was to be completed by June of 2004.  The logic for creating two phases of development was to prove that Mr. Lochtefeld was a capable developer (since all previous Lessees had failed), and to prove that Mr. Lochtefeld’s new business model would be accepted by the community and would be financially successful.  Mr. Lochtefeld successfully completed Phase I in 2004 with the opening of Wave House.  The community has overwhelmingly embraced Wave House, and through Mr. Lochtefeld’s efforts, the gross tenant revenue at Belmont Park increased from $9 million to over $21 million.  Based upon the foundation of Phase I, the Phase II development envisioned an additional $9 million expansion, of which, the key element was the structural refurbishment of the Plunge building.  The deadline for submittal of the Phase II plan was 2006, with completion targeted for June 26, 2010.  Unfortunately, the City rejected Mr. Lochtefeld’s plan, and the anticipated structural refurbishment to the Plunge building never occurred.  A recent engineers report found the structure  to be unsafe and recommended closing it down in the interest of public safety.  Closure of the Plunge was an avoidable consequence that now will be borne by the public as a result of the City’s breach of its promises under the Fifth Operating Memorandum.  Instead of  trying to  rectify the situation, the City has focused its energies on legal efforts to collect disputed rent from Belmont Park, and meanwhile the Plunge has been allowed to  continue to deteriorate.

In 2006, what department in the City received the Phase II development plan to rehabilitate the Plunge building?
The plan was submitted to Real Estate Assets.

How much later was the Phase II plan to rehabilitate the Plunge building rejected?
On July 28, 2008, Mr. Lochtefeld received a phone call from James Barwick, Director of Real Estate Assets, who requested that Mr. Lochtefeld refrain from further development and negotiate an “AS IS” lease.

Why did the City deny Mr. Lochtefeld’s 2006 proposal for a revenue generating upgrade to rehabilitate the Plunge?
The only explanation provided by the City was that they did not want to spend any political capital on Belmont Park.  The ‘Belmont / Plunge’ problem was from a prior administration and was not a priority of the current administration.

Was there any proposed modification of the Phase II plan as originally submitted?
No modification was provided.  However, Mr. Lochtefeld, his representatives and the City negotiated for two years – approximately 20+ meetings, but to no avail.

During this two year period (from 2008 – 2010) did Mr. Lochtefeld tell the City that he couldn’t pay more rent, if he was to continue with responsibility for the Plunge?
Yes, Mr. Lochtefeld explained on a multitude of occasions that it was economical infeasible to both pay the rent and rehabilitate the Plunge.  In fact, Mr. Lochtefeld, at the City’s recommendation,  hired two independent financial consulting firms, Economic Consulting Services and Economic Research Associates, to provide feasibility studies on an “AS IS” operation, that proved the infeasibility.  (indicate downloadable reports).

During their period of negotiation, or anytime thereafter, did the City ever conduct their own studies on what it would cost to rehabilitate the structure of the Plunge building?
No, the City has never conducted an analysis of the Plunge structure, or how it might be rehabilitated.

Does the City’s current claim for rent take into account the reduction in value to the Belmont Park leasehold as a result of the known structural defects?
No.  Although, a reduced rent was what Mr. Lochtefeld originally bargained for, the City refuses to account for the unviable economic realities that result from the significant costs associated with rehabilitating and maintaining the Plunge building structure.

Is Mr. Lochtefeld damaged in any other way by the City’s actions to unjustifiably raise the rent?
Yes.  In addition to significant legal fees, the closure of the Plunge is now resulting in a significant loss of Athletic Club member and swimmer revenue. If Mr. Lochtefeld’s prediction of the demise of Belmont Park comes to pass, he will also lose the money he has invested in the project.  He is currently the guarantor on $17  million of debt used thus far in the redevelopment of the project and the planning of Phase II.

How will The Plunge's closure affect my Wave House Athletic Club membership?
Your membership will not be affected, we have plenty of exciting group classes and a state of the art gym upstairs. We will also be adding new group classes for the members that are only interested in swimming. Email [email protected] with any questions.

How can I help?
The fate of the Plunge and the future of Belmont Park is now in the hands of the public and their ability to convince the Mayor and City Council to shift their focus from demanding short-term lease revenue to finding a solution to preserve a City of San Diego historical treasure and the crown jewel of Mission Beach. Please contact your family and friends and sign our petition, attend a city council meeting or write letters, emails, and phone calls to our elected representatives and key City staff. Contact information is listed below, or you can fill out our webform to send a message to everyone at once.

Additional Councilmembers to contact

Local Media Outlets

The San Diego Uniont-Tribune: [email protected].
Voice of San Diego: [email protected].

All emails submitted to the media must include your full name, phone number and community of residence.

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