A dispute over the future of a Redwood City marina heated up Wednesday when workers showed up with power tools.

Boat owners are refusing to leave Pete's Harbor and saying no to a five-figure settlement offer.

In the morning, crews at Pete's Harbor took apart some metal cleats used to tie up boats.

The work took place against a backdrop of an on-going dispute between the harbor owner, Paula Ucceli, who wants to sell to a developer and the dozen people who live on boats and refuse to move.

Boat owner Chris Murphy claimed the harbormaster said, "'You need to move because we're going to dismantle the docks."

Murphy said when workers refused to turn off their saws, "I unplugged the power cord and threw the end of it in the water."

He said that workers didn't leave and then things got a little confrontational.

Police showed up and boaters reluctantly agreed to let the crew remove some cleats.

A spokesman for the harbor owner called the work maintenance.

"I would call it a small misunderstanding. There's no dismantling of the harbor," said Adam Alberti, Pete's Harbor Spokesman.

The dispute focuses on the property's outer harbor which was leased to Uccelli's late-husband by the State Lands Commission.

Boat owners claim the lease requires the outer harbor remain a commercial facility.

The state is studying the lease.

Redwood City, which owns part of the harbor, put off action until a state decision.

"I think there's a lot to look at and there really was no rush today certainly to dismantle it and not even to take the cleats off," said Alison Madden, boat owners' attorney.

KTVU has learned the developer, Pauls Corporation, has offered to keep the outer harbor a public marina and offered $50,000 to the boat owners.

But the boat owners' attorney said she rejected that offer, saying it doesn't cover costs or protect the people who want to stay here.

So, the issue could remain unresolved until the next State Lands meeting in April.