Costly Battle Over Treasure Island

An aggressive campaign over plans to develop a rare piece of prime beachfront property is rocking the 24,000 residents of Laguna Beach.

Measures A and B would make way for a resort community on the site of Treasure Island, a former mobile home park. Plans call for a 275-room hotel and 31 housing units on 30 acres.

Supporters say the measure would provide a hotel with facilities that locals would use, as well as bring in money to the city and its schools.

Opponents argue that the development is too dense, provides too little public space and doesn’t fit with what they call the charming ambience of their city.

The decision is up to the 16,000 registered voters in Laguna Beach, many of whom will cast ballots in a referendum vote April 27.

If passed, the measures would ratify a council-approved change in the general plan and in zoning for the land, worth up to $40 million, to allow a resort.

The council approved a memorandum of understanding in February calling for the resort development. The plan calls for:

* A hotel with 275 rooms, along with 14 condominiums and 17 houses.

* The view of the ocean from Coast Highway to be unobstructed for half the length of the frontage, or 950 feet.

* Part of the property to be open to the public as parks, pathways and beaches.

The resort is projected to bring to the city $2.2 million in hotel taxes each year and $350,000 in property and sales taxes, according to City Manager Kenneth C. Frank.

The property taxes from the houses and the hotel will bring in an additional $470,840 for the school district each year, according to Frank.

The campaign, described as the biggest and most contentious to strike Laguna Beach this decade, is just the latest chapter in the saga of Treasure Island.

The property derived its name from French pirates who landed there in 1818 and buried their loot, according to local historians. In following years, portions of films, including “Treasure Island” and Lucille Ball’s “The Long, Long Trailer” were set there.

Merrill Lynch Hubbard purchased the land in August 1989 with the intention of upgrading the existing mobile home park, said the company’s chief executive, Jack Cuneo. After a series of conflicts arising from rent increases, the company closed the park July 31, 1997, and was forced to settle claims by several residents.

The company proposed several other plans for the site, the first of which was a 268-home gated community. After several indications from the council that the plan had to be scaled back, the company submitted a proposal for a hotel and residential resort.

After the council approved the memorandum, a group of opponents calling themselves Laguna for a Better Treasure Island Resort gathered more than 2,000 signatures in December for a referendum vote. Many members of the group are former council members.

They argue that there should be no houses or condominiums in the plan and that the project would bring in too much traffic.

The city should not barter its long-cherished charm for tax revenue, they say.

“This is a town of small-scale buildings and architecture,” said Ron Harris, the organization’s chairman. “It’s not Miami Beach or the Hawaiian coast.

“This is a place of character. We want to give people a sense of an old-fashioned town. It’s not about turning itself into as large of a cash cow as possible.”

The opponents argue that the development would result in 4,070 more car trips in Laguna Beach every day, and they object to the $1.2 million in landscaping costs and fee deferrals the city is providing the developer.

“Laguna Beach taxpayers should not subsidize Merrill Lynch,” read one mailer put out by the Laguna Beach No on A & B Coalition.

But supporters say that deferred fees and other subsidies are common practices of cities that stand to gain far more in tax revenue from a development than they pay out.

“It’s an accepted practice,” said Wally Campbell, who manages the Treasure Island project for the Athens Group, one of the development partners.

The plan’s supporters include four of the five City Council members. The idea has been endorsed by the school district and the California Coastal Commission.

Backers say the city can use the additional tax revenue on arts and on police services; they claim that residents would benefit from the amenities and access to the beach.

They contend that when the lot was a mobile-home park, there was actually more traffic wending its way through the city.

“I believe in private property rights,” said Laguna Beach Mayor Steve Dicterow. “The objections that the ‘no’ side have are subjective and personal ones, and not ones the government should be regulating.

If the measures do pass, the developers will have to get approval from the city’s design committee on the architectural plans. They’ll also need a permit from the Coastal Development Commission.

One local consultant says the nature of the luxury-hotel business is laden with risks.

“The longer this is stretched out, the riskier it is,” said Michael Meyer, a resort development advisor. “Who knows how long it will be before the economy dips and it just doesn’t make sense to build a luxury hotel?”

Athens’ Campbell said his company probably would abandon the project if the measures fail.

“It’ll be a relief come April 27, whichever way the vote lands,” Docterow said. “This debate has really torn the city apart.”

Library researcher Sheila Kern and staff writer E. Scott Reckard contributed to this report.

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Development Measure

Proponents of a proposed 30-acre resort at the former mobile home park say it would provide public beach access, offer large banquet facilities for the city’s use and bring in $2.5 million annually in hotel and property taxes for the city. Opponents say it is too dense and doesn’t fit in with Laguna Beach’s charm.

Sources: Athens Group, City Manager Ken Frank