Hotel Debate Fills a Decade of Deja Vu

Times Staff Writer

The only equal distribution of benefits to the community from this investment should be future tax relief. This property must be returned to the tax rolls.

--November, 1972, ballot argument in favor of a proposal to build a 22-story hotel at the former site of the Biltmore hotel. Construction of this hotel will be a major step toward alleviating some of the economic burden carried by our residents.

--May, 1985, statement by Councilman Gary Brutsch in favor of a proposal to build a four-story hotel at the Biltmore site. Council members have come and gone; development proposals have been altered, amended, rewritten and scaled down; committees and subcommittees have held public hearings, commissioned studies and made countless recommendations, and residents have cast ballots three times on proposed hotel projects.

Yet after more than a decade of debate and indecision over what to do with the city-owned former site of the Biltmore hotel, some of the basic issues that first divided residents in the early 1970s remain essentially the same as the city's fourth binding election on a hotel development approaches.

Voters go to the polls Tuesday for a special election on a proposed 250-room hotel and park for the one-acre Biltmore site and several adjoining properties on the Strand between 13th and 15th streets. The $31-million proposed development, smaller and less obtrusive than one narrowly rejected by voters six months ago, could be under construction as early as this fall if voters approve it.

As in elections and battles past, proponents of the project have talked finances and stressed the "bottom line": The Hermosa city government is nearly broke, and tax revenue from new commercial development and a revitalized downtown offer the only hope for solvency in years to come. Variations of the argument have been presented since the hotel was torn down in 1969, leaving the site vacant.

'Fearful of Change'

Besides, the proponents say in a new twist on an old debate, after years of haggling over proposed developments, this hotel development is the right one, both in terms of design and financial promise.

"We are sinfully fearful of change," said Edie Webber, a former councilwoman and a supporter of the hotel, reflecting on years of public opposition to Biltmore-site developments. "Change in this case will lead us to a better life."

Opponents have stressed familiar themes, too, albeit with varying intensity. Opponents do not dispute that the city is in the midst of a financial crisis, but they object to the terms of the proposed financial arrangement with the developer. They argue that the city could strike a more lucrative deal with someone else.

"The alternative is not a sandbox," said former Councilman George Schmeltzer, a member of the Hotel Referendum Committee, which opposes the project. "There is no competition for the use of that site. They (city officials) have been in the bedroom with the developer for 2 1/2 years."

Points of Criticism

Many of those against the new proposal, however, oppose any hotel at the Biltmore site, saying projected increases in traffic on residential streets, higher zoning densities and worsening parking problems would prove intolerable.

Some of these opponents have been active for years in the struggle to keep a hotel off the site, a task that began shortly after the swing of a 3,000-pound iron ball tumbled the old hotel in 1969. They argue that the city could come up with a development more compatible with Hermosa's residential character, one that would earn the city money but would preserve the town's quaint beachfront atmosphere.

"It happens to be my town, and no one is going to buy it from me," said Sheila Donahue Miller, an attorney who has been active in fighting proposed hotel developments at the site. "We have an ambiance of life and no one is going to take it away from us."

The special election Tuesday, the third in 1 1/2 years, has sparked considerable interest in the small oceanside community, with campaign posters dotting windows and rooftops, a public debate airing several times on the city's cable television station and one City Council watchdog launching a recall against the entire council because of its support last fall and this spring for successive hotel proposals.

Issue in Courts

The election also has been entangled in legal uncertainty ever since the Hotel Referendum Committee, a group of residents opposed to the hotel, took the city and the Los Angeles development firm of Greenwood & Langlois to court last month in an effort to cancel it. Although the group convinced a Los Angeles Superior Court judge that the vote is illegal because it comes too soon after the December referendum, the election will go on as scheduled pending an appeal by the developers. The entire exercise may be nullified by a state appellate court in the weeks ahead if it sides with the lower court.

A last-minute effort to block the election despite the appeal failed last Thursday in Los Angeles Superior Court. Judge Norman L. Epstein, acting on a petition by Hermosa resident Roger Creighton, who opposes the hotel, ruled that the order canceling the election must be stayed while the issue is appealed. Attorneys for Creighton had argued that the election should be canceled anyway.

Aside from the ongoing legal battle, several themes, most of which are not new, have dominated the campaign in recent weeks. Some of them:

-Campaign Spending--Friends of Our New Hotel and Park, a group heavily financed by developer Greenwood & Langlois, had collected nearly $38,000 in monetary and non-monetary contributions at the end of May. The group had spent $3,500 for full-page ads in the Hermosa weekly newspaper, the Easy Reader, and thousands of dollars more for posters and campaign literature. Greenwood & Langlois has also agreed to foot the city's bill for running the election--estimated at $22,000.

The Hotel Referendum Committee, in contrast, had collected just over $5,600 in monetary and non-monetary contributions by the end of May. The group's major donor was Harold Cohen, operator of La Playita restaurant, which would need to relocate if the hotel measure passes because the property he leases would be purchased by the developers.

The wide margin in campaign contributions and spending has left a foul taste in the mouths of many residents, some of whom have accused the developers of trying to buy the election. During a debate last month, Schmeltzer chastised the hotel's supporters for waging a campaign of "misinformation and disinformation" through expensive newspaper advertisements.

"This is the height of cynicism," Schmeltzer said.

But Chuck Sheldon, Hermosa planning commissioner and a real estate broker, defended the ads and the heavy spending, saying the Friends of Our New Hotel and Park have set out to educate the public.

"Educating people is very expensive," he said. "We have had to bear the burden of presenting to the city the merits of a very complex proposal."

-Benefit to the City--Proponents say the hotel will provide a much needed source of tax revenue as well as an impetus for a renaissance downtown. Opponents argue it will do neither.

At issue is a complicated development agreement that requires the city to float as much as $20 million in bonds to help pay for the project. The money will be paid back to the city through bed taxes and revenue from an underground parking garage. Schmeltzer and others call the deal a city "subsidy" for the developers. Supporters of the hotel, however, say the hotel guarantees income to the city over the long term--"in effect subsidizing the taxpayers," they wrote in an advertisement.

The two sides disagree on how much revenue the hotel will generate for the city, despite guarantees in the ground lease that the city will receive at least $125,000 in the first year of operation, $175,000 in the second year, $225,000 in the third and $350,000 thereafter.

Proponents estimate that the hotel more likely will generate an average of $600,000 a year in taxes and other revenue to the city during the first 10 years of operation. Opponents contest the estimates, saying they are exaggerated and based on unrealistic expectations about the success of the project.

In addition, the opponents argue in a ballot statement that city and downtown businesses will suffer financially from lost parking, business taxes and business revenues during an estimated 30 months of construction. "Our financial interests are not being adequately safeguarded," the statement said.

-Project Design--One of the key issues in the court battle to block the special election was the design of the project. How different is it from the five-story hotel proposed by the same developer in a referendum in December?

Members of the Hotel Referendum Committee say it isn't very different, and Los Angeles Superior Court Judge John L. Cole tended to agree. But proponents of the hotel argue it is a new project that has been tailor-made to address objections to previous hotel proposals.

One Story Lower

The hotel would be one story (or 15 feet) lower than the hotel proposed in December and would have 10 fewer rooms, underground rather than above-ground parking, an adjacent half-acre public park rather than no park and a U-shape design rather than a solid block design.

Hotel opponents, however, say the changes are insignificant and are intended only to cloud the real issue: Voters are being asked to vote again on essentially the same issue.

20 YEARS AT THE BILTMORE

NOVEMBER, 1965: City inspectors rule the 40-year-old Biltmore Hotel is a "hazardous" structure.

JANUARY, 1966: City orders Biltmore owners to erect a fence around the hotel and provide a canopy over an entrance to protect pedestrians from falling concrete.

SEPTEMBER, 1966: City buys and then closes hotel, paying the Internal Revenue Service $46,000 in back taxes and $67,000 to hotel owners Charles and Ruth Rippy.

MARCH, 1969: City holds demolition ceremony at the hotel, paying $55,000 to a wrecking company to destroy the building.

NOVEMBER, 1972: Voters reject, by a greater than 2 to 1 margin, a ballot measure that would have permitted the construction of a hotel as high as 22 stories on the site and adjacent properties.

NOVEMBER, 1983: Voters decisively defeat two development proposals for the site: a seven-story hotel and 49 time-share residential condominiums.

DECEMBER, 1984: Voters repeal an ordinance, by 19 votes out of 4,291 cast, that would have allowed the development firm of Greenwood & Langlois to build a five-story hotel.

MARCH, 1985: The City Council, at the request of Greenwood & Langlois, calls for a special election June 11 on a proposed four-story hotel.

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