Bond Sale for Avalon Resort Wins Initial OK

The operator of this tourist town’s only combination resort and conference center has received initial approval for up to $9.5 million in tax-exempt bonds to expand the facility.

The 130 rooms for Las Casitas Resort and Conference Center in Avalon Canyon would be Santa Catalina Island’s first significant increase in hotel rooms since 1958. The island has 779 rooms in 27 hotels.

The state Coastal Conservancy, which helps local governments implement coast-related plans, last week approved the developer’s application for bond financing under the conservancy’s Urban Waterfront Restoration Program, which provides financing for coastal visitor-servicing projects that include public improvements or public recreational facilities.

Final approval of the bonds is expected to come Wednesday when finance officials in the state agency review the application, said Marc Beyeler, manager of the state restoration program. The state would sell the bonds, funds from which would cover the estimated total cost of the expansion.

The expected final approval puts the expansion closer to reality than ever before. (Plans were first submitted to the city in 1979.) Still, developer J. Jay Feinberg, who operates Las Casitas, is not celebrating until the first shovelful of dirt is tossed.

“I’ve been through so much for so long, dealt with so many governmental agencies over the past six years, run through so many hoops, that this is just another hoop,” he said. “What is it they say? ‘It’s not over until it’s over.’ Or, ‘It’s not over until the fat lady sings.’ ”

Feinberg said he did not want to discuss the project further until ground is broken. He said a lot of paper work and meetings with attorneys and bankers lies ahead before he can relax.

City officials, however, are confident that the project is finally going to be completed. “It looks like it might now go,” said Councilman W. F. (Oley) Olsen III.

City Manager ‘Confident’

City Manager John Longley said he is “confident that the project will be built.”

“We think the project is quite important to upgrade the quality of accommodations on the island,” Longley added.

City officials said the additional rooms are expected to generate nearly $300,000 annually in transient occupancy, property and sales taxes for Avalon.

Ironically, the city’s demand that Feinberg build public improvements--a baseball field and a flood control project--allowed him to qualify for the 1 1/2-year-old tax-exempt bond financing program.

“This project is a fine example of a private development providing much-needed public improvements while at the same time providing commercial visitor-serving facilities,” Beyeler said.

He said that besides providing much-needed rooms, the expanded hotel will create 75 permanent jobs and 50 construction jobs.

Beyeler said the hotel’s design will fit into the natural environment of Avalon Canyon. The same early California architecture--with tiled roofs, stucco finish and patio walls--will be used for the additional 130 rooms, which will be in two-story buildings.

Las Casitas now consists of 34 detached one- and two-bedroom cottages on 7.3 acres that were once the training camp of the Chicago Cubs baseball team. The team, once owned by William Wrigley Jr., who developed Avalon, trained on the island from 1921 to 1951. The hotel is owned by Santa Catalina Island Co. and is leased to Feinberg. The company also owns the land where the addition will be built, but Feinberg will own the buildings.

Feinberg’s original plans included a single four-story building with a restaurant and a 41,000-square-foot conference center. Now, rather than build those facilities, Feinberg has leased part of the Catalina Country Club, which is adjacent to the hotel, from Santa Catalina Island Co. for 15 years.

Feinberg remodeled the old club, which has always been a public facility with restaurants and golf and tennis pro shops, and built a new restaurant and bar. The facility also has meeting and banquet rooms.

In 1981, Feinberg was allocated additional fresh water for the expansion by Southern California Edison Co., which runs the city’s water and power, and the city gave final approval for the project.

Demand for Baseball Field

By spring of 1982, Feinberg was ready to break ground, but the city held up construction until he built a baseball field to replace one the expansion would eliminate. Men’s softball and Little League baseball are a big part of the city’s recreation programs, and sports organizers put pressure on the city not to let the project go forward without a new field.

It was not until early 1984 that the field was completed, at a cost to Feinberg of about $70,000, but then the city and Feinberg argued over who should be required to build a flood-control project.

The hotel lies at the bottom of Avalon Canyon, and the city feared that the present flood control channel and debris basin would be insufficient in a major flood. In addition, there is a substantial deposit of sediment in Avalon Bay from upstream rain runoff.

Feinberg agreed to build a large flood control detention basin and to reconstruct the flood control channel at a cost of nearly $1 million. The city agreed to use 2.5% of the bed tax collected from the hotel for maintenance of those facilities.

Last November, the city set a June 1, 1985, deadline for construction to begin. But by then Feinberg’s financial backing had to be reorganized and in May he asked for an extension. Despite some grumbling that fresh water was being held up for a project that might never be completed, a new deadline was set for May 1, 1986. Feinberg will construct the flood control basin and the hotel addition simultaneously.

Feinberg’s plan to build a Hilton hotel in Carson recently fell through for lack of financing.