Scars Dale : After Years of Trying, an Elite Condo Project Rises From Ruins on Catalina

For years, a huge unfinished condominium project on Santa Catalina Island was possibly the most conspicuous waterfront housing flop in all Southern California.

Mainlanders arriving by ferry from Los Angeles and Long Beach got up-close looks at giant building scars on steep hillsides in the next cove over from postcard-pretty Avalon, the island’s only city.

“Everybody asked about it,” Marian Post, executive director of the island Chamber of Commerce, said recently. “They still do.”

The answers are considerably different these days.

Following 16 years of tentative starts and abrupt halts by a parade of developers, the project known as Hamilton Cove finally seems ready to shed its reputation as a mega-failure--although it does remain controversial in some quarters on the island.

Gone are the most visible scars that annoyed island residents and made arriving visitors pause. In their place is a resort-style residential complex that features stacked layers of Mediterranean-style condominiums extending high up the hill.

Project officials say Hamilton Cove turned the financial corner this summer when they held a lottery and chose buyers for 48 of the condominiums. Altogether, 78 units have been built in recent years, and an additional 61 are expected to be finished by next spring.

If all requisite building permits are obtained, developers plan a total of more than 400 units in seven phases through 1992. The entire project is expected to cost $80 million to build and to generate sales of $115 million.

“Now that it has turned around, everyone wants in,” said an enthusiastic Kenneth Klopp, the real estate executive who supervises the project. “We’re building 60 units a year. That’s as fast as we can go.”

Last month’s stock market crash appears to have had little impact on sales, all of which were in escrow at the time. The sales are just starting to close, and only two have fallen through, Klopp said.

Promoters unabashedly tout the development as an elitist gathering spot--ideal for those who prefer an island weekend getaway two hours from Los Angeles by ferry, rather than more traditional retreats in the mountains or desert.

Louis Jourdan, a French-born actor, has been given a long-term contract as celebrity spokesman. Now in his mid-60s, Jourdan tells would-be buyers in a slick videotape--which cost $150,000 to make--that Catalina and Hamilton Cove remind him of the Greek islands, a favorite getaway spot for European tourists. (Jourdan declined to be interviewed for this article.)

Those who have agreed to buy--or said they may buy--homes at Hamilton Cove are largely a collection of executives and professionals who are not well known but are well-to-do. Typical buyers are usually at least 50 years old and have multimillion-dollar net worths, project officials say.

“You wouldn’t believe some of the 100-foot yachts some of these people have,” Klopp said.

Owned by Canadian Firm

W. G. Bennett, chairman of the Circus Circus casino company in Las Vegas, is negotiating for a unit and recently flew to the island on a private plane to view the development firsthand, project officials said.

Santa Barbara real estate developer Fess Parker, who played frontiersman Davy Crockett in the old television series, was going to buy a part interest in another unit but later backed out, reportedly because his wife didn’t like the steep staircases.

Hamilton Cove is now owned by a real estate development firm known as BCE Development, a Canadian firm that is an affiliate of Bell Canada, the telephone company. BCE Development owns about $2.6 billion worth of real estate in North America, including about 6,000 acres in Southern California.

BCE Development is, in reality, the recapitalized successor company to Daon Development, a large Canada-based real estate firm that had a long flirtation with bankruptcy in the early 1980s. The same man who headed Daon, Jack Poole, now heads BCE Development.

But Daon’s name is not mentioned much anymore in connection with Hamilton Cove, primarily because it was so closely associated with the project’s last flop in the early 1980s, when the Canadian company halted construction after lending and mortgage rates soared into double-digits.

Now, it is BCE Development’s reputation that is on the line. “This project has a profile that exceeds the balance sheet investment,” Poole acknowledged in a telephone interview from Vancouver, where the firm is headquartered. “We’re mindful of that. We’re in a goldfish bowl.”

Too Crowded

Although the condominiums loom large from incoming ferries, they are reached from Avalon by a hilly, winding road that is lightly traveled by tourists. A guarded gate keeps the public out.

“That cove is part of Avalon, but it’s in a different world,” said Ralph Morrow, a businessman in Avalon.

Separate though it may be, Hamilton Cove continues to send ripples of concern and aggravation through the island. Although there is no organized opposition to the project, many worry that Avalon is already too crowded, particularly on summer weekends. About a million people visit the island every year.

According to Donald Haney, publisher of the local paper, the Catalina Islander, Avalon bulges at the seams in the summer like a “fat girl who can’t get a bigger corset.”

Of particular concern is the fact that each condo buyer at Hamilton Cove has been promised a golf cart--known as “autoettes”--for driving around town. Avalon’s streets are already choking on autoette rentals during the zenith of the tourist season.

“The traffic situation is horrendous,” said James F. Trout, an 85-year-old retiree who was born on the island. “The streets of Avalon are just one big parking lot” in the summertime.

History of Problems

The Avalon City Council recently put a temporary moratorium on new autoettes while it searches for a solution.

To some islanders, Hamilton Cove’s size and character simply do not fit on an island whose tourist business and ambiance is small-town and mainly middle class. From well out on the ferry, the project appears to arriving visitors to be almost as large as the town itself. Avalon has a population of 2,300.

“It’s just too massive for this island,” Trout complained.

Others simply don’t like the appearance. “It’s just a pile of white concrete as far I am concerned,” said Ron Black, owner of Avalon’s Catalina Lodge, who added, “to me, it looks like a prison.”

There are other concerns as well, including heavy construction traffic that adds to the clogging of Avalon’s streets. There are also questions about how a project so large will affect the island’s water supply. A major retardant to growth on Catalina is the shortage of fresh water.

The beach at Hamilton Cove is to be open to the public, but just how that will work has yet to be resolved. “That is a sensitive issue,” Avalon City Manager John Longley said.

The history of Hamilton Cove is a long jeremiad of financial problems, ownership changes and regulatory delays. The project has started and stopped three different times and has been run by five different developers.

As City Councilman George Scott put it, “It’s a miracle that anything is out there.”

The Hamilton Cove project was started in 1971 as a satellite resort for the affluent sailing set of the Balboa Bay Club in Newport Beach, according to a history prepared by project promoters. But preliminary grading work was halted after voters passed the Coastal Zone Conservation Act in 1972 that limited building along the California coast.

Grading began anew and was completed in 1975 once the building permits were obtained, but no additional work was done for years because the developers ran into financial difficulty.

Lifetime Communities, a partner with the Balboa Bay Club, bought out the development in 1978 but had to go back to the coastal commission for new permits because the old ones had lapsed.

Then the project was sold again--this time to development concern known as Hamilton Tarnitzer in partnership with Daon Development. Daon eventually took control of the project but suspended construction from 1982 to 1984 after high interest rates weakened the company. BCE Development assumed control of the building and development work last year.

Intense Campaign

The job of selling Hamilton Cove, 1987-style, and redoing its image fell to a Palos Verdes Estates promotion company headed by Bryan Hardwick, a longtime real estate marketing executive in Southern California. It was, in effect, an effort to turn lemons into lemonade.

“The project had failed badly, and everyone knew it,” Hardwick said in an interview in his office.

What resulted was an intense, $700,000 advertising and sales campaign that lasted several months and targeted people in some of the toniest areas in Los Angeles and Orange counties. The campaign climaxed in early August with a two-hour lottery that resulted in $14 million in sales on condos priced from $200,000 to $350,000.

Several elements threatened to make the project a tough sell, Hardwick said.

For one, he noted, Catalina has not had an in-crowd image since the 1930s, when it was a playground for some of Hollywood’s biggest names. These days, the evidence of Hollywood is limited to lesser known actors, one of whom is island resident Richard X. Slattery, who plays “Murph” the gas station man in Unocal television commercials.

Promoters felt compelled to persuade prospective condo buyers that there was more to Avalon than what meets the eye on a summer afternoon. As an internal marketing plan prepared by Bryan Hardwick Associates noted:

“We must overcome the ‘day-tripper’ image--that Catalina is a place for people to come in the morning, buy an ice cream cone and a T-shirt, wander around the island and then go back that evening on a boat. These people cannot afford to stay overnight, much less buy at Hamilton Cove, yet they are the primary tourists on the island.”

Among other “marketing disadvantages,” according to the study, is the fact that the condos are on leased land. The property is owned the Santa Catalina Island Co., which owns most of the island.

In addition, the study pointed out, the condominiums are on hillsides with steep staircases “that may discourage some of the older buyers.” Local antipathy and the lack of fresh water on the island were other disadvantages listed by the report.

But the project has equally strong draws, the report said, including an island location that makes it unique along the California coast. Other attractions include boat moorings and a feeling of remoteness unusual for weekend playgrounds in Southern California.

Avalon Face Lift

“We looked up and down the coast for a place to buy,” said Earl Brooks, a well-traveled island devotee and wealthy Pasadena businessman who wants to build a $1-million home in one of the future phases of Hamilton Cove. “This reminded me of the . . . Greek islands. It had that kind of appeal.”

Some see the rebirth of Hamilton Cove as part of a general face lift going on in Avalon, which now has better restaurants, a spruced-up waterfront shopping area and a luxury bed-and-breakfast inn that has a majestic view of the harbor.

“If anything,” City Manager Longley said, “Hamilton Cove is symbolic of the rejuvenation of Avalon.”