McCarty Sues in Effort to Revive Hotel Project : Development: He seeks to invalidate vote on beach complex, saying the state has jurisdiction. The city says restaurateur agreed to abide by the decision. : SANTA MONICA

Restaurateur Michael McCarty has filed a lawsuit against the city of Santa Monica claiming that, despite being turned down by voters last year, he still has a valid contract to build a luxury hotel on the beach.

The lawsuit, filed Thursday in Santa Monica Superior Court, seeks to invalidate two 1990 ballot measures in which voters rejected his or any beach hotel project, on the grounds that local voters do not have a say on what is built on state beach property.

“Everyone assumed the election was a valid way of deciding this,” McCarty attorney Howard B. Miller said. “It turned out the voters don’t have the right to affect the use of state land. . . . Put most directly, the 86,000 voters of Santa Monica cannot bar the other 29,760,210 citizens of California from appropriate uses of state-owned beach.”

Santa Monica City Atty. Robert M. Myers disagreed, saying that because the city controls the beaches within its boundaries under a long-term lease with the state, the Santa Monica electorate has the power to decide the matter.

Even if a court found otherwise, Myers said McCarty would still be bound by the contract he and his partners signed. “They consented to the voters being the decision-makers when they signed the contract,” Myers said. “I think this will be a slam dunk for the city.”

McCarty was selected by the city to develop the property after a spirited competition, and poured millions into the design of the proposed hotel at 415 Pacific Coast Highway--the site of the now-closed Sand and Sea Club. Early last year, however, the project got caught up in a wave of slow-growth sentiment.

At a public hearing on the proposal in the summer of 1990, McCarty, owner of Michael’s restaurant, said he would abide by the will of the voters. He planned to build a 160-room, $300-a-night luxury hotel that would have generated $3 million annually in taxes and fees for the city, including $1 million for the beach fund. As part of the proposal, McCarty agreed to build a $12-million community center and to pay the center’s operating fees.

The hotel package was narrowly approved by the City Council, but was resoundingly rejected by voters in November, 1990.

The city took the position that that was the end of it, but McCarty filed a claim against the city. In September, charging the city had not lived up to its lease agreement and was usurping state authority, he persuaded lawmakers in Sacramento to intervene on his behalf.

With a lobbyist’s help, he was able to get a proposal for the state to take back the property tacked on to a parks appropriation bill. It was passed the legislature, but Gov. Pete Wilson vetoed the bill.

City Atty. Myers, in a pointed reference to McCarty’s promise last year that he would accept the voters’ decision, said, “By filing this lawsuit Michael McCarty is indicating he lied to the people of Santa Monica (and) is a man of no integrity.”

McCarty’s lawsuit contends, however, that he--and city officials--were merely mistaken in concluding that Santa Monica voters had any say in the matter. Attorney Miller contends that the city has gone beyond its administrative authority as outlined in the lease, which does not grant local voters the right to make policy about state land.

Miller said there continues to be interest in the outcome of the dispute in Sacramento. The state zealously guards its jurisdictional rights over state-owned land, he said. State entities such as the UC system are not subject to local zoning and land use regulations, he noted.

Miller said McCarty’s goal is to move forward with the hotel. Alternatively, the lawsuit seeks unspecified monetary damages from the city to recoup the developers’ investment.

Myers, who dismissed the lawsuit as “frivolous,” said he would seek to recoup the city’s legal fees from McCarty if the city prevails.

Since the membership-only Sand and Sea Club was evicted from the Pacific Coast Highway property, the city has renovated the club house and made it available to civic groups, and it is for rent for private events. The paddle tennis courts and the parking lot are open to the public and a moderately priced restaurant, Back on the Beach, is in business.