City Holds Firm on Proposed Resort at Mobile Home Park

Long before residents were evicted and mobile homes were abandoned in favor of more grandiose plans, Lucy and Desi found Treasure Island.

America’s first sitcom couple filmed their 1954 movie, “The Long, Long Trailer,” inside the white and green coach parked on spot 113 of the South Laguna mobile home park.

The trailer, like the rest of Treasure Island, is empty now. The ice plant, bougainvillea vines and hibiscus hedges are the only other remnants of life on the park’s 30 acres, which have been shuttered for about six months.

But the property’s western edge reveals what enchanted Hollywood: a stretch of coastline that is described only with superlatives.

“You’d be hard-pressed to find a better-looking site in Southern California,” said John E. Montgomery, assistant director of community development in Laguna Beach. “It’s breathtaking.”

Hollywood used the panoramic ocean views to film movies for decades, including the 1937 version of Robert Louis Stevenson’s classic book that gave the mobile home park its name.

Now, Wall Street is charmed by Treasure Island.

Merrill Lynch Hubbard Inc., the New York investment firm’s real-estate subsidiary, which bought the mobile home park in 1989, wants to transform it into a $100-million luxury resort with a five-star hotel and villas. The plan also includes million-dollar home sites.

The Laguna Beach Planning Commission is reviewing the proposal, and the City Council is expected to vote on it within weeks.

Although the project would add about $1.8 million in bed and property taxes a year to the city’s $20-million general fund, it isn’t gliding through the approval process. City officials have leaned on Merrill Lynch to increase the resort’s size and reduce the number of homes. Even after several years of wrangling, some council members said recently that the potential tax windfall won’t sway them.

“We support a project,” Councilman Wayne Peterson said. “Whether it’s this one, we’ll see.”

Environmental groups and other opponents charge that the resort would be overdeveloped and too commercial for the postcard setting.

“We prefer public uses for the property, and that means no houses,” said Becky Jones, a vice president at Village Laguna. “We just have a serious problem with it.”

About 10 acres of the site would be used for the resort, which would include a 100-room hotel and 25 villas. The privately owned villas would be rented as additional hotel rooms when the owners were away. Other parts of the resort open to the public would include a restaurant, bar, spa, banquet rooms and a bluff-top park. The likely hotel operator is Dallas-based Rosewood Hotels and Resorts, which runs The Mansion on Turtle Creek in Dallas and The Lanesborough in London, among eight other luxury hotels.

The remaining 10 acres of development space would be allocated to 37 home lots, some of them on the bluff with prime views.

Another luxury oceanfront resort is under consideration just a few miles north, at Crystal Cove State Park, between Laguna Beach and Newport Beach. A group of shoreline cottages, some of which were built in the 1920s and ‘30s, would be refurbished and rented for overnight stays for as much as $400 a night.

The original Treasure Island proposal was for a gated, high-priced housing development, which was rejected by the city, residents and the California Coastal Commission. The city pushed for a hotel because of its revenue potential and because it wouldn’t tax other city services, such as schools.

With hotel room rates estimated at $300 a night and the city’s bed tax at 10%, Laguna Beach could collect nearly $1.5 million a year in bed taxes from Treasure Island.

Some of the project’s details remain unacceptable to a few city officials and elected leaders. They would like to see the hotel built before the houses, and more acreage reserved for the resort.

And some council members are concerned that a developer has not been selected for the project. Once Merrill Lynch sells the project to a development firm, it may want to change the plan that city officials have spent years finessing.

Such issues are more than details to Paul Freeman, the council member who has shown the most interest in shaping the resort. Last March, when Freeman was mayor, he and Frank, the city manager, flew to New York to urge Cuneo and others at Merrill Lynch to scale back the residential portion of the project, among other issues. At that time, 268 homes were being proposed by the property owner.

Freeman said he is interested in Treasure Island’s potential to make money for the city and enhance its reputation.

“We don’t have a truly world-class destination, even though we truly are a world-class destination,” he said.

The council will not have the final say. The Coastal Commission, which also must approve the project, could hear Treasure Island’s application as early as April, but probably won’t until June, officials said.