Hopes and Fears for the Miramar

It was a funky, blue-roofed landmark, a remnant of Southern California’s clapboard-sided beach culture and a time when surfers really lived at the water’s edge and drove woodies.

Almost a year ago, the century-old Miramar Hotel closed. In its final days, a procession of guests paid respects to the old resort, one more time sharing mediocre food in the dining car, bedding down one last night in the scruffy guest rooms that smelled of suntan lotions they don’t make anymore.

But it wasn’t to be the end of the Miramar, said the new owner, hotel impresario Ian Schrager. It would just be the end of its hippie adolescence. A brand-new, 21st century Miramar would reopen by the end of this year, he said, its acres of baking asphalt replaced by gardens and its face turned not to noisy U.S. 101 but properly to the sea.

That was premature, it turns out. What remains of the old resort now lies dormant. The lobby building has been demolished, cottages are up on blocks and the grounds are dug up. Locals say work stopped eight months ago. A scribbled note recently appeared outside the bungalow that Melchiori Construction Co. uses as an office: “Please fix this,” it read. “You have a Montecito treasure in your hands.”

Catherine Lee, executive director of a citizens group called the Montecito Assn., said she did not write the anguished note, “but I’ll bet you one of our association members did.”

“We’re unhappy and disappointed nothing has happened,” Lee said last week. Her group took a tour of the construction site several days ago to find out what’s going on.

They are not the only ones concerned. The inactivity has raised a flurry of rumors that Schrager is in financial trouble, that he’s selling the Miramar and even selling his entire hotel group in Europe and America to an Arab sheik.

“It’s an issue because no one wants to see it sit there for years,” said Steve Cushman, an executive with the Santa Barbara Region Chamber of Commerce.

Schrager, the high-flying entrepreneur who gained fame and then notoriety operating the Studio 54 nightclub in New York, said the rumors have no substance. “Plans for the Miramar have not changed,” Schrager said through a spokeswoman. “But the process is longer and more complicated” than expected.

His representatives say hotel financing became harder to obtain after the economy dipped. There also have been problems locating all the underground services to the old cottages. And Schrager’s Clift Hotel in San Francisco has occupied his attention.

The Clift has now opened to good reviews, new financing is almost in place, and the bills are being paid, Schrager’s associates say. “I know people have been concerned up there,” said Michael Overington, president of Ian Schrager Hotels. “But no, we’re not selling anything. We’re fully committed to moving forward, and we’re on the verge of getting started.”

Rumors started after the heavy equipment stopped rolling earlier this year. A publication in New York mentioned that Schrager was in talks with a rich Arab.

“My understanding is [Schrager] put out an offer on all properties, including the Miramar,” said Cushman.

Lee said neighbors have become more concerned as time has passed and nothing seemed to be happening. “It kind of makes you sick,” she said. “It’s been a jewel, a tired jewel, but now it’s dead.”

Cushman said he heard that problems began when construction bids came in much higher than expected. The project is expected to cost about $65 million.

Another apparent factor is that Schrager has never done a property like the Miramar, with multiple buildings. “I need 90 permits,” said Overington, referring to the complexity of the project.

When the demolition began, builders discovered that pipes were not where they were expected. And then the dot-com economy crashed, and money for big hotel redesigns dried up.

As for the rumored Arab sheik, a source close to the project said there is nothing unusual about venture capitalists inquiring about properties. “They get 10 to 15 calls like that a month.”

Overington said he hopes to get work started again within 60 days, aiming for an opening in 12 to 14 months. In fact, he said, work never stopped; it was going on inside the cottages.

Lee said she believes the Schrager folks want to be good neighbors. She also feels better after touring the site and hearing the continued assurances that the builders remain committed to a first-rate project.

Overington said he is receptive to the neighbors’ worries about the treasure next door. “I respect everyone’s concern,” he said. “I wish more communities were so proactive.”