Lack of Progress on Hotel Tests Neighbors’ Patience

For almost a year now, the residents of this wealthy coastal community have been trying to resolve their most troublesome local problem with diplomacy.

But now, they say, the time for patience may be coming to an end. The new year could bring a new round of open hostility.

The problem is the lack of any tangible progress in the long-promised renovation of the Miramar Hotel, the blue-roofed landmark just off U.S. 101 that long symbolized Montecito’s casual chic.

New York hotelier Ian Schrager bought the Miramar in 1998, then started leveling it and tearing up its landscape. He was talking then about transforming the property into a seaside resort with an English cottage feel.

About two years ago, however, everything came to a stop. Schrager had money problems. And Montecito wound up with a giant mudhole and a half-wrecked hotel, instead of the classy renovation that had been promised.

There was a showdown last February, when Schrager, once the owner of New York’s Studio 54 and a convicted tax cheat, came to town to essentially apologize to Montecito’s moneyed and politically connected residents.

Pleading for patience, he told a crowd of about 100 angry residents that he hoped he could restart work in a few months.

“I would ask you to believe a little bit longer,” he said.

Diane Pannkuk, president of the Montecito Assn., one of the community’s institutional watchdogs, said she has been trying to do that ever since.

Schrager did deliver on some minor promises, Pannkuk said. A security guard was hired to patrol the abandoned grounds and keep transients away. A fence was erected to block the view. And the ugliest partly destroyed building visible to the public was torn down.

In addition, Schrager’s top aide, Michael Overington, began making himself much more accessible to local residents when they called for progress reports.

“They have been very responsive on the little things,” Pannkuk said.

In July, still citing funding problems, Schrager convinced both the Montecito Assn. and Santa Barbara County officials to go along with a proposal allowing him to rebuild the hotel in phases, instead of all at once.

That would help him obtain the money he needed to finally get construction underway again, Schrager said. Pannkuk’s memory is that Overington also said then that it would probably take four or five months to get things moving.

A former contract negotiator for the U.S. Defense Department, Pannkuk was moved to pledge in return that she would avoid any strong criticisms of Schrager until Jan. 1.

“I promised I would give them until then,” she said last week.

“The flip side is we still have a big hole in the ground. I think that meeting back in February bought him a year, but that year is coming to an end.”

Santa Barbara County Supervisor Naomi Schwartz has also tried diplomacy, but recent letters between her and Schrager show an increasing sense of frustration.

“I continue to be approached by constituents with concerns about the incomplete status of the Miramar Hotel renovation project,” Schwartz wrote Oct. 18. “The community is still waiting. When may we expect construction to begin?”

In response, Schrager avoided giving any specific timetable.

Stating that the economy has grown worse since his initial promises were made, he wrote back that “we are confident that we will secure financing if we are both persistent and patient.”

And with that, the supervisor’s own patience appeared to be fading.

“I was disappointed that your response was not more promising,” she wrote back in November. “I do think that it is important for you to provide another update to the community that incorporates more specifics and a tentative schedule to resume work on this project.”

Schrager’s response was that it is impossible to predict anything in the current economy, said John Davies, a Santa Barbara public relations executive.

“The impatience is well-appreciated,” he said, “but running out of patience is not going to help the situation. To try to predict any time frame now would be a huge error.

“Ian Schrager will get this done, but it’s simply going to take more time.”