Resort Plan a Hot Issue in Beverly Hills

It’s getting nasty in them thar hills -- Beverly Hills, that is -- as voters wrestle over a proposal to build a $200-million luxury resort hotel, public garden and parking garage in the ritzy commercial district known as the Golden Triangle.

The proposed development has dominated civic discourse for more than a year and prompted a big-bucks campaign that pits developers of the planned Montage resort against the equally posh Peninsula Beverly Hills hotel, which is investing heavily to defeat the project.

By the time voters go to the polls Tuesday to vote on Measure A, the two sides between them probably will have spent nearly $3 million on political consultants, precinct walkers, absentee-ballot mailings and other electioneering, interviews and campaign finance documents suggest.

With fewer than 7,000 expected votes hanging in the balance, that means the two camps together will have devoted about $420 to each vote.

The eight-story Montage project has percolated for years. The city and Athens Group, which plans to develop the project, in 2001 began talks on revitalizing a section of land between Beverly and Canon drives, just north of Wilshire Boulevard.

Last summer, a brouhaha erupted when anti-hotel forces sent out volunteers and hired workers to begin collecting signatures to put the issue on the ballot. The hotel’s developers in turn hired aggressive signature “blockers” to dissuade signers, and hapless Beverly Hills residents found themselves caught in the middle in grocery store parking lots.

“I’ve never seen this town so fractured,” said Barry Brucker, a school board veteran running for a City Council seat Tuesday.

Funding for the Yes on A campaign has come from Beverly Hills Luxury Hotel LLC, a partnership of Athens Group, private investors and Montage Hotels & Resorts, which would be the hotel’s operator. That partnership has so far contributed about $1.4 million toward the campaign.

Nearly all of the No on A side’s funding is coming from a real estate development company owned by the family that also owns the 200-room, five-star Peninsula Beverly Hills. Probity International Corp. has kicked in more than $968,000 so far to fight the proposed 214-room Montage, which would be topped by 25 luxury condos.

“It’s a question of basic fairness,” said Robert Zarnegin, Probity’s chief executive, whose four-story Peninsula, which opened in 1991, was built to comply with the city’s 45-foot height limit. “If we hadn’t gotten involved, the public opposition to this project wouldn’t have been heard at all.”

Planned as a destination resort, the Montage would feature a full-service spa, a signature restaurant, a rooftop pool and penthouse residences. The hotel would be designed in the classic Spanish Colonial Revival style found throughout the city.

The project has galvanized homeowner groups and others who fear that such a tall hotel would open the floodgates for other big projects that would change the city’s character and add to traffic.

Beset by an economic slump after the Sept. 11 terrorist attacks, Beverly Hills has been in a strong recovery mode for several months. A recent face lift of Rodeo Drive, which a few years ago was showing signs of wear, has pumped new life into the business district. Like other cities, however, Beverly Hills is looking for ways to beef up its coffers.

Montage opponents complained that city officials overstepped their bounds in negotiating with Athens Group on the project. As a consequence, the issue has overshadowed the race for three City Council seats.

Brucker, who was out canvassing for votes Tuesday evening, said all that voters seemed to care about was how he planned to vote on Measure A. (Although he said he hasn’t “endorsed” the project, he does plan to vote to approve it.)

The Montage would be developed on a combination of privately owned parcels and what is now a city-owned parking lot. The city would commit about $32 million to help construct the 1,172-space garage that would serve hotel guests and customers of nearby shops, restaurants and other firms.

Counting hotel taxes, parking fees and other revenues, Athens Group and the city say Beverly Hills would rake in from $5 million to $6 million a year from the project. That, they contend, would help provide funds for schools and fire and police protection.

The project has already been approved by the current five-member City Council, some of whose members participated in the initial negotiations with Athens.

Montage’s founder, chief executive and owner is 48-year-old Alan J. Fuerstman, who got his start in the hotel business as a part-time doorman at a Marriott in Saddle Brook, N.J. The fledgling company also operates the Montage Resort & Spa in Laguna Beach. Fuerstman’s friend Pierre M. Omidyar, the billionaire founder of EBay, is a passive but deep-pocketed investor in the company.

Montage recently sparked controversy in Laguna Beach, where it began amassing property and quietly exploring the possibility of building a championship golf course on a protected wilderness park.

Although residents have been largely satisfied with the way the luxurious but understated resort has blended into the landscape, environmentalists balked at plans to encroach on open space. In February, Orange County rejected the proposal.

Athens and Montage have assembled an impressive list of supporters for the Beverly Hills hotel plan, including many former City Council members and mayors. Both local newspapers have endorsed the project.

But two former mayors -- Robert K. Tanenbaum and Richard A. Stone -- recently published a four-page open letter to the community, urging voters to defeat a project that they contend is financially unsound.

They said the city has understated its investment by failing to include the appraised land value -- $14.6 million -- of the city-owned parking lot.

The letter went on to discuss the annual interest the city would have to pay on its $32-million portion, which it would borrow at a rate of about 6%. Servicing that debt, they said, would cost $2.5 million a year for 25 years -- a cost that hasn’t been explained adequately to voters.

And, they said, the city has agreed that it would not receive its full projected revenue until the third full year after the hotel was built and operational, on top of a construction period projected to take as long as five years.

Beverly Hills’ voters have found themselves pulled this way and that. By now, however, it’s likely that most have made up their minds.

“This is a very prime piece of dirt,” said Larry Larson, a Beverly Hills attorney who opposes the project, “and this is the worst deal that the city has ever done in its history.” If Measure A goes down to defeat, he said, the city could renegotiate and come up with a better package.

Rona Leuin, interviewed Tuesday on Rodeo Drive, said she has already cast her absentee ballot in favor of the hotel.

“I’m always in favor of more hotels and nice restaurants for events,” she said. “I’d just as soon patronize my own city.” Still, she said, she found it tough to swallow the amount of money being spent to sway voters. “It’s unbelievable,” she said.

Times staff writer Kimi Yoshino contributed to this report.