Caruso Affiliated LLC announced Tuesday that it has paid off its Miramar Hotel property loan and a nearly $1.4 million mitigation fee.
The California Coastal Commission requires a Santa Barbara County mitigation fee to pull a building or demolition permit.
Funds will go toward improving Santa Barbara County Parks Department public beachfront accommodations, according to Rick Caruso of Caruso Affiliated, which purchased Miramar’s $52.5 million note in 2007.
“Despite the challenges of today’s economy, we are optimistic about getting closer to the day we will be able to welcome guests to the new Miramar,” he said in a news release.
The estimated $170 million luxury Montecito hotel project has been delayed by lack of financing. The Santa Barbara County Board of Supervisors recently added one year to Caruso’s permits and agreed to study a new Hotel Incentive Program that would provide tax rebates.
The county would generate $1.7 million annually in property taxes and $1.5 million in sales taxes, Caruso representative Rick Lemmo said at a Montecito Association Land Use Committee meeting. The suggested 10-year transient-occupancy tax rebate, available to new luxury hotels like the Miramar and some renovations, would help speed up the process, Caruso representative Matt Middlebrook said.
“There are no luxury hotels being built from the ground up,” Middlebrook said. “Look at the Bacara — people are buying fully built hotels for substantial discounts. That’s where the money is going, rather than ones built from the ground up.”
Some in the community support the incentives, arguing that the decrepit property is not currently generating any bed taxes, and its construction would stimulate the economy. Dissenters disagree with the idea of the county subsidizing a private developer.
Caruso will demolish the existing buildings immediately if the HIP program is adopted, which would cost $3 million, Middlebrook said. But even with the tax rebate, some still doubt its construction.
“It’s basically undevelopable given the political climate,” Seth Ludwick of Pacific Southwest Realty Service said. “It would be great to see property developed, but it’s expensive and a headache to develop it. I don’t think it will happen.”
The Miramar had served as a historic Montecito luxury hotel since 1876, but in 2000 it closed its doors for renovations that never materialized. Caruso is the third owner trying to revive the hotel after hotel magnate Ty Warner became frustrated with the difficulty of developing in Montecito.
Prior to Warner, Studio 54 co-founder Ian Schrager gave up his goal to develop the property because of financial difficulties.
“While there were unavoidable delays due to uncertainties in the economy, the steps we have taken to pay off our loan and to pay the county the mitigation funds further demonstrate our long-standing dedication to this project and to this community,” Caruso said.