The Montecito Planning Commission received a report Wednesday from county planning staff concluding that Ty Warner Hotels and Resorts did not breach the conditions of approval for its 2005 renovation of its Coral Casino Beach and Cabana Club.

However, after hearing two hours of scathing testimony from club members, the commissioners unanimously sent staff to collect more information, particularly from members who were not interviewed for the initial report.

“You have been heard this morning, and I know staff here are taking notes,” Jack Overall, chairman of the commission, said after public comment.

Margaret Spencer, a member of the Coral Casino and its membership committee, said she recently took her 7- and 10-year-old daughters to enjoy the private club’s jacuzzi but found it overflowing with drunken men celebrating a bachelor party.

She said the Coral Casino club is now a shade of its historical use as a multigenerational gathering spot in the Montecito community with members’ children swarming the pool and teenagers in sand-covered wetsuits drifting in from the beach.

“The Raft (Restaurant) was filled with laughter, and games, and towels, and vibrant Santa Barbara soul,” Spencer said.

Many members claimed Wednesday that the restaurant was removed during the renovation without any notification from management.

After hearing public comment, the commissioners instructed representatives of Ty Warner Hotels and Resorts to meet with a subcommittee from the club’s member committee within the next 30 days. The Montecito Planning Commission, the management and members who attended agreed after a few hours of testimony that negotiation is still possible and remains the better path to take.

Bill Reyner, chairman of the club’s membership committee, said the commission’s decision to reject the staff report is unprecedented, and that “it’s as much as we could have hoped for. We’re very thankful for the commission’s concern about our community.”

At the heart of the members’ argument is that Ty Warner Hotels and Resorts has broken its promise to operate the Coral as a private club, increasingly encouraging Four Seasons Biltmore guests to use the pool, restaurants and lounge areas. Also a hot-button issue is whether management should consult the members on issues such as staffing, dues increases and membership applications.

Bill Medel, project development manager for Ty Warner, countered the members’ assertion that they had not been adequately consulted, citing monthly meeting with the membership committee. He said this is strictly a membership-owner issue.

“It’s not a perfect process, but we do meet and we do consult,” Medel said.

Dianne Black, county director of development services, agreed with Medel’s argument, adding that her understanding of consultation does not mean agreement or approval between the management and members.

James McGowan is among members who disagree with Medel.

“There is very little if any consultation that goes on,” he told the commission. “We have a very arrogant Four Seasons and a very arrogant owner, and it’s very difficult to make any progress with them.”

While there might be no requirement for member approval, Spencer said this line of thinking ignores the “good faith” aspect of the contract’s spirit. In other words, he said, Ty Warner Hotels and Resorts ignores the club’s place as a cornerstone of the community for business concerns.

Member James Barbabella said substantive consultation means that both sides should coming to a “reasonable” outcome.

Commissioner Michael Phillips asked member Michael Corgan why the members didn’t do enough to protect their interests when the Coral Casino’s renovation was in the planning process.

“Perhaps part of the problem was that the membership was too trusting,” Corgan said.

Commissioners and Deputy County Counsel Rachel Van Mullem also debated the commission’s authority to hear appeals of county staff decisions on the club’s type of permit — a coastal development permit. As the director of development services, Black has authority over enforcement of this type of permitting.

During the planning process for the renovation, the Coral Casino morphed from being governed under a conditional use permit, of which the commission has the control to revoke or change, to a coastal development permit, of which it does not. The commission would have no say to overturn a decision from county staff under Van Mullem’s interpretation.

Derek Westen, the attorney representing the club members, said Van Mullem failed to admit that there is a section in county law that allows all appeals that aren’t explicitly exempted.

“The loser is the commission, because it’s your authority that is being usurped,” Reyner said.

Medel would not confirm nor deny that the club’s management has failed to respond to concerns raised by the membership committee every month.

“There does need to be a time frame,” he said. “We are certainly committed to getting them any information they need.”

Ultimately, though, Medel declined chairman Overall’s request that a neutral mediator be involved in the coming negotiations with the members.

Noozhawk intern Daniel Langhorne can be reached at Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Become a fan of Noozhawk on Facebook.