Thursday, July 19 , 2018, 6:28 pm | Fair 73º


Local News

Santa Barbara County Supervisors Grant Permit Extensions for Miramar Hotel Project

Board also will consider a new hotel incentive program; if approved, Miramar's developer says he's ready to proceed immediately with property demolition

The Santa Barbara County Board of Supervisors on Tuesday granted developer Rick Caruso a one-year extension of the permits for his luxury Montecito Hotel planned for South Jameson Lane in Montecito.

The board sweetened the deal by agreeing to study a new hotel incentive program that, if approved, would give Caruso a tax rebate worth millions of dollars.

The project has been stalled for years because of a lack of financing, and additional permits for the Miramar Hotel could be extended until 2015, according to county staff.

Matt Middlebrook of Caruso Affiliated faced some scrutiny from county Supervisor Janet Wolf. He came before officials last March asking for approval for a slimmed down project for which he said would be easier to find financing.

When asked Tuesday about the fact that the project still didn’t have funding, he responded, “It’s a fair point. We have been optimistic about the market turning and it hasn’t.”

But Middlebrook said the Miramar isn’t an outlier, adding that he’s unaware of a luxury hotel being built from the ground up anywhere in the country.

Rick Caruso also spoke Tuesday, acknowledging that it had been a frustrating process for both the community and his company. But Caruso compared the Miramar’s woes to that of the now-successful L.A. shopping center, The Grove, which he developed.

When the project was under way, the theater industry was slumping, and Caruso was forced to finance the shopping center’s theater himself.

“The theater today is the No. 1 theater in North America on a weekly basis,” he said.

Fast forward to the Miramar, and Caruso said he has negotiated with the bank holding the property’s $50 million note.

“We are prepared to pay off the loan, so the property will sit there free and clear,” he said.

With the property paid for and the transient occupancy tax being examined, he said the company will be able to make the case for financing for the project.

The motion on permit extensions passed Tuesday with a vote of 3-2, with Wolf dissenting and Supervisor Joni Gray abstaining, who said she was doing so out of respect for Supervisor Salud Carbajal and that she “had a very bad feeling about extending this.”

The Board of Supervisors also approved moving ahead on a hotel incentive program, which would provide a tax rebate and apply to luxury hotels in county unincorporated areas.

For new projects like the Miramar, a rebate of 100 percent of their transient occupancy tax was suggested for a period of 10 years. There would also be a partial rebate for certain hotels doing renovations.

Caruso approached county staff and requested that they explore incentives, according to County CEO Chandra Wallar. She said that as research progressed, “we became more and more convinced that a hotel incentive program would enable economic vitality.”

New revenues as well as the creation of construction and hospitality jobs would be among the project benefits, she said.

Middlebrook told the supervisors that if the incentives were approved, his company would be willing to move forward immediately with demolition of the property.

The county can’t compel Caruso to demolish the structures, which would cost the company $3 million.

Many of the dozen or so public speakers on Tuesday supported the incentives, while those who opposed it took issue with the county “subsidizing” a private developer.

“I’m troubled by this proposal. To give a rebate of TOT in this climate makes no sense to me,” Wolf said, adding that the county will have to come up with the money to pay for a jail at some point.

Noozhawk staff writer Lara Cooper can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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