Treasure Island’s new owner

Barbara Diamond

Treasure Island has had four owners and three name changes since

development as a hotel was first proposed.

Laguna Beach Resorts LLC announced Friday that a partnership of

Montage Hotels & Resorts, The Athens Group and private investors had

purchased the 30-acre, oceanfront site from Marriott International Inc.

for a reported $190 million.

Newly-formed Montage Hotels and Resorts will operate the resort, now

to be called Montage at the Laguna Beach Colony.

The sale was signaled by a request in May from Athens Group to revise

the development agreement to read that the ownership could change as long

as the resort was operated as a five-star luxury resort, as defined by

Smith Travel Research.

Montage at Laguna Beach Colony will be the first hotel owned by

Montage President Alan Fuerstman, according to Ned Snavely, Fuerstman’s

community liaison. Fuerstman was formerly vice president of the Bellagio

Hotel in Las Vegas.

“I am delighted to have this property as the Montage flagship,”

Fuerstman said. “This resort will compliment the beauty and aesthetic

sensibilities of this coastal retreat and community.”

Laguna Beach Resorts LLC is the first collaboration between Montage

and Athens Group, which continues to oversee the development.

“Since we came here seven years ago, we have come to know and

understand the host community of Laguna Beach,” said Kim Richards,

president of Arizona-based Athens Group. “Montage Hotels & Resorts joins

us in our commitment to be a contributing citizen.”

Athens Group has come to know Laguna Beach the hard way, in a series

of confrontations that included both critics and supporters of the

project. A divisive special election affirmed the City Council approval

of the proposed project. The development agreement was challenged at the

California Coastal Commission hearing, prompting some changes.

Even the council members who supported the project came into conflict

with the developer, when spiraling costs of the public park on the site

were made public. The swath of bluff-top open space is to be called

Treasure Island Park, the original, and still generally used name of the

30-acre site, which for 60 years was a mobile home park. The city will

pay for the park by deferring bed taxes. Projected bed taxes from the

260-room hotel could reach $3 million a year, which the city does not

have to share with the county or the state. Property taxes also will

benefit the city, as well as Laguna Beach Unified School District, which

is funded primarily by the taxes, rather than state.

Sales taxes from visitors’ excursions to city shops, restaurants and

galleries also will swell city coffers.

Sales of the 14 residential lots and 14 condominiums on the site will

begin this fall, according to the press release, which announced the sale

of the property. Private investors in the new partnership were not named,

but are rumored to include the owner of the e-bay Web site, who also

reportedly owns luxury hotels in Europe.

History:

1988: Treasure Island Mobile Home Park was purchased in 1988 by

Treasure Island Associates, a partnership of Laguna Beach resident

Richard Hall and a Merrill Lynch Real Estate Trust known as MHL VI.

1991: The city passed a rent-control ordinance. A referendum

overturned the ordinance.

1994-95: The city issued a conditional-use permit to close the mobile

home park and approved a relocation assistance program.

1996: Park tenants filed a lawsuit against the closure.

1997: Treasure Island prevailed in the lawsuit.

1998: The city approved the Local Coastal Plan modifications requested

by the California Coastal Commission to the development agreement.

1999: Project critics gathered enough signatures in January to qualify

a referendum on the city’s approval. The referendum was held in April

and the city’s approval was upheld by a 55 percent majority of the

voters. Five Star Resorts, a partnership between Marriott International

Inc. and Athens Group purchased the site in August. The city approved a

development agreement in September.

2000: The city approved in February a coastal development permit for

the project, which included a hotel, condominiums, single-family homes, a

public park and public parking. Project critics appealed the permit terms

to the Coastal Commission. The appeal was denied in June, but some

modifications were made to the plans for the project. Both sides claimed

a victory.

2001: Project opponents asked the commission to revoke the permit in

January. The request was denied in February.

2002: Spiraling park costs put the city council and a lot of residents

in a fit this spring. No cap had been put on the costs, despite the

recommendation of City Manager Ken Frank. But no one had anticipated that

the costs would escalate from an estimated $2.5 million in 1999 to more

than $9 million by 2002. Frank refused to agree to more than $5.75

million and an auditing company was hired. The park costs were set to go

to arbitration when Athens Group proposed in May a reduction in its

estimates and a cap. In return, the company asked for a revision in the

development agreement that allowed more flexibility in the ownership. The

council approved the revision and the cap at the June 18 meeting. The new

ownership was announced June 20.

Information, courtesy of Athens Group.