Amendment Could Revive Beach Hotel Plans : Development: Proposal for Sand and Sea Club site was defeated by city voters. But a last-minute addition to a budget bill threatens to return the property to state jurisdiction.

Restaurateur Michael McCarty, rebuffed by Santa Monica voters last year in his effort to build a luxury hotel on the beach, has made a move in Sacramento aimed at reviving the project by returning the old Sand and Sea Club site to state jurisdiction.

Santa Monica officials have acted swiftly to try to thwart him.

McCarty’s move was in the form of a last-minute surprise addition to a state budget bill, which was passed by both houses of the Legislature last week. The amendment awaits Gov. Pete Wilson’s signature or veto.

McCarty’s plans to build a hotel and community center at the 415 Pacific Coast Highway site were derailed in November, 1990, when Santa Monica residents voted to block the project. The property, considered part of Santa Monica Beach, is owned by the state but managed by the city under a 60-year lease.

The City Council had previously approved a development agreement with McCarty for a 160-room, $300-a-night hotel and community center that would have generated $3 million in fees and taxes for the city, including $1 million for the city’s beach fund. When oppositionescalated, McCarty agreed to put the project before the voters.

The amendment affecting the beach property was inserted by Sen. Robert Presley (D-Riverside) in a budget bill for state parkland. Sacramento consultant Jeff Arthur, a former Presley aide whom McCarty hired to lobby on behalf of the project, said Presley offered the amendment at his request. McCarty declined to comment.

The amendment directs the State Department of Parks and Recreation to generate at least $1 million a year in revenue from the Sand and Sea Club site. Unless Wilson vetoes it, the amendment would set in motion the return of the land to state jurisdiction if Santa Monica fails to collect that amount.

A rationale is that if the lease is broken, the $1 million a year in revenue promised by the hotel to the beach fund would go to the state, not the city. Out of that, the state would have to assume about $500,000 in annual operating costs for the beach but would have a net gain of $500,000.

McCarty’s maneuver took Santa Monica officials by surprise, but they moved quickly and decisively to counter it after the news was relayed to them late Friday night by Assemblyman Tom Hayden (D-Santa Monica).

Santa Monica Mayor Judy Abdo convened an emergency City Council meeting Monday night at which a unanimous vote was taken to fight back by orchestrating a protest campaign to the governor.

A resolution passed by the council said the effort to retake control of the property would mean the state was reneging on the beach lease, which runs to the year 2006.

City Atty. Robert M. Myers told the council he believed that Presley’s amendment was unconstitutional because it violates a law requiring that bills passed by the Legislature be confined to a single subject. Myers also said that the state has no grounds to break the lease, and that the city would prevail in court if necessary.

But the council members agreed that the quickest and cheapest way to fight the amendment would be to persuade the governor to veto it. To that end, letters and a delegation will be dispatched to Sacramento. City Manager John Jalili was authorized to hire a community organizer to galvanize opposition.

Several residents who fought against the hotel last year testified at the council meeting, urging citizens to call or write Wilson to protest McCarty’s attempt to revive the project.

“This is one of the most outrageous and venal expressions of contempt for the democratic process that I have seen since I have been in office,” City Councilman Dennis Zane said.

Hayden said he has also asked Wilson to veto the measure. But Hayden contended that even if the governor signs the bill, McCarty’s chances of building the hotel are nil.

“If Michael thinks he’s going to build his hotel because of this language, it’s laughable,” Hayden said. “This had to be done secretly because it wouldn’t have had anyone’s support if it was done publicly.”

McCarty, contending that the city breached its agreement with him, has filed a claim for damages against the city, the required prelude to a lawsuit. Otherwise he had been quiet until last week’s surprise in the Legislature.

McCarty consultant Arthur contended that the state has ample reason to reclaim the beach land. Arthur said he questions whether Santa Monica voters have jurisdiction over what should be built on state land, even if the land is leased to the city. Generally, developments on state land are not subject to the local planning and approval process.

Arthur also noted that the hotel project, after being approved by the city last year, was written into the state’s General Plan for Santa Monica Beach. By rejecting the hotel, he argued, the city therefore violated the terms of its lease.

A spokesman for Wilson, James Lee, said the governor has not decided whether to accept the amendment dealing with the beach property.

Lee described the legislation containing as a “pork bill,” adding, “It contains the special projects for legislators passed at the end of the session.”

The governor will use his line-item veto power to retain the projects he agrees with and reject the rest, Lee said.

The city and the state have squabbled for years over what to do with the beach property. The Sand and Sea Club occupied it for 30 years, but in recent years the arrangement was frequently criticized because it generated only $250,000 a year in rent and because, as a private club on publicly owned land, it ostensibly violated state public access laws. The club was evicted in October, 1990, shortly before the voters rejected the hotel project.

According to Assistant City Manager Lynne C. Barrett, some portions of the property, such as the parking lots and paddle tennis courts, were almost immediately opened to the public. A restaurant has been open since December.

Barrett said a $300,000 renovation project to bring the facility up to code and install access for the disabled is nearly complete, after which it will be open to public meetings, community groups and available for rental to private parties.

Meanwhile, the exterior of the club has been used for movie and television location sets, including “Beverly Hills 90210.”

BACKGROUND

Michael McCarty, owner of Michael’s restaurant in Santa Monica, was chosen by the city in 1987 to develop a hotel and community center on the site of the Sand and Sea Club. Although smaller than four other beach-hotel projects the city had approved in the previous two years, the McCarty project came under attack as a symbol of overdevelopment as it neared final city approval last year. The City Council gave the final OK, but in response to the clamor, McCarty agreed to submit the project to a voter referendum and said he would abide by the outcome. In November, Santa Monica residents voted 62% to 38% to block the project.