Developer Target of Criticism

MONTECITO —  The showdown was only minutes away, and there was an edge to the crowd. They filed into the school auditorium, made their choices among the bottled waters, the little wrapped mints, the Guatemalan roast and Costa Rican decaf, then settled into their seats.

There he stood, the target of their wrath: Ian Schrager, famed former owner of New York’s Studio 54, convicted federal tax cheat, millionaire hotel owner and, most important to this group, accused defiler of one of California’s most exclusive coastal enclaves.

He smiled out at them, jaunty in faded jeans, blue blazer, crisp white shirt with pen clipped just over the second button, a man prepared not only to listen but even to take notes. He nodded like a middleweight hoping for the best. “I’m ready,” he said.

It had all started happily enough in 1998, when Schrager bought Montecito’s landmark Miramar Hotel, whose blue-roofed cabins just off Highway 101 long symbolized a kind of funky California beach chic.

Montecito is old money and proud of it, a place of country roads and gated mansions where the 10,000 or so residents guard their privacy. It’s also new money and celebrity: Oprah Winfrey recently bought a $50-million estate.

The Miramar had always had a down-to-earth quality. In its 100-year history, guests have included Ronald Reagan, Hubert Humphrey and a mix of Hollywood names. But it was a place for ordinary tourists, too. No pretensions.

The hotel fit Montecito, and the community supported Schrager’s plans for a classy renovation.

The bulldozers arrived, century-old palms were uprooted, old bungalows were put up on blocks. Then, about 15 months ago, everything stopped. As time passed, the 13-acre site became the community eyesore, and the fate of the Miramar turned into the hottest issue in town.

The leading citizens of Montecito--rich, smart and a formidable match for any errant developer--had grown increasingly frustrated since work stopped. Schrager had betrayed them by halting construction without explanation, they thought.

It was Tuesday night, and the man who had survived a cocaine arrest, raids by the IRS, a federal prison term for tax fraud and a movie about Studio 54 starring Mike Myers had finally come to town to face them.

Dianne Pannkuk, president of the Montecito Assn., one of the community’s institutional guardians, opened the meeting the way she used to when she was negotiating contracts for the U.S. Defense Department--straight to the point.

“In the last year, no issue has been bigger than the future of our beloved Miramar Hotel,” Pannkuk said. “Its current appearance has been described as half correctional facility and half ghost town. That simply isn’t acceptable.

“This is a unique community,” Pannkuk said, affronted by Schrager’s failure to maintain the Miramar’s sprawling grounds.

“Most of us have gardeners who come at least once a week. We expect nothing less from you,” she told Schrager.

The Montecito Assn. was demanding that Schrager immediately hire landscapers to spruce up the perimeter of the resort’s grounds, and install a uniformed security guard on the property at least from dawn to dusk, she said.

“There has already been a major graffiti incident,” said Pannkuk, glaring pointedly at Schrager. “And transients have been seen in the area.”

This was Schrager’s cue. He stepped to the microphone. “I’m terribly sorry,” he said.

This owner of a chain of acclaimed hotels around the world, a man who had spent $50 million to renovate San Francisco’s Clift Hotel last year, told the crowd he had stopped the Miramar project for financial reasons.

He would immediately comply with the association’s requests, Schrager promised. In fact, he might start early on a planned sound wall along the property, shielding it from view until construction is finished. And he would pursue other short-term cosmetic fixes, he vowed.

Schrager denied rumors that he had run out of money or is trying to unload the property and make a quick profit by selling it to some other developer.

He estimated that he has spent $50 million so far on the property and will need to spend an additional $60million or so to complete the planned 213-room hotel complex.

And his original vision stands, he said: a seaside resort with an English cottage feel, facing the sea instead of the highway, surrounded by acres of gardens and orchards.

“I’ve got a lot of money in this. I still have that dream,” he said.

“First there was a softening of the economy,” he offered as explanation for all the delays. “Hotel occupancy rates were dropping. We had to be cautious. And then came Sept. 11, and everything stopped.

“But I am encouraged now,” he said. “The economy is improving. I have come here to ask you to be a little more patient with us.”

Schrager was on a roll. But it wasn’t enough for some of the 100 residents squeezed into the Montecito Union School auditorium on San Ysidro Road. Actress Eva Marie Saint and her husband, Jeffrey Hayden, helped lead the public scolding.

“Sorry doesn’t get it for me,” Hayden said. “You go back to New York and you drive in your limousine and you buy your tickets to the Met, and we have to look at that mudhole. It is your mistake we are having to live with.”

Responded Schrager, “I would ask you to believe a little bit longer. If I’ve lost your trust, I’m sorry.”

Rising from her seat, Saint quietly reprimanded Schrager for making himself impossible to reach during most of the past year, dodging their efforts to get the facts.

“I didn’t know what to expect tonight,” he said later. “I don’t know if this did any good or not.”

“I really don’t think we got any answers,” said Saint. “At least he was here. I give him credit for that. It took some courage.”