When dirt starts to move on the Miramar Hotel project in Montecito next year, the region’s newest resort will help usher in a new era in hospitality products — smaller, niche-oriented properties that are priced for a wide range of budgets.

The Miramar, along with Fess Parker’s Waterfront property, which is now under construction on Cabrillo Boulevard, and the $20-plus million remake of the soon-to-be-renamed Royal Scandanavian Inn in Solvang all point to a new phase in the evolution of the region’s tourism industry.

These smaller hotels take a cue from the change in economic times. Parker’s property, which took a decade to get off the ground, will be about 150 rooms and it will share meeting space, restaurants and other services with the larger Fess Parker’s Doubletree Resort across the street. The Chumash tribe’s plans for the 130-plus-room Royal Scandanavian include more amenities but also a family-friendly getaway for families from Los Angeles or the Silicon Valley.

For Los Angeles Developer Rick Caruso, it took a year and a half of wrangling to finally hammer out what he wanted: approval to rebuild the Miramar Hotel in Montecito.

In a 4-1 decision Dec. 9, the Santa Barbara County Board of Supervisors denied two appeals challenging the Montecito Planning Commission’s October approval of the project.

With the green light to step out of the courtroom and into the construction phase, Caruso is eager to get started. “We’ve got a lot of drawing to do a lot of engineering to do,” he told the Business Times while driving back to Los Angeles after the court’s decision. “We’re hoping that the appellates that we had up there don’t try to stop the project any further with any more lawsuits.”

After buying the hotel 20 months ago to create a luxurious resort on the 16-acre site at 1555 S. Jameson Lane, Caruso got caught in a web of legal proceedings in mid-July when the Montecito Planning Commission couldn’t forge a consensus. Opponents, including “Seinfeld” star Julia Louis-Dreyfus, complained the project was too large. At one point in August, he asked the commission to reject his plan so he could sell the property.

Construction on horizon
But with the credit crunch looming and buyers in short supply, he was locked into the project, so he revised his plans to meet the community’s calls for a scaled-down resort.
Caruso said barring any more legal setbacks, construction is set to start fall of 2009 with a tentative opening in fall of 2011.

Caruso Affiliated’s final design includes a 192-room luxury hotel, with three restaurants, a spa, beach club, ballroom facilities and a beachfront boardwalk along Miramar Beach. Initially, he had proposed 204 rooms, a taller main building than finally proposed and lighted tennis courts. He also expanded the buffer separating the project from South Jameson Lane.

“It’s a great project, it’s well designed, it’s well thought-out, it’s in keeping with what the community wants,” said Caruso, chief executive officer of Caruso Affiliated. “The community was very, very involved in the project and it’s been studied to death on every aspect of it and I think the superior court recognized that.”

He noted that the Montecito Association, Montecito Planning Commission and the board of supervisors “have all endorsed a project. We’re very proud of that.”

Caruso Affiliated officials have said the developer spends about $1 million a month on the Miramar for such expenses as security and maintenance, taxes, legal costs and planners. They said Caruso will have paid some $300 million by the time the project is finished.

The Miramar’s doors closed on Sept. 10, 2000 to begin renovations and was set to reopen about 18 months later. More than eight years have passed and the hotel still sits vacant on one of the most valuable beachfront properties in Southern California.

Caruso purchased the Miramar in January 2007 from Beanie Baby tycoon Ty Warner, reportedly for around $40 million.

Caruso Affiliated is known for developing high-quality outdoor retail properties such as The Lakes at Thousand Oaks, The Promenade at Westlake, The Commons at Calabasas, The Grove in West Los Angeles and The Americana at Brand in Glendale.