After a two-year-long obstacle course, Montecito’s Miramar Hotel project cleared a serious hurdle April 7 when a Montecito couple dropped its lawsuit against developer Rick Caruso and his firm, Caruso Affiliated, allowing Caruso to move forward with construction plans.

Montecito residents Jean and Stan Harfenist, alongside Caruso, announced that they had reached an agreement in which the Harfenists withdrew an environmental California Environmental Quality Act, or CEQA, lawsuit they had filed against Caruso. Reached by phone, neither party would comment further about the announcement.

The Harfenists and several of their neighbors who live near the proposed Miramar Hotel also withdrew an appeal of the project they had filed with the Coastal Commission. The settlement includes an agreement calling for the parties to work together to improve the drainage problems at Oak Creek, according to the announcement.

“I am pleased that we have put this chapter behind us, and we can proceed with real planning for the hotel,” Caruso said in a statement. “From day one we have worked with the community to ensure that this is a good project for everyone, and our agreement today helps achieve that. I want to thank the Harfenists and the Miramar neighbors for working closely with us over the past several months to find a solution.”

The Citizens Planning Association also announced their withdrawal of a separate Coastal Commission appeal.

The Miramar Hotel has stood vacant since September of 2000. Caruso’s team bought the property two years ago to create a luxurious resort on the 16-acre site. But Caruso became tangled in legal proceedings last summer when the Montecito Planning Commission couldn’t form a consensus.

In October, the planning commission voted to approve the project. Two months later, the Santa Barbara County Board of Supervisors shot down two appeals challenging the decision.

The Harfenists also issued a statement about the April 7 agreement, saying they are “pleased that we have been able to reach a solution between the neighbors and Mr. Caruso. Throughout this process we have been supportive of a new hotel at this site, but we had concerns that we felt needed to be addressed. This agreement accomplishes that goal. It is a win-win for the entire community, particularly for our Oak Creek neighbors and for Hedgerow-area residents.”

In a December 2008 interview with the Business Times, Caruso said that barring any further hindrance by lawsuits, his firm hoped to start construction on the Miramar Hotel this fall and may open by fall 2011.

Caruso Affiliated’s final design of the property includes a 192-room luxury hotel with three restaurants, a spa, beach club, ballroom facilities and a beachfront boardwalk along Miramar Beach.

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