New Owners to Remake Aliso Creek Inn

Among Laguna Beach’s 20 hotels, Aliso Creek Inn may well be the lone holdout to lack flatscreen TVs in its suites. In two of its 62 rooms, guests still dial on rotary phones. Reviews on Tripadvisor alternately rave about its unspoiled natural splendor or rant about smelly, dated accommodations.

Now, restoring the hidden but shabby gem with its canyon view restaurant and challenging nine-hole golf course is in the hands of new owners, led by local surf shop owner Mark Christy. “We’re honored and quite fortunate to be the new stewards,” said Christy, whose group is the fifth owner in 142 years.

“We love this place and respect what it means to the community. We’ll take good care of it,” promised Christy, who described a love affair with the natural setting that started in the ‘60s golfing with his father and brother. He recalled envying the evening walks of its third owner, the widowed Violet Brown, escorted from her creekside living quarters by Ginger, a St. Bernard.

Not surprisingly, golf fans and conservationists are eager to learn plans for the 80-acre property, known as Laguna’s little Yosemite.

“As redevelopment of the site commences, it will be important to preserve the canyon’s vital natural resources, scenic vistas, water quality and Laguna character,” said Derek Ostensen, president of Laguna Canyon Foundation, an open space advocacy group. He expressed optimism in Christy’s adhering to values sensitive to the environment and local attitudes.

“Everyone is supportive of a successful business here,” said Ostensen, noting, though, that Aliso and neighboring Hobo canyons were identified in a biological inventory as Laguna’s most highly valued habitat because of its diversity.

Blues artist and local resident John Heussenstamm, practicing on the putting green, voiced a practical lament. “I’d hate for the new owner’s to jack up the price; that’s probably everybody’s fear,” said Heussenstamm, who favors the $22 twilight rate. Weekend rates at the course are $39.

Christy says considering options for restoring the existing property are only starting. “We have no timeline and nothing is definite,” he said.

After months in gestation, the deal by the private investment group Laguna Beach Golf & Bungalow LLC closed last week for undisclosed terms. The seller, Aliso Creek Properties LLC, whose principles include investors in Montage Hotels and Resorts LLC, purchased the property in 2004 from Violet Brown. She managed the property for 30 years after the death of her husband, Ben. Locals still know the place as Ben Brown’s. The property’s history dates back to 1871 when homesteaders George and Sarah Thurston staked claim to the site.

Golf & Bungalow LLC paid $19 million – a figure Christy disputes — for the property, according to Alan X. Reay, president of Irvine’s Atlas Hospitality Group, which specializes in hotel sales. “The price doesn’t make sense on current rates,” he said, referring to the hotel’s $159 to $299 room rate, but reflects a bet by investors that they can either reuse the property by adding more rooms or renovating and raising rates.

Montage’s investors paid $17.6 million for the property, Reay said, unsuccessful at realizing their redevelopment plans. After a public furor, the investors ditched a plan to expand the course to 18 holes into the bordering Aliso Wood Canyon Wilderness park. Amid the recession, in December 2009 they withdrew an ambitious redevelopment plan to remake the flood-prone property into a high-end conference center and spa with tee-close homes along the course and estate-sized homes along nearby Driftwood Drive.

In 2005, such a project was projected to take five years to realize, but throw off $6.4 million in assorted tax revenue, compared to $890,000, John Mansour, an executive of Athens Group, developer of the Montage, projected at a town hall meeting at the time.

Christy likened the plan to developing a state of the art ballpark in Boston within historic, revered Fenway Park.

“We’re looking forward to restoring the existing buildings and giving them a fresher, lighter twist, something that says Laguna,” he said, while remaining in the current footprint.

No plans for Aliso Creek have yet surfaced in the city’s planning department, said planning manager Ann Larsen. “I think it’s way too early.”

Updating the current structures may not require a coastal development permit, which would require Coastal Commission approvals, she said. To comply with the city’s flood-zone ordinance, though, improvements can only be made up to 50 percent of the market value, excluding costs for building code upgrades, she said.

Such makeovers can require investors with longevity. For example, revamping Santa Barbara’s El Encanto, a historic 77-room hotel, took nine years and $1 million per room, Reay pointed out.

But for investors “who fall in love with a property,” he said, even a 20-year horizon to recoup their investment isn’t too long.