Transformation ahead for funky old Leucadia

By: ADAM KAYE - Staff Writer | Saturday, September 3, 2005 11:09 PM PDT ∞

ENCINITAS ---- First there was Noah's Ark. The customers came two by two, to partake of food and beverage in the biblically named restaurant by the beach.

Then by Volkswagen bus arrived, and hippies began to dwell in cottages on "hippie hill."

Now, inevitably, come the developers, who have planned a 126-room hotel on the former restaurant site and a 26-unit time-share resort at the loamy knoll across the Coast Highway.

Both sites have been vacant for decades.

While developers say their projects will enliven the city's northern entryway, some residents of the Leucadia community are less excited about the inevitable transformation and air of affluence it will bring.

Leucadia is nothing if not funky. Many cling dearly to the ecclectic character of their neighborhoods and commercial district, and some residents say high-end hotels and time shares just don't mesh.

"It's horrifying when you see the lack of design sense or connection to the community," said Ron Ranson, a longtime resident. said. "At the end of the day, we're left with oversized buildings that are insensitive to our funkiness."

Is this funky?

A case in point, he said, is a planned hotel with 200 slots of underground parking. The hotel would occupy a perch atop a bluff, overlooking South Carlsbad State Beach and Batiquitos Lagoon.

Officials from KSL Encinitas Resort Co. said last week that they expect to begin construction in the fall of 2006.

To prepare the hotel site, heavy equipment would chew away some of the hill where wooden tigers, elephants and camels once marched toward the restaurant and trailer court called Noah's Ark. Both closed in 1960.

Just east of North Coast Highway 101, hippie hill also would be excavated to make way for underground parking and a complex of two-story buildings. The planned time share is called "Surfer's Point."

'Ain't gonna happen'

Decades ago, a collection of cottages and buses cluttered the property. The buildings reportedly came from an exposition in San Diego.

Once relocated to Encinitas, the exhibit called "Midget Village" quickly deteriorated, recalled Fred Caldwell, a longtime resident and owner of a nearby antique store.

"It was really run-down," Caldwell said. "Flea-infested buses, a million dogs, there was a goat ---- once when my car was stolen, that's where the police found it."

The cottages were all painted differently, and as a whole, the compound earned monikers such as hippie hill, the leper colony and psychedelic motel.

With the hippies, dogs and goat long gone, the Planning Commission last Thursday approved Surfer's Point, a time share first proposed in 2000.

The approval paves the way for construction to begin in spring of 2006, said developer Dan Reedy of Surfer's Point LLC.

Caldwell alone raised objections to the proposal, which drew dozens of opponents to a 2002 hearing. Some of them said the project was appalling and insensitive to the beach community's roots.

On Thursday, however, Planning Commissioner Lester Bagg brushed aside nostalgia as the panel voted 4-0 to approve the project.

"People in this town kinda wish those hippie shacks would go back up," Bagg said. "That ain't gonna happen."

Money questions

Reedy says his project would pump revenue into city coffers.

That project, and the nearby hotel, represent Encinitas' first new hotel rooms in more than a decade.

The projects would add 152 rooms to Encinitas' inventory of 670 rooms at 15 hotels that are subject to a 10 percent transient occupancy tax.

That's a 22.7 percent increase in taxable rooms.

At the time shares, the city has required that at least seven of the 26 units remain available as hotel rooms.

Also, the city has ordered that time-share owners may not occupy the units for more than 30 consecutive days, meaning that those stays also would be subject to city transient occupancy taxes.

Those taxes totaled $791,000 in 2004-05, said Jay Lembach, city treasurer, and 2 percent of that revenue is set aside for sand replenishment at city beaches.

Reedy says visitors to his project would spend $1,400 a week at restaurants and stores in Encinitas, but opponents have challenged that claim.

That's because motorists leaving the resort can only turn right onto the Coast Highway, toward Carlsbad.

"It takes about four miles before you can make a U-turn and come back to Encinitas," Caldwell told the Planning Commission. "All the revenue's going to Carlsbad."

Reedy says Encinitas would be a more convenient place for visitors to eat and shop, however, and that the resort would encourage its guests to travel south, not north.

"Make no mistake," Reedy said of the planned, $11 million resort. "This is an Encinitas project."

The sands of time

So is the nearby and yet unnamed hotel planned by KSL Resorts, said William Dodds, senior vice president of development for KSL.

KSL also owns La Costa Resort and Spa in Carlsbad and Hotel del Coronado in San Diego.

For more than a decade, developers have eyed the 4-acre, bluff-top site for a hotel. A previous landowner, Sports Shinko, secured city approvals for a hotel in 1992.

The Japanese company that once owned the hotel site and La Costa Resort and Spa delayed construction in the mid-1990s because of a recession.

Later, under KSL's ownership, a public stairway that climbs from the beach to the hotel site was completed in 2003. The state Coastal Commission had ordered the developer to provide beach access to the public.

Hotel opponents have said construction could weaken the bluffs and that years of delay have rendered environmental studies obsolete. Those voices, however, have been all but silent since the hotel's approval more than a decade ago.

Of dollars and sands

While the hotel plan itself remains unchanged, KSL officials say they now plan to sell the hotel rooms as "limited occupancy" condominiums.

That means prospective owners would pay up to $1.5 million each for rooms they could occupy for no more than 90 days annually. Under an agreement, owners also would stay no longer than 25 days within a 50-day period, Dodds said.

During the remainder of the year, hotel agents would rent the rooms ---- for $400 to $600 a night ---- and owners would collect a share of 50 percent.

"It will look, operate and feel just like a hotel," Dodds said.

Equity secured by individual owners is needed to secure financing for the planned resort, he said.

Banks and lenders have favored owner participation for hotel financing since the tourism slump that followed the terrorist attacks of Sept. 11, 2001, Dodds said.

Changing the ownership structure requires the Coastal Commission's approval because it represents a change from earlier proposals, and the hotel's application should come before the commission in November, said a staffer from the agency's San Diego office.

The application also includes a request to place 60,000 cubic yards of sand excavated from the hotel site onto the beach.

While several agencies have approved the sand proposal, a final one ---- the Army Corps of Engineers ---- must review and approve sand samples from the site for its granule size, color and other attributes, the Coastal Commission staffer said.

Councilman James Bond last week said the "opportunistic" sand would be a windfall for city beaches.

"We've worked our way through all of those permits," Bond said, "and I'm not aware of any fatal flaws."

The sand plan has not prompted public controversy.

As hippie hill and the hotel site are carved away, however, anxiety over the northern gateway's transformation and that of Leucadia overall is bound to increase.

"Unfortunately, I think Leucadia is done," said resident Rachelle Collier. "Oh well, (we) will try to enjoy it while it lasts, and then where will we go?"

Contact staff writer Adam Kaye at (760) 943-2312 or akaye@nctimes.com.