DOOMED BEFORE BIRTH: There are a million stories in the Naked City, and about 1,500 of them involve the doomed and domed four-story complex of five-star mondo-condos known as Chapala One, located at the cursed crossroads of Chapala and Gutierrez streets. None, to date, have had happy endings. None will. In the latest chapter, a Santa Barbara jury concluded last week that Chapala One developer — and car dealer — Don Hughes was guilty of stiffing construction mini-mogul Mark Melchiori to the tune of $5.8 million. Most damning, the jury ruled Hughes could not hide behind the veil of his corporate shell, and that he be held personally liable for the debt. That’s huge. I have no idea what Don Hughes is really like, but in court, he emerged as a cross between Benito Mussolini and Martha Stewart, an arm-waving, petty dictator whose quest for aesthetic perfection lead to no less than 8,000 design changes after construction started. When Melchiori first bid on the job, he said he could do it in 14 months for $18 million. By its glitzy grand opening in 2008, construction of Chapala One cost about $35 million. It was more than two years late. And with total costs running closer to $60 million, the project managed to be upside-down and underwater at the same time. The economy had tanked, and suddenly there weren’t a lot of people interested in $3.5-million penthouses. The lender initiated foreclosure proceedings. In the meantime, $6 million in bills didn’t get paid, precipitating a daisy chain of grief and pain that was left to a jury — on which Independent photographer Paul Wellman stoically and heroically served — to apportion blame and responsibility.
Thrown to the Dogs
Bill Levy, the Former Boy Wonder of Santa Barbara Real Estate…
Thursday, May 19, 2011
Hughes tried to argue that because the lender and the title company paid the subcontractors $3.7 million and Melchiori $2.3 million that Melchiori suffered neither harm nor foul. He would have done better to argue that the property was jinxed and that he was yet another victim of the Bill Levy curse. He might not have prevailed, but it would at least be truthful. Levy, for the uninitiated, was a charismatic wheeler-dealer in this town for decades with a true genius for getting impossibly oversized projects approved but, somehow, never built. He also had a genius for spending investors’ money faster than it came in, which might explain the inordinately large number of lawsuits filed against him over the years. It was Levy who suckered Hughes into the deal in the first place. Hughes knew nothing about land development, but his family owned the old car lot next to the old labor hall on Chapala Street that Levy had bought. Levy bought the hall as part of a brilliant patty-cake deal that got him both political and investment capital from organized labor for his now infamously bankrupt (and un-built) Entrada project along the bottom of State Street. The bad juju involved in transforming a union hall for working stiffs into luxury condos for gazillionaires should now be obvious, but at the time, it was somehow overlooked. (With union support for Entrada, Levy managed to secure the endorsement of then-Assembly Leader Bob Hertzberg in Sacramento, who instructed his appointees on the Coastal Commission to give Levy a green light and ignore the wailing and wanking of Santa Barbara enviros trying to block the project.)
By combining the union hall and the Hugheses’ car lot, Levy and Hughes would build something grand and glorious. But when Levy’s house of cards at Entrada collapsed, Hughes found himself in the driver’s seat at Chapala One. By any reckoning, the successful car dealer had no idea how to drive it. Initial plans for the property were decidedly grandiose. But then city planning commissioners Bendy White — now on the City Council — and Bill Mahan pushed to make the project even bigger as part of a deal to move it further away from Mission Creek and to include more affordable units than were legally required. Once construction started, the buzz around City Hall suggested Hughes was a closet metrosexual run amok. He was obsessing over design details to an unheard-of degree. The project was stuck. As construction malingered on, Hughes’s personal eccentricities became a matter of public and political concern. His festering project was freaking people out. The project looked way too big. It overwhelmed. Chapala One quickly became Public Enemy Number One in what escalated into a ballot-box battle over Santa Barbara’s sacrosanct city skyline and new, stricter building heights. Longtime friends and allies within the Democratic-slow-growth camp found themselves seriously estranged over this debate. Ironically, both White and Mahan — partially responsible for the offense given by Chapala One — would emerge as key supporters in the campaign to reduce allowable building heights. It was during this campaign, two years ago, that reclusive Texas real estate tycoon — and onetime Santa Barbara resident — Randall Van Wolfswinkel burst onto our political scene, spending $700,000 to support the height restrictions and also to take over City Hall while he was at it. The sheer size of Van Wolfswinkel’s wad — coupled with the over-the-top nastiness of his ad campaign — backfired badly. In the short term, the height-limit measure got creamed. In the long term, friends who had been merely estranged became permanently embittered. The personal scorching that Councilmember Grant House endured at Van Wolfswinkel’s hands has everything to do with why conservatives now control Santa Barbara’s City Council for the first time in 25 years.
House, a card-carrying bleeding-heart liberal, gave the conservatives their majority by breaking with his own bloc and voting to appoint Randy Rowse to fill Das Williams’s seat. House worried at the time — erroneously — that White would break ranks first and vote to appoint planning commissioner and former mayor Sheila Lodge. Because Lodge — normally a solid liberal — had been tight with Van Wolfswinkel over building heights, she was viscerally unacceptable to House. All this might seem like X-treme insider baseball. But it’s exactly why our current council is poised to gut all kinds of recreational and after-school programs so it can spend $2 million the city doesn’t have to hire 13 additional cops we don’t need. If you want to blame somebody for all this, blame Don Hughes. Better yet, blame Bill Levy. In the meantime, as you try to make sense of the Naked City, be sure to wear sunscreen.