PART I -- Club Route 66 Reaches End of the Road

By Jorge Casuso

Feb. 18 -- After more than a decade in the works, plans for Club Route 66 -- a 699-seat nightclub and restaurant that was to help revitalize the Santa Monica Pier -- have collapsed, spurring a nearly $23 million claim against the City and the Pier Restoration Corporation.

Filed by local developer Russell Barnard, the claim alleges $1,057,850 lost in "special and incidental damages" and $21,721,336 in "lost profit and opportunity costs and diminution in value" The losses are based on the full term of the 10-year lease with three 10-year options.

The claim -- which was filed on Feb. 4 -- lays the groundwork for a lawsuit and caps a 13-year process that has left a prime pier site up in the air and both parties passing the blame.

Barnard, who filed the claim after the third and final extension on his building permit expired in late 2000, charges that the City "materially breached" the terms of the Lease Agreement signed in 1993 "and committed other wrongful acts and omissions."

"I have no idea what happened," said Barnard, who owns Rusty's Surf Ranch on the pier. "It's dumbfounding. Who knows how long I would have been left hanging if the permit hadn't expired."

But former City and pier officials familiar with the lease and subsequent negotiations said it was Barnard who dragged his feet, in large part because he didn't have the necessary financing for the more than $4 million project.

"If he wanted to do something, he could have," said a source who asked to remain anonymous. "The Pier board wanted to see the project go forward. They wanted him to sh-- or get off the pot."

A week-long investigation by The Lookout provides an unusual glimpse of how a major development intended to pump cultural life into the pier can become snarled in red tape, leaving the prime site vacant and the City without a dime in rent.

While the developer and pier officials quarreled over the terms of the agreement, the project actually grew in scope with a go-ahead from the City Council over the objections of police and neighbors, who called the proposed 20,000-square-foot nightclub a "drinking stadium."

After nearly a decade, the old Sinbad's site is an empty lot and the only sign of development is some minor -- some say invisible -- substructure work that Barnard estimates in his claim cost a total of $45,000, including "estimation and value engineering."

City officials must now decide whether to reject the claim, accept it, or authorize a negotiated settlement, said Jeff Mathieu, the City's head of Resource Management, the division charged with overseeing the lease negotiations. The City can also file a counter suit, Mathieu said.

Whatever decision the council makes, the PRC board, which includes three new members, will have a clean slate to work with when they once again try to chart the future of the historic municipal pier.

"The PRC needs to determine what is the proper balance between open space and commercial space, and the site of Club Route 66 is crucial," said Bill Spurgin, who resigned from the PRC last year after serving a record 18 consecutive years.

***

In 1988, when the PRC board entertained bids for a project to occupy the site of the building that housed Sinbad's restaurant (which had closed its doors in 1973) and the adjacent American Grill building, Club Route 66 seemed to perfectly fit the bill.

Barnard's winning proposal -- which called for two buildings that would function as one structure -- would provide everything Pier officials were looking for. They wanted fine dining and live music, as well as a retail store and café, and they wanted the exterior of the main building to recreate Sinbad's old brick structure, which Barnard would tear down and rebuild at his own expense.

"That's exactly what we gave them," Barnard said. "We had all the necessary approvals. We've had the building permit in our hands since 1998. This project was done and ready to go."

Barnard had big plans, and they would grow even bigger with time. Club Route 66 would be much more than a restaurant on the Santa Monica Pier. It would be a franchise that included offshoots in Asia and the marketing of Route 66 paraphernalia (Barnard said he secured the rights to the historic highway's logo from the states of California, Arizona, Missouri and Illinois). He even lined up a station on Satellite TV that would be called the "Route 66 Dance Channel."

Rockenwager's, a popular upscale restaurant at the Edgemar complex on Main Street, would handle the food. The entertainment team would be headed by Ewart Abner Jr., a savvy black record executive who had originally signed The Beatles and Michael Jackson, and Matt Kramer, who partnered with Katharine King to book acts for the Twilight Dance series on the pier.

During the delays, Abner would die, Kramer would move to San Francisco, investors from Hong Kong would pull out and plans for a second franchise in the Philippines would fall through, Barnard said.

"It's a dead deal now," said Barnard, a local developer headquartered on Main Street. "My partners are no longer interested. You can only work on a project for so long, and we've been working on it for 14 years.

"We're not some Bubba Gump, some corporation," said Barnard, referring to the Paramount-owned chain slated to move into the old Boathouse building across from the Route 66 site. "We're the ideal operator."

In his claim, Barnard alleges that the City wrongfully refused to renew his building permit, which was originally issued in 1998; breached the terms of the contract; misrepresented the site boundaries and failed to refund the building permit fees after the permit was cancelled.

Key to the claim is the charge that the City failed or refused to perform required work to strengthen the pier's substructure and failed to put in writing "the fact that Claimant was now required to do some of the substructure work for the pier." According to the claim, the City promised to reimburse the cost, plus interest.

"Such promises and representations were false when made, known to be false when made, made without any intent to perform on the part of the City and/or the PRC," states the claim drafted by Santa Monica attorney Jeffrey Lee Costell.

Barnard said he began substructure work in good faith, expecting the City would follow through on its promise.

"The last few years I have been doing substructure work to keep the permit alive," Barnard said. "Three years ago they changed the lease to reflect the substructure and update the timing. They never came back (with it) in writing."

Barnard said the City dragged its feet while looking for a replacement for the staff member negotiating the lease, then delayed further while his replacement learned the ropes. When City officials finally got back to him, nothing was in writing.

Their only explanation, Barnard said, was, "I don't know what to tell you, Russ."