Oct. 20, 2009--CAPITOLA -- After 61 years, the empty Capitola Theater may be ready for a wrecking ball.

Barry Swenson Builder, which would like to build a hotel at that location 150 feet from the beach, has applied for a coastal permit to demolish the building at 120 Monterey Ave. The Capitola City Council plans a public hearing Thursday night on whether the building is a local historic resource and if the demolition permit should be granted..

"Some people might think it is historic," said Mayor Bob Begun. "I don't."

The property is owned by a Barry Swenson Builder partnership. The current assessment is for $2.9 million, down from the purchase price of $3.75 million listed by the county assessor.

When Swenson bought the property three years ago, city officials expected a hotel proposal from the San Jose-based developer. Councilman Kirby Nicol said a hotel would bolster the city as a destination vacation location.

That same year, Swenson became a partner in the project for a hotel at the city-owned Rispin Mansion. Then the economy took a nosedive, and a suspicious fire damaged the vacant mansion at the end of May, a few days after the Rispin hotel project gained city approval.

On July 29, city building official Dan Kostelec issued an abatement order, noting the theater's location below a grove of eucalyptus trees created the potential for a serious fire.

The order termed the building hazardous because of inadequate seismic reinforcement,

dilapidated electrical, mechanical and plumbing systems and mold.

Kostelec said the building leaks and contains aspergillus and stachybotrys. Both molds can cause health problems.

In a letter to the Barry Swenson partnership, Kostelec said leaving the building vacant "is not an adequate level of mitigation." He gave the owners 60 days to repair or demolish the structure.

Swenson determined it would be cost-prohibitive to repair and reinforce the building.

"The hotel idea has been the idea all along since the site was purchased," said Chris Ferrante of Barry Swenson Builder. "The first thing is to get site cleaned up, then move forward on design."

She added, "I have not heard one peep about historical significance of the building."

The family-owned cinema enjoyed a 48-year run, treating generations to second-run films at bargain prices.

Audrey Jacobs, a Stanford University graduate whose father and uncle opened the theater, was the manager until she turned 72.

She sold the theater in 1995, saying it was too hard to compete with multi-plexes.

A developer's hotel proposal flopped, but Papken and Claire Der Torossian turned the theater into a venue for lyric opera productions until they found the building too costly to maintain.

Although the theater is a local landmark, it is not on the National Register of Historic Places or the California Register of Historic Resources.

Made of cinderblocks, the building has some elements of architectural modernism but "is not particularly fine or unusual example of that style," according to San Jose consultant Robert Cartier, who noted it is adjacent to the historic site of the Capitola Hotel, a 160-room establishment destroyed by fire in 1929.

"Definitely it's a local historic resource but there are other factors," said Capitola historian Carolyn Swift, citing the safety and mold issues. "There's not a future for it as a theater. Unfortunately the city doesn't have anything in place to judge historic resources so all we have are opinions."

Gary Wetsel, owner of the Paradise Beach Grille on Capitola's Esplanade, doesn't mind if the theater is demolished.

"It's prime real estate in the village I'd love to see developed," said Wetsel, who heads the Capitola Village Wharf and Business Improvement Association. "The consensus is a hotel would be a welcome addition. The space and height is going to dictate what is acceptable."

Swenson has already met with village residents, and has scheduled meetings with the city's traffic and parking commission, also headed by Wetsel, for November, and with the business association in December.

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