One week it was Sausalito's venerable Alta Mira Hotel, repository of 50 years' worth of holiday memories. The next week it was the Alta Mira Treatment Program, offering in-house treatment for wealthy people wrestling with alcohol, drugs or other addictions.

At least that's how fast this fall's conversion of the Alta Mira felt to Sausalito city leaders, who say that they had almost no advance notice that one of the town's most renowned landmarks was being changed into an upscale rehab facility.

Sausalito officials allege that the Alta Mira's owners are using a state licensing loophole to sidestep the city's planning procedures, including requirements for a use permit and business license, and to avoid paying local business and transient occupancy taxes. The city's lawsuit claims that the separate state license applications depicting the 48-bed Alta Mira Treatment Program as eight independent facilities each serving six or fewer people is a facade designed to evade the city's jurisdiction.

Using the six-or-fewer-beds provision to set up larger rehab centers in residentially zoned areas is known as "clustering," and Sausalito is just the latest town to balk at this enterprising approach to creating highly profitable treatment facilities in desirable locations. Similar situations have surfaced statewide in the last decade, particularly in the Southern California coastal towns of Malibu and Newport Beach.

Proponents say residential treatment centers are desperately needed and shouldn't be stopped by local "not in my backyard" attitudes. Opponents argue that well-heeled property owners are using the six-bed rule to create for-profit rehabs without any local guidance or control, causing traffic congestion and other infrastructure problems while changing the nature of the residential neighborhoods where the centers are located.

The question being argued in Sausalito and elsewhere is whether for-profit residential rehab centers should be allowed to bypass the local planning and tax rules because of the important benefits they theoretically provide to the community.

Into the Light of Freedom

Meditation. Heart circle. Nutritional therapy. Sweat lodge. Adventure therapy. Labyrinth walk. Toltec wisdom group. Rebirthing. Blindfolded trance dance. Revolution coaching. These are some of the services the Alta Mira Treatment Center's website lists for "Reflections," its 14-day intensive program. The description for the 35-day "Life Recovery" session notes that art and movement therapy, yoga, massage and acupuncture are "provided throughout your stay to promote mind-body awareness and relieve distracting symptoms."

In addition to treatment for drug and alcohol abuse, the Alta Mira advertises residential help for those struggling with eating disorders, a situational life crisis (defined as passing from school-age to adolescence, from adolescence to adulthood, leaving home, getting married, divorced, having a baby, losing a job, beginning a career, etc.), post-traumatic stress, sexual addiction, compulsive gambling or Internet addiction.

Regardless of the addict's chosen treatment path, the center's promotional materials assure that "in the midst of the challenges that our personal journeys can bring, we . . . offer healing from highly trained professionals who guide you with wisdom, compassion and respect from the shadows of false beliefs and judgments into the light of freedom."

A 30-day stay costs $42,000 or more. Operating at just half its 48-bed capacity would mean grossing more than $1 million each month; full capacity would pull in more than $2 million every 30 days. Granted, overhead for staff and other amenities is undoubtedly substantial, but that's still a lot of monthly moolah. The city of Sausalito would like its fair share through taxes—to support infrastructure such as roads and emergency services—as well as a chance to lessen any impacts on the surrounding neighborhood.

Intent & Operation

A private residence was built on the Alta Mira site in the 1880s and later converted into a hotel. It burned down in 1926 and was rebuilt, then remodeled and enlarged starting in the 1950s. Its sweeping views of San Francisco Bay made the Alta Mira a favorite spot for wedding receptions, golden anniversary celebrations and other galas. The chocolate-brown and adobe-cream buildings are tucked into a hillside neighborhood where stately Victorians and 1950s beach houses stand side by side. Narrow, winding streets meander along the steep incline and intersect at odd angles. The views of San Francisco Bay are always gorgeous.

Michael Blatt bought the Alta Mira property in December 2003 and renovated it, reopening it in March 2004 as a 23-room bed and breakfast with a private dining facility. Blatt and his son, Raymond Blatt, apparently filed for multiple alcohol and drug treatment facility licenses from the state in September 2006, but didn't notify the city of Sausalito of the planned change until this August, just before the switch was made.

The Blatts could not be reached for comment. Candace Bruce, marketing director for the Alta Mira Treatment Program, declined to discuss the lawsuit for this article and turned down a request for a tour of the facility, saying it would be disruptive and raise confidentiality issues for clients already living there.

The treatment center's "campus" includes the hotel and its nearby cottages, plus several adjacent houses owned by the Blatts. In seeking to get the center to apply for permits that would force it to follow local zoning rules and pay local taxes, the city's lawsuit alleges that although the Alta Mira Treatment Center's eight license applications were filed using three different limited liability companies, all are ultimately controlled by the Blatts.

According to the lawsuit, each application shows Raymond Blatt as the contact person and each lists the same facility phone number. The paperwork attached to each application—a statement of goals, lists of activities and services, names and titles of key personnel—is identical, the city claims. Seven of the license applications say the facility being licensed will be called the Alta Mira Treatment Program; the eighth application simply calls it the Alta Mira. The city also alleges that the center's website originally advertised it as a 48-bed facility.

"In both intent and operation, the [Alta Mira Treatment Program] is a unified business operation providing services for up to 48 residents," charges the lawsuit. "It is the antithesis of the small –six residents or fewer' residential treatment program that state law mandates be treated like any other residence for purposes of local law."

The Alta Mira's license applications were properly processed under existing state rules says Lisa Fisher, public information officer for the California Department of Alcohol and Drug Programs.

"We are governed by a set of regulations and laws. The law requires us to license a facility if it meets state requirements. We have no authority to deny a license because of proximity, because it's close to another facility."

SoCal Woes

Clustered rehabs are unfairly sneaking around the rules, says Newport Beach city manager Homer Bludau. "They are taking advantage of a legitimate state law that says six and under should be treated like any family use."

Small facilities can choose to operate with or without a state license. With a population around 83,000, Newport Beach has about 26 licensed residential treatment facilities and as many as 80 to 120 unlicensed ones, Bludau says. He adds that they run the gamut from high-end, spa-like facilities to cheap "sober living" homes that aren't much better than flophouses. However, he estimates that the average cost is $2,000-$5,000 for a month of rehab services. Many are in side-by-side or upstairs-downstairs units that have separate addresses and therefore separate six-beds-or-less licenses, but are operated as one center.

Last April, Newport Beach approved a law saying any treatment facilities that are "operated integrally"—with separate addresses but shared services—must apply for a state license for seven or more beds. Any new facilities have to comply with this new requirement.

None has applied.

"People don't see a strong business model in a standalone six-and-under," Bludau asserts. "They see a strong business model in networked six-and-unders integrally operated. When Newport Beach put a cap on those, they stopped coming."

Bludau adds that one facility operator admitted that his center applied for an alcohol and drug license because it's the easiest one to get, with the least restrictions. A facility set up primarily to treat eating disorders, Bludau says, needs a congregate-living, health-facility license, which is more closely evaluated and monitored. Plus, congregate-living facilities have to be at least 300 feet apart. So a rehab center might start with an alcohol and drug license, then branch out to include other services, such as eating disorders, without bothering to apply for a separate license.

Bludau agrees it's important for a community to have sufficient drug and alcohol treatment facilities, but enough is enough.

"We need to accommodate the treatment needs of our residents and folks nearby, but we're at the point where we're accommodating folks from Ohio and Iowa. One of our major operators markets Newport Beach to Europe: –Come to sunny California and recover by the beach.' I don't think any community wants to be known as the recovery hub of the state or the nation or the world."

The clustering process worked a bit differently in Malibu, where multimillion dollar estates are scattered in isolated canyon neighborhoods of 20 to 30 houses. The rehabs moved in one at a time, buying first one million-dollar home, then the next and the next.

"The first one in the chain—if it's successful—tends to buy the house next door, and you end up turning a family residential neighborhood into a hospital zone. It fundamentally changes the nature of the neighborhood," says Mayor Jeff Jennings.

He adds that many of these neighborhoods are located on roads that don't meet today's safety requirements. "They're narrow and winding. In addition to the six beds in a home, you have counselors and staff and whatever, and that creates more traffic."

There's also the fact that many areas use onsite wastewater-treatment systems designed to handle the discharge from single family homes, not a cluster of rehabs each with up to six residents and all the associated staff and support services. The local infrastructure wasn't designed for the heavier load.

With a total population of some 13,000, Malibu now has 26 licensed alcohol and drug rehab facilities, but it's estimated that there are actually only about eight or nine centers, each with multiple licenses. Typically, a 30-day stay at one of these rehabs costs about $50,000, more than double the cost of a month's stay at the famed Betty Ford Clinic. The Grecian-styled Renaissance Malibu, a rehab by the sea started by a retired Pennsylvania dentist, bills $110,000 for 30 days in its master suite.

Jennings notes that Malibu officials have been watching developments in Newport Beach, which has been coping with "clustered" rehabs for a longer time. Now folks in both Newport Beach and Malibu are interested in what's happening in Sausalito, and whether it might spark new attention to what for them is an ongoing problem.

"There are a lot of reasons to take a fresh look at this issue," Jennings says.

"That's all we're asking, is that the state take another look at the situation."

Bed Count

There are 910 licensed residential treatment programs statewide, with a total of 21,000 beds or about 23 per facility. In Marin County, there are now 19 facilities (including the Alta Mira's eight separate licenses) with 316 beds or about 17 per site; in Napa, there are 172 beds at six licensed sites, or around 29 per; and in Sonoma County, it's 400 beds in 15 centers, or an average of 27 at each location.

When evaluating a license application, the state wants to ensure that the facility meets basic health and safety standards.

"What we're looking for is approved fire clearance, an alcohol- and drug-free environment, a facility that's adequate and clean," explains Fisher by phone from her Sacramento office in the Department of Alcohol and Drug Programs. "We're looking for measures that protect personal rights and that there are adequate opportunities for [physical and social] activities for the clients."

Fisher adds that while she can appreciate neighbors' concerns about treatment centers, the laws are clear. "If a facility meets the state requirements, we must license it, and we can't deny a license simply because facilities are in close proximity with each other."

But Sausalito mayor Mike Kelly argues that the eight Alta Mira Treatment Program applications bend the six-beds-and-under law just a bit too far. "We filed the lawsuit for the specific and sole reason that we believe they have violated our planning process by creating 48 units of drug and alcohol services."

The city, Kelly adds, doesn't oppose the creation of residential treatment facilities.

"It's not our intent to stop it. It's our intent to massage that law to make it what we think it was originally meant to be. Drug and alcohol rehab centers are important, but we don't want this abused."

More than 200 Sausalito residents turned out for an Alta Mira meeting state Sen. Carole Migden held in September.

It's one thing if you have one center in one neighborhood. It's a whole different issue when you begin clustering," says Tracy Fairchild, the press liaison for Migden's office.

The senator is working with state Assemblymember Jared Huffman to introduce legislation in January with a goal to stop the practice of clustering rehabs.

"Unfortunately, as far as we know right now there's nothing we can do to stop clustering that's already happened because it's allowable under state law," Fairchild explains.

"But we want to make sure that this doesn't happen in more neighborhoods."

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