The Ex-Mayor's Booby Prize

The Lusty Lady's not for sale, so he and some developer friends bought the sky above.

In the high-stakes game of downtown real estate, the tacky little building at 1315 First Ave. was surely doomed. A group of heavyweight developers, including a billionaire, a wealthy venture capitalist, and a former Seattle mayor, aimed their wrecking ball at Peaches, Kitten, Trixie, and the rest of the struggling dancers at the Lusty Lady theater. They and their nudie house were about to become the next victims of the condofornication of Seattle. Then the inconceivable happened: In a city where rapacious new development effortlessly bulldozes fading history, someone said no to money. Christto Tolias and his family, longtime owners of the century-old, mostly vacant structure housing Peaches and other strippers at the popular peep-show theater, refused to sell the property to ex-Mayor Paul Schell and his fellow hotel/condo developers.

An attorney with knowledge of the deal says the rejected offer was "several" millions of dollars. Stunning as that seems, Tolias made money anyway. Schell and partners in the new 21-story, $120 million Four Seasons hotel and condo tower at First Avenue and Union Street had to regroup, then make Tolias another offer—for air rights above the Lusty building. In the end, the big developers not only didn't get their prized property, they paid the defiant Tolias $850,000 for thin air.

"We think it's awesome!" says one of the Lusty Lady's managers, Debra, no last name please. Instead of leveling the three-story building, developers now must build out over the live theater and porn-video house, known for its racy, double-entendre marquee readerboard. Surrounded by scaffolding for some minor structural repair work, the nudie joint's marquee words could be interpreted as a victory proclamation this week: "We're Open Not Clothed!"

Tolias and his family partnership "was not interested in selling," confirms Roger Nyhus, spokesperson for the disappointed Seattle Hotel Group (SHG) that is erecting the new adjoining tower. Headed by veteran hotelier John Oppenheimer, the partnership includes Schell, cellular magnate Bruce McCaw, and investment whiz Tom Alberg. They had hoped to fit the swank new hotel/condo into an upscaled neighborhood that includes the new Washington Mutual skyscraper and an expanded Seattle Art Museum across the street. Now, the scruffy Lusty Lady will remain midblock on the west side, a stubby wedge between the new Four Seasons tower and the massive Harbor Steps condo high-rises to the south. And the strippers, among the last practitioners in Seattle's once-thriving First Avenue porn-house district, will stay on as the neighbors who walk around in the nude.

The Toliases' attorney, John Sinsheimer, says the family's motives to not sell are personal and financial. "They like the building. It's a good investment with a steady income stream," he says, "and they just wanted to keep it." Property records list the building's birth date as 1900 and the site's assessed value at $1.3 million. In latter days, the building is remembered as a seaman's bar and hotel called the Seven Seas (the upper two floors are empty but might be renovated for low-income housing). It became one of the city's first gay nudie theaters, the Sultan, before the Lusty Lady moved in 21 years ago. In a tip to good neighbor SAM across the street, the Lusty's lobby features original artwork, and the marquee often plays off art museum and other civic events. (Seafair: "Chicks Ahoy!" WTO: "Nude World Order." Holidays: "Happy Spanksgiving!") For discriminating consumers, the lobby also has a photo roster of dancers: Besides Peaches, Kitten, and Trixie, there's Havana, Kimchi, and Entropy, among others. Dancers perform fully nude on a stage surrounded by men—themselves occasionally partially exposed—in enclosed booths, dropping quarters into peep-show coin slots. Other booths feature dirty movies. It's a highly profitable skin business owned and managed by women. "All this new development going up around us, it's a nice thing," says manager Debra, "but we're just happy we are still here. This is a historical building passed down through the family over the years."

The Toliases issued a quitclaim deed for the vertical air rights in December, according to property and sales documents filed with the King County Recorder's office. A purchase agreement notes that the hotel group and Harbor Properties, which developed Harbor Steps to the south, went together on the aerial buy. (The purchase, no kidding, also comes with an annual government property tax bill for air—tab yet unknown, 82 percent of which SHG will foot.) The agreement allows SHG to extend such aerial structures as decks and balconies overhead. During construction, developers are not allowed to utilize the Lusty Lady building's roof or walls without permission.

SHG spokesperson Nyhus says the developers are nonetheless happy with their Lusty Lady booby prize—that expensive new sky. "Seattle Hotel Group was able to dramatically improve the south facade of the Four Seasons building by adding windows on the residential levels," he says of the structure that will eventually replace the Heliparker building now being demolished. The hotel/condo will be topped by a three-story penthouse rumored to be selling for more than $50 million. "This [air rights] purchase will also allow much more natural light for the Four Seasons residences," Nyhus says, "because most of the south facade of the building will have translucent openings." A high-scale peep show, you say? Now that's the spirit.

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