Homesteading In Pioneer Square -- They Rescued An Old, Rundown Hotel And Now Enjoy Loft Living

UPON FIRST TOUR, THE majority of Dean Haugen and Bonnie McCallister's friends wondered if the couple had lost their minds. After all, the four completely trashed, water-logged floors of the turn-of-century State Hotel in Pioneer Square were so decrepit the most often-heard comment was: "Oh . . . this place is creepy!"

It was a completely understandable observation given the soggy state of affairs Haugen and McCallister faced back in 1990 when Jack Buttnick (a member of the property-rich local clan who - along with the late and legendary Sam Israel - owned most of the buildings in the downtown district) agreed to sell the former hotel and Gold Rush days brothel.

Luckily, the squalor hadn't completely obliterated the building's historical appeal, including the deep bed-frame grooves etched into the wood floors by long-ago residents Haugen delicately refers to as "the more active sporting girls."

The deal also included the antique landmark sign hanging over the First Avenue entrance that reads "Rooms 75 Cents," an advertisement the couple was soon to discover still generated occasional middle-of-the-night phone calls from club patrons looking for an unbelievably cheap place to stay.

But in the way of true dreamers everywhere, they went for the deal anyway, paying $575,000 for the entire "romantic" mess; the dried pigeon droppings were thrown in for free.

In the end, however, it was their pragmatic side that saw the project through. They hooked-up with a trusted financial partner, drew up plans to renovate the building one soggy floor at a time, and set the scene to deliver three floors of live/work rental space that would turn an ongoing profit - or at least enough of one to enable them to live rent-free in the fourth-floor flat they planned to design for their own use.

Above all, what they saw was the opportunity to transform the brick walls, the crumbling arches, the sagging 12-foot ceilings and the graceful but cracked windows into something beautiful. An extra half-million dollars of borrowed construction money and endless hours of sweat equity later they got what they wanted: a calm, fourth-floor oasis of Asian-inspired design for themselves and their 2-year old son, Rainier.

Furnished with a casually eclectic mishmash of Japanese antiques collected during their various Pacific Rim travel adventures, home-grown garage sale finds and original works of art "bartered for service" from local artists and merchants who happen to be friends, the flat is the culmination of a four-year process. With its open floor plan and bedroom loft space, the flat seems much larger than its 1,000-plus square feet.

They even took care to build in some nature: A curved interior staircase leads to a roof-top garden deck planted with bamboo and anchored by a crowd-size hot tub with views of Elliott Bay and the Smith Tower.

They also managed to pull off the rest of their dream. Today, the thriving New Orleans restaurant and bar occupies the renovated ground floor, seven flats of work/live space come next (most of which are currently occupied by Zombie, a team of virtual-reality game masters), plus there's that extra fourth-floor flat to lease.

"We're gamblers," laughs Haugen, when asked what prompted the already busy owners of the Pioneer Square-based PROVIDEO Productions to take on a project that took over their lives.

An electrician by trade and an architectural space designer by avocation, both Haugen and the former Asian textile-importer McCallister were long-time residential investors.

More to the practical point, both enjoyed getting their hands dirty. Having purchased (and sold) the International District's Panama Hotel prior to buying the State Hotel, they had some experience in what could go right - and wrong. The experience also made them painfully aware just how much work and hard cash it took to bring a historic building up to earthquake and fire safety code.

This time, when Haugen and McCallister went looking for investment partners, they turned to friends Karl and Linda Weiss. It was a decision that resulted in more than just a meeting of money and brawn, it resulted in a "roommate" situation no one had predicted. When the Weisses decided that they, too, wanted a home base in the building, it meant going back to the city to redo the construction permits to allow for three top-floor units instead of the planned two. Reluctant to repeat what had already been a delicate zoning dance, the partners decided to "share" one of the two city-approved units by designing a common entrance and a large central kitchen.

Having carved separate living/sleeping/bathroom spaces on either end of the 2,400-square-foot floor plan, the accommodation worked for everyone. It's a share situation Haugen says requires the same kind of delicacy as does a marriage, but in this case the "marriage" is helped along by the fact that neither couple is in residence full time.

Haugen and McCallister also have a home on Vashon Island, while the Weisses and their 6-year-old daughter, Leela, spend much of their time on their boat. Recently, the Weisses spent a full year sailing around the world.

The partners also shared another passion besides investment and renovation: art. Haugen and McCallister brought much of their Japanese collection to their part of the flat, while the Weisses brought their not-insubstantial collection of Chihuly glass, part of which resides on top of the shared kitchen cabinets. They also commissioned a "common area" interior window from Weiss' brother, renowned glass artist Dick Weiss.

Although each personal living space has a totally different design feel, Weiss and Haugen (but not necessarily their wives) were in complete agreement as to how to capitalize on the kitchen's nearly 700 square feet of shared open space: a pool table. Topped with plywood when it's time for one of their frequent community feasts, they decided it was the perfect complement to two identical black refrigerators, two sets of cabinets and two sets of cookware.

As for the building's most charmingly turn-of-the-century touch, there's no elevator up those four floors - just long, steep flights of stairs.

Victoria Medgyesi covers regional and national architecture, interior design and real-estate development trends. Benjamin Benschneider is a Seattle Times photographer.