Why is beloved The Zephyr Club still abandoned and decaying?

Gil Sanchez was shocked when he heard The Zephyr Club, where he'd worked for a decade, would be closing. Today, having moved on to work at Piper Down for the past 12 years, he's "just disgusted."

When he drives by The Zephyr's abandoned, dilapidated shell on the corner of 300 South and West Temple, he said, "I just picture the days when I'd be going to work, and there'd be a line outside the door."

(Read more about The Zephyr Club's heyday.)

Former Salt Lake City Mayor Rocky Anderson added, "It's not only an eyesore, it's a lost opportunity to do something really fantastic in that area of our city."

So why is the building empty and decaying in a downtown district with high property values?

No one could have predicted this fate in 2003, when club owner Otto Mileti's lease was up and he decided to buy The Zephyr for $1 million. But Zions Bank said another buyer was interested and put the property up for auction.

The successful bidder, at $1. 6 million, was David Bernolfo, a descendant and heir of Utah Gov. Simon Bamberger, a wealthy railroad and mining investor.

Bernolfo could not be reached for comment, but he has made it clear that he'd like to demolish The Zephyr.

He first sought permission in 2003, asking to pave the site as parking lot, but the city said no. That summer, he did demolish the historic Stamp and Yabuts buildings on 300 South, but was denied permission to replace them with parking lots.

He has also demolished a boarded-up apartment building and a small strip mall near 500 East on South Temple; both were damaged by fires. Now, the dusty, fenced South Temple lot sits vacant. Bernolfo's real estate broker, Vasilios Priskos, said Bernolfo is waiting for the right development to come along.

The proposal to raze The Zephyr surfaced again in 2008, when the city was searching for a site for its new Broadway-style theater, now under construction on Main Street.

Bernolfo would have sold the city the parking lot behind the Peery Hotel, at 110 W. 300 South; as part of the deal, he would have gotten permission to raze The Zephyr and other buildings at the site, "one of the things David said he would love to be able to do," said Bill Becker, who led Mayor Ralph Becker's Downtown Theater Action Group.

Besides the lot at the Peery, Bernolfo owns parking lots east of Squatters up to Gracie's.

Before the city will grant a demolition permit, it must approve an owner's plan for reusing the property. And it prohibits new surface lots in the central business district, reasoning a lively downtown needs to balance businesses and parking.

Bernolfo's real estate broker, Vasilios Priskos, argued parking lots can be a boon to the city — they're being used, after all. And the ordinance actually hinders development, he said, reasoning that it inhibits competition, and parking rates go up as a result. Owners in turn have less reason to develop lots, and dig in their heels.

The Downtown Alliance also has questioned whether it might be better to allow some of the city's junkiest buildings, like The Zephyr, to be razed in favor of landscaped parking.

Read more: Developers, Salt Lake City clash over fees, parking rules

Mileti said he knows some blame Bernolfo for The Zephyr's demise, but he disagrees.

"Everyone wants to make [Bernolfo] out to be the bad guy, but he's not," Mileti said. "The club closed because the lease ran out and we just weren't ready to move, or spend the money to make the move."

Mileti had plans to move The Zephyr to a building on 500 West near The Gateway, but after the 1999 Salt Lake City tornado destroyed the would-be club, plans were halted. He owned another building, but wasn't prepared to fork out the cash to remodel and reopen The Zephyr.

Once, when he was thinking he should have done more with his life, Mileti's kids reminded him he had "one of the coolest clubs in Salt Lake."

Mileti now looks at The Zephyr as one of his great accomplishments.

He has no regrets: "I'm happy with our run of 20 great years."