Developer Scrubs $200-Million Condo Project in Downtown L.B.
A $200-million, 905-unit apartment and condominium project on the old Pike amusement park property has been canceled, surprising city officials who for years have tried to find a builder for the 10 prime ocean-front acres.
Dominion Properties Co. of Santa Monica, which had received city permission to build three condo towers in what would have been the largest residential project in Long Beach history, pulled out of the deal several weeks ago, said Dominion spokesman Tim Cameron. He declined further comment.
Redevelopment Agency officials said they had heard informally that the deal had fallen through, but the city Planning Department had not been notified.
“We had no knowledge of that,” said planner Bonny Lay, who had worked on the Dominion proposal. “I am disappointed.”
An attorney for Long Beach Amusement Co., which had intended to sell the Pike property to Dominion, said the project collapsed because a change in federal tax law forced Long Beach Amusement to renegotiate its agreement with Dominion after its original one-year contract expired in February.
The attorney, Michael McAndrews of Los Angeles, said other strong offers are already being considered.
“I’d say we’re close to a new agreement,” said McAndrews. “It is surprising the contacts and interest in it (have come forward) right away.”
In the works for 15 months, the Seaside Towers project had been seen as a centerpiece of city redevelopment because it would have lured hundreds of middle- and upper-middle income residents downtown to the $200,000 condos. No residential project has yet been built in the 421-acre downtown redevelopment zone, although several are on its periphery.
City officials consider the Pike site--south of Ocean Boulevard, between Pine and Magnolia avenues and adjacent to City Hall--one of the best in the city. It is attractive because it is the largest piece of real estate on the local coastline where construction is still allowed, Planning Director Robert Paternoster has said.
It has remained, however, mostly vacant land used for parking.
In explaining the lost deal, attorney McAndrews said a new tax law, which went into effect this year, would have forced Long Beach Amusement to pay capital gain taxes on the full price of the property at the time of the sale, even though it would not have received much of the sale proceeds for years. As a result, the owners required more money up front from Dominion, he said.
“Dominion could not find a way to change its plan to match this new law,” McAndrews said.
If all had gone as originally planned, the new tax law would not have been a factor, said McAndrews. The Planning Commission and City Council approved Seaside Towers promptly last fall, but an appeal for technical reasons by a single individual to the California Coastal Commission delayed final project approval and sale of the Pike land until after the new law had gone into effect, said McAndrews.
The City Council showed how much it wanted the project in late October, when it sidestepped a city ordinance that would have required Dominion to spend about $100,000 a year to maintain promenades, walkways and bicycle paths within the project. The council, noting that Seaside Towers would generate $2.4 million in city tax revenue, asked the Redevelopment Agency if it would maintain those public areas. The agency has routinely acceded to such requests.
Had it been constructed, the project would have included three residential towers, ranging in size from 27 to 31 stories, 166,000 square feet of office space and a 3,200-space parking garage.
Since 1979 at least three other developers have seriously negotiated for the site, owned by about 100 Long Beach Amusement stockholders, said McAndrews.
At first, Redevelopment Agency officials wanted luxury condominiums there to complement the office towers and hotels already being built. Condominiums are still preferred, but city officials have said they should be lower priced so downtown office workers might afford them.
