Pomona Council Members Urge Caution : Trade Tower Idea Faces Skeptics

A proposal to build a $90-million world trade center complex as part of an effort to revitalize the downtown has aroused increasing skepticism from City Council members.

Some council members have urged city administrators to take a cautious approach as they negotiate terms under which the city would provide some of the financing if the project is approved.

Concerns have also been raised by the director of planning for the port authority in Long Beach, where plans for a world trade center have already been approved, and real estate developers who question whether businesses would rent office space in Pomona.

H. Thomas Felvey, president of Urbanetics Inc. of Los Angeles, wants to build a 12-story office building with 220,000 square feet of rental space, a hotel, a theater for touring groups, restaurants, a product display area and an exhibition hall.

Under his proposal, the city would become a kind of business partner in the venture by paying for construction of a $13-million parking garage with 1,200 spaces, providing $1.5 million for a promotional campaign and obtaining a $5.2-million loan from the Department of Housing and Urban Development. Urbanetics said that it has spent $1 million of its own money for planning and attorney fees.

“There are some uncertain elements about the total project,” said Vice Mayor Mark Nymeyer. “I don’t want an albatross in downtown Pomona.”

Mayor G. Stanton Selby said he generally favors the project, “but I’m not going to sell the city out for it.”

Felvey is undaunted by the newly raised concerns and still believes that Pomona is an ideal location for a world trade center.

He said the center will be an economic boon to Pomona. “The fiscal impact is rather extraordinary,” Felvey said. “In the first 10 years, the city will reap $37 million in taxes. If they (city officials) acknowledge the fact that they’re in the epicenter of the fastest-growing region in the country, something of this size will happen--whether today or tomorrow. They have to realize that they are part of an international environment.”

Urbanetics said it hopes that office space will be rented by international trade brokers and companies seeking headquarters for heavy machinery manufacturers, electronics firms, high technology and aerospace industries, large warehousing firms and multinational companies.

Such business would attract law firms, insurance agencies and other ancillary services, the developer has said.

The company would like to build the project on what is now empty land as the cornerstone of an effort to reverse the decay that has plagued the downtown area for years. Urbanetics, a Los Angeles real estate development firm, is involved in the restoration of historic buildings in Los Angeles, including the old Broadway department store at Hollywood Boulevard and Vine Street and the former Pantages theater at 7th and Hill streets. The firm also has proposed construction of a $210-million world trade center in Oakland.

Last December the council gave Urbanetics the exclusive right to develop the 4.6 acres on the northwest corner of Mission Boulevard and Garey Avenue after the firm approached the city with its plan. Since then, the city’s redevelopment agency and the developer have been negotiating the terms of a financial agreement.

The council, which is acting as the redevelopment agency for the project, is expected to decide in the next two weeks whether to extend the guarantee under which Urbanetics has exclusive rights to develop the land. In recent interviews, council members expressed concerns about the city’s financial risk and the decision by a Dallas realty and investment firm not to help find some of the private financing.

The Dallas firm, Pacific Realty, informed the city last month that it would not take part in the project, although Urbanetics had hoped the firm would help find private financing. “We believe that the project has great promise; however, it does not fit well with our long-term corporate strategy,” a Pacific Realty vice president said in an Aug. 13 letter to Mayor Selby.

“I guess I would have to say this is a temporary setback because the negotiations had gone farthest with them,” Community Development Director Sanford A. Sorensen said. “But I don’t think their lack of interest makes the project any less feasible.”

“The heat’s on Mr. Felvey now,” said Nymeyer. “If he wants the project to go he’s going to have to come up with the financing. The ball’s in his court.”

Felvey said the decision by Pacific Realty was not a financial setback and that negotiations with private investors will produce the necessary backing. He said he has other candidates, but he refused to name them.

“Pomona is a great location, but the problem is money,” Selby said. “We don’t want to overextend ourselves.”

Councilwoman Donna Smith, the council’s most vocal critic of the project, said she is worried about committing redevelopment funds to the project.

“We need some guarantees,” Smith said. “We don’t want to be taking all the chances.”

Sorensen acknowledged that the city might not be granted federal community block grants in the future if the project failed and the $5.2-million loan could not be paid back.

Felvey said the loan, which would be used to help pay back the city for the land, would be backed by private funds deposited in a special account. Urbanetics would have about five years to pay back the loan.

Felvey noted that the city would keep the revenue from the parking garage. The $13 million needed to build a parking garage under the office complex would come from $40 million in federal funds the city has set aside for redevelopment projects.

Concerns about the project have been raised by the director of planning for the Long Beach Port Authority. Port officials have approved a plan to build a $413-million world trade center with 2.2 million square feet of commercial space and a major hotel. The entire cost is to be paid by the developer.

Leland Hill, director of planning for the port, said he doubts that the Pomona project could succeed.

“I don’t think the market is quite as strong as some people would make it out to be,” Hill said. “My gut feeling is they would have difficulty in succeeding out there. The action is here in the port areas.”

Economic studies done for Urbanetics, Felvey said, showed that the Pomona center would not compete for customers with the Long Beach office building, but would instead draw from what he believes is a neglected inland market.

“We’re responding to demands,” Felvey said. “There is no focal point for the inland region, no central point to conduct trade. We’re aware of that need.”

A survey sent to 11,000 local and regional businesses showed that 88 expressed some interest in leasing space in the Pomona building, Felvey said. If all these businesses came to Pomona, the building would be filled, he said.

John Bollinger, whose Los Angeles consulting firm, the Mentor Group, develops plans for world trade centers and who has been hired by Urbanetics, said highways and rail lines passing through the area make Pomona an ideal location for businesses involved in world trade.

“The ports are aging,” said Bollinger, whose firm is also involved in planning the Long Beach trade center. “What we see is they don’t have enough space to store and transfer. There is a demand for housing and industrial space at a low cost.”

Bollinger said a market survey identified hundreds of regional manufacturing and service firms with worldwide marketing potential. A number of the companies expressed an interest in renting space in Pomona, he said.

Richard M. Lee, an office leasing specialist for Coldwell Banker, said he thought the space could be rented out, although he was reluctant to get involved when he first heard about the proposal. But Lee changed his mind after studying the situation and said he now thinks the project will work and has offered to handle some of the leasing for the building.

“To say we’re going to put up a 220,000-square-foot building on a speculative basis is kind of crazy,” Lee said. “It’s no secret what downtown Pomona looks like. But the world trade center has a better prospect of succeeding simply because of the type of tenants it will attract.”

But Sanford Newton, a Pomona real estate dealer who specializes in commercial leasing, said he is more skeptical about the center’s prospects for success.

“I would not take the assignment to lease the building (if it had been offered),” said Newton, explaining that he does not think the building could be filled.

Some local businessmen, however, take a more optimistic view. Several interviewed said they were looking forward to the project as a way to revive downtown Pomona.

For example, Frank Summers, a local accountant who has been in business since the early 1950s, said there has been a flurry of renewed interest in the buildings he owns since plans for the center were announced.

Summers owns several businesses along the Pomona mall, a city project built in 1962 that was designed to beautify downtown and generate interest in downtown shops. The mall was closed to autos to encourage foot traffic.

Despite widespread press attention and some initial success, however, the pedestrian mall concept began to fail toward the end of the decade, and foot traffic remained low.

Summers said the vacancy rate along the mall climbed steadily, from zero in 1962 to a high point of 65% in 1977, when Summers and other business owners persuaded the city council to reopen the mall to cars.

Conditions along the mall improved slightly, and the vacancy rate dropped to 40% by 1980.

Summers said he and other building owners have aggressively sought to fill vacant buildings since then, and that the mall is currently about 5% vacant.

Still, the shops continue to have trouble drawing customers, according to local business owners.

But Summers said the world trade center plans have already had a “ripple” effect on interest in the mall. He said several businessmen have in recent months proposed investing in some of his least attractive buildings because they knew the trade center would increase traffic in the area.

Felvey’s proposal fits all the requirements of the World Trade Center Assn., an umbrella organization run from the World Trade Center in New York that represents a loose confederation of 44 world trade centers around the globe. Felvey has already secured accreditation from the association for Pomona projects.

Tom Kearney, chairman of the information and communications committee for the association, said Urbanetics’ application for membership was closely scrutinized by the association’s board of directors.

“Our constitution permits us only to have one world trade center in a city or economic region,” Kearney said, adding that there was some concern among board members that the Pomona center would intrude on the Long Beach center’s market. “The trade center is a singular concept; you can only have one center of anything.” But Kearney said that after discussing the potential conflict and reviewing Urbanetics application, which showed extensive public and private support for the project, the association decided to make an exception in Pomona’s case and agreed to accredit the project. With accreditation comes marketing advice and the right to use the trade center association’s name.