Irvine Co.’s Nielsen Calls for Pursuit of Expansion Plans

The day after a 2 1/2-year struggle to gain approval for Newport Center expansion ended in defeat, Irvine Co. Vice Chairman Thomas H. Nielsen said he believes the firm should return immediately to the Newport Beach City Council to seek approval for new shops and restaurants at Fashion Island.

Nielsen, who is a member of the Irvine Co. executive committee, said that he considers it important not to lose the “momentum” and “excitement” of the ongoing effort to improve and reinvigorate the 20-year-old mall, which faces stiff competition from Costa Mesa’s South Coast Plaza.

The $300-million expansion plan that was rejected by Newport Beach voters in a special election Tuesday included three office towers, houses, apartments, shops, restaurants, cultural facilities and a day-care center for Newport Center. The Irvine Co. had also promised $47 million in road improvements in and around the Newport Center/Fashion Island area as part of the project.

Cites Voters’ Distrust

The 15-year plan had been approved by the City Council, but a special election was called after a petition drive by a group of Newport Beach residents who contended that the traffic generated by the added development would worsen congestion on the city’s already choked road system.

Nielsen, in an interview Wednesday, attributed the election results to voters’ distrust of assurances by the company and by independent consultants hired by the city that the $47 million in road improvements included in the plan would more than offset the traffic that would be generated.

The citizens’ skepticism, Nielsen said, stems from “the mess” of traffic they see around them. But in the past it has been government, not the Irvine Co, that has failed to provide adequate roads, he said.

The course that the Irvine Co. follows now, Nielsen said, will depend on company chairman and owner Donald Bren and the rest of the company’s board of directors. The most likely approach by the company, he said, would be to ask the City Council to approve construction projects one by one, rather than again attempt to gain city approval of a master plan for the entire area.

The first step, Nielsen said, should be to return immediately to the Newport Beach City Council to seek approval of the company’s plan to add 188,000 square feet of shops and restaurants to the existing 1.35 million square feet in Fashion Island.

Seeks More Housing

Nielsen said he also will urge the company to seek city approval of revised plans to build more than 1,200 housing units near Newport Center because there is a “strong market demand” for additional housing in the city.

Even if the city does not approve the full expansion of the Fashion Island shopping center, Nielsen said, the company could go ahead and build 66,000 square feet of shops already permitted by the city’s existing master plan for the area.

There was speculation Wednesday that the failure of the company’s hard-fought campaign to win passage of the Newport Center expansion--a political effort into which the company had invested more than $600,000--would jeopardize Nielsen’s job.

Two months ago, Nielsen was stripped of the title of corporate president and of all administrative duties in a company reorganization. At that time Nielsen, whose remaining job is that of company spokesman and advocate, said his first priority in his new position would be to work for an affirmative vote on the Newport Center expansion.

Gary Hunt, a senior vice president of the Irvine Co. and spokesman for Bren, called the speculation that Nielsen might lose his job “a ridiculous rumor. . . . No changes of Tom’s role, or for that matter of any person’s role . . . is anticipated due to yesterday’s election results.”

David Mudgett, head of the Irvine Co.’s retail operations, said Wednesday that the ballot defeat was not a death knell for Fashion Island. He said the mall is expected to generate more than $200 million in sales this year, which is a 13% increase over last year. And he said a number of stores are renovating and in some cases enlarging their spaces. “As it is, we are going to still provide the best goods and services that we can,” he said.

While Nielsen wants the Irvine Co. to try to move full steam ahead with its retail and residential plans at Newport Center, he conceded that the defeat means that “it will take a long time now” for the company to obtain city approval of its plans to build more high-rise office buildings.

Office Buildings Opposed

Leaders of the opposition to the Newport Center expansion said their greatest objection was to the company’s plan to add 1.3 million square feet of offices to the 3 million square feet now in place. That would have included one 16-story tower and two 11-story buildings as well as some low-rise garden office buildings.

Real estate experts had projected that those office buildings would have provided the lion’s share of increased revenue to the Irvine Co. from the proposed center expansion.

Wednesday, Richard Sim, president of the company’s office and industrial subsidiary, had breakfast with two of the center’s tenants who are seeking more office space.

The breakfast session had been arranged earlier in expectation that the company would win voter approval of its expansion proposal in the special election. The tenants were supposed to be working with Sim on Wednesday morning to choose the space they wanted in a new 300,000-square-foot Newport Center office tower.

“Instead, we talked about alternative space that the company has available in office buildings outside Newport Center,” Sim said.