Santa Ana Looks Beyond Centerpointe

Santa Ana city officials hope that a major corporation will step in and fill the void created by the collapse of the $85 million Centerpointe hotel-office project, downtown development director Roger Kooi said Wednesday.

The project--which was to have included a 15-story office building, an eight-story luxury hotel, a conference center and a parking garage--officially died Tuesday when the Redevelopment Agency voted to dissolve the agreement between the city and the developer, Milwaukee-based Carley Capital Group.

City officials and the developer have had serious concerns about the feasibility of the hotel and conference center for several months. They “mutually agreed” that the project should be dropped about three weeks ago, Kooi said.

A market study in 1984 showed that a downtown Santa Ana hotel “probably could make it,” Kooi said, but the construction of luxury hotels in south Santa Ana and Costa Mesa since then have dimmed the outlook for a downtown hotel.

The city will now ask other developers to submit qualifications and, eventually, project proposals for the site, bounded by 4th, 5th and Ross streets and Broadway.

“We’re looking for a major corporate office center, along the lines of the Xerox Center (on East 1st Street),” Kooi said. “It’s still a great site, and it’s going to be a great project. It’s a natural for the area.”

Kooi said his phone has been ringing “off the wall” with developers interested in the site since the scuttling of the Centerpointe plans. But, Kooi said, the city is in no rush to pick a new developer for the site, which is vacant and being used as a temporary parking lot by downtown workers.

The Centerpointe complex was one of two major projects the city hoped would anchor the extensive redevelopment of the downtown area. The other project, Fiesta Marketplace, is being built a few blocks east of where Centerpointe was to have stood.

City officials had wanted the Centerpointe project badly enough to promise about $18 million in public subsidies and the lease of 72,000 square feet of office space for city departments.

Whatever project eventually goes up on the site will not enjoy the same “humongous” subsidy the Carley group would have received, Kooi said.

“We want to be sure our subsidy will be minimal,” Kooi said, adding that the city still hopes a developer will build a project there “similar in scope, size, density and probably . . . construction cost--but it won’t have a hotel component.”

But an attorney for a group that fought the Centerpointe project in court said Wednesday that a smaller project would be more beneficial to the city.

“The city’s own study said the highest and best use of that property is an office building with surface-level parking,” said David E. Llewellyn, who represented the Alliance for Fair Redevelopment and the Citizens Property Rights Committee in lawsuits filed against the developer and the city.

“Any attempt to manipulate the use of the property for some other use . . . means that you are going to reduce your economic gain.”

The lawsuits, while unsuccessful in stopping the project, hampered the Carley group’s ability to obtain financing, a staff report said.

In the lawsuit, the groups argued that the project exceeded the scope for the city’s redevelopment plan and that the project site was not blighted and, therefore, ineligible for redevelopment.