Delays Fail to Sidetrack Fans of Towne Center

Landscaping edges the vast field, a groomed fringe of trees, shrubs and artificial waterfalls in search of buildings long planned as the culmination of this city’s metamorphosis from dairy land to master-planned suburb.

The 125-acre plot of former farmland known as Towne Center is a development waiting, waiting and waiting to happen. Envisioned as a commercial-office complex that will give a heart to this community of housing tracts and shopping centers, the Towne Center project has stumbled into repeated delays since the city bought the land in 1982. Would-be developers have pulled out, financing packages have collapsed, city hopes have fallen victim to market factors.

More than a year after work on the first buildings was supposed to have begun, heavy equipment is finally disturbing the field’s country-like tranquility, scraping out dusty paths for roads and underground utilities. But only one ground breaking is on the near horizon, marking the construction of a single seven-story office building, a fraction of the planned office space.

A hotel-room glut and last fall’s stock market difficulties have prevented the center’s developer from nailing down financing for the 203-room hotel that is to rise next to a lavish new community arts center now being design. Plans for a 40-acre retail section remain so amorphous that the city has shelved discussion of that part of the project.

None of that has diminished the City Council’s allegiance to Towne Center. Anxious to see some activity on Cerritos’ biggest vacant lot, the council late last year authorized construction of about $5 million worth of streets and utilities. It also dropped a long-standing condition that the developer, Transpacific Development Co., could not start work on the office portion of the project until hotel construction began.

The hope is that streets and an office building will reel in financial backing for other phases of the development. “If I were a lender, I would want to see some action,” said Councilman Donald Knabe.

“I hope this will create a chain reaction,” said Mayor Daniel Wong, who is running for a third term in this April’s city election. Like a number of his challengers, Wong called for Towne Center’s completion in the candidate statement he filed with the city. The center has proved to be a perennial election topic, as residents wonder year after year why one of the largest undeveloped tracts in Southeast Los Angeles County remains bare.

City officials and developers attribute Towne Center’s snail-like progress to a variety of factors: market cycles, the complexities of launching a major development and the city’s insistence that Towne Center’s buildings and tenants enhance the city’s carefully cultivated image as a model suburb.

“One of the normal processes of development is that cities can’t really force projects to proceed,” said Councilwoman Diana Needham.

While Transpacific has first dibs on developing the center’s retail portion, what shops will be built, when they will be built and who will build them remain major questions. General Growth of California tried for two years to sign a mix of retailers that would satisfy the council’s wishes for an upscale shopping mall, only to withdraw in frustration when it couldn’t lure the kind of swanky department store the council wanted as an anchor.

“We’re not doing anything on the retail,” said Robert Blumin, Transpacific’s project manager for the hotel. “The city doesn’t even want to talk about retail until things get going” with the rest of the project.

Concerns persist that another big shopping mall would only steal customers from one of the city’s major sources of sales tax revenue, Los Cerritos Center.

Council members talk of paring down the retail acreage or building a tourist-oriented marketplace, but in the meantime, the retail plans lie dormant.

Somewhat less of a Towne Center cheerleader than her council colleagues, Ann Joynt suggests the development has bogged down because the city didn’t forge ahead in riper economic times. “If we really cared about a hotel out there, it should have been built four years ago.” Now, she points out, nearby cities such as Norwalk have clinched hotel deals, and the market has softened in the wake of a construction boom that has left Southern California’s hotel industry with more rooms than it can fill.

“Hotel financing is very difficult to come by these days because there are a lot of vacant hotel rooms,” said Blumin. “I can’t tell you there’s a loan waiting for us now.”

Some See Long Wait

While the company insists financing is within reach, some council members acknowledge it may be years before the hotel becomes a reality. “I don’t have real strong confidence that things will move forward in a timely fashion,” said Joynt, the dissenter in the council’s 2-1 vote to give Transpacific the money to start utility and road construction. Two council members were absent for the vote.

“I don’t think an office building sitting in the middle of 125 acres of dirt really warrants $4.5 million worth of roads,” she said.

Under its development agreement with Transpacific, the city is loaning the company $5 million to install streets and utilities. The city will also give Transpacific a $5-million loan to build the hotel, as well as $750,000 a year to offset operating losses until the hotel turns a profit.

The 140,000-square-foot office building scheduled for construction this year is the first of 23 office buildings Transpacific has planned for Towne Center. Altogether, the developer wants to erect 1-million square feet of office space--a massive addition to the Southeast-area’s office inventory. Leasing agents say there is only about 3.3-million square feet of commercial office space in Southeast, excluding downtown Long Beach.

“That’s a scary proposal,” said Eric Hinkelman, a Cerritos sales associate with the real estate firm of Coldwell Banker. “You’re taking a chance. That’s a risk.”

Traditionally an industrial area, Southeast is just beginning to sprout office buildings. Rising land costs and the area’s midpoint location between downtown Los Angeles and the major Orange County business centers are nudging the trend along, despite an office vacancy rate of nearly 19% in suburban business centers in the metropolitan region.

Transpacific is gambling that it can create a new office market at Towne Center, benefiting from the site’s location a stone’s throw from the 91 Freeway. Transpacific “will make things happen,” predicted Dennis Davis, the city’s director of environmental affairs.

Hinkelman, too, expressed optimism. “I think the Towne Center project will do well when it gets on its feet. The question is, when is it going to get on its feet?”

“I think everybody went in with real high expectations and a lot of excitement,” Davis said of Towne Center. He called the subsequent setbacks, “a matter of reality setting in.”