Harbor Dept. Scales Back Building Plans for San Pedro : Development: Harbor commissioners will consider $25-million proposal for two port-owned lots at a meeting Wednesday.

The Los Angeles Harbor Department has dramatically scaled back plans for developing two port-owned lots in downtown San Pedro, convinced that a proposed $57-million office and retail complex is too costly and could sit largely vacant for years.

Instead, the department is recommending a $25-million development that would provide additional office space for port staff but would eliminate several key elements of the previous plan.

The new plan, which will go before harbor commissioners next Wednesday, has renewed debate in San Pedro over the port’s commitment to the community’s commercial development.

Although the new plan has been met with a wait-and-see attitude by many merchants and officials, including Harbor Councilwoman Joan Milke Flores, one San Pedro business leader has complained that the port’s staff is shortchanging the community by indefinitely delaying the large and long-promised commercial development adjacent to its headquarters building.

“I think they’re being so shortsighted it’s ridiculous,” said Rick Gaydos, president of the San Pedro Revitalization Corp. “Not only have they been land banking the parcels for years, but they have been unwilling to develop that area in a way that benefits San Pedro.”

But port officials, with qualified support from the San Pedro Peninsula Chamber of Commerce, insist that reducing the project’s size is the only prudent course at a time when commercial office buildings in the community, and throughout the region, are begging for tenants.

The new plan represents the latest proposal for developing the last two parcels in the Community Redevelopment Agency’s Beacon Street project, an endeavor that began in 1969 and has transformed San Pedro’s downtown business district with new offices, hotels and restaurants.

As part of that project, the port not only built its new headquarters building at 425 Palos Verdes St., but entered into an agreement with the CRA in 1983 to develop two parcels between Harbor Boulevard and Palos Verdes Street.

Most recently, the port had proposed that its parcels, including one purchased for $4.3 million from the CRA, include a mix of development. An existing warehouse on Harbor Boulevard was to be replaced by an 11-story office tower. The 200,000-square-foot building was to accommodate the port’s administrative staff and provide seven stories of offices for lease, as well as 12,000 square feet of retail shops. In addition, the port proposed a 6,000-square-foot visitors’ center between its headquarters and the office tower.

But those plans, which were viewed as too ambitious by several harbor commissioners last December, have now been abandoned by the port’s staff. “There was a concern over costs and a concern that the market demand just isn’t there for that much office space,” said Dwayne Lee, the port’s deputy executive director of development.

Now, Lee said, the port’s staff proposes a six-story office building on the vacant lot directly across from the department’s headquarters. The 100,000-square-foot building would be used by the port and would be linked to the headquarters by an elevated walkway above Palos Verdes Street. In addition, the port has proposed refurbishing the 29,000-square-foot warehouse on Harbor Boulevard for, among other things, a 4,000-square-foot day-care facility open to the community.

The new proposal does not include any retail space or a visitors’ center, although port officials say some sort of tourist facility is still a possibility.

A 200,000-square-foot office tower also could be built on the warehouse site but only if the demand for offices in San Pedro increases enough to justify that project, Lee said.

Lee said the new plan was developed after a recent consultant’s report concluded that leasing the 11-story office tower could take from five to 25 years. “It just wouldn’t generate revenues for us. So it made sense to reduce the project and our costs,” Lee said.

In doing so, however, the port has already been told by the CRA that the agency expects the quality of the new proposal to match what the department earlier planned for the site.

“We’re prepared to discuss the size of the project, and we’ll be willing to support a scaled-down version,” said Len Betz, the CRA’s project manager for the Beacon Street redevelopment area. “But we will be looking for the same quality of project and by that I mean the look of the project, the type of construction and the public benefits.”

Specifically, Betz said in a Sept. 14 letter to the port, the CRA wants the new proposed development to address the issues of retail space, future office development, and completing the project, which has been debated and delayed for years.

Under the port’s new plan, the project would be finished by June, 1994.

That completion date is key to the Chamber of Commerce’s qualified support for the port’s new plan, according to chamber Director Leron Gubler.

“We would have preferred to see a larger development,” Gubler said. “But it’s our feeling that it’s in the best interest of the community to get this project moving, to keep the development momentum going in San Pedro, rather than having the land vacant for another five to six years.”

Although one recent area transportation study suggests that significant commercial development will occur in San Pedro over the next 20 years, Gubler cautioned that the report does not pinpoint when the forecasted demand for nearly 1 million more square feet of office space will occur.

“I agree we have a bright future,” Gubler said, “but the current climate for commercial office space is not the greatest.”

Moreover, Gubler warned that pressing the port to immediately build a 200,000-square-foot office tower when the market is soft may inadvertently slow other commercial development in San Pedro, most notably the second phase of Pacific Place, a 7th Street redevelopment project that could add as much as 300,000 square feet of office space to downtown San Pedro.

An aide to Flores said the councilwoman has not taken a position on the port’s new plan, because she is awaiting some of the details that will be presented at next week’s Harbor Commission meeting.

“The bottom line is that we want to make sure that the port planners look at everything,” said Flores’ spokeswoman, Karen Constine. “We understand that today’s market is not the best for new office buildings. But we also hope the port is looking at what may happen five years from now.

“We want the port planners, who go out and look at every detail when they consider how to develop a container project, to spend the same sort of time on this.”