‘Risky’ Pact With Mall Builder Approved : Finance: City Council accepts possible added liability to get Atlantic Square project moving.

The City Council, shrugging off one member’s warnings about possible financial risks, on Monday approved a modified contract with the developer of Atlantic Square Shopping Center.

The amended contract, designed to help Long Beach-based Champion Development Inc. finally get a $29-million construction loan for the project, could put the city at a greater financial risk should the project fail, Councilman Sam Kiang warned.

Under the new contract, if Champion defaulted, the city would immediately have to pay off the loan in one lump sum, instead of assuming the loan and making payments. If it failed to do so, the property would revert to the bank, which might decide not to pursue the project.

But other city officials and developer Champion said this would occur only in a highly unlikely worst-case scenario.

The council voted 3 to 2 to approve the new contract, with Kiang and Councilman Fred Balderrama dissenting. Mayor Betty Couch and Councilwomen Judy Chu and Marie T. Purvis dismissed Kiang’s concerns as unfounded.

Despite financing difficulties plaguing the 3 1/2-year redevelopment project, some council members and residents emphasized that they want to keep Champion as developer because the firm has promised that the majority of stores in the mall will be owned by major chains.

Many of the city’s businesses are family-owned specialty stores that cater primarily to the area’s Asian clientele.

As part of the $50-million project, Champion has planned to keep a Thrifty drug store currently in the mall and to replace Albertson’s grocery store with a Ralphs market. It would be one of only two American chain supermarkets in Monterey Park. Most of the city’s groceries specialize in Chinese food, although they carry everyday household items as well.

“Quite frankly, I want Mr. Champion to build this center,” resident and former City Councilman Irv Gilman said. “Because as a minority resident of this community, I want the services that are going to be in that center. I don’t want another 100,000 square feet of Tai Lai Department Store, and I don’t want a market that’s going to force me to go shop in Montebello at Lucky’s.”

Robert D. Champion, head of the company, has missed several deadlines for obtaining financing, primarily due to tighter lending policies imposed on developers by banks during the recession.

Because of changing financial times, the bank expected to finance the project, Security Pacific, is demanding a large cash down payment from the developer--about $10 million instead of the $3.2 million it originally requested. As a result, Champion has brought in another partner, SunAmerica Realty Partners, a subsidiary of Broad Inc., to provide the bulk of the money.

In addition, the bank imposed another condition for granting the loan: that if Champion defaults on his loan payments and the bank forecloses on the property, Monterey Park no longer can assume the loan and take over the project.

That condition was in the modified contract approved by the council Monday.

The City Council has given Champion until Monday to secure a loan. If he is unsuccessful, the city plans to issue $13 million in bonds to purchase Atlantic Square itself and choose another developer.