SANTA ANA : Developer Wants to Downsize Project

Two years after getting City Council approval for a massive tri-tower development, Xerox Centre Partners is asking the city to downsize its project on 1st Street and reduce some development fees for transportation-related improvements.

The proposal, scheduled for a council vote Monday, would reduce a previously planned 23-story office tower to six or seven stories, giving the developer flexibility to develop and sell that portion of the project to the State Compensation Insurance Fund.

Robyn Uptegraff, the city’s planning and building safety executive director, said Thursday that the developer still must complete mitigation measures required by the project’s environmental impact report, including construction of Cabrillo Park Drive between 1st and 4th streets.

However, the “community contribution” of $1.3 million to improve the 1st Street and Grand Avenue intersection will be reduced by about $500,000, Uptegraff said.

Mitch Brown, a vice president for Birtcher Business Communities, which is asset manager for the project, said the developer will actually pay slightly more per square foot for the road improvements than it would have under the original development agreement because the project has been downsized.

“I think it’s a very fair understanding of our agreement all the way around,” Brown said. “The project is still more than paying its way and it’s now structured to have the flexibility to accommodate the State Compensation Insurance Fund.”

The reduction of what was to be the third phase means that the total site--bounded by the Santa Ana Freeway on the west, 1st Street on the south, Cabrillo Park Drive on the east and 4th Street on the north--will have about 817,000 square feet instead of the 1.1 million originally planned, according to a city staff estimate.

While the office space market has been in a slump, Brown called this a “positive” expansion of the Xerox Centre project.

“This central (Orange County) office market is relatively healthy, despite what you read in the newspapers,” he said.

Brown said the development’s second phase--a twin tower to the 15-story building already constructed--is on hold until a major tenant can be found. But he said the first tower has a 96% occupancy rate.