No Need to Rush in on Redevelopment : * Ambitious Local Efforts Should Proceed With Caution

So much of Orange County is new that talk of “redevelopment” may seem misplaced. But redevelopment has become an important priority for some of the county’s older areas, which stand in contrast to the palmy new shopping malls of South County.

The recession, however, has proved to have a will of its own, in sharp contrast to the best-laid plans of cities looking to spruce up. Two of them, Santa Ana and Huntington Beach, both have had laudable and ambitious plans on the books that already have showed some results. Yet each recently has found itself looking squarely at the harsh economic realities in the early 1990s.

The trick for both will be to retain a positive outlook for the long term without overextending. That may mean opting for more modest renovations while adopting a “wait-and-see” approach on the big-ticket plans.

Take Santa Ana, which has envisioned a bold, $500-billion development that would include the county’s tallest office tower. It dreams of a new Orange County “hub,” even as there was a daunting 21.5% office vacancy rate in central Orange County for the first quarter, according to Grubb & Ellis.

This project looks to a future with a 10% or lower range by the expected opening date of 1996, when the first phase would be completed. It would eventually include townhouses and condominiums, live theater and movie theaters. We’ll see.

For the moment, this project seems dated by about a decade. It’s hard to envision how Main Street Concourse, as the project is called, would be financed in the current environment.

Not all of Santa Ana’s plans are a stretch, however. It has won praise from one neighbor, Anaheim, with whom it actually was in competition at one time to be first to build an indoor sports arena. That’s because it has made things happen, as MainPlace and other projects demonstrate. It can be forgiven, or at least understood, for thinking big. But as it dreams of an estimated $6 billion in new tax revenue and business fees annually, it ought to be cautious, too.

Meanwhile, Huntington Beach is coming to terms with its own second thoughts about previous redevelopment decisions. Recession has slowed things down. The time is clearly not right for three proposed hotels, and, indeed, the Waterfront Hilton, a mainstay, announced it was seeking protection from bankruptcy recently.

But much depends on how one views the glass--half empty or half full. The city’s scruffy waterfront has been given a face lift. Now, the city has a slow-growth majority on the City Council, elected last fall. There are still plans to go ahead, but developers say it may take longer.

And yet, there are victories in redevelopment already to savor. There is a new look downtown and new leases to boast about. Deputy City Administrator Barbara Kaiser, who heads the redevelopment staff, asserts that none of the existing redevelopment projects have drained the city treasury and that property values have risen. Even the Hilton traces its financial troubles to refinancing of its construction loan, rather than day-to-day operations.

That may add up to a delay, rather than a burst bubble. In Massachusetts, which preceded Orange County into recession by several years, there is talk of renewed confidence, and plans to go ahead with major shopping mall projects, now that financing is becoming easier to get in that state’s stirring economy.

But in Orange County, with its glut of space and lingering recession, caution on the mega-plans still remains a wise approach.