COSTA MESA : Developers’ Switch to Retail Center OKd

The Metro Pointe development agreement is no longer the agreement it once was.

The Arnel Development Co., which originally intended to construct high-rise offices under the development agreement, will instead build a retail shopping center between Bear Street, South Coast Drive and the San Diego Freeway.

The City Council gave the developers the go-ahead Monday night, after Leonard Hampel, the attorney for the company, explained the amendment outlining the changes in the development agreement.

“The spirit of the development agreement still exists. It’s just changed a little,” Hampel told the council.

Where there were to be two 15-story office buildings, there will now be a 400,000-square-foot, open air shopping center named South Coast Boardwalk, complete with a bookstore, a linen store, a 10-screen cinema, an electronics shop and a few clothing stores.

The $60-million project should be completed by November, 1995, said Dave Ball, president of the development company. The about-face in development occurred when he realized the market for office space was weak.

Two office buildings already built on the site, which are four stories and six stories, respectively, are just 80% full, according to Don Lamb, deputy city manager and director of development services.

The council liked the idea of a shopping center, especially the $1.4 million in estimated sales tax revenue.

“The response (in the community) has been, ‘Oh, I’d like to go to that,’ ” Mayor Sandra L. Genis said.

And just how does the new shopping mall plan to compete against South Coast Plaza and Crystal Court, two large, established malls in the area?

“I’m sure the developers have done their research,” said Bill Morris, director of public services for the city. “I don’t think the malls are going to be going head to head because the stores are different inside the new one. There’s a demand for these type of stores. If they do compete, it’s not going to be a detriment.”

Arnel’s change of plans prompted council members to express only one fear Monday: If the development company decides to withdraw from the project, the city might end up owing it an estimated $3 million--the sum Arnel has paid up front for freeway improvements, including the South Coast Drive off-ramp from the San Diego Freeway now under construction.

“But that’s only theoretical. They’re not going to walk out on something they’ve invested so much money in,” Morris said. Also, the company has leased the land for 99 years, so it must build something on it, he added.

Lamb said he saw another advantage to the new shopping center.

“This could be a new entrance to the South Coast Plaza,” he said. “It’s right across the street.”

The shopping center would be the third phase of the Metro Pointe Master Plan. The first two phases included construction of two two-story office buildings and a 296-unit apartment complex.