The City Shopping Center to Be Razed and Replaced : Development: Theaters and restaurants will be a big part of the new $150-million complex, scheduled to open in 1998.

City officials and a Washington, D.C.-based development company on Tuesday announced plans to tear down The City and replace the aging shopping center with a $150-million retail complex filled with restaurants, movie theaters and space for live entertainment.

City Council members also unanimously voted to open negotiations with the developer, which hopes to garner up to $25 million in redevelopment funds to help build the 1.2-million-square-foot center.

“We’re looking at something positive for Orange as we come out of the economic situation we’ve been in for the last few years,” Mayor Joanne Coontz said. “We should be thankful for the direction we’re going in.”

Mall proponents and city officials said they hope that the new facility, which will be built by Mills Corp., will be able to compete better with more attractive malls nearby, particularly MainPlace / Santa Ana and South Coast Plaza in Costa Mesa.

The proposed outdoor shopping center, to be known as The Mills at City Center, will follow an industry trend toward pumping more entertainment and restaurant options into new retail properties. Developers on Tuesday promised that the center would have top-name restaurants, a health club, nightclubs and movie theaters.

“People will go there not just to shop but because it’s a place to go,” Councilman Mark Murphy said before the meeting Tuesday.

City officials have been talking to Mills executives for more than a year about a possible redevelopment venture at the old mall. They hope Mills’ project will help to turn the dying center into a retail and tourist attraction, Murphy said.

The City Shopping Center, built in the late 1960s, is now scheduled to be torn down in late 1996. Only half a dozen stores are still open in The City, which has seen its tenant list shrink dramatically from the original 106 stores. JCPenney, the center’s last anchor store, left the site across from the county’s Theo Lacey Branch Jail in February.

Murphy, 38, recalled working at The City as a teen-ager and watching over the years as executives always seemed to miss the latest fad.

“In my personal opinion, the center to me has always just lagged the competition,” he said. “When it was an outdoor center, everybody else built indoor. . . . Timing-wise, it was a little bit late.”

Mills officials said that the new center is scheduled to open in the spring of 1998.

Mills owns and operates four outlet malls and 12 other shopping centers. The publicly traded development company in April began building a similar mall in Ontario that will feature a JCPenney outlet store, Marshalls,Burlington Coat Factory, Sports Authority and a Saks Fifth Avenue outlet store.

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Mills has been studying Southern California locations for several years.

“We’re going to offer upscale, value-oriented retail stores as well as entertainment in an open-air, festive setting,” Mills Vice President Steve Jacobsen said. “We don’t have a tenant list yet, but we’re going to have some of the unique tenants we have at our other centers, as well as some special things for this urban location.”

While most shopping centers draw from a relatively small surrounding area, Jacobsen said, the planned center is designed to draw customers from throughout Orange County as well as other parts of Southern California.

“This project will rely heavily on tourism,” Jacobsen said. “This will draw heavily on a much larger area than a typical mall.”