Long Beach Threatens to Fire Developer of Bay Project

Frustrated by delays in their waterfront redevelopment plan, Long Beach city officials Wednesday told the builder of a proposed $100-million entertainment complex to move forward on it within 30 days or face dismissal.

The ultimatum reflects the city’s growing discontent over the stalled Queensway Bay development, which officials had hoped would lure tourists to attractions such as the Queen Mary ocean liner and the struggling Aquarium of the Pacific.

“This is the best thing we can do,” said Vice Mayor Dan Baker, whose council district includes the development. “The albatross around the neck of this project has grown larger and larger. We need to wash our hands and move ahead with new ideas.”

The City Council voted in closed session late Tuesday night to issue a “notice to cure” to Developers Diversified Realty Corp., which is based in Ohio. Officials said the company has failed to secure tenants and obtain financing for the entertainment center that is almost two years behind schedule.

The notice gives Developers Diversified 30 days to find financing or face termination of its contract by the City Council. City Manager Henry Taboada informed the company of the action Wednesday.

Executives for Developers Diversified responded with a prepared statement, saying that they will consider their options. The firm estimates that it has done $13 million worth of planning and preliminary studies on the project.

“We are extremely surprised and disappointed by the action of the Long Beach City Council,” said Eric Mallory, a senior vice president at Developers Diversified. “This is a sad day for Long Beach and particularly for the Aquarium of the Pacific.”

The $120-million aquarium has been suffering a steady decline in revenue and attendance since it opened in June 1998. City officials have said the attraction’s success hinges on building an adjacent entertainment complex of restaurants, shops and theaters. They are to be housed in 12 buildings on 18 acres south of Ocean Boulevard near the Long Beach Convention Center.

Withdrawal of 2 Movie Chains

City officials said that if the builder cannot proceed with the development, it may be scrapped in favor of a much smaller one.

The entertainment complex ran into serious problems earlier this year when two major movie theater chains were eliminated as anchor tenants because of bankruptcy filings. A four-acre alternative comprised of restaurants and shops was proposed as a fallback, but construction failed to begin this month as scheduled.

Council members said they approved the notice after the city and Developers Diversified could not agree on new deadlines and on whether the developer should post a $500,000 performance bond in case it defaulted on its contract.

“We’ve been jerked around as a city for months, if not years,” said Baker, the vice mayor. “Now the developers have 30 days to cure what they have not been able to do in two years. I think it is highly unlikely they will be able to do that.”

A source close to the negotiations, who requested anonymity, said the company wanted to put up $5 million worth of studies and plans for the project in lieu of a performance bond. He said Developers Diversified offered to allow the city to solicit backup plans from other builders to keep the development going. “The mood is grim,” the source said.

Depending on what happens within the next 30 days, Baker said there is a possibility that the city will proceed with a scaled-down project next to the aquarium. Unlike with the original entertainment complex, Baker said, the planning process for the smaller project will include community input.

“We will go back to square one and open up the process,” Baker said. “Maybe we will just focus on the shoreline part of the project and tie it into the aquarium. I’m still optimistic we can do something.”