Long Beach Pins Hopes on Downtown Mall

Attempting to resurrect a failed shopping area in the heart of downtown Long Beach, the City Council has cleared the way for a $75-million retail and residential complex on the site of a defunct redevelopment project.

The approvals came late Tuesday night amid rosy projections that the state’s fifth largest city could top the commercial successes of San Diego, Santa Monica and Pasadena, which arguably have achieved far more with redevelopment over the last 20 years than the struggling port town has.

Santa Monica built the popular Third Street Promenade while San Diego renewed its gas lamp quarter and downtown near the waterfront. Pasadena has steadily revitalized an area known as Old Pasadena straddling Colorado Boulevard.

Meanwhile, some of Long Beach’s main redevelopment efforts--such as the waterfront Hyatt Regency, the Queensway Bay project and the Aquarium of the Pacific--have been stalled or have performed far short of predictions.

The new project involves the vacant Long Beach Plaza, a shopping mall built with the help of city funds but closed last year after almost 20 years of operation. It is on Pine Avenue, one of the city’s main redevelopment areas.

On an 8-1 vote, council members approved a multimillion dollar operating agreement with the city’s redevelopment agency and Developers Diversified Realty Corp. of Ohio, the property’s current owner.

Remaking the mall “will help renew downtown and take advantage of the rebirth of Pine Avenue,” said Melanie Fallon, executive director of the city’s redevelopment agency. She told the council that the project could help Long Beach eventually “surpass San Diego, Pasadena and Santa Monica.”

Under terms of the deal, the city will provide $17.4 million worth of subsidies, including the International School site, a flat 8-acre parcel in downtown. The city bought the land for about $8 million, but it has been valued at $6 million for the project.

Plans call for a hotel, condominiums, apartments and retail stores. The site is bordered by Elm Street, Long Beach Boulevard and 3rd, 4th and 6th Streets, as well as Pine Avenue.

The old mall will be demolished, except for the parking structure. Construction, which could begin late this year or early next year, is scheduled to take 24 to 36 months.

Builders say a WalMart discount store and an Albertson’s supermarket will be two of the project’s main anchors. Other major retailers are expected, but Developers Diversified declined Wednesday to name any.

Supporters predict that the new mall will be far better than the old plaza because it will be more open to pedestrians and will solve a glaring lack of shopping in downtown Long Beach.

“This will be more of an urban village and a continuation of what already exists on Pine Avenue,” said Craig Trottier, the development director for Developers Diversified. “This will be similar to the Santa Monica promenade. It will have the same scale, the same feel and some of the same architectural elements.”

Fallon said that if the new mall is successful it could prompt developers to proceed with about $1 billion in other commercial and residential projects.

Critics say the project is not unusual enough, calling it a “cookie-cutter” development despite several design changes. They contend that a WalMart and an Albertson’s will not attract the volume of shoppers needed for success and will threaten other retailers in the area.

“This was an opportunity to put Long Beach on the map, but that opportunity has been lost,” said Michelle Berg, a member of the Plaza Coalition, a citizens group. “This is not a recipe for success. They should have lofts, offices, an open-air market and be even more pedestrian oriented.”

Before Tuesday night’s vote, Long Beach City Auditor Gary Burroughs told the council that the city should get a larger share of the revenue from the project, given the size of its subsidy.

If the developer sold the project in 10 years at an assumed price of $75 million, Burroughs said, the city would be about $1.4 million in the hole. There has been some speculation that Developers Diversified will sell the property shortly after it is finished.

“I am not opposed to the project,” Burroughs said Wednesday. “My opposition is to the way it pencils out if we sell it. . . . We should get a bigger piece of the cake and a glass of champagne.”

Fallon and Vice Mayor Dan Baker said, however, that over a 15-year period the city stands to gain $33 million in property tax and sales tax revenue from the project, almost double the city’s investment.

Councilman Ray Grabinski, who voted against the new mall, said he was concerned about the city’s valuing the International School at $2 million less than the $8 million it paid for the site. He said the site might be worth far more today, but other city officials contend that the assessment is fair.

Grabinski also said that another major redevelopment project--the Queensway Bay entertainment complex across from the aquarium--should be undertaken before the mall project starts. He further cautioned that voters might approve a utility tax cut in November that could substantially reduce city revenue.

“This is risky business,” the councilman said. “It scares the hell out of me.”