Long Beach Gives Queensway Bay Builder More Time

Retreating from threats to fire the developer of a long-stalled waterfront project, the Long Beach City Council has granted the builder a 15-month extension to break ground on the $100-million entertainment and retail center.

Council members voted 6 to 1 on Tuesday night to let an Ohio-based company continue with the Queensway Bay project, which has been described as a cornerstone of the city’s effort to remake itself into a prime tourist destination.

The decision effectively grants Developers Diversified Realty Corp. a reprieve from a City Council ultimatum in late December that threatened termination if the company did not make progress in 30 days on the project, which is about two years behind schedule.

“We have always been committed to the development of Queensway Bay, and this agreement reflects our continued faith in the project,” said Eric Mallory, a senior vice president with the company.

Plans call for a complex of restaurants, retail shops and theaters on 18 acres of city-owned land south of Ocean Boulevard near the Long Beach Convention Center. Municipal officials predict that the attraction and related projects will help attract 10 million visitors a year to the area, a forecast that critics call grossly exaggerated.

The proposal ran into serious problems last year when two major movie theater chains dropped out as anchor tenants because of bankruptcy filings. Other leases in the center were contingent on the participation of the theaters.

Mallory said that Developers Diversified is still committed to having multiscreen cinemas in the complex and that he remains optimistic, despite a broad economic downturn in the theater industry.

Under the terms of the extension, the developer cannot sue the city over the project and the company must pay the city $500,000 if construction does not proceed within 15 months.

The city also can court backup offers from other builders during the extension period and Developers Diversified must forfeit $5 million worth of plans and studies to the city at no charge if deadlines cannot be met.

Mallory said the company hopes to have the complex finished by July 4, 2002, more than three years behind schedule.

“It is important that construction of Queensway Bay begin expeditiously so that the residents of Long Beach get what they have been promised--a first-class waterfront project,” said Mayor Beverly O’Neill.

City Councilman Ray Grabinski cast the only vote against the extension, saying the center would be just another shopping mall, not the unique waterfront attraction that was promised five years ago.

In another related development, Long Beach Vice Mayor Dan Baker has returned $1,250 in campaign donations he received from various corporate officers and partnerships associated with OliverMcMillan, a San Diego-based developer that was once part of the Queensway Bay project.

The refund was in response to an inquiry by City Clerk Shelba Powell, who requested that Baker justify the donations under the city’s campaign reform act. Among other things, the law sets contribution limits and forbids multiple donations from companies that have the same corporate officers.

Kinde Durkee, the treasurer of Baker’s campaign committee, has denied any impropriety. Although Durkee could not fully explain the donations, she wrote in a letter to Powell that Baker voluntarily decided to return the money “out of an abundance of caution and in an effort to assure confidence in the system.”