Santa Ana Project Turns Spotlight on Big Developer

He owns much of downtown Santa Ana, where he has quietly saved old buildings and helped fuel an urban renaissance. But few in town knew Michael Harrah, the 6-foot-6 biker-turned-stunt-pilot-turned-millionaire developer.

Until he tried to put up an office building. A really big office building.

Harrah owns or co-owns about 50 buildings, worth more than $212 million. Their combined total of more than 2 million square feet house art galleries, restaurants, a performing arts center, parking lots and office buildings.

Harrah, 51, has built a real estate fiefdom in the heart of Santa Ana. In the process, he has given the city a respectability it has not enjoyed since the 1950s.

“A lot of these buildings were 100% vacant and ready for demolition. Nobody wanted to invest in downtown--until Mike Harrah came along,” said City Councilman Jose Solorio.

Now, downtown Santa Ana is an acclaimed arts and culture center. Galleries, studios and theaters attract patrons from throughout Southern California to buildings Harrah saved from either the wrecking ball or blight.

The Masonic Temple, built in 1930, was boarded up for almost a decade, slowly falling apart before Harrah turned it into a performing arts center with three theaters and restaurant.

One street over, the two-story Santora Building, built in the 1920s in the Spanish Colonial Revival style, was destined to be an indoor swap meet until Harrah bought and restored it. It now houses galleries, art studios and a restaurant.

Harrah took a gamble on Santa Ana at a time when things could not have looked bleaker for the city and Orange County. He began buying properties at bargain prices after the county filed for bankruptcy in 1994--the largest municipal bankruptcy in U.S. history.

Harrah’s low-profile business style kept him out of the spotlight until last year, when he revealed plans for One Broadway Plaza, a 37-story office tower on the edge of downtown that would be Orange County’s tallest building. The $90-million project would add 650,000 square feet to his holdings. Overnight, Harrah became the target of criticism and curiosity.

Even critics expect the project to be approved by the Planning Commission, despite objections from the Santa Ana Historical Preservation Society. The group says the proposed 493-foot building violates the city’s Midtown Specific Plan, which limits new structures to three stories or 35 feet, and says it will destroy the character of the historic Broadway Corridor, lined with homes and buildings more than 50 years old. The project also would require demolition or removal of a historic apartment building--the kind of structure Harrah once was known for saving.

The bickering over One Broadway Plaza has put a spotlight on Harrah.

Many want to know more about the oversized millionaire--Harrah weighs 300 pounds--with the ZZ Top beard and a preference for jeans and boots over business suits. Among other intriguing details: Harrah flies his own Cobra attack helicopter in stunts for movies like the latest “Austin Powers” sequel and “The Siege.”

“Folks are curious about who he is. Mike isn’t seen much in public. A lot of people don’t know what he looks like or who he is,” said preservationist Tim Rush.

But even while criticizing Harrah, Rush and others express grudging admiration for what he has accomplished in Santa Ana.

“He came in and rehabbed downtown when everyone [else] was running away from it,” Rush said.

The son of a machinist and a teacher, Harrah was raised in Whittier. He attended Cal State Long Beach, studying architecture, but did not graduate. Instead, he went to work as a carpenter. By the time he was 25, he had made $3 million with his own company building apartments in Riverside.

By 1985, Building Design and Construction magazine ranked his company as the 20th-largest construction firm in the nation. Harrah went on to develop a resort at Lake Havasu, making millions in the process, all before he was 35.

“I was buying boats, motorcycles, planes and vintage cars by the dozens. I was making a lot of money,” he said.

But a bad business deal in Lake Havasu, he says, pushed him into bankruptcy in 1990. “I went down pretty hard. I owed people $20 million,” he said. And he wound up moving “from my house in Newport Beach to renting a bedroom from my mother-in-law in Garden Grove.”

Harrah is coy when it comes to talking about how he emerged from bankruptcy. But five years after going broke, he turned his attention to Santa Ana, convincing investors and lenders there were millions to be made by redeveloping downtown.

Rueben Martinez, owner of a well-known bookstore in downtown Santa Ana, said Harrah is “the most unforgettable character I’ve ever met.”

Several people said Harrah’s handshake is good enough to seal a business deal. That was the case with Martinez.

Harrah asked him to move into one of his buildings. But when he said how much he wanted in rent, Martinez replied, “I sell books, not diamonds.”

“He grinned and cut the rent in half. Then he dropped the keys in my hand and said I could move in any time I wanted,” he said.

Harrah is not without his detractors, however. Critics like attorney Barry Jensen complain that city officials never say no to Harrah.

Jensen lives in French Park, a neighborhood that would be in the shadow of One Broadway Plaza. Its residents have been among the more outspoken opponents of Harrah’s project.

Jensen and others believe the city gave in to Harrah when it issued a demolition permit for the Yale Apartments, built in the 1930s. Though dilapidated, the buildings are on the city’s historic register.

The apartments are in the middle of the proposed One Broadway Plaza. Initially, Harrah was ordered to repair the buildings, which were then occupied. Records show that Harrah failed to act on the order, and the city attorney’s office filed a misdemeanor complaint against him in 2001.

But Harrah produced an engineering report that showed the buildings needed expensive repairs to make them safe.

City Atty. Joseph W. Fletcher said Santa Ana accepted the engineering report submitted by Harrah without an inspection by a city engineer. With the buildings deemed unsafe, Harrah was ordered to vacate the apartments and was issued a demolition permit, Fletcher said.

The buildings, however, still stand. Harrah has extended an olive branch to preservationists by offering to give the empty, boarded-up buildings to anyone who has a place for them.

Harrah also attracted scrutiny--this time from the federal government--when questions arose about invoices he submitted in 1998 totaling at least $80,000. The invoices were for work done on a building owned by Harrah and leased to the U.S. Department of Housing and Urban Development.

Jensen said he turned copies of the invoices over to HUD after the documents were dropped off at his home by someone he declined to identify. He said that the companies did not exist and that their addresses were mail boxes, not offices. A GSA spokeswoman would not confirm that an inquiry was underway, but sources said federal investigators have interviewed at least one witness.

Harrah admitted in an interview that the addresses on the invoices were mail drops and that the companies were using his general contractor’s license. But he said that the companies are subcontractors he owns, and that he formed them for tax purposes on the advice of his accountant.

He appears unruffled by the allegations of wrongdoing. He has his eye on other properties and plans to move from Newport Beach to French Park, just blocks from his office.

When reminded that French Park residents have been among his harshest critics, Harrah joked, “If you can’t beat ‘em, join ‘em.”