Anaheim condo concept downsized

A developer whose project was expected to set the tone for sprucing up Anaheim’s entertainment district has decided those plans are no longer economically viable, adding fuel to the debate about what types of development belong in the resort district.

The Harbor Boulevard project was initially pitched as a luxury high-rise condo-hotel. But developer Derek Baak said rising construction costs, competitive hotel room rates in the resort district and an unproven luxury hotel market made the original concept untenable in Anaheim. So he’s tweaking the plan, seeking to change from the high-rise, one-tower vision to a smaller hotel with condos in a building at the back.

“If the city is waiting for a luxury hotel-condo project on that site, who knows how long the land will sit there vacant?” he said. “You just can’t build a hotel now without some kind of subsidy.” With more condos added in his new plan, “the condos subsidize the hotel.”

Baak’s proposal has changed from a hotel-condo complex with as many as 300 units of each to a 75-room boutique hotel and 191 condominium units separate from it.

The new proposal, planned for the site of a closed Toys R Us, is proportionally more residential-heavy and further stokes the debate that has engulfed city and tourism officials in Anaheim: Does housing belong in the 2.2-square-mile resort district surrounding Disneyland? City zoning currently prohibits new residential development there.

Baak’s altered plan has been endorsed by city planners and some City Council members but is opposed by the Walt Disney Co.

Disney is opposed to any stand-alone residential project in the resort district, arguing that housing doesn’t mix with tourists and night revelers.

The company recently filed a lawsuit and backed two ballot measures to prevent housing in the district, including Platinum Pointe. That development would consist of about 1,275 condos and 225 low-income apartments near where Disney hopes to build a third amusement park. The City Council last month rezoned the property on a 3-2 vote to allow for wholly residential housing. A vote on the Platinum Pointe project itself could come this year.

Disney Chief Executive Robert Iger weighed in last week, saying a sprawling residential community did not belong near Disneyland and calling the theme park “the best neighbor Anaheim has ever had.”

“We don’t believe that the property being talked about ... is as recreation- or business-friendly as the businesses that could go there,” Iger said in his first public comments on the matter.

Baak said his Harbor Boulevard project should be viewed differently because it includes a hotel along the street with condos near the rear of the 5-acre parcel.

“Our project is a good compromise,” said Baak, vice president of West Millennium Homes, which is a co-developer with Renaissance Pacific Properties. “But Disney told us they can’t pick and choose projects, so they are throwing us into the same bucket as the rest because we have residential.”

Baak’s downsized development was part of a March compromise plan offered by Anaheim Mayor Curt Pringle and Councilman Harry Sidhu.

But that plan died once Pringle, Sidhu and Disney began pushing a ballot initiative that would forbid housing in the resort zone, created to help extend visitors’ trips by erecting world-class hotels, entertainment venues and restaurants.

Pringle could not be reached for comment.

In a written statement, Disneyland spokesman Rob Doughty said: “The Anaheim Resort Area was created by the City of Anaheim in 1994 to be a tourist-serving area. We believe that the residents of Anaheim have clearly indicated through the recent referendum petition their interest in protecting that vision.”

Disney’s strong opposition hasn’t deterred Baak from moving forward with the project. “Just because we don’t have their support doesn’t mean we won’t continue,” he said. “I think we have the support we need. We’ll continue working with the city and neighbors. We still think it’s the right project in that location.”

Sidhu, who opposes the Platinum Pointe project, said he was “fully supportive” of Baak’s development, because it wasn’t originally part of the resort district and was added only in recent years. Also, Sidhu said the hotel at the front of the property would create a “resort feel.”

Despite his support, Sidhu backs the ballot measure to ban housing in the district.

If the ban gets on the ballot and is approved by voters, the council would have had to approve the Baak project before the February election for it to be built.

“This is a great project,” Sidhu said. “It will clean up that end of Harbor. Disney should work with us on this.”

Frank Elfend, a consultant to the Platinum Pointe project, said Sidhu’s position was inconsistent.

“It would seem to be hypocritical,” Elfend said, “to be part of a movement precluding residential development in one case but be supportive of residential in some other instance.”

david.mckibben@latimes.com