Finally time for Promenade hotel?
By Don Jergler
Staff writer
LONG BEACH — Alain Sarfatti's vision for a once-dilapidated corner at The Promenade and Broadway has changed a great deal since he acquired the land in 1982. Some of the ideas: condominiums, a small office park, a hotel.
But the corner along the pedestrian walkway behind Pine Avenue has changed little, serving as a reminder of how rundown the area was before revitalization took hold in recent years.
The area's three paid-parking lots and a couple of worn buildings are surrounded by more than $1 billion in development that includes several upscale restaurants and nightclubs that are home to Pine's thriving nightlife.
But today may be Sarfatti's day. The seven-member Redevelopment Agency Board will review the residential and commercial developer's plans for an 8-story, 210-room hotel, restaurant, sports club and spa at a 9 a.m. study session at City Hall.
It won't be the first time Sarfatti has presented an idea to the group, but it could be the last major hurdle in a long battle Sarfatti, now 58, has fought since he came here from his native France.
This review is the latest event in a saga between Sarfatti and the board, which took a turn for the worse a month ago, after an architect and a hotel executive involved in the project went on the defensive because RDA board members questioned the hotel's latest design.
Since then, Sarfatti has worked with RDA staff and has implemented board member suggestions.
If the RDA board shows favor for the newest plans, the project will be placed on an upcoming agenda for design approval. A nod in favor of the project today from the board may foreshadow how the board will eventually vote.
"This is kind of a watershed decision," said Jay Von Klug, an RDA staff member who oversees downtown projects.
Minor permits and paperwork not withstanding, the hotel could win final approval in as few as 30 days. Construction is expected to take 24 months.
Long trek
In short, a good meeting today could mark the beginning of the end of a long trek for Sarfatti. A quarter century ago, he left Paris, where he worked for a short time as a developer after graduating from the Sorbonne. He came to America in 1981, and less than a year later, invested in The Promenade property.
Looking back to 1982, when he and his Swiss partner purchased the 30, 000-square-foot parcel for $2.25 million with the former Barker Brothers furniture store on it.
"When we bought it in '82, the plan was to simply renovate the existing building, and turn around and sell it," Sarfatti said.
Except for a small California Bank branch operating on the ground floor, the 8-story building was vacant.
But the structure was designed in 1929, before the 1933 earthquake. Tests showed it didn't meet modern earthquake codes. The building was demolished in 1994, after efforts to have it restored and include it in project plans were abandoned.
One of the early concepts for the site was for "Promenade Plaza," a mixed-use office and retail project to rehabilitate the Barker Building, as well as construction of a new 8-story building and a 4-story parking structure.
By Sarfatti's admission, the $13.6 million project was too ambitious. "For economic reasons, it didn't fly," he said.
DisneySea, an aquatic theme park that incorporated the Queen Mary and other harbor elements, carried the promise of tourism and untold economic benefit.
Because of the DisneySea project, Sarfatti had several backers wanting to get in on developing his property.
But when the Walt Disney Co. abandoned the project to expand its Anaheim resort, it drove off Sarfatti's interested investors, he said.
"We were always hit by something," he said with a laugh.
Next was a large-scale residential project that called for demolishing the existing building and erecting a 10-floor structure of 140 condominiums above ground-floor retail.
However, a decision in the mid-to late-1990s to rezone The Promenade from a residential to commercial area forced him to scrap those plans. The area has since been re-zoned to allow residential construction, but not hotels.
D-Orsay's start
The idea of Hotel D'Orsay, named for a museum in Paris, was a concept Sarfatti introduced in 1998. Financing was in place from an independent hotel operator. He forged ahead through the next few years with development plans.
Then, another stumbling block: 9/11.
"That hit the hotel plan," Sarfatti said. "We have always been hit by a torpedo from somewhere. This frustration is on and on. It's a saga."
He kept looking for backers. More of Sarfatti's money was being poured into what is now a parking lot that he said brings in nearly $20, 000 per year.
"It just pays for property taxes, that's it," Sarfatti said, adding, "I park there all the time when I'm downtown."
In 2003, Sarfatti signed a deal with Beverly Hills-based Hilton Corp. for its Embassy Suites franchise. That same year, he obtained financial backing, and was granted design approval by the Redevelopment Agency.
That paved the way for an 11-story, 230-room hotel with ground-floor retail space.
As part of a deal with the RDA, the agency is selling Sarfatti an adjacent 9, 000-square-foot plot for $588, 000, including rights to build a 152-space underground parking garage.
Construction was slated to begin in the first quarter of 2004, with completion in mid-2005.
Expensive design
Then there was yet another blow to Sarfatti's dream; this time a design problem.
When the number-crunchers took a hard look at the costs of what had been envisioned, they realized that nearly $10 million would be added to the $40 million project cost.
Another re-design, and a shorter hotel that looked much different than what was approved, went before the board in late April.
The RDA board had approved a conceptual drawing with massive amounts of glass, rounded entrances and architectural flourishes.
But the new, modest design presented to the RDA Board called for an eight-story hotel, with fewer, but larger, rooms.
"This is like a Ramada Inn that I can find off a freeway," RDA Board member Tom Fields said.
Others held up the old hotel drawings as a standard.
"This is what we saw, and this is what we liked," said architect and board member Alan Burks.
The board voted to send the matter to the RDA design review committee.
Sarfatti has since worked with the committee and RDA staff on revisions. The new plan calls for 210 suites, above a restaurant and a sports club with a spa. Balconies, planters and other exterior attributes give it "an ambiance that blends with the condominiums planned for The Promenade," Sarfatti said, adding that the price is still within the $40 million range.
Now, time is working against the project.
As interest rates continue to increase, so does financing. That could cut into profits. He and his Swiss partner have invested $10 million.
"Speed is now the essence for us," he said.
As part of the $75, 000 agreement for an Embassy Suites franchise from Hilton, "D'Orsay' has been dropped in favor of "Embassy Suites at the Promenade, Long Beach."
Almost every day since he bought the property, Sarfatti, who lives off Ocean Boulevard near downtown, has worked on one plan or another to put a development there.
"It's been almost every day," he said. "Studies, architects, surveys, permits. It's constant."
Not a note of bitterness can be detected in his voice. Impatience, yes. His attitude about the project can spring to life like it's 1982 at any moment.
Hotel room boom
"The good news is that the hotel market is really booming now," Sarfatti said. "Financing is in place. Plans have been approved by Hilton, the market is there."
Indeed, the market is there for hotel rooms. Data provided by Smith Travel Research in 2004 shows that occupancy reached more than 70 percent, an increase of 4.4 percent over a year earlier, making the Los Angeles area the fifth-best market in the United States. Hotel occupancy is anticipated to increase 1.1 percentage point to 72.9 percent in 2005, according to the Advisory Services Group.
Long Beach's hotel occupancy rates are even higher, according to a study by Cal State Long Beach economics professor Joe Magaddino.
A report he issued last year shows local hotel occupancy rates running at near capacity, in excess of 75 percent. Regular hotel operations call for a cushion between rooms and the number of guests, meaning 80 percent occupancy rates are considered nearly full.
Long Beach Area Convention & Visitors Bureau officials have stated they have lost conventions because of a lack of local hotel rooms available, and would relish additional hotel space.
CVB estimates show there are roughly 2, 500 hotel rooms downtown to accommodate large groups. That means Sarfatti's project would add nearly 10 percent to available room space.
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