Sunday, October 15, 2000 What's next for Queensway?   By John W. Cox, Staff writer LONG BEACH The Queensway Bay waterfront development proposal is going back to the drawing board in the wake of news that a second theater operator has withdrawn from the $100 million dining, retail and entertainment project. A substantial redesign is possible as are reductions in the project's scope now that Resort Theaters of America is in bankruptcy proceedings and out of the Queensway picture, city leaders and a developer spokesman said Saturday. "It could very well be that we end up with a scaled-down version of Queensway Bay," said 3rd District Councilman Frank Colonna. Jeff Adler, speaking for the Beachwood, Ohio-based development team of Developers Diversified Realty Corp., or DDR, said no changes have been ruled out, including scaling back the project so that it would no longer require the city to sell some $40 million in bonds to support a parking structure and other improvements to the city-owned site. "We are stepping back and looking at alternatives," Adler said. As a result of the theater's withdrawal, Adler said, Queensway Bay's groundbreaking ceremony has been indefinitely postponed. But he added that DDR wants to build something on the site soon that would help draw tourists' attention to the adjacent Aquarium of the Pacific, which is struggling in the wake of attendance shortfalls. The delays are not expected to affect the impending redevelopment of the Long Beach Plaza mall, a few blocks north on Pine Avenue. The new uncertainty has reinvigorated the project's critics, some of whom said Resort Theaters' financial troubles present an opportunity either to improve Queensway Bay's overall design or move forward with its less-controversial components, such as its waterfront dining area. "We should look at this as a positive," said downtown restaurateur John Morris, one of many Long Beach businesspeople who had criticized the Queensway plan as unworkable. Mayor Beverly O'Neill called the theater's withdrawal "disheartening," but said she looks forward to meeting with city administrators to draw up a new development strategy. "I agree that we have to reassess our direction, and I will be looking forward to some early week talks on what this actually means to the project," she said. Queensway Bay, plagued by delays after being proposed in concept more than a decade ago, is an 18-acre tourist attraction designed for the downtown waterfront between the Convention and Entertainment Center and the Aquarium of the Pacific. City officials have promoted it as a cornerstone of Long Beach's billion-dollar redevelopment efforts. Resort Theaters, a year-old cinema chain based in Southern California, had agreed to build a 15-screen theater and was expected to become Queensway Bay's anchor tenant, as well as a source of one-fifth of the project's leasing income, according to city documents. But the company recently filed for bankruptcy protection, making it the latest victim of overbuilding in the industry. The project's previous anchor tenant, Edwards Theatres, also backed out upon declaring bankruptcy in August. Many aspects of the project are now in limbo. Among other things, Adler and city officials said, financial agreements and leases signed by the project's non-theater tenants will have to be reviewed to make sure that they are still valid. Despite these changing circumstances, Mike Murray, chairman of the Long Beach Area Chamber of Commerce, said, "I think Queensway Bay is an anchor tenant for the city of Long Beach, and it really needs to happen in some form," Murray said. Timing remains an important factor. Eric Mallory, senior vice president for DDR, said in a statement Friday that the Queensway delays cost the company "tens of thousands of dollars every day." DDR's development agreement with the city is intact despite the delays, Assistant City Attorney Heather Mahood said. The city will be ready to sell bonds to support the project once the company identifies a new anchor tenant, she said. The delays could have a ripple effect on the financially troubled aquarium and other downtown development proposals that hope to feed off Queensway's tourist draw. Part of the reason the project has received as much support as it has is because it would bring visitors and new investment to the area. Alder, DDR's spokesman, said the developer and City Hall remain committed to moving forward with at least part of the project as soon as possible. "Both partners still want to make this work," Adler said. "We're the victims of timing, and unfortunately we've fallen into what has to be one of the historic lows in the American movie industry. That doesn't mean the project's not sound or viable." But activist Traci Wilson-Kleekamp, one of many Queensway detractors, said the developer and the city should have noticed signs of weakness in the theater industry. To have moved ahead with the project as designed would have been a mistake, she said. "Market forces saved us from committing a huge act of stupidity." Colonna noted that other large retail and entertainment projects have been built recently without theaters as anchors. "I really would like to see what kind of a fall-back or secondary plan DDR has."